Appeal Outcome: Special leave granted by the High Court - 26 August 2008
New South Wales
Court of Appeal
CITATION: Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 HEARING DATE(S): 8 August, 2 October 2007
JUDGMENT DATE:
19 May 2008JUDGMENT OF: Giles JA at 1; Basten JA at 172; Young CJ in Eq at 224 DECISION: (1) Appeal allowed and cross-appeal allowed in part; (2) Set aside the declaration and orders (1), (2) and (3) made on 29 March 2007 and the judgment for the first plaintiff against the first defendant in the amount of $853,000 given on 13 April 2007; (3) In lieu thereof, order that there be judgment for the first plaintiff against the first defendant in the amount of $850,000 taking effect on 13 April 2007; (4) Appellant pay 90 per cent of respondents' costs in this Court. CATCHWORDS: CORPORATIONS- Oppression- Sections 232-233 Corporations Act 2001 (Cth)- 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- Whether necessary for the oppressive conduct to be continuing at the time of hearing- Whether the trial judge's order of a share buy-out appropriate in light of a provisional liquidator being appointed- (By majority) No order should be made. - MISLEADING OR DECEPTIVE CONDUCT- Whether the vendor's giving of contractual warranty misleading or deceptive- Whether purchaser relied on the alleged misrepresentations- (By majority) Yes- Consideration of proper amount of damages. LEGISLATION CITED: Corporations Act 2001 (Cth) ss 232, 233
Fair Trading Act 1987 ss 42, 72CATEGORY: Principal judgment CASES CITED: Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23
Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470
Alati v Kruger (1955) 94 CLR 216
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568
Aloridge Pty Ltd v West Australian Gem Explorers Pty Ltd (1995) 127 ALR 410
Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104
Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35
Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426
Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249
Castlemaine Tooheys Ltd v Carlton & United Breweries (1987) 10 NSWLR 468
Club Hotels Operations Pty Ltd v CHG Australila Pty Ltd [2005] NSWSC 998
Colly Cotton Marketing Pty Ltd v Simmons [2006] NSWCA 134
Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670
Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60
CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458
Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax (1943) The Valuer vol vii 299
De Tocqueville Private Equity Pty Ltd v Linden & Conway Ltd; Re Linden & Conway Ltd (2006) 59 ACSR 587
E S Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1994) 15 ACSR 536
E W Blanch Pty Ltd…
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Details
- Case
- [2008] NSWCA 95
- Decision Date
CaseChat Overview and Summary
In *Campbell v BackOffice Investments Pty Ltd*, the Court of Appeal of New South Wales considered an appeal and cross-appeal concerning claims of oppression under the *Corporations Act 2001* (Cth) and misleading or deceptive conduct. The dispute arose from a share sale agreement, shareholders agreement, and services agreement, where the vendor's conduct in excluding the purchaser of a 50% shareholding from the management of the company was alleged to be oppressive.
The primary legal issues before the Court of Appeal were whether the vendor's exclusion of the purchaser from management constituted oppression, whether oppressive conduct must be continuing at the time of the hearing to warrant relief, and whether the trial judge's order for a share buy-out was appropriate, particularly in light of a provisional liquidator being appointed. Additionally, the court had to determine whether the vendor's provision of contractual warranties amounted to misleading or deceptive conduct, whether the purchaser relied on these representations, and the appropriate quantum of damages for any such conduct.
By majority, the Court of Appeal found that while the vendor's conduct in excluding the purchaser from management was oppressive, it was not necessary for such conduct to be continuing at the time of the hearing for relief to be granted. The majority also determined that the trial judge's order for a share buy-out was not appropriate in the circumstances, especially given the appointment of a provisional liquidator. Furthermore, the majority concluded that the vendor's contractual warranties were misleading or deceptive and that the purchaser had relied on these representations, but they varied the quantum of damages awarded by the trial judge.
Consequently, the appeal and cross-appeal were allowed in part. The declaration and orders made by the trial judge, including the judgment for $853,000, were set aside. In lieu thereof, judgment was entered for the plaintiff against the defendant for $850,000, effective from 13 April 2007. The appellant was ordered to pay 90 per cent of the respondents' costs in the Court of Appeal.
The primary legal issues before the Court of Appeal were whether the vendor's exclusion of the purchaser from management constituted oppression, whether oppressive conduct must be continuing at the time of the hearing to warrant relief, and whether the trial judge's order for a share buy-out was appropriate, particularly in light of a provisional liquidator being appointed. Additionally, the court had to determine whether the vendor's provision of contractual warranties amounted to misleading or deceptive conduct, whether the purchaser relied on these representations, and the appropriate quantum of damages for any such conduct.
By majority, the Court of Appeal found that while the vendor's conduct in excluding the purchaser from management was oppressive, it was not necessary for such conduct to be continuing at the time of the hearing for relief to be granted. The majority also determined that the trial judge's order for a share buy-out was not appropriate in the circumstances, especially given the appointment of a provisional liquidator. Furthermore, the majority concluded that the vendor's contractual warranties were misleading or deceptive and that the purchaser had relied on these representations, but they varied the quantum of damages awarded by the trial judge.
Consequently, the appeal and cross-appeal were allowed in part. The declaration and orders made by the trial judge, including the judgment for $853,000, were set aside. In lieu thereof, judgment was entered for the plaintiff against the defendant for $850,000, effective from 13 April 2007. The appellant was ordered to pay 90 per cent of the respondents' costs in the Court of Appeal.
Orders
Orders of the court
(1) Appeal allowed and cross-appeal allowed in part; (2) Set aside the declaration and orders (1), (2) and (3) made on 29 March 2007 and the judgment for the first plaintiff against the first defendant in the amount of $853,000 given on 13 April 2007; (3) In lieu thereof, order that there be judgment for the first plaintiff against the first defendant in the amount of $850,000 taking effect on 13 April 2007; (4) Appellant pay 90 per cent of respondents' costs in this Court. (orders of the Court, in part by majority)
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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