Gambotto v Resolute Samantha Ltd - [1995] HCA 48

HIGH COURT OF AUSTRALIA

GUMMOW J

GIANCARLO GAMBOTTO v RESOLUTE SAMANTHA LIMITED

(1995) 69 ALJR 752

28 September 1995

Headnote

Hearing

SYDNEY, 18 September 1995
#DATE 28:9:1995

No. S7 of 1995
The plaintiff appeared in person.

Counsel for the Defendant: J.D. Heydon QC
I.M. Jackson and
M. Leeming

Solicitors for the Defendant: Blake Dawson Waldron

No. S12 of 1995
Mr G Gambotto appeared for the plaintiffs.

Counsel for the Defendant: R.J. Webb

Solicitors for the Defendant: Piper Alderman

Intervener
G. Griffith QC Solicitor-General for the Commonwealth, instructed by the Australian Government Solicitor.

Orders

Action dismissed in both matters.

Decision

GUMMOW J Mr Giancarlo Gambotto ("Mr Gambotto") is the plaintiff in action No S7 of 1995 against Resolute Samantha Limited ("Samantha") which, when the action was instituted, was Samantha Gold NL. The change in name and status was effected on 17 July 1995.

2. Mr Gambotto also is a plaintiff in action No S12 of 1995 against Beach Petroleum NL ("Beach"). Mr Gambotto appeared for himself in the first matter and, without opposition, I permitted him to appear for all plaintiffs in the second action.

3. Mr Gambotto now resides in the State of Queensland. When the actions were commenced, Mr Gambotto lived in Sydney.

4. Orders were made before trial that the actions be tried concurrently.

5. The facts are in short compass and not disputed. Mr Gambotto was the registered holder of 18,285 shares in Resolute Resources Ltd ("Resources"). Samantha made an offer to acquire all the shares of Mr Gambotto in Resources. If the offer had been accepted by Mr Gambotto, he would have received 5,224 shares in Samantha. Mr Gambotto did not accept the offer. Samantha and Resources both are incorporated in the State of Western Australia. The offer was made under a takeover scheme and s 701 of the Corporations Law ("the Law") became applicable to those shareholders who were dissenting offerees. Section 701, in short, is a provision for compulsory acquisition of the shares of dissenting offerees.

6. Mr Gambotto and the other plaintiffs in the action against Beach were the registered holders of a total of 88,598 shares in Claremont Petroleum NL ("Claremont"). Beach made an offer to acquire all those shares and, if accepted, this would have resulted in the plaintiffs receiving a total of 44,301 shares in Beach. The offer was not accepted by the plaintiffs. Claremont is incorporated in the State of Queensland and Beach in the State of South Australia. Again, s 701 of the Law became applicable to the dissenting offerees.

7. In each case, the offeror has invoked the compulsory acquisition provisions of s 701 of the Law against the plaintiffs. The gist of the case of the plaintiffs against both offerors is that a declaration should be made that the provisions of s 701 are invalid. The requisite notices under s 78B of the Judiciary Act 1903 (Cth) were given. The Attorney-General for the Commonwealth intervened in response to the notice and appeared by counsel in support…

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: [1995] HCA 48
Decision Date: 18 September 1995

CaseChat Overview and Summary

Gambotto v Resolute Samantha Ltd concerned a dispute between minority shareholders, the Gambotto family, and the majority shareholder, Resolute Samantha Ltd, regarding the compulsory acquisition of the minority's shares in a subsidiary company. The Gambotto family held shares in a company that was a subsidiary of Resolute Samantha Ltd. Resolute Samantha Ltd sought to compulsorily acquire the minority shareholding in the subsidiary, which would result in the Gambotto family being forced to sell their shares. The Gambotto family challenged this proposed acquisition. The case was heard by Gummow J in the Supreme Court of Victoria.

The central legal issue before the Court was whether the proposed compulsory acquisition of the minority shareholding was oppressive conduct under the relevant company law provisions. Specifically, the Court had to determine if Resolute Samantha Ltd's actions in seeking to acquire the shares were unfairly prejudicial to the interests of the minority shareholders, the Gambotto family, and if such conduct warranted intervention by the court.

Gummow J considered the principles of oppression under company law, focusing on whether the majority shareholder's conduct was unfairly discriminatory or disregarded the interests of the minority. His Honour examined the purpose of the compulsory acquisition and whether it served a legitimate corporate purpose or was primarily aimed at disadvantaging the minority. The Court applied the established legal test for oppression, which requires a finding that the conduct complained of is both unfair and prejudicial to the interests of some or all of the members.

The Court ultimately found that the proposed compulsory acquisition was oppressive and ordered that Resolute Samantha Ltd be restrained from proceeding with the acquisition.

Orders