Elkington v Farsands Solutions Pty Ltd - [2012] NSWCA 334

Court of Appeal

New South Wales

Case Title: Elkington v Farsands Solutions Pty Ltd

Medium Neutral Citation: [2012] NSWCA 334

Hearing Date(s): 11 October 2012

Decision Date: 17 October 2012

Jurisdiction:

Before: Barrett JA (at [1]), Tobias AJA (at [46])

Decision:
Summons seeking leave to appeal dismissed with costs

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: CORPORATIONS - options to subscribe for shares - action by option holder for breach of contract - alleged breach of implied term by which company promises that its decision makers will not include any person having obligations conflicting with those owed to the company - statement of claim dismissed as disclosing no reasonable cause of action - whether arguable that such term implied - held not - CONTRACTS - implied terms - terms implied by law in contracts of a particular class - contracts creating options to subscribe for shares

Legislation Cited: Corporations Act 2001 (Cth), ss 236, 237
Uniform Civil Procedure Rules 2005, rule 13.4

Cases Cited: Bell v Lever Bros Ltd [1932] AC 161
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Fitzsimmons v R (1997) 23 ACSR 355
Forsayth Oil & Gas NL v Livia Pty Ltd (No 2) (1985) 59 ALJR 746
Foss v Harbottle (1843) Hare 461; 67 ER 189
Hirsch v Burns (1897) 77 LT 377
Johnson v Gore Wood and Co [2002] 2 AC 1
Liverpool City Council v Irwin [1977] AC 239
Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192
O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310
Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204
Quancorp Pty Ltd v Macdonald [1999] WASCA 33; (1999) 32 ACSR 50
Re MIA Group Ltd [2004] NSWSC 712; (2004) 50 ACSR 29
Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418
University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491

Texts Cited:

Category: Principal judgment

Parties: Gordon Bradley Elkington - First Applicant
Milly Elkington - Second Applicant
Winpar Holdings Limited - Third Applicant
John Warwick Cox - Fourth Applicant
Ian Keith Gerke & Barbara Maria Gerke - Fifth Applicant
Meggsies Pty Limited - Sixth Applicant
Farsands Solutions Pty Limited - Respondent

Representation

- Counsel: Dr C J Birch SC/Mr A Ahmad - Applicants
Mr B A J…

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.

Keep reading for free

Create a free CaseChat account to read Elkington v Farsands Solutions Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2012] NSWCA 334
Decision Date: 17 October 2012

CaseChat Overview and Summary

The plaintiff, Elkington, sought leave to appeal a decision of the primary judge who had dismissed his statement of claim as disclosing no reasonable cause of action. The dispute concerned an option to subscribe for shares in the defendant company, Farsands Solutions Pty Ltd. Elkington alleged a breach of contract, contending that the company's decision-makers included individuals with conflicting obligations to the company, thereby breaching an implied term. The appeal was heard by Barrett JA and Tobias AJA.

The central legal issue before the Court of Appeal was whether there was an arguable case that a term should be implied into the option agreement. Specifically, the court had to determine if it was arguable that the contract contained an implied term by which the company promised that its decision-makers would not include any person who had obligations conflicting with those owed to the company.

The Court of Appeal held that such a term was not arguable. Applying principles relating to terms implied by law in contracts of a particular class, the court found no basis for implying the alleged term into a contract creating an option to subscribe for shares. The reasoning focused on the nature of such contracts and the absence of any established legal precedent or compelling commercial necessity to support the implication of such a restrictive term.

Consequently, the summons seeking leave to appeal was dismissed with costs.

Orders

Orders of the court

Summons seeking leave to appeal dismissed with costs

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Case Title:	Elkington v Farsands Solutions Pty Ltd
Medium Neutral Citation:	[2012] NSWCA 334
Hearing Date(s):	11 October 2012
Decision Date:	17 October 2012
Jurisdiction:
Before:	Barrett JA (at [1]), Tobias AJA (at [46])
Decision:	Summons seeking leave to appeal dismissed with costs [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	CORPORATIONS - options to subscribe for shares - action by option holder for breach of contract - alleged breach of implied term by which company promises that its decision makers will not include any person having obligations conflicting with those owed to the company - statement of claim dismissed as disclosing no reasonable cause of action - whether arguable that such term implied - held not - CONTRACTS - implied terms - terms implied by law in contracts of a particular class - contracts creating options to subscribe for shares
Legislation Cited:	Corporations Act 2001 (Cth), ss 236, 237 Uniform Civil Procedure Rules 2005, rule 13.4
Cases Cited:	Bell v Lever Bros Ltd [1932] AC 161 Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Fitzsimmons v R (1997) 23 ACSR 355 Forsayth Oil & Gas NL v Livia Pty Ltd (No 2) (1985) 59 ALJR 746 Foss v Harbottle (1843) Hare 461; 67 ER 189 Hirsch v Burns (1897) 77 LT 377 Johnson v Gore Wood and Co [2002] 2 AC 1 Liverpool City Council v Irwin [1977] AC 239 Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192 O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 Quancorp Pty Ltd v Macdonald [1999] WASCA 33; (1999) 32 ACSR 50 Re MIA Group Ltd [2004] NSWSC 712; (2004) 50 ACSR 29 Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Texts Cited:
Category:	Principal judgment
Parties:	Gordon Bradley Elkington - First Applicant Milly Elkington - Second Applicant Winpar Holdings Limited - Third Applicant John Warwick Cox - Fourth Applicant Ian Keith Gerke & Barbara Maria Gerke - Fifth Applicant Meggsies Pty Limited - Sixth Applicant Farsands Solutions Pty Limited - Respondent
Representation
- Counsel:	Dr C J Birch SC/Mr A Ahmad - Applicants Mr B A J…