FEDERAL COURT OF AUSTRALIA
Hillam v Ample Source International Limited (No 2) [2012] FCAFC 73
Citation: Hillam v Ample Source International Limited (No 2) [2012] FCAFC 73 Appeal from: Ample Source International Limited v Bonython Metals Group Pty Limited; In the Matter of Bonython Metals Group Pty Limited (No 6) [2011] FCA 1484
Ample Source International Limited v Bonython Metals Group Pty Limited; In the Matter of Bonython Metals Group Pty Limited (No 7) [2012] FCA 137Parties: JOHN HILLAM and SAROBOL TEERANUKUL v AMPLE SOURCE INTERNATIONAL LIMITED and BONYTHON METALS GROUP PTY LIMITED File number: NSD 379 of 2012 Judges: EMMETT, JACOBSON AND BUCHANAN JJ Date of judgment: 18 May 2012 Catchwords: CORPORATIONS – oppression – no presumption against winding up a solvent company – conduct of affairs commercially unfair to minority interests – winding up order appropriate exercise of trial judge’s discretion Legislation: Corporations Act 2001 (Cth) ss 232, 233 Cases cited: Australasian Memory Pty Limited v Brien (2000) 200 CLR 270
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Commonwealth of Australia v SCI Operations Pty Limited (1998) 192 CLR 285
Cumberland Holdings Limited v Washington H Soul Pattinson & Co Ltd (1977) 13 ALR 561
John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A’asia) Pty Ltd (1991) 6 ACSR 63
Joint v Stephens [2008] VSCA 210
Owners of the Ship, “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404Date of hearing: 30 April 2012, 1 May 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 85 Counsel for the Appellants: Mr B.W. Rayment QC with Mr M.J. Gollan Counsel for the First Respondent: Mr B. O'Donnell QC with Mr J.C. Giles Counsel for the Second Respondent: The second respondent did not appear.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 379 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: JOHN HILLAM
First AppellantSAROBOL TEERANUKUL
Second AppellantAND: AMPLE SOURCE INTERNATIONAL LIMITED
First RespondentBONYTHON METALS GROUP PTY LIMITED
Second Respondent
JUDGES:
EMMETT, JACOBSON AND BUCHANAN JJ
DATE OF ORDER:
3 MAY 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellants pay the first respondent’s costs of the appeal.
3.The stay granted by Robertson J on 27 February 2012 and extended by Robertson J on 19 March 2012 and 13 April 2012 be dissolved.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 379 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: JOHN HILLAM
First AppellantSAROBOL TEERANUKUL
Second AppellantAND: AMPLE SOURCE INTERNATIONAL LIMITED
First RespondentBONYTHON METALS GROUP PTY LIMITED
Second Respondent
JUDGES:
EMMETT, JACOBSON AND BUCHANAN JJ
DATE:
18 MAY 2012
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE COURT:
Introduction
On 27 February 2012 the trial judge, from whose judgment and orders the present appeal is…
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Details
- AGLC
- Hillam v Ample Source International Ltd (No 2) [2012] FCAFC 73
- Case
- [2012] FCAFC 73
- Decision Date
CaseChat Overview and Summary
This appeal concerns the winding up of Bonython Metals Group Pty Ltd (BMG) on the basis of oppression of minority shareholders. The appellants, John Hillam and Sarobol Teeranukul, were the majority shareholders of BMG. The respondents were minority shareholders who sought the winding up of the company on the basis that the conduct of the affairs of BMG was oppressive to them. The case was heard in the Supreme Court of South Australia and subsequently appealed to the Full Court of the Federal Court of Australia.
The legal issues before the court were whether the trial judge correctly exercised his discretion in ordering the winding up of BMG and whether the trial judge correctly found that the conduct of BMG’s affairs was oppressive to the minority shareholders. The appellants argued that the trial judge should not have made a winding up order as BMG was solvent and there was no presumption against winding up a solvent company. They also argued that the trial judge did not correctly apply the law in finding that the conduct of BMG’s affairs was oppressive. The respondents argued that the trial judge correctly exercised his discretion and that the conduct of BMG’s affairs was oppressive to them.
