Allways Resources Holdings v Samgris Resources Pty Ltd - [2017] QSC 112

[2017] QSC 112

SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION
BOND J
No 11618 of 2014
ALLWAYS RESOURCES HOLDINGS Applicants
PTY LTD and ANOTHER
and
SAMGRIS RESOURCES PTY LTD Respondents
and ANOTHER
BRISBANE
3.30 PM, FRIDAY, 12 MAY 2017
JUDGMENT

HIS HONOUR: In my judgment in Allways Resources Holdings Pty Ltd v Samgris Resources Pty Ltd [2017] QSC 74, published on 8 May 2017, I concluded that:

(a) the working relationship between the plaintiffs, who are the two minority shareholders of Samgris Resources Pty Ltd (“Samgris”) and its majority shareholder, Asia Pacific Joint Mining Pty Ltd (“APJM”), had irretrievably broken down and that in the absence of any other remedy, it would be just and equitable that Samgris should be wound up; and
(b) the plaintiffs were entitled to redress under s 232 of the Corporations Act 2001 (Cth) for the cumulatively commercially unfair effect of a number of considerations, which I had identified in my reasons, but principally for the fact that:
(i)Samgris had not been managed so as to accord to the plaintiffs the degree of participation in management to which they were entitled under its constitution and board operation rules;
(ii)Samgris had not been managed so as to accord to the plaintiffs the degree of participation in management, which in light of the assumption which underlay the formation of the relationship between its members, was just and equitable, and the mutual trust and cooperation between the groups of its members had completely broken down; and
(iii)there was no reason to believe that either of those two considerations would change, and the plaintiffs were subject to restraint on their ability to exit Samgris, which APJM had indicated that it would insist upon.

In my judgment, I recognised that the evidence suggested that Samgris was a solvent company and that I should regard it to be an extreme step to wind up a solvent company. Nevertheless, for reasons which I set out, the orders which I made were:

Samgris be wound up;
Mr W J Harris and Mr A N Connolly be appointed as liquidators of Samgris, jointly and severally;
the orders made in 1 and 2 be stayed until 4:00pm on 15 May 2017.

The reason for the brief stay was to give the parties one last opportunity to reach a compromise which might avoiding winding up.

No compromise has occurred. Dr Huang on behalf of the successful plaintiffs thinks that there is no prospect of a compromise happening before the expiry of the stay.

APJM has filed a notice of appeal. The appeal contends that my discretion in relation to the grant of relief on the facts which I found, miscarried in various ways. By the appeal, APJM seeks to have substituted for the order which I made, an order that it buy the plaintiffs’ shares in Samgris at a price to be determined by the court.

APJM now seeks to stay the orders which I made until a determination of its appeal. It contends that absent…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] QSC 112
Decision Date: 12 MAY 2017

CaseChat Overview and Summary

The case of Allways Resources Holdings Pty Ltd v Samgris Resources Pty Ltd [2017] QSC 112SUPREME COURT OF QUEENSLANDCIVIL JURISDICTION involved the applicants, Allways Resources Holdings and another party, suing the respondents, Samgris Resources Pty Ltd and another party. The dispute revolved around the working relationship between the minority shareholders of Samgris and its majority shareholder, Asia Pacific Joint Mining Pty Ltd. The applicants sought redress for the unfair management of Samgris and requested a winding-up order.

The legal issues in this case were whether the working relationship between the parties had irretrievably broken down, and if so, whether it was just and equitable to wind up Samgris. Additionally, the court had to determine if the applicants were entitled to redress under section 232 of the Corporations Act 2001 (Cth) for the unfair management of Samgris.

The court found that the working relationship between the parties had indeed irretrievably broken down and that it was just and equitable to wind up Samgris. The court also found that the applicants were entitled to redress for the unfair management of Samgris, primarily due to the failure to provide the applicants with the degree of participation in management to which they were entitled under the company's constitution and board operation rules.

The court granted a stay of the winding-up order to give the parties one last opportunity to reach a compromise. After no compromise was reached, the court had to decide whether to grant a stay pending the determination of an appeal filed by Asia Pacific Joint Mining Pty Ltd. The appeal sought to have the winding-up order substituted with an order that Asia Pacific Joint Mining Pty Ltd buy the applicants' shares in Samgris at a price to be determined by the court.

In deciding whether to grant a stay, the court considered the principles governing the application and the evidence presented by the parties. The court concluded that the fair balance of the rights of the parties was to grant the stay, subject to certain conditions. These conditions included undertakings by Asia Pacific Joint Mining Pty Ltd and the Samgris directors to limit the activities and expenditures of Samgris during the stay period, as well as reporting requirements to the applicants.

The final orders of the court were to stay the winding-up order until the determination of the appeal, subject to the conditions outlined above. The costs of the application for stay were reserved.

Orders