Alpine P/L v Panizza

[2001] QCA 267

[2001] QCA 267

COURT OF APPEAL

McMURDO P
DAVIES JA
THOMAS JA

Appeal No 5950 of 2001
SC No 11984 of 1998

IN THE MATTER OF CARRINGTON COTTON CORPORATION LIMITED

ALPINE PTY LTD            First Applicant/First Appellant

and

GIOVANNI PANIZZA
(also known as
John Panizza)           Second Applicant/Second Appellant

and

MARY PANIZZA              Third Applicant/Third Appellant

and

HELEN PANIZZA           Fourth Applicant/Fourth Appellant

and

BENEDICT PANIZZA          Fifth Applicant/Fifth Appellant

and

MARK PANIZZA              Sixth Applicant/Sixth Appellant

and

ALBERT PANIZZA        Seventh Applicant/Seventh Appellant

and

ALBEM PTY LTD  
(ACN 009 820 302)       Eighth Applicant/Eighth Appellant

and

CARRINGTON COTTON CORPORATION LIMITED    First Respondent/
(ACN 002 963 340)               not a party to the appeal

and

RMI PTY LTD (ACN 000 616 964)          Second Respondent/
  not a party to the appeal

and

ROSS TOWNSEND MARCHANT   Third Respondent/First Respondent

and

BROMLEY INVESTMENTS PTY LTD            Fourth Respondent/
(ACN 001 109 628)  Second Respondent

and

CHRISTOPHER MAXWELL McCOSKER            Fifth Respondent/
  not a party to the appeal

and

WENALINE PTY LTD (ACN 003 690 542)      Sixth Respondent/
  not a party to the appeal

and

SUSAN DOROTHY MARCHANT Seventh Respondent/Third Respondent

and

RUSSELL CLIVE MAUGHAN                  Eighth Respondent/
  not a party to the appeal

and

JOSEPH RAY MAGILL  Ninth Respondent/
  not a party to the appeal

BRISBANE

..DATE 11/07/2001

JUDGMENT

THE PRESIDENT:  Justice of Appeal Davies will deliver his reasons first.

DAVIES JA: This is an appeal from a decision refusing to disclose a class of documents said to be directly relevant to allegations in issue between the parties. The action is one by minority shareholders alleging oppression under the Corporations Law. The respondents are majority shareholders and persons associated with a shareholding.

The trial of the action is due to start at a time next Monday.  This appeal has accordingly been brought on before this Court as a matter of urgency and for that reason I think it is appropriate that we give judgment now.

The statement of claim in the action alleges that between 1994 and 1998 the company, which I will call Carrington, entered into a series of management agreements, four in all, with Bromley Investments Pty Ltd, one of the respondents, a company owned and controlled by those who also controlled the majority of the shares in Carrington.

It alleges that the agreements were entered into on terms more favourable to Bromley and its shareholders than it was reasonable to expect if the parties had dealt with each other at arm's length.  The documents, the subject of the present appeal, are documents evidencing work performed in fact by Bromley and its directors under those agreements.

The learned primary Judge refused to order disclosure of those documents accepting an argument of the respondents that the allegations against the respondent, Bromley, are of services promised rather than services performed and it may be inferred, it followed, that documents evidencing work performed by Bromley or its directors were not directly relevant to that issue.

I agree with his Honour's conclusion and in substance with his Honour's reason but I think it is desirable that I expand on that a little.  It appears from the statement of claim that the amounts which were payable to Bromley under the management service agreements were not fixed at a rate referable to the work actually performed by Bromley from time to time but were fixed on some other basis. 

That is not entirely clear from the pleadings but it seems to have included a base remuneration together with bonuses, the basis upon which they were fixed not being stated, and some additional remuneration such as a motor vehicle and accommodation.

It was alleged that these sums were excessive by reference to amounts which were paid to managers of other comparable companies.  However, it was also alleged, and these are the material allegations for present purposes, that another company, Wenaline Pty Ltd, was engaged during a period in which the Bromley agreements were in force to perform a number of services which Bromley had contracted to perform and for which it was paid under the management agreements. 

And it was alleged that Wenaline was controlled by two of the respondents, one of whom also shared effective control of Carrington.  The allegation that Wenaline was paid for a number of the services which Bromley undertook to perform under the management services agreement and for which it was paid was made in a number of different ways both in the statement of claim and the reply.

To prove that allegation required a comparison of the work which Bromley had undertaken to perform under the management service agreements and the work which Wenaline actually performed under its agreement or agreements over the same period and for which it was paid.  In that way, and on the pleadings only in that way, the applicant/appellant hoped to prove that there was a duplication between the work which Bromley undertook to do and for which it was paid in the manner I have described and the work which Wenaline actually performed and for which it was paid.

In that way it hoped to show that Bromley and through it those others who were associated with a majority of shareholding of Carrington were not only paid an excessive sum for management work which Bromley undertook to perform under the management agreement but also that Wenaline was paid for performing some of the same work.

However, it seems to me, that to none of these allegations is the work actually performed by Bromley directly relevant.  As I have already mentioned Bromley's entitlement to payment under the management service agreements does not appear to be calculated on the basis of payment for specific work performed from time to time but was an overall base yearly fee with bonuses, the basis of calculation of which was not clear.  For that reason the work which was in fact done by Bromley were not directly relevant to the question in issue. 

For those reasons I do not think that the documents relating to the work actually performed by Bromley are directly relevant to any allegation in issue in the proceedings and I would accordingly dismiss the appeal.

THE PRESIDENT:  Yes, I agree.

THOMAS JA:  I agree.

...

THE PRESIDENT:  The order is the appeal is dismissed with costs to be assessed.

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