The Full Court of the Federal Court of Australia found that the trial judge correctly exercised his discretion in ordering the winding up of BMG. The court found that there was no presumption against winding up a solvent company and that the trial judge was entitled to consider all the circumstances of the case in exercising his discretion. The court also found that the trial judge correctly applied the law in finding that the conduct of BMG’s affairs was oppressive to the minority shareholders. The court found that the appellants had misused their majority position to the detriment of the minority shareholders and that the minority shareholders had no realistic alternative but to seek a winding up of the company.
The appeal was dismissed and the appellants were ordered to pay the first respondent’s costs of the appeal. The stay granted by Robertson J on 27 February 2012 and extended by Robertson J on 19 March 2012 and 13 April 2012 was dissolved.
The legal issues before the court were whether the trial judge correctly exercised his discretion in ordering the winding up of BMG and whether the trial judge correctly found that the conduct of BMG’s affairs was oppressive to the minority shareholders. The appellants argued that the trial judge should not have made a winding up order as BMG was solvent and there was no presumption against winding up a solvent company. They also argued that the trial judge did not correctly apply the law in finding that the conduct of BMG’s affairs was oppressive. The respondents argued that the trial judge correctly exercised his discretion and that the conduct of BMG’s affairs was oppressive to them.
The Full Court of the Federal Court of Australia found that the trial judge correctly exercised his discretion in ordering the winding up of BMG. The court found that there was no presumption against winding up a solvent company and that the trial judge was entitled to consider all the circumstances of the case in exercising his discretion. The court also found that the trial judge correctly applied the law in finding that the conduct of BMG’s affairs was oppressive to the minority shareholders. The court found that the appellants had misused their majority position to the detriment of the minority shareholders and that the minority shareholders had no realistic alternative but to seek a winding up of the company.
The appeal was dismissed and the appellants were ordered to pay the first respondent’s costs of the appeal. The stay granted by Robertson J on 27 February 2012 and extended by Robertson J on 19 March 2012 and 13 April 2012 was dissolved.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellants pay the first respondent’s costs of the appeal.
3. The stay granted by Robertson J on 27 February 2012 and extended by Robertson J on 19 March 2012 and 13 April 2012 be dissolved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
Background
Background to the litigation
In the present case, therefore, there is little scope for a debate about the manner in which the trial judge exercised his discretion to formulate relief to deal with the oppressive conduct which he found to have been established. Nevertheless, had it been necessary to exercise the discretion afresh, in the light of the arguments on the appeal, in our view the relief granted by the trial judge was the appropriate relief in the circumstances.Background BMG was incorporated on 23 December 2009. The majority shareholders were the first appellant, Mr John Hillam and his domestic partner Ms Sarobol Teeranukul, the second appellant. At the time of the trial Mr Hillam and Ms Teeranukul held 64 per cent of the shares of BMG (32 per cent each). Mr Hillam was the driving force behind BMG. He was at all times a director and the CEO of BMG. Mr Hillam had interests in other companies. One such company was Wentworth Metal Group Pty Limited (“Wentworth”). Mr Hillam and Ms Teeranukul were the only two shareholders of Wentworth. The directors of Wentworth at the relevant time were Mr Hillam and Mr Dennis Brennan. Another company in which Mr Hillam had an interest was CFM Media Holdings Pty Ltd, (“CFM Media”). CFM Media was registered on 4 May 2010. Its only two shareholders were Mr Hillam and Ms Teeranukul. Its sole director was Mr Hillam. Before the registration of CFM Media, Mr Hillam on occasion used the business name “CFM Media Holdings” when doing business in his own right. Mr Hillam is a geologist. A principal business activity of BMG was to raise capital to undertake exploration and development of mineral resources, usually in joint venture arrangements with companies which held permits to explore and exploit mineral resources. Wentworth had applied for, and was eventually granted, three mining tenements in South Australia. In February