Trendy Fortitude Valley nightclub to be wound up due to irretrievable breakdown of trust
A bitter civil war between the partners who own one of Brisbane’s trendiest nightclubs has ended with a judge deciding the fate of the business.
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A bitter civil war between the partners who own one of Brisbane’s trendiest nightclubs has ended with a judge deciding the fate of the business, ordering it be wound up due to an irretrievable breakdown of trust.
On Thursday in a 44-page decision following a four-day hearing last year, Justice Paul Freeburn ordered that two companies that run Fortitude Valley mega-club X Cargo: Three Two Three Pty Ltd (323) and Three Two Three (Services) Pty Ltd (323 Services) be wound up.
Justice Freeburn made the orders after neither of the two warring sides asked him to make a compulsory buyout order, and finding that part-owner DJ Aydan Sturgess, 37, from Newstead, had acted in an oppressive or unfairly prejudicial way towards his former business partners veteran hotelier couple Angus, 39, and Leah Cattanach, 36, from New Farm.
Justice Freeburn noted in his decision that Mr Sturgess’ behaviour was “designed to defeat Angus and Leah’s management role as well as their shareholding” in the McLachlan St business which runs a partly-open-air multistorey bar and nightclub made from shipping containers.
The judge also ruled that Mr Sturgess had blocked Angus Cattanach from accessing the businesses bank accounts in November 2020 and then obtained a court order on December 3, 2020 relying on a business sale contract as entitling him to sole ownership of the business.
That court order, forcing Angus and Leah Cattanach to give up possession of the Fortitude Valley premises to 323, has now been discharged.
Mr Sturgess launched the legal action in December 2020 arguing he owned the X Cargo business outright, claiming the Cattanach’s made an oral agreement to sell to him in March 2020 for just $10,000, because it was “financially distressed” including by a $1m debt to kitchen equipment rental company Silver Chef.
But Justice Freeburn ruled against Mr Sturgess and ordered that Mr Sturgess’ company DosDos holds the shares in 323 in trust for Angus and Leah, with each of them entitled to 20 shares.
Justice Freeburn noted that he had a “lack of confidence in” Mr Sturgess’ evidence in court that the Cattanachs agreed to sell the business to him.
He noted he preferred the Cattanach’s evidence over the sale agreement over Mr Sturgess’ evidence.
“In cross-examination, he seemed more interested in saying what suited his case, often in a combative way, rather than giving a careful account of what happened,” Justice Freeburn said of Mr Sturgess.
The Cattanach’s denied agreeing to sell to Mr Sturgess, instead alleging they agreed to a restructure where the business would be sold to a new entity but continue trading.
Mr Sturgess was to hold their shares in that new entity on their behalf, for reasons related to their credit rating, the court heard.
“The court rejects (Mr Sturgess’s) contention that there was an agreement reached in March 2020 whereby (Mr Sturgess) purchased the business,” Justice Freeburn stated in his decision, pointing to an email and a Facebook message as evidence.
Justice Freeburn has also ordered that Mr Cattanach be paid $76,275 by 323 Services for wrongful sacking on November 26, 2020.
The judge noted that it was likely that Mr Cattanach was sacked because Mr Sturgess “wished to exclude him from the business”.
The nightclub and bar opened in July 2018 and by late 2019 was already in financial hot water, with one related company wound up due to failure to pay employee entitlements, the court heard.
At one point the club was turning over $180,000 a week from its 73 per cent female clientele.
The case is set to return to court at a later date to decide the form of further orders and costs.
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