Betta Products (Australia) Pty Ltd v Crampton - [2009] FCA 520

FEDERAL COURT OF AUSTRALIA
Betta Products (Australia) Pty Ltd v Crampton [2009] FCA 520
BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200) v LESLIE CRAMPTON and LISA CHRISTINA CRAMPTON
VID 176 of 2009
AND
IN THE MATTER OF BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200); MARKWOOD COURT PTY LTD (ACN 050 031 251)
VID 338 of 2009
GORDON J
20 MAY 2009
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 176 of 2009

BETWEEN:
BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200)
Plaintiff

AND:
LESLIE CRAMPTON
First Respondent

LISA CHRISTINA CRAMPTON
Second Respondent

JUDGE:

GORDON J

DATE OF ORDER:

20 MAY 2009

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1.These proceedings be listed for further directions at 9:30am on 18 June 2009.
2.Costs reserved.
3.Liberty to apply.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 338 of 2009

IN THE MATTER OF BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200)

BETWEEN:
MARKWOOD COURT PTY LTD (ACN 050 031 251)
Plaintiff

JUDGE:

GORDON J

DATE OF ORDER:

20 MAY 2009

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1.The material filed in VID 176 of 2009 be taken as material filed in this proceeding.
2.Markwood Court Pty Ltd (ACN 050 031 251) have leave to issue proceeding VID 176 of 2009 in the name of Betta Products (Australia) Pty Ltd (ACN 102 333 200) nunc pro tunc.
3.The costs of the application for leave be costs in the cause of proceeding VID 176 of 2009.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 176 of 2009

BETWEEN:
BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200)
Plaintiff

AND:
LESLIE CRAMPTON
First Respondent

LISA CHRISTINA CRAMPTON
Second Respondent

AND

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 338 of 2009

IN THE MATTER OF BETTA PRODUCTS (AUSTRALIA) PTY LTD (ACN 102 333 200)

BETWEEN:
MARKWOOD COURT PTY LTD (ACN 050 031 251)
Plaintiff

JUDGE:

GORDON J

DATE:

20 MAY 2009

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
INTRODUCTION

Proceeding VID 338 of 2009 is an application under ss 236 and 237 of the Corporations Act 2001 (Cth) (“the Act”) by Markwood Court Pty Ltd (ACN 050 031 251) (“Markwood Court”), a shareholder in Betta Products (Australia) Pty Ltd (ACN 102 333 200) (“Betta Products”), for leave to bring proceeding VID 176 of 2009 on behalf of Betta Products against the sole director of Betta Products (Mr Leslie Crampton) and his daughter, Ms Lisa Crampton. Ms Crampton is also a shareholder of Betta Products, as is Mr Crampton.
The principal of Athelbrook Pty Ltd (ACN 068 699 525) (“Athelbrook”), the…

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: [2009] FCA 520
Decision Date: 20 May 2009

CaseChat Overview and Summary

The case of Betta Products (Australia) Pty Ltd v Crampton involves a dispute concerning the shareholding and management of Betta Products, an Australian company. The primary parties involved are Markwood Court, a company associated with Mr Hocking, and the Crampton family, who hold significant shares in Betta Products. The legal issues centre around the validity of an agreement made between Mr Hocking and Mr Crampton in 2005, which purportedly granted Mr Hocking 10% of Betta Products’ shares in exchange for Mr Crampton's use of Mr Hocking's car in a motor racing competition. The dispute escalated to the point where Markwood Court sought leave to commence proceedings in the name of Betta Products to address the issues, a request which Mr Crampton opposed on procedural grounds. The court was required to decide whether the procedural rules allowed Markwood Court to proceed with the action in Betta Products' name, and if the agreement in question was valid and enforceable.

The court considered the procedural history and relevant legal precedents, notably South Johnstone Mill Ltd v Dennis and RTP Holdings Pty Ltd. It found that Markwood Court could validly seek leave to proceed in Betta Products' name, consistent with established legal principles. The court also examined the substantive agreement between Mr Hocking and Mr Crampton, assessing whether it was a binding contract. The evidence indicated that while the agreement was made, the shares were not formally issued until 21 August 2006, raising questions about the enforceability of the agreement. However, the primary focus of the court's decision was on the procedural aspects, concluding that the application for leave should be granted, and the substantive issues could be addressed in the forthcoming proceedings.

The court granted Markwood Court leave to proceed with the action in Betta Products' name, effectively allowing the litigation to continue under the correct corporate entity. The decision addressed the procedural concerns raised by Mr Crampton and clarified that the substantive issues, including the validity of the 2005 agreement, would be determined in the subsequent litigation. The court ordered the case to be listed for further directions on 18 June 2009, reserving costs and granting liberty to apply for further orders as necessary.

