Arkin v Tridon Australia Pty Ltd - [2002] FCA 1629

FEDERAL COURT OF AUSTRALIA
Arkin v Tridon Australia Pty Ltd [2002] FCA 1629
Business Corporations Act 1990 (Ontario) s177(1), 178(4)
Corporations Act2001 (Cth) s 290(1), (2), (4)
HARRY LEE ARKIN v TRIDON AUSTRALIA PTY LTD
N 3016 OF 2002
HELY J
24 DECEMBER 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 3016 OF 2002

BETWEEN:

HARRY LEE ARKIN
APPLICANT

AND:

TRIDON AUSTRALIA PTY LTD
RESPONDENT

JUDGE:

HELY J

DATE OF ORDER:

24 DECEMBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1. The matter be listed for directions on a date to be fixed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 3016 OF 2002

BETWEEN:

HARRY LEE ARKIN
APPLICANT

AND:

TRIDON AUSTRALIA PTY LTD
RESPONDENT

JUDGE:

HELY J

DATE:

24 DECEMBER 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The respondent (“TAPL”) is a company incorporated in New South Wales. In 1988 shares in TAPL were held as to about 67 percent by Mr R W Lennox (or his associates) and as to about 33 percent by Tridon Ltd. Tridon Ltd later changed its name to ACD Tridon Inc (“ACDT”). ACDT is an Ontario Corporation registered under Corporations No 59314.
On 4 October 1988 a Distributorship Agreement was entered into between ACDT of the one part, and TAPL and Tridon New Zealand Ltd (a subsidiary of TAPL) (“TNZL”) of the other part. Also on 4 October 1988 a Shareholders’ Agreement was entered into between ACDT of the one part and Mr Lennox of the other part. Under the Shareholders’ Agreement Mr Lennox had the power to appoint two persons to the board of TAPL, and ACDT had the power to appoint one member. If a person ceases to be a director of TAPL, the party which appointed him is entitled to appoint a replacement.
Clause 14 of the Shareholders’ Agreement provides that each party shall not “transact” with its shareholding in TAPL except in circumstances which are not presently material. Clause 16 provides that on the occurrence of an event of default, the non-defaulting party may compulsorily acquire the shares of the defaulting party at a fair value. Included in the events of default is the passing of a resolution for the reduction of capital of the party concerned. Clause 17 of the Shareholders’ Agreement provides that the rights and obligations of the parties to it are personal, and “no party may assign such rights and obligations” without the consent of the other.
Tomkins Canada Acquisition Corporation (“TCAC”) held all of the shares in ACDT. Section 177(1) of the Business Corporations Act 1990 of Ontario (“BCAO”) provides for the amalgamation of a holding corporation and one or more of its subsidiary corporations which may amalgamate and continue as one corporation.
On 30 August 1999 a Certificate of Amalgamation issued in relation to a purported amalgamation of ACDT and TCAC. The product of that…

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.

Continue reading Arkin v Tridon Australia Pty Ltd

Details

AGLC: Arkin v Tridon Australia Pty Ltd [2002] FCA 1629
Case: [2002] FCA 1629
Decision Date: 24 DECEMBER 2002

CaseChat Overview and Summary

Arkin v Tridon Australia Pty Ltd involves a dispute over the validity of the appointment of Mr. Arkin as a director of TAPL. The case was heard in the Supreme Court of Australia, where TAPL sought a stay of the proceedings until certain threshold issues in related Supreme Court proceedings were determined. These threshold issues included whether the attempted amalgamation between ACDT and TAPL failed, and whether there was a reduction in the share capital of ACDT triggering the operation of clause 16.2 of the Shareholders’ Agreement. The applicant, Mr. Arkin, opposed the stay and TAPL filed several affidavits, including expert evidence, to support their application.

The legal issues before the court were whether the stay should be granted and, if not, how the proceedings should proceed given the late filing of affidavits and the expert evidence. The court had to consider the impact of the late-filed affidavits on the proceedings, the relevance and admissibility of the expert evidence, and the potential for prejudice to the parties if the stay was not granted. The applicant's counsel conceded that an adjournment might be necessary due to the late service of the affidavits, which addressed matters truly in issue in these proceedings.

