Fantuz v Totem Road Pty Ltd - [2023] NSWSC 1342

Supreme Court

New South Wales

Medium Neutral Citation: Fantuz v Totem Road Pty Ltd [2023] NSWSC 1342
Hearing dates: 1 November 2023
Date of orders: 1 November 2023
Decision date: 01 November 2023
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order for the inspection of records is made and the Interlocutory Process seeking valuation and sale of shares is dismissed. Directions made as to submissions and documents with respect to costs, with a determination as to costs to be made in Chambers.

Catchwords:
CORPORATIONS – Application for inspection of company's books – Where shareholder seeking documents for the purpose of valuation – Whether orders for inspection should be made.
CONTRACTS — Construction — Where option agreement contains a term as to the "agreed market value” of company shares — Whether agreement as to market value is required before orders can be made to oblige the sale of the shares under the option.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 247A, 247B, 293, 1324
- Evidence Act 1995 (NSW), s 136

Cases Cited:
- Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344
- Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99
- Booker Industries Pty Ltd v Wilson Parking (QLD) Pty Ltd (1982) 149 CLR 600
- Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2014) 251 CLR 640; 306 ALR 25; [2014] HCA 7
- Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; 325 ALR 188; [2015] HCA 37
- Price (as executor of the estate of Price (dec’d)) v Spoor (as trustee) (2021) 391 ALR 532; [2021] HCA 20
- Shogroup Hotels Pty Ltd v Harris Street Holdings Pty Ltd [2022] NSWSC 1119
- Snelgrove v Great Southern Managers Australia Ltd [2010] WASC 51
- Tinios v French Caledonia Travel Service Pty Ltd (1994) 13 ACSR 658
- Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; 211 ALR 342; [2004] HCA 52
- United Group Rail Services Ltd v Rail Corporation New South Wales (2009) 74 NSWLR 618; [2009] NSWCA 177

Category: Principal judgment
Parties: Marcel Fantuz (Plaintiff/Respondent)
Totem Road Pty Ltd (Defendant/Applicant)
Representation:
Counsel:
A Gauja (Plaintiff/Respondent)
A Lim (Defendant/Applicant)
Solicitors:
Rockcliff Lawyers (Plaintiff/Respondent)
Panetta Lawyers (Defendant/Applicant)

File Number(s): 2023/171291

Judgment – EX TEMPORE (Revised 3 November 2023)

By Summons filed on 29 May 2023 the Plaintiff, Mr Fantuz, sought two forms of relief under ss 247A and 1324 of the Corporations Act 2001 (Cth) (“Act”) respectively. The relief now sought by Mr Fantuz, at the hearing, has narrowed significantly, and I will refer to the narrower relief which he now seeks below. By Interlocutory Process filed 9 October 2023, in the nature of a cross-claim, the Defendant, Totem Road Pty Ltd ("Company") in turn sought relief seeking to require the sale of shares held by Mr Fantuz to the Company or its nominee (“Cross-Claim”). 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.

Keep reading for free

Create a free CaseChat account to read Fantuz v Totem Road 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: [2023] NSWSC 1342
Decision Date: 01 November 2023

CaseChat Overview and Summary

The parties to the case were Fantuz, a shareholder in Totem Road Pty Ltd, and the company itself. Fantuz applied for an inspection of the company's books for the purpose of valuing the shares he held. The dispute arose when the company refused to provide the necessary documents. The case was heard in the Supreme Court of New South Wales.

The primary legal issues the court had to address were whether the orders for inspection should be granted, and if an agreement on the market value of the shares was necessary before enforcing the sale under the option agreement. The court needed to determine whether the shareholder's right to inspect the company's books outweighed the company's right to protect its commercial interests.

The court held that the shareholder's right to inspect the company's books for the purpose of valuation was justified, and orders for inspection should be made. Regarding the option agreement, the court found that an agreement on the market value of the shares was not a prerequisite for enforcing the sale. The court concluded that the term "agreed market value" in the option agreement was not a condition precedent to the obligation to sell the shares. The court was satisfied that the shareholder had a legitimate interest in obtaining the necessary information for the valuation of his shares.

The final orders of the court were that the company was required to provide Fantuz with access to its books and records for the purpose of valuation. The court did not find it necessary to determine the exact market value of the shares at that time. The decision emphasised the importance of the shareholder's right to inspect the company's books and the flexibility in interpreting option agreements.

Orders