Clunies-Ross v Davis - [2020] WASC 461

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   CLUNIES-ROSS -v- DAVIS [2020] WASC 461
CORAM:   MASTER SANDERSON
HEARD:   ON THE PAPERS
DELIVERED          :   11 DECEMBER 2020
PUBLISHED           :   11 DECEMBER 2020
FILE NO/S:   COR 114 of 2020
BETWEEN:   JOY DELISSA CLUNIES-ROSS
Plaintiff
AND
GAVIN JOHN DAVIS
First Defendant
SOIL SOLVER PTY LTD
Second Defendant
SUE CHRISTIANSEN
Third Defendant

Catchwords:

Joinder - Whether shareholder who is not directly affected by proposed 'buy-out' order ought be party to proceedings - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance

Solicitors:

Plaintiff	:	Tan & Tan Lawyers
First Defendant	:	Law Central Legal
Second Defendant	:	Hale Legal
Third Defendant	:	Law Central Legal

Case(s) referred to in decision(s):

Acehill Investments Pty Ltd v Incitec Ltd [No 2] [2002] SASC 406
News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410
Re North Coast Transit Pty Ltd [2013] NSWSC 1119
Russell v Lee Holdings Pty Ltd [No 3] [2020] WASC 346
Wurth Australia Pty Ltd v Burgess [2012] WASC 504

MASTER SANDERSON:

This application concerns whether or not the third defendant should remain a party to these proceedings. The first and third defendants seek the following orders:
1.Pursuant to O 18 r 6(2)(a) the Rules of the Supreme Court 1971 (WA) the Third Defendant be removed as a party to the originating process on the ground that no relief is claimed against the Third Defendant in the originating process.
2.The Plaintiff pay the Third Defendant's costs.
In the originating process the plaintiff sought relevantly the following orders:
1. An order under subsection 233(1)(d) of the Corporation Act 2001 (Cth) that the first defendant purchase the plaintiff's shareholding (10 'Ordinary' class and 10 'C' class) in the second defendant.
2. That the Court determine the fair value of the plaintiff's shareholding, having due regard to the sale of 1 Ordinary class share by the first defendant to the third defendant for $30,000 on 25 March 2020.

The application is actually brought under s 232(e) of the Corporations Act 2001 (Cth) (the Act). This is what is generally known as the oppression ground. If, and only if, the plaintiff is able to establish the affairs of the company are being conducted in a manner which is oppressive or unfairly prejudicial to a member of the company, then the relief under s 233 of the Act is available. In this case, the plaintiff has been quite specific. It is seeking a buy‑out order against the first defendant.
The relevant facts are as follows. The second defendant was incorporated on 10 June 2014.[1] It has on issue 30 ordinary shares, 20 B class shares and 10 C class shares.[2] Its constitution contains pre‑emptive rights which govern the transfer of shares in the second defendant.[3]
[1] Affidavit of Joy Delissa Clunies-Ross sworn 3 September 2020, p 77, 639.
[2]…

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 Clunies-Ross v Davis

Details

AGLC: Clunies-Ross v Davis [2020] WASC 461
Case: [2020] WASC 461
Decision Date: 11 DECEMBER 2020

CaseChat Overview and Summary

Clunies-Ross v Davis was a case in which the Federal Court of Australia was required to determine whether a shareholder, who was not directly affected by a proposed 'buy-out' order, ought to be a party to the proceedings. The case involved Clunies-Ross, a shareholder of a company, and Davis, the other shareholders who were seeking to enforce the buy-out order. The nature of the dispute was centred around the proper procedure for enforcing the buy-out order and whether the non-directly affected shareholder should be joined as a party to the proceedings.

The legal issues the court had to decide were whether Clunies-Ross should be joined as a party to the proceedings and whether the court had the power to make an order for joinder. The court considered whether Clunies-Ross had a direct interest in the outcome of the proceedings and whether the absence of Clunies-Ross as a party would result in a failure of justice. The court also had to determine whether the relief sought by the other shareholders could be granted in the absence of Clunies-Ross.

The court held that the shareholder who was not directly affected by the proposed buy-out order did not need to be joined as a party to the proceedings. The court found that the absence of Clunies-Ross would not result in a failure of justice, as the other shareholders were seeking to enforce an order that was not directly affecting Clunies-Ross. The court also held that it had the power to make an order for joinder, but in this case, it was not necessary. The court determined that the relief sought by the other shareholders could be granted in the absence of Clunies-Ross, as the buy-out order was not dependent on the participation of Clunies-Ross. The court's decision was based on the facts of the case and the principle that a party should not be joined unless they have a direct interest in the outcome of the proceedings.

Orders