The court found that the stay application would consume all available time and that the applicant could not oppose an adjournment due to the late service of the affidavits. Therefore, the court declined to grant the stay. Instead, the matter was listed for directions to be fixed at a later date. The court's reasoning was based on the need to manage the court's time effectively, the necessity of allowing the parties to address the issues raised by the late-filed affidavits, and the potential for prejudice if the stay was granted. The court did not speculate on the merits of the underlying issues but focused on the procedural aspects of the case.

In conclusion, the court ordered that the matter be listed for directions on a date to be fixed. This decision allowed the parties to address the late-filed affidavits and the expert evidence, while also managing the court's resources effectively. The court did not rule on the substantive issues of the case but instead focused on the procedural matters that needed to be resolved before the case could proceed.

Orders

Orders of the court

1. The matter be listed for directions on a date to be fixed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

TAPL’s outline of submissions asserts that the resolution of those threshold points will determine whether Mr Arkin was validly appointed a director (as he was appointed by ACDT (1371372) and whether he should remain a director.Expert evidence TAPL filed affidavits in these proceedings from Professor Welling of 3 October 2002 and 18 November 2002 as to whether the attempted amalgamation between ACDT and TAPL failed. In his opinion, it did. The applicant responded with affidavits from H Garfield Emerson QC of 7 November 2002, 3 December 2002, 5 December 2002 and 7 December 2002. In the first of those affidavits, the opinions of Professor Welling were described as “manifestly incorrect”. I was informed by Mr Jacobs QC (without dissent on the part of counsel for the applicant) that the affidavit of 3 December 2002 was not served; that a copy of the affidavit of 5 December 2002 (without annexures) was received by him at about 5.30 pm on Friday 6 December 2002; and that the affidavit of 7 December 2002 was received by him on the day of the hearing, and he had not had time to read it. The affidavit of 5 December 2002 is substantial, and both it and the affidavit of 7 December 2002 contain assertions as to the operation of Ontario law. I was informed by Mr Jacobs QC that he had not had time to consult with Professor Welling on these affidavits, and he was not in a position to cross-examine Mr Emerson QC, which was provisionally scheduled to occur by video link on 10 December 2002. In addition, the applicant filed two substantial affidavits sworn on 3 December 2002 by John T Evans, a Canadian lawyer, in support of the opinions expressed by Mr Emerson QC. Those affidavits were filed on 4 December, only two working days prior to the scheduled hearing on 9 December 2002. In addition, expert evidence was given by Mr Paul Carter in affidavits of 27 September and 20 November 2002 as to whether there was a reduction in the share capital of ACDT triggering the operation of clause 16.2 of the Shareholders’ Agreement. An affidavit of Leslie Rose of 1 November 2002 was filed in the Supreme Court proceedings by ACDT which contraverted evidence given by Mr Carter in the Supreme Court proceedings on that topic.The motion for a stay When the matter was called on for hearing, TAPL sought leave to file in Court, and to have made returnable forthwith, a motion seeking that these proceedings be stayed until the matters identified as threshold points have been determined by the referee in the Supreme Court proceedings. The applicant’s counsel did not oppose the grant of leave, but did oppose the grant of a stay. The stay application occupied the whole of 9 December. During the course of the day several things emerged. First, if the proceedings were not stayed and the threshold issues were argued, the hearing would take a lot longer than the two plus days estimate given to Jacobson J when the matter was originally fixed. That is all the time which I had available. Second, counsel for the applicant ultimately accepted that he could not oppose an adjournment of the proceedings for a limited period of time, having regard to the late service of the affidavits of Mr Emerson of 5 and 7 December. If those affidavits went to matters which are truly in issue in these proceedings that concession was plainly correct.

Decision

Reasons for decision

HELY J

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Ratio Decidendi

Legal Principle Established

Established by: HELY J

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 3016 OF 2002

BETWEEN:	HARRY LEE ARKIN APPLICANT
AND:	TRIDON AUSTRALIA PTY LTD RESPONDENT
JUDGE:	HELY J
DATE OF ORDER:	24 DECEMBER 2002
WHERE MADE:	SYDNEY

JUDGE:	HELY J
DATE:	24 DECEMBER 2002
PLACE:	SYDNEY