Orders

Orders of the court

1. These proceedings be listed for further directions at 9:30am on 18 June 2009.

2. Costs reserved.

3. Liberty to apply.

Note:

1. The material filed in VID 176 of 2009 be taken as material filed in this proceeding.

2. Markwood Court Pty Ltd (ACN 050 031 251) have leave to issue proceeding VID 176 of 2009 in the name of Betta Products (Australia) Pty Ltd (ACN 102 333 200) nunc pro tunc.

3. The costs of the application for leave be costs in the cause of proceeding VID 176 of 2009.

Note:

Background

Background to the litigation

In light of that opposition, on 4 May 2009, Markwood Court filed separate proceedings by way of originating process (“VID 338 of 2009”) seeking leave to file proceeding VID 176 of 2009 in the name of Betta Products. This was consistent with the procedure adopted in RTP Holdings Pty Ltd 36 ACSR 170. On any view, it is possible for leave to commence proceedings in the name of Betta Products to be granted nunc pro tunc: South Johnstone Mill Ltd v Dennis (2007) 163 FCR 343 at [24]-[59] and RTP Holdings Pty Ltd 36 ACSR 170. Accordingly, any procedural objection raised by Mr Crampton to the application being commenced in VID 176 of 2009 falls away. BACKGROUND TO THE PROCEEDINGSBETTA PRODUCTS Betta Products was incorporated in September 2002. The issues in dispute concern, at least in part, the shareholding in and management of Betta Products. The Australian Securities and Investments Commission (“ASIC”) current and historical extract (as at 18 March 2009) records that the ordinary shareholders of Betta Products are:Athelbrook 200Markwood Court 83,752Lisa Crampton 136,948Leslie Crampton 112It will be necessary to return to consider the shareholding in further detail later in these reasons for decision. For present purposes, it is sufficient to note that the shareholders in Betta Products fall into two “camps” – the Cramptons on one side and Athelbrook and Markwood Court on the other. The ASIC extract also records that from 18 November 2008 Mr Crampton was its sole director. Mr Hocking, the principal of Markwood Court, had been a director for the limited period from 7 August until 18 November 2008. The circumstances surrounding Mr Hocking’s removal as a director of Betta Products is another of the issues in dispute between the “camps”. Before turning to consider the other facts said to give rise to the dispute between the two camps, it is necessary to say something about Betta Products. It is a holding company. Mr Hocking’s evidence was that its major asset now is a majority shareholding (somewhere between 55%-65% according to the differing evidence of Messrs Hocking and Crampton) in Coolshield International Pty Ltd (“Coolshield”) which Betta Products holds via a 50% shareholding in Helical Innovations Pty Ltd (“Helical”). Some of the circumstances giving rise to the involvement of Helical and, via Helical, Betta Products’ shareholding in Coolshield form part of the issues in dispute and are addressed in further detail below. According to Mr Crampton, Coolshield has a number of lucrative products and “is about to become very profitable”. 2005 AND 2006 The dispute between the two “camps” is both factual and legal. Mr Hocking stated he met Mr Crampton in about 2002 through their mutual interest in open-wheeler Australian Formula 4000 motor racing and that, in 2005, he and Mr Crampton agreed that Mr Crampton would drive one of Mr Hocking’s cars in competition over several years for which Mr Crampton would pay a fee. None of that was directly disputed by Mr Crampton. Mr Hocking then contends that rather than paying him a fee, Mr Crampton agreed to issue to Mr Hocking 10% of the issued shares in Betta Products, a company Mr Crampton described to Mr Hocking as a holding company of various businesses which had the potential to be worth many millions of dollars (“the 2005 Agreement”) but that the shares were not recorded in the ASIC extract as having been issued until 21 August 2006.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GORDON J

It was not in dispute that this criterion is satisfied. Conclusion For the reasons set out above, it is appropriate that, in VID 338 of 2009, Markwood Court be granted leave pursuant to s 236 of the Act to issue proceedings VID 176 of 2009 in the name of Betta Products (Australia) Pty Ltd (ACN 102 333 200) nunc pro tunc. Proceedings VID 176 of 2009 will be listed for directions after service has been effected and at a time convenient to the parties. At that time, any issue of which Registry of the Federal Court manages the interlocutory steps and / or ultimately hears the substantive proceeding can be raised. Accordingly, I direct proceedings VID 176 of 2009 be listed for further directions at 9:30am on 18 June 2009.

Ratio Decidendi

Legal Principle Established

Established by: GORDON J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 176 of 2009

JUDGE:	GORDON J
DATE OF ORDER:	20 MAY 2009
WHERE MADE:	MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 338 of 2009

JUDGE:	GORDON J
DATE:	20 MAY 2009
PLACE:	MELBOURNE