Brazis v Rosati - [2014] VSCA 264

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0112

PAUL BRAZIS	First Applicant
BRAZIS NOMINEES PTY LTD (ACN 102 996 001)	Second Applicant
FERNDELL PTY LTD (ACN 110 422 145)	Third Applicant
v
EMILIO ROSATI	First Respondent
WASYL ROSATI	Second Respondent
NICK SPIROPOULOS	Third Respondent
ROSATI NOMINEES PTY LTD (ACN 102 995 862)	Fourth Respondent
NICK SPIROPOULOS NOMINEES PTY LTD (ACN 102 995 136)	Fifth Respondent
BONDILLY PTY LTD (ACN 165 032 593)	Sixth Respondent
NRJMD PTY LTD (ACN 160 435 245)	Seventh Respondent
KEY PROPERTIES INVESTMENTS PTY LTD (ACN 155 877 857)	Eighth Respondent
KIRTAS PTY LTD (ACN 003 231 141)	Ninth Respondent

---

JUDGES:	KYROU JA and GINNANE AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 October 2014
DATE OF JUDGMENT:	17 October 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 264
JUDGMENT APPEALED FROM:	Re Form 700Holdings Pty Ltd [2014] VSC 385 (Robson J)

---

ARBITRATION – Application for leave to appeal against order staying part of proceeding and referring dispute to arbitration pursuant to s 8 of Commercial Arbitration Act 2011 – Some but not all parties to proceeding also parties to Shareholders’ and Unitholders’ Agreement containing arbitration clause – Claim seeks various relief pursuant to the oppression and derivative action provisions of Corporations Act 2001 (Cth) – Whether decision is wrong or attended with sufficient doubt to justify grant of leave and whether substantial injustice would occur if the decision is not set aside – Application granted.

CORPORATIONS – Oppression – Arbitration clause – Interrelationship between Corporations Act 2001 (Cth) and Commercial Arbitration Act 2011.

---

APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr P L Ehrlich	Rankin & Co
For the Respondents	Mr E N Magee QC with Mr T M Dowling	DLA Piper

KYROU JA
GINNANE AJA:

Introduction

This is an application for leave to appeal against an order made by a judge in the Trial Division staying a claim pursuant to s 8 of the Commercial Arbitration Act 2011. The judge held that those parties to the proceeding who are also parties to a Shareholders’ and Unitholders’ Agreement (‘Shareholders’ Agreement’) that contains an arbitration clause cannot continue an oppression claim under s 233 of the Corporations Act 2001 (Cth) because it falls within the arbitration clause.[1]
[1]Re Form 700 Holdings Pty Ltd [2014] VSC 385 (‘Reasons’).

The Appendix to this judgment sets out the parties to the proceeding, the parties to the Shareholders’ Agreement and the relationships between those persons and entities. The Appendix indicates that:

·Form 700 Holdings Pty Ltd, the other Corporations listed in item 1 of the Appendix (‘Corporations’) and other companies that collectively comprise the ‘Group’ of companies (‘Group companies’), operate a formwork business.
·The applicants — Mr Paul Brazis, Brazis Nominees Pty Ltd and Ferndell Pty Ltd — are shareholders in the Corporations.
·Mr Brazis is a director and shareholder in Brazis Nominees Pty Ltd and Ferndell Pty Ltd. He is also a former director of the Group companies.
·Brazis Nominees Pty Ltd is…

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 Brazis v Rosati

Details

AGLC: Brazis v Rosati [2014] VSCA 264
Case: [2014] VSCA 264
Decision Date: 17 October 2014

CaseChat Overview and Summary

The case of Brazis v Rosati involved an application for leave to appeal against a decision to stay part of a proceeding and refer a dispute to arbitration. The matter was heard in the Supreme Court of Victoria. The dispute arose from claims made under the oppression and derivative action provisions of the Corporations Act 2001 (Cth). The central issue before the court was whether the decision to refer the dispute to arbitration was incorrect or sufficiently questionable to warrant granting leave to appeal, and whether substantial injustice would occur if the decision were not overturned.

The court examined the interrelationship between the Corporations Act 2001 (Cth) and the Commercial Arbitration Act 2011, focusing on the arbitration clause contained in the Shareholders’ and Unitholders’ Agreement. The court needed to determine whether the arbitration clause applied to all parties involved in the proceeding or only to those who were parties to the agreement. Given that not all parties to the proceeding were also parties to the arbitration agreement, the court had to decide the extent to which the arbitration clause was binding.

In its reasoning, the court found that the decision to refer the dispute to arbitration was indeed flawed. The court concluded that not all parties were bound by the arbitration clause, and thus, the referral to arbitration was not justified. Consequently, the court granted leave to appeal, stating that substantial injustice would occur if the decision to refer the dispute to arbitration were not set aside. The court's decision highlighted the importance of carefully assessing the applicability of arbitration clauses in the context of proceedings under the Corporations Act 2001 (Cth).

Orders