Eddy v Angell, in the matter of Enhanced Communications and Electrical Pty Ltd
[2013] FCA 1321
•31 October 2013
FEDERAL COURT OF AUSTRALIA
Eddy v Angell, in the matter of Enhanced Communications and Electrical Pty Ltd [2013] FCA 1321
Citation: Eddy v Angell, in the matter of Enhanced Communications and Electrical Pty Ltd [2013] FCA 1321 Parties: BRETT JAMES EDDY v PETER JEFFREY ANGELL, JULIA KERYN ANGELL and ENHANCED COMMUNICATIONS AND ELECTRICAL PTY LTD (ACN 146 067 174) File number(s): WAD 114 of 2013 Judge(s): SIOPIS J Date of judgment: 31 October 2013 Catchwords: PRACTICE AND PROCEDURE – discovery before the close of pleadings – oppression - aggrieved shareholder seeks a buyout order – whether early discovery should be given in respect of documents going to the value of the company on the basis that it may facilitate an early settlement of the matter. Legislation: Federal Court of Australia Act 1976 (Cth) s 37M
Corporations Act 2001 (Cth) s 232Date of hearing: 31 October 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 13 Counsel for the Plaintiff: Mr PJ Hannan Solicitor for the Plaintiff: Meredith Saayman Lawyers Counsel for the First and Second Defendants: Mr D Vivian
Solicitor for the First and Second Defendants: Taylor Smart Lawyers
Counsel for the Third Defendant: The Third Defendant did not appear.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 114 of 2013
IN THE MATTER OF ENHANCED COMMUNICATIONS AND ELECTRICAL PTY LTD (ACN 146 067 174)
BRETT JAMES EDDY
PlaintiffPETER JEFFREY ANGELL
First DefendantJULIA KERYN ANGELL
Second DefendantENHANCED COMMUNICATIONS AND ELECTRICAL PTY LTD (ACN 146 067 174)
Third DefendantJUDGE:
SIOPIS J
DATE OF ORDER:
31 OCTOBER 2013
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
Pleadings
1.By 4.00 pm on 15 November 2013, the plaintiff file and serve a statement of claim.
2.By 4.00 pm on 29 November 2013, the first and second defendants file and serve a defence.
3.By 4.00 pm on 29 November 2013, the third defendant file and serve either a:
(1)Notice of intention to abide by any order of the Court, save as to costs; or
(2)Defence.
4.By 4.00 on 12 December 2013, the plaintiff file and serve any reply to the defence/s filed by the defendants.
Discovery
5.By 4.00 pm on 29 November 2013, the third defendant give informal discovery (in the manner provided for below) of the following documents concerning the electrical contracting business conducted by the third defendant;
(1)All the data recorded in the MYOB files kept by the third defendant for the period 30 August 2010 to 30 June 2013.
(2)All invoices issued for the period 30 August 2010 to 30 June 2013.
(3)Service contracts between the third defendant and the operators of the businesses known as;
(i)“Harvey Norman”;
(ii)“Rick Hart”; and
(iii)“Hutchinson Builders”
for the period 30 August 2010 to 30 June 2013.
(4)A list of all cheques (or, in lieu of a list, copies of all the cheques themselves) received by the third defendant from the operators of the businesses known as;
(i)“Harvey Norman”;
(ii)“Rick Hart”; and
(iii)“Hutchinson Builders”
for the period 30 August 2010 to 30 June 2013.
(5)All loan, hire purchase and similar agreements relating to financial accommodation provided to the third defendant for the period 30 August 2010 to 30 June 2013.
6.The informal discovery referred to above shall be given by way of:
(1)An email from the defendants’ solicitors to the plaintiff’s solicitors attaching PDF copies of the subject documents and/or electronic files containing the subject documents; or
(2)A letter from the defendants’ solicitors to the plaintiff’s solicitors enclosing photocopies of the subject documents and/or a device containing an electronic version of the subject documents.
7.Notwithstanding paragraph 6 above, the defendants may comply with paragraph 5 above, in relation to any document or category of document, in any such other manner as may be agreed between the solicitors for the plaintiff and the defendants.
Further directions hearings and costs
8.There be a further directions at 10.15 am on 19 December 2013.
9.The costs of the interlocutory process and the directions hearing be in the cause.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 114 of 2013
IN THE MATTER OF ENHANCED COMMUNICATIONS AND ELECTRICAL PTY LTD (ACN 146 067 174)
BRETT JAMES EDDY
PlaintiffPETER JEFFREY ANGELL
First DefendantJULIA KERYN ANGELL
Second DefendantENHANCED COMMUNICATIONS AND ELECTRICAL PTY LTD (ACN 146 067 174)
Third DefendantJUDGE:
SIOPIS J
DATE:
31 OCTOBER 2013
PLACE:
PERTH
REASONS FOR JUDGMENT
This is a directions hearing following a failed mediation.
The third defendant is a company in respect of which the plaintiff, Mr Eddy, and the first defendant, Mr Angell, were once shareholders and directors. The two shareholders operated a quasi-partnership. In November 2011, the plaintiff, Mr Eddy, signed a document which on its face disposed of his shareholding in the third defendant to Mr Angell, and the second defendant, Mrs Angell, as trustee for the Peter Angell family trust, and which evidenced Mr Eddy’s resignation as a director of the company.
The primary relief which Mr Eddy seeks in his originating application is to set aside this agreement. Mr Eddy also contends that there has been oppression under s 232 of the Corporations Act 2001 (Cth), and he seeks orders that Mr and Mrs Angell are obliged to purchase Mr Eddy’s 50% shareholding in the third defendant on such terms as the Court thinks fit.
The parties attempted to settle this matter by way of a mediation before a Court appointed mediator, but failed to do so.
The minute of proposed directions put forward by Mr Eddy contains the normal directions for the exchange of pleadings. However, there is a controversial aspect to the minute of proposed directions. This is the order that Mr Eddy seeks that, prior to the close of pleadings, the third defendant gives informal discovery of a number of documents relevant to the conduct of the business by the third defendant. These documents include accounting records, invoices, service contracts between the third defendant and three named businesses, a list of cheques and hire purchase agreements and other agreements which relate to financial accommodation provided to the third defendant.
Mr Hannan, counsel for Mr Eddy, stated that the reason discovery was sought of those documents was that those documents are relevant to determining the value of the business operated by the third defendant and that the early determination of its value could assist in facilitating an early settlement of the matter.
Mr Vivian, counsel for Mr and Mrs Angell, the first and second defendants, opposed the giving of discovery at this stage because he said that it was unusual for the Court to grant discovery where the pleadings had not yet closed, and the issues in dispute had not been defined. I also raised the same point with Mr Hannan, counsel for Mr Eddy, during the argument.
However, I have decided that in this case the limited discovery sought by Mr Eddy should be given at the early stage which he has proposed.
My reason for doing so is that s 37M of the Federal Court of Australia Act 1976 (Cth) provides that the conduct of litigation in the Court should be carried out in a manner which promotes the overarching purpose described in that section. This is to facilitate the just resolution of disputes according to law and as quickly and as inexpensively as possible for the parties’ benefit.
In this case there was a failed mediation but, according to counsel, a settlement may still be possible. In my view, therefore, the earlier that a view can be reached on the value of the third defendant, the more likely it is that the parties will be in a position to negotiate a settlement of this proceeding. The potential for the saving of the parties’ and the Court’s resources attendant upon any settlement which may be achieved, justifies, in this case, departing from the usual practice of the Court - which is to await the closing of the pleadings before ordering discovery.
Further, it is obvious that the value of the third defendant is an issue in respect of which discovery would ultimately have to be given. This is because one of the items of relief which Mr Eddy claims is an order for the buyout of his shares by Mr and Mrs Angell. The determination of the question of whether to grant that relief will be likely to require the Court to consider and determine by reference to expert evidence, the value of the third defendant.
This does not mean to say, of course, that once the pleadings have been filed and served and the issues have been defined, that further orders for discovery will not be required.
I will make the orders in terms of Mr Eddy’s minute of proposed directions, with appropriate amendments.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate:
Dated: 6 December 2013
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