Crawley v Short

Case [2009] NSWCA 410
Reported Decision: 76 ACSR 286

New South Wales


Court of Appeal


CITATION: Crawley v Short [2009] NSWCA 410
HEARING DATE(S): 19-21 October 2009
 
JUDGMENT DATE: 
16 December 2009
JUDGMENT OF: Allsop P at [1]; Macfarlan JA at [5]; Young JA at [8]
DECISION: Appeal allowed in part. Cross appeal allowed in part. Parties to bring in short minutes of order in accordance with the reasons (to deal with calculations of adjustments).
CATCHWORDS: CORPORATIONS - oppression- numerous instances of oppression by director of companies- remedies- appropriate remedy a compulsory purchase order- valuation of shares. CORPORATIONS - oppression- remedies- compulsory buy-out order- valuation of shares- company's assets solely land and business- relevance of capital gains tax (CGT) liability when sold- whether CGT deducted from value-whether selling costs to be deducted from gross proceeds. EQUITY - general principles- equitable defences- laches and delay- elements of laches- degree of knowledge of wrongdoing required depends on facts in all the circumstances- applicability of defence to oppression suit. EQUITY - fiduciary duties- directors' duties to shareholders- when owed to shareholders. REAL PROPERTY - valuation of land- highest and best use- special value irrelevant in prevailing circumstances.
LEGISLATION CITED: Civil Procedure Act 2005, ss 56, 57, 58, 59, 60
Corporations Act 2001 (Cth), ss 140, 233
Corporations Law (Cth), s 260
Evidence Act 1995, s 81
CATEGORY: Principal judgment
CASES CITED: Ansett v Butler Air Transport Ltd (No 1) (1957) 75 WN (NSW) 299
Auxil Pty Ltd v Terranova [2009] WASCA 163
Baburin v Baburin (No 2) [1991] 2 Qd R 240
Baiyai Pty Ltd v Guy [2009] NSWCA 65
Brunninghausen v Glavanics (1999) 46 NSWLR 538
Buhrer v Tweedie [1973] 1 NZLR 517
Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; 66 ACSR 359
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304
Charlton v Baber (2003) 47 ACSR 31
Clegg v Edmondson (1857) 8 De GM & G 787 ; 44 ER 593
Coleman v Myers [1977] 2 NZLR 225
CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] 2 BCLC 108
Erlanger v The New Sombrero Phosphate Co (1878) 3 App Cas 1218
Fedorovitch v St Aubins Pty Ltd (No 2) (1999) 17 ACLC 1558
Fisher v Brooker [2009] 1 WLR 1764
Fysh v Page [1956] HCA 13; 96 CLR 233
Glandon Pty Ltd v Strata Consolidated Pty Ltd (No 3) (NSWSC, Young J, 4 June 1990, unreported) (BC9002364)
Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543
Goold v Commonwealth of Australia (1993) 42 FCR 51
Haas Timber & Trading Company Pty Ltd v Wade [1954] HCA 39; 94 CLR 593
Hart v Clarke (1854) 19 Beav 349; 52 ER 385
Hatch v Hatch (1804) 9 Ves 292; 32 ER 615
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41
In re Gold Company (1879) 11 Ch D 701
In re London School of Electronics Ltd [1986] 1 Ch 211
Inland Revenue Commissioners v Clay [1914] 3…

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AGLC
Crawley v Short [2009] NSWCA 410
Case
[2009] NSWCA 410
Decision Date

CaseChat Overview and Summary

The proceeding concerned an appeal and cross-appeal arising from a decision of the primary judge regarding claims of oppression brought by Mr. Crawley against Mr. Short in relation to several companies. The dispute centred on allegations of Mr. Short's oppressive conduct as a director towards Mr. Crawley as a shareholder.

The Court of Appeal was required to determine, among other things, the appropriate remedy for the proven instances of oppression, specifically whether a compulsory purchase order for Mr. Crawley's shares was appropriate. Further issues included the method of valuing those shares, particularly the relevance of potential capital gains tax (CGT) liabilities and selling costs in determining the net value of the company's assets, which consisted solely of land and a business. The applicability of equitable defences, such as laches and delay, to an oppression suit was also a point of contention.

The Court considered the principles of corporate oppression and the remedies available under the relevant legislation. It addressed the valuation of shares in the context of a compulsory buy-out, examining whether CGT and selling costs should be deducted from the gross proceeds of sale to arrive at the true value. The Court also analysed the elements of laches and delay, noting that the degree of knowledge required for the defence to succeed depends on the specific circumstances. The Court affirmed that directors owe fiduciary duties to shareholders and that the defence of laches may be applicable in oppression proceedings, subject to the established legal principles.

The appeal and cross-appeal were allowed in part, with the parties directed to submit short minutes of order to address the calculations of adjustments.

Orders

Orders of the court

Appeal allowed in part. Cross appeal allowed in part. Parties to bring in short minutes of order in accordance with the reasons (to deal with calculations of adjustments).

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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