Australian Olives Ltd v Livadaras - [2008] FCA 1407

FEDERAL COURT OF AUSTRALIA
Australian Olives Limited (ACN 078 885 042) v Livadaras
[2008] FCA 1407
CORPORATIONS – consideration of the nature of an interest arising under a registered managed investment scheme for the purposes of the Corporations Act 2001 (Cth) – consideration of the validity of a decision made by a chair of a meeting of scheme members convened for the purpose of considering a resolution to remove the responsible entity of the scheme and replace that entity with a new responsible entity – consideration of whether the chair of the meeting acted in good faith – consideration of whether the chair acted reasonably in refusing to accept the vote of a member on the resolution to remove the responsible entity and the resolution to appoint a new responsible entity – consideration of the duty owed by the chair of such a meeting in the circumstances – consideration of whether the chair was deciding a question of fact – consideration of whether the decision of the chair involved an error of law
CORPORATIONS – consideration of whether the principles developed in relation to judicial review of administrative decisions are a relevant or useful analogue in considering the jurisprudential basis for reviewing decisions of the chair of a meeting in part governed by the Corporations Act 2001 (Cth) and in part governed by other instruments – consideration of whether inferences of fact arise from foundation facts taken into account by the chair of the meeting – consideration of ss 253E and 253G of the Act
Corporations Act 2001 (Cth), s 12(2)(a), (b) and (c), s 253E, s 253G, s 1322(2), s 1322(4)(b)
National Dwellings Society v Sykes [1894] 3 Ch 159 - cited
McLean Bros. & Rigg Ltd v Grice (1906) 4 CLR 835 - cited
Corpique (No. 20) v Eastcourt (1989) 15 ACLR 586 - cited
Direct Acceptance Corporation Ltd (1987) 5 ACLC 1037 – cited and quoted
Fast Scout Ltd v Bergel & Ors (2001) 40 ACSR 376 – cited and quoted
Link Agricultural Pty Ltd v Shanahan & Ors (1998) 28 ACSR 498 – cited and quoted
Perera v Reilly (2006) 59 ACSR 317 – cited and quoted
Triden Contractors Ltd (1992) 30 NSWLR 615 – cited and quoted
ANZ Nominees Limited v Allied Resources Corporation Limited & Ors (1984) 2 ACLC 783 – cited and quoted
Byng v London Life Association Ltd [1990] 1 Ch 170; [1989] 1 All ER 560 - cited
Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 - cited
Craig v South Australia (1995) 184 CLR 163 at 179 - cited
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 - cited
Avon Downs Pty Ltd v FCT (1949) 78 CLR 353 - cited
R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co. Pty Ltd (1953) 88 CLR 100 – cited
Attorney‑General (NSW) v Quin (1990) 170 CLR 1 - cited
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 –…

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: [2008] FCA 1407
Decision Date: 15 September 2008

CaseChat Overview and Summary

In the case of Australian Olives Ltd v Livadaras, the primary dispute involved the conduct of a meeting of members of Australian Olives Ltd (AOL), specifically whether the resolutions passed at the meeting were valid. The dispute centred on whether certain entities, including TOG, were acting in concert with AOL in relation to voting on resolutions, which would have disqualified them from participating in the meeting. The Federal Court of Australia was tasked with determining the validity of the resolutions passed at the meeting and the conduct of the meeting itself.

The legal issues before the court included whether the chair of the meeting correctly excluded certain entities from voting on the resolutions, and whether those entities were acting in concert with AOL. The court was required to consider the evidence presented regarding the relationships between AOL, TOG, and other entities, as well as the implications of those relationships under the Corporations Act 2001 (Cth). The court had to assess whether the exclusion of TOG from the meeting was justified and whether the resolutions passed at the meeting were valid.

The court found that the chair had correctly excluded TOG from the meeting as they were acting in concert with AOL, which was not permitted under the Corporations Act. The evidence demonstrated a close relationship between AOL and TOG, particularly through Mr. Coney's role in both entities. The court considered the circumstantial evidence, including the timing of transactions, the nature of the sale of interests, and the appointment of Mr. Ammit as TOG's proxy to vote against the resolution. The court concluded that the exclusion of TOG was justified and that the resolutions passed at the meeting were valid.

The court dismissed the application and ordered that the applicant pay the respondents' costs of and incidental to the application. This decision upheld the validity of the resolutions passed at the meeting, affirming the actions taken by the chair to exclude TOG from participating in the voting process.

Orders

Orders of the court

1. The application is dismissed.

2. The applicant shall pay the costs of the respondents of and incidental to the application.

Background

Background to the litigation

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Evidence

Evidence Before The Court

Apart from this exchange concerning TOG’s acquisition of the resumed interests contextualised by the discussion about the groves and the treatment of revenue from the 237 interests, Mr Shaw gave evidence that he put to the chair that no reasonable grounds existed for the chair to conclude that TOG was an associate of AOL. After Mr Livadaras identified the factors leading him to his view, Mr Shaw repeated his objection and asked that it to be noted in the minutes. In light of the chair’s decision to exclude TOG’s 237 groves and having regard to other matters discussed between Mr Kostas Livadaras and Mr Simon Beddoe, both Livadaras and Beddoe advised the chair that the total number of members entitled to vote on the resolutions at the meeting was 741. The chair accepted that 401 votes had been cast in favour of the resolution to remove AOL as responsible entity and the resolution was declared passed. The second resolution appointing Huntley was also passed. The evidence of Mr Spiros Livadaras Mr Livadaras gave evidence that the issue of the status of Mr Coney and that of TOG had been a contentious issue in December 2007 in relation to the original meetings sought to be convened in December 2007 concerning Projects 4, 5 and 6. Mr Livadaras gave evidence that he sought advice from Mr Jessup on 17 March 2008 in relation to the meetings for Projects 5 and 6 convened for 18 March 2008 in the light of Mr Shaw’s letter of 14 March 2008. The advice was directed to the implications of the role discharged by Sean Coney as self‑described CFO of Collinsville including Coney’s past or present relationship in a range of entities with which Messrs Ammit and Handbury were associated. Mr Jessup said he would need to undertake company searches to determine whether, on the facts, particular relationships rendered a person an associate of another for the purposes of the Act. Mr Jessup made reference in his response to Mr Livadaras that Collinsville may arguably be a person with whom AOL was acting or proposing to act in relation to whether or not AOL would remain the responsible entity of the particular project. Mr Jessup mentioned the notion that emerged in his letter of 28 April 2008 that Mr Livadaras might ‘be able to argue that [Sean] Coney is an associate on the basis that he is a person with whom AOL is acting or proposing to act in concert in relation to whether or not AOL is to remain the responsible entity’. Accordingly, Mr Livadaras had sought advice about these matters in the context of the earlier project meetings. As to the meetings on 18 March 2008, Mr Livadaras said that he relied upon the advice of Mr Jessup, as an expert, and was not able to comment on whether the conclusion reached by Mr Jessup that TOG was an associate of AOL was based upon a conclusion that TOG was a body corporate controlled by AOL; or, a body that controlled AOL; or, a body corporate controlled by an entity that controlled AOL. In other words, Mr Livadaras was not confident whether the ultimate view was based upon a result brought about by s 12(2)(a) of the Act or whether Mr Jessup’s arguable notion that AOL and TOG were acting relevantly in concert was the prevailing basis for the view. However, Mr Livadaras gave evidence that in his view, informed by the advice of Mr Jessup, TOG was a person with whom AOL was acting or proposing to act in concert in relation to the voting of the 237 interests against the resolution to remove AOL at the meeting on 29 April 2008.

Decision

Reasons for decision

GREENWOOD J

Mr Simon Beddoe gave evidence concerning the changes to the members register. Mr Beddoe recalls receiving the email from Mr Coney. Mr Beddoe believes that he did change the register of members to reflect TOG’s interest although he can not remember at what time on 7 December 2007 the change was made. Mr Beddoe said that he was advised by Mr Ammit of the sale; spoke to Mr Coney; obtained ‘some written confirmation that the transfer had occurred and to the sum of the groves involved, the dollar amount involved and the entity to which the sale was taking place’. Mr Beddoe said that once he received that information he amended the register. Conclusions as to the sale arrangements and contentions as to acting in concert The respondents invite the Court to draw an inference that Mr Coney and Mr Ammit entered into an arrangement to act in concert in connection with the voting of TOG’s interests in Project 4 at the meeting of members on 29 April 2008. In doing so the respondents rely upon ‘circumstantial evidence’ sometimes called ‘evidentiary facts’ (a ‘factum probans’) or ‘facts relevant to an issue’ from the existence of which the Court may infer the existence of a fact in issue sometimes called a ‘principal fact’ (or a ‘factum probandum’) (‘Cross on Evidence’, 7th Ed, 2004, J D Heydon [1100]). The meeting on 29 April 2008 represented a meeting ultimately called to consider resolutions to remove AOL as a result of earlier meetings not proceeding. The essential matters said to support an inference of acting in concert in relation to the resolution involve the extensive business relationship between Mr Coney and Mr Ammit; the relationship between Mr Coney and the Handbury Group entities and their directors; Mr Coney’s former role in AOL and COGL at a time when Mr Ammit and Mr Handbury were directors of those companies; the compression in the timing between the transaction events on 3 December 2007 and 7 December 2007 and the meeting on 10 December 2007; the content of the terms on which TOG acquired 237 interests for a nominal sum having regard to historical sale prices; the appointment of Mr Ammit as TOG’s proxy with a direction that TOG’s interests be voted against the resolution to remove AOL; and the failure on the part of AOL to offer the resumed interests to any other member or to otherwise take reasonable steps to secure a sale price on behalf of the former members. It seems to me that the evidence of Mr Ammit and Mr Coney in relation to a sale price at $10 and the evidence concerning the timing of the transaction raises real questions as to the purpose and objective of the transaction. However, I accept that the question of management fees payable by those members whose interests had been repossessed was a matter of significant controversy between AOL and the defaulting members (seven in all although represented by eight investor parties) and the subject of discussions with Mr Livadaras as to a number of issues. I accept that AOL was confronting a failure on the part of those members to pay substantial management fees and AOL saw some advantage in quitting those interests. Mr Coney says that the grove interests were in themselves, at best, of neutral value as all revenue from the 237 groves had been allocated to other members of Project 4 for the term of the project and correspondingly TOG assumed no responsibility for management or harvesting fees in respect of those groves and the trees planted on them. From Mr Coney’s point of view, the COGL shares gave him a commercial reason for acquiring the groves coupled with some assurances which he described as a warranty in the event that the former members succeeded in claims of restitution of their interests in the project both as to groves and shares.

Ratio Decidendi

Legal Principle Established

Established by: GREENWOOD J

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