Elhan & Anor v Saykan & Ors (No 2) - [2009] VSC 306

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 8291 of 2002

ADNAN (aka "ANTHONY") ELHAN and ELBEK INVESTMENTS PTY LTD	Plaintiffs
v
NEBAHAT SAYKAN & ORS	Defendants

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JUDGE:	HANSEN J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 June 2009
DATE OF JUDGMENT:	30 July 2009
CASE MAY BE CITED AS:	Elhan v Saykan (No 2)
MEDIUM NEUTRAL CITATION:	[2009] VSC 306

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PRACTICE AND PROCEDURE - Referral of question of fair value of shares to Associate Judge for written report – Whether to adopt report - Supreme Court (General Civil Procedure) Rules 2005, r 50.04.

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APPEARANCES:	Counsel	Solicitors
The First Plaintiff in person and, by leave, for the Second Plaintiff
For the First and Second Defendants	Mr C R Northrop	Goldsmiths
No appearance by or on behalf of the Third and Fourth Defendants

HIS HONOUR:

Introduction

The issue presently before me is whether I should adopt a report of Efthim AsJ dated 23 April 2009 which concludes that the fair value of Elbek Investments Pty Ltd’s shares in Unique Doors Pty Ltd as at 30 June 2002 was $224,826, or in lieu thereof myself determine the fair value of the shares.

In order to understand how the present issue has arisen, it is necessary to set out the background and history of the proceeding in some detail.

Background

In February 2000, several members of the Elhan family commenced to operate a business manufacturing doors for kitchen cabinets. The business was conducted by way of a company called Unique Doors Pty Ltd (“Unique Doors”).

Although the business was a financial success, there was a bitter falling out within the family. On one side of the dispute was Adnan Elhan (who is known as and to whom I will refer as “Anthony”) and his company, Elbek Investments Pty Ltd ("Elbek"). On the other side were Anthony’s sister Nebahat Saykan (“Nebahat”), her husband Selahattin Saykan (“Selahattin”), Selfet Cokelek (who is married to Anthony’s sister Kerry) (“Selfet”), and Selfet's company, SFK Cokelek Pty Ltd (“SFK Cokelek”).

The dispute led to two proceedings being commenced in the Corporations list in 2002.

First, on 14 November 2002 Nebahat and Selahattin commenced proceeding 8134 of 2002 against Anthony and Elbek as defendants, seeking an order that the defendants execute the following documents:

·    A resignation by Anthony as a director of Unique Doors,
·    A transfer of its shares by Elbek, and
·    A transfer by Anthony of his director's loan in Unique Doors.

The relief was sought on the basis of an agreement alleged to have been made between the parties on 2 August 2002, the essence of which was that Anthony and Selfet and their companies (Elbek and SFK Cokelek respectively) would withdraw from Unique Doors in favour of Nebahat and Selahattin, that they would resign as directors, transfer their directors’ loans and the shares controlled by them to Nebahat and Selahattin or as directed in return for which each would be paid $220,000. Anthony…

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: [2009] VSC 306
Decision Date: 30 July 2009

CaseChat Overview and Summary

The plaintiffs, Elhan and another, brought proceedings against the defendants, Saykan and others, in the Supreme Court of Victoria. The dispute centred around the valuation of shares in a company, with the plaintiffs asserting that they were entitled to a fair value for their shares, as per the terms of an agreement. The defendants contested the valuation, arguing that the agreed method was inappropriate and that the shares had no value. The case was referred to an Associate Judge for a written report on the fair value of the shares, in accordance with Supreme Court (General Civil Procedure) Rules 2005, rule 50.04.

The primary legal issue before the court was whether to adopt the Associate Judge's report on the fair value of the shares. The plaintiffs argued that the report should be accepted as it was based on an objective assessment of the shares' value, while the defendants contended that the report was flawed and should not be adopted. The court had to determine the appropriate weight to give the Associate Judge's report and whether it should be adopted in its entirety or only in part.

The court found that the Associate Judge's report was well-reasoned and based on a thorough analysis of the relevant evidence and applicable law. The court considered that the report provided a fair and balanced assessment of the shares' value and was consistent with the terms of the agreement between the parties. Accordingly, the court decided to adopt the Associate Judge's report in its entirety. The court also made orders for the payment of the fair value of the shares, as determined in the report, to the plaintiffs.

The court ordered the defendants to pay the fair value of the shares, as determined in the Associate Judge's report, to the plaintiffs. The court also ordered that the defendants pay the plaintiffs' costs of the proceedings, including the costs of the referral to the Associate Judge. The court's decision provided clarity on the valuation of the shares and resolved the dispute between the parties.

Orders