Drinkwater v Caddyrack Pty Ltd - [2001] NSWSC 255

CITATION: Drinkwater v Caddyrack Pty Ltd [2001] NSWSC 255

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 3970/96

HEARING DATE(S): 16/03/01

JUDGMENT DATE:
10 April 2001

PARTIES :

Peter Westgarth Drinkwater, John Francis Drinkwater and Lustray Pty Ltd (Plaintiffs/Respondents)
Terrance Kyrwood, Geoffrey Kyrwood, Gedrot Pty Ltd and Gavros Pty Ltd (Defendants/Appellants)

JUDGMENT OF: Young J

LOWER COURT
JURISDICTION : Supreme Court (Master)

LOWER COURT
FILE NUMBER(S) : 3970/96

LOWER COURT
JUDICIAL OFFICER : Master McLaughlin

COUNSEL : M Ashhurst (Plaintiffs/Respondents)
M Painter (Defendants/Appellants)

SOLICITORS: Hansens (Plaintiffs/Respondents)
Wood Roberts (Defendants/Appellants)

CATCHWORDS: PROCEDURE [115]- Masters- Appeal- Valuation judgment- When appeal allowed. VALUATION [25]-Shares- Capitalization of maintainable profits- When appropriate method. VALUATION [36]- Appeal- Valuation by Master- When appeal against valuation by Master should succeed.

CASES CITED: Ahmedi v Ahmedi (1991) 23 NSWLR 288
Commssioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia (1947) 74 CLR 358
Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409
Drinkwater v Caddyrack Pty Ltd [1999] NSWSC 17
Dynasty Pty Ltd v Coombs (1995) 59 FCR 122
Golosky v Golosky (NSWCA 5.10.93)
House v The King (1936) 55 CLR 499
Kent & Martin v Federal Commissioner of Taxation (22.10.1945)
Kyrwood v Drinkwater [2000] NSWCA 126
Ledesma v Nobule Pty Ltd (Master McLaughlin 11.12.97)
Morrison v Judd (NSWCA 10.10.95)
Narayanan Chettiar v Kaliappa Chettiar [1946] AC 116
Re Golden Bread Pty Ltd [1977] Qd R 44
Sapir v Sapir (No 2) (1989) 13 Fam LR 362
Wilsher v Essex Area Health Authority [1988] AC 1074

DECISION: Appeal dismissed with costs.

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

YOUNG J

TUESDAY 10 APRIL 2001

3970/96 - DRINKWATER v CADDYRACK PTY LTD

JUDGMENT

1 HIS HONOUR: This is an appeal from Master McLaughlin who, in a reserved judgment delivered on 26 August 1999, valued the shares of the first defendant as of 25 September 1997, at $41,495 per share.

2 The reason why that question was before the Master is a judgment I gave in 1997, formalised in orders made on 28 November 1997 in proceedings under what is now s 233 of the Corporations Law.

3 That decision was taken on appeal to the Court of Appeal. The Court heard argument on 1 February 2000 and reserved its decision. On 25 August 2000, the appeal was dismissed. It is reported sub nom Kyrwood v Drinkwater [2000] NSWCA 126. The Court of Appeal’s decision was a split decision, Powell and Meagher JJA forming the majority, Fitzgerald JA dissenting. An application for special leave to appeal to the High Court has been filed and the best prognosis at present is that that application will be heard in June 2001.

4 No stay was granted of my orders of 1997. One of those orders was that the 5th and 6th defendants purchase the shares which the second plaintiff holds in the first defendant at a valuation to be agreed or assessed in accordance with the orders. The parties could not agree and order…

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: [2001] NSWSC 255
Decision Date: 10 April 2001

CaseChat Overview and Summary

The dispute in Drinkwater v Caddyrack Pty Ltd involved a disagreement over the valuation of shares in a company, Caddyrack Pty Ltd, between the plaintiff, Drinkwater, and the defendant. The case was heard in the Supreme Court of Australia, where the plaintiff appealed against a decision made by a Master regarding the valuation of the shares. The primary issue before the court was the appropriateness of the method used by the Master to determine the value of the shares, specifically whether the capitalization of maintainable profits was a suitable approach. The court also considered the circumstances under which an appeal against a valuation judgment by a Master should be allowed.

The court's reasoning centred on the principles of valuation and the appropriateness of the method used by the Master. The court examined whether the capitalization of maintainable profits was a suitable method in this context, taking into account the specific circumstances of the case. The court also addressed the standard for allowing an appeal against a valuation judgment by a Master, considering the balance between the role of the Master and the court in such matters. In reaching its decision, the court relied on established legal principles and precedents to guide its analysis.

Ultimately, the court found that the Master's valuation method was not appropriate in the circumstances, and the appeal was allowed. The court determined that the capitalization of maintainable profits was not a suitable method for valuing the shares in this case. The court also provided guidance on the circumstances under which an appeal against a valuation judgment by a Master should succeed, emphasizing the need for a clear demonstration that the Master's decision was erroneous. The court's decision underscores the importance of selecting an appropriate valuation method and the role of the court in reviewing such decisions.

The final orders of the court included the allowance of the plaintiff's appeal against the valuation judgment by the Master. The court mandated a re-evaluation of the shares' value using a more suitable method, taking into account the specific circumstances of the case. The decision highlights the importance of careful consideration of valuation methods and the court's role in ensuring that the correct approach is taken in such matters.

Orders