Aligned Investment Management Pty Ltd as Trustee for the Rose Family Trust v Aligned FM Pty Ltd

[2019] NSWSC 1051

Supreme Court

New South Wales

Medium Neutral Citation:	Aligned Investment Management Pty Ltd as Trustee for the Rose Family Trust v Aligned FM Pty Ltd [2019] NSWSC 1051
Hearing dates:	31 July 2019
Decision date:	31 July 2019
Jurisdiction:	Equity - Commercial List
Before:	Hammerschlag J
Decision:	The plaintiff’s shares in Aligned FM are determined to have a value of $2,425,977
Catchwords:	CORPORATIONS – OPPRESSION - PRACTICE AND PROCEDURE – CASE MANAGEMENT – where parties agree that the plaintiff will sell its shares in a company to the second defendant at a value determined by the Court – single expert forensic accountant appointed by the Court to determine value – desirability of determining real issue quickly and cheaply – desirability of cooperation between parties and lawyers
Category:	Procedural and other rulings
Parties:	Aligned Investment Management Pty Ltd as Trustee for the Rose Family Trust – Plaintiff Aligned FM Pty Ltd – First Defendant Boultwood Ho Investments – Second Defendant
Representation:	Counsel: J.A.C. Potts SC with M.P. Cleary – Plaintiff M. Condon SC – First Defendant M.J. Heath with S.A. Adair – Second Defendant   Solicitors: Baker McKenzie - Plaintiff Squire Patton Boggs - First Defendant David P Selig Lawyer - Second Defendant
File Number(s):	2018/17909

EX TEMPORE Judgment

1. HIS HONOUR:   The manner in which the parties and their legal advisers have conducted this litigation is a refreshing and welcome example of how litigation in this List should be conducted. The proceedings are an oppression suit. To have litigated all of the issues would have been time consuming and very expensive.

2. The plaintiff and the second defendant each owned 50 per cent of the first defendant (“the Company”), a profitable entity that earns revenue from providing hotel management services. The plaintiff is associated with Ms Rose and the second defendant with Mr Boultwood.

3. Mr Boultwood has had the running of the business from some years. It was inevitable that if oppression had been made out, there would be a buy out and Mr Boultwood would have been entitled to buy. In any event, he wanted to. Plainly the relationship between them had broken down.

4. As a result of a suggestion by the Court, the parties agreed on a regime under which a single expert would determine the value of the shares. There would then be a hearing at which the expert could be cross-examined. The Court would fix the value. The Boultwood interest would then buy the Rose interest at that value.

5. Mr Michael Potter, of Axiom Forensics, was appointed to be the expert.

6. Two potential streams of income earned for the company are specialised fees. One is described as a ‘Long Term Incentive Fee’ and the other as a ‘Deferred Hotel Value Management Fee’. Mr Potter is an experienced forensic accountant, but he considered that, given the highly specialised nature of these fees, an expert specifically qualified in that field should be retained. The parties agreed. A report dealing with those fees was obtained from an expert, Mr Dean Dransfield.

7. Mr Potter took up Mr Dransfield’s opinion and opined that the value of the company, at a mid-point valuation, is $4,851,953. This would oblige the Boultwood interest to purchase the Rose interest shares for $2,425,977.

8. The parties then had a contest before me, each raising its own contentions as to whether Mr Potter’s opinion on value should be accepted, rejected or modified in specific ways.

9. The agreed regime did not, in my view, contemplate that the Court would give reasons or explanations for fixing the value. In the end result, sensibly, in accordance with the way they have acted up to this point, the parties reached a consensus that the valuation opined on by Mr Pottter (incorporating Mr Dransfield’s opinion) should be accepted. I should say that it was trending towards the inevitable that this is how I would have ruled in any event.

10. I have accordingly fixed a value in accordance with the regime between the parties. I am indebted for the assistance of counsel and solicitors on both sides of this transaction and litigation.

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Decision last updated: 16 August 2019