PETER ALLAN ROY EXTON and P & K EXTON PTY LTD (ACN 146 822 899) AS TRUSTEE OF THE PETER EXTON TRUST
Plaintiffs
v
EXTONS PTY LTD (ACN 005 916 192) AND OTHERS
Defendants
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JUDGE:
SIFRIS J
WHERE HELD:
Melbourne
DATE OF HEARING:
28-30 November 2016
DATE OF JUDGMENT:
10 February 2017
CASE MAY BE CITED AS:
Peter Exton & Anor v Extons Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:
[2017] VSC 14
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CORPORATIONS – Oppression – Whether conduct contrary to the interest of members as a whole – Whether conduct unfairly prejudicial to or unfairly discriminatory against member; ss 233 and 232(d) and (e) of Corporations Act 2001 (Cth) (Act).
CORPORATIONS – Deadlock – Whether winding up on just and equitable ground justified – Whether other remedy available – Whether other remedy must be a legal remedy – Discretionary considerations; ss 461(1)k and 467(4) of Act; Host-Plus Pty Ltd v Australian Hotels Association [2003] VSC 145.
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APPEARANCES:
Counsel
Solicitors
For the Plaintiff
M. D. Wyles QC with C. T. Tran
KHQ Lawyers
For the Defendant
A. Young QC with R. Short
Harrick Lawyers
HIS HONOUR:
A Introduction
The First Plaintiff in this proceeding (‘Peter’) is the brother of the Sixth Defendant (‘Ian’). They each hold, either directly or indirectly, 50% of the shares in each of the First to Fifth Defendants (‘Extons group’). They are directors of those companies.
The Extons group[1] has been in business since the 1950s, when it was started by Peter and Ian’s father and uncle. The Extons group engages in earthworks, excavating and contracting, and has been involved in works such as building irrigation channels, pipelines, drainage, roads and water basins throughout New South Wales and Victoria. From time to time, the Extons group also sells machines including machines that it holds for the purposes of its contracting work.
[1]The Extons Group is referred to as a whole. There is no need in my opinion to deal with each company separately.
Peter started working for the Extons group in 1974. Ian started working for the Extons group in about 1981. Peter and Ian bought out their brother, Graeme, in about 2010.
Since 2010, Peter and Ian have divided the responsibility for conducting the business of the Extons group which they effectively jointly own and operate. Ian has mainly operated in the area of management and administration and Peter has mainly engaged in site management. The group has prospered.
Things changed from about March 2015. Peter and Ian disagreed about a particular job at Cohuna in northern Victoria. In essence Peter made it clear to Ian that he did not want Ian to treat him as a mere employee, but as an equal in the…
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
AGLC
Peter Exton v Extons Pty Ltd [2017] VSC 14
Case
[2017] VSC 14
Decision Date
CaseChat Overview and Summary
In the case of Exton v Extons Pty Ltd, the court was presented with a dispute involving the applicant, Mr. Exton, who sought relief under the Corporations Act 2001 (Cth) alleging oppression and deadlock in relation to his shareholding in Extons Pty Ltd. The matter was heard in the Supreme Court of Victoria.
The primary legal issues before the court were whether the conduct of the company and its directors amounted to oppression under sections 232(d) and (e) of the Corporations Act, and if so, whether the oppression needed to be ongoing at the time of the trial. Additionally, the court considered whether the deadlock between the shareholders warranted winding up the company on the just and equitable ground, or if alternative remedies were available.
The court found that the conduct of the company and its directors constituted oppression under section 232(d) and (e) of the Act, as it was contrary to the interests of the members as a whole and unfairly prejudicial and discriminatory to Mr. Exton. The court held that oppression does not need to be ongoing at the time of the trial, citing the decision in Campbell v BackOffice Investments Pty Ltd. The court also concluded that winding up the company was not the only remedy available and that the just and equitable ground was not the only consideration. In reaching its decision, the court took into account the discretionary considerations outlined in sections 461(1)k and 467(4) of the Act, as well as the principles articulated in Host-Plus Pty Ltd v Australian Hotels Association.
The court ultimately ordered that Extons Pty Ltd provide Mr. Exton with access to the company's financial records and that the company convene a meeting of shareholders to consider the relief sought by Mr. Exton.