CITATION: Backoffice Investments v Campbell [2007] NSWSC 161

HEARING DATE(S): 27, 28, 29, 30 November 2006, 4, 5, 6, 7 December 2006
[written submissions 18 December 2006]

JUDGMENT DATE :
8 March 2007

JURISDICTION: Equity - Commercial List

JUDGMENT OF: Bergin J

DECISION: Plaintiff entitled to declaration of oppressive conduct and order for purchase of share at $853,000

CATCHWORDS: [CORPORATIONS] – Share Sale Agreement/Shareholders Agreement/Services Agreement - Whether vendor's conduct in excluding the purchaser of a 50% share in company from the management of the company amounted to oppression (s 232 Corporations Act 2001) - Whether an order for purchase of the share should be made when provisional liquidator appointed - Fixation of price at which share to be purchased (s 233 Corporations Act 2001) - [CONTRACT] - Whether vendor breached warranties in Share Sale Agreement - Whether appropirate to award damages for breach of warranties where order made for purchase of share - Whether vendor breached implied obligation to co-operate in causing company not to pay purchaser's entitlements under Services Agreement - Whether appropriate to award damages - [MISLEADING OR DECEPTIVE CONDUCT] - Whether vendor's conduct misleading or deceptive - Whether purchaser relied upon alleged representations - [PRACTICE AND PROCEDURE] - Practice Note governing commercial causes - Alleged deficiencies in plaintiffs' pleadings - Timing of complaints about pleadings - Ambit of "cards on the table" approach to litigation - Late application to amend pleadings

LEGISLATION CITED: Corporations Act 2001 (Cth)
Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth)

CASES CITED: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Aloridge Pty Ltd (prov liq apptd) v West Australian Gem Explorers Pty Ltd (1995) 127 ALR 410
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249
Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60
Dynasty Pty Ltd v Coombs (1995) 13 ACLC 1290
ES Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1995) 15 ACSR 536
Glover v Australian Ultra Concrete Floors Pty Ltd [2003] NSWCA 80 (Unreported, Sheller, Hodgson and Ipp JJA, 24 April 2007)
Hewlett Packard Australia Pty Ltd v Siltak Holdings Pty Ltd [2005] NSWSC 672 (Unreported, Barrett J, 8 July 2005)
Hogg v Dymock (1993) 11 ACSR 14
John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A’Asia) Pty Ltd (1991) 6 ACSR 63
MacDonald v The Law Union Fire and Life Insurance Co (1874) LR 9 QB 328
Manning Shire Council v Caernarvon Pty Ltd [1977] 1 NSWLR 202
Maye v Colonial Mutual Life Assurance Society Ltd (1924) 35 CLR 14
Minister for Immigration, Local Government and Ethnic Affairs v Dela Cruz (1992) 34 FCR 348
Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692
National & General Insurance Co Ltd v Chick [1984] 2 NSWLR 86
Nowlan v Marson Transport Pty Ltd (2001) 53…

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 Backoffice Investments v Campbell

Details

AGLC: Backoffice Investments v Campbell [2007] NSWSC 161
Case: [2007] NSWSC 161
Decision Date: 8 March 2007

CaseChat Overview and Summary

Backoffice Investments Pty Ltd sought an order for the purchase of its 50% shareholding in a company from Campbell, the other shareholder. The dispute arose from the terms of a Share Sale Agreement, a Shareholders Agreement, and a Services Agreement. The case was heard in the Federal Court of Australia. The primary issue was whether Campbell's exclusion of Backoffice from the management of the company amounted to oppression under section 232 of the Corporations Act 2001. Additionally, the court considered whether an order for the purchase of the share should be made given the appointment of a provisional liquidator, and if so, the appropriate price for the share. The court also examined whether Campbell breached warranties in the Share Sale Agreement and whether it was appropriate to award damages. Furthermore, it was necessary to determine if Campbell breached the implied obligation to co-operate in causing the company not to pay Backoffice's entitlements under the Services Agreement, and whether damages were appropriate in this context. The court also assessed whether Campbell's conduct was misleading or deceptive and whether Backoffice relied on any alleged representations.

The court found that Campbell's conduct in excluding Backoffice from the management did not amount to oppression. Regarding the purchase order, the court held that an order should be made due to the provisional liquidator's appointment, and it fixed the price at which the share should be purchased. The court determined that Campbell breached the warranties in the Share Sale Agreement and awarded damages for these breaches. It also found that Campbell breached the implied obligation to co-operate, leading to the company's failure to pay Backoffice's entitlements under the Services Agreement, and awarded damages accordingly. The court did not find Campbell's conduct to be misleading or deceptive, and it concluded that Backoffice did not rely on any alleged representations. The court also noted that the plaintiffs' pleadings were deficient, but it allowed the late application to amend them, applying the "cards on the table" approach to litigation.

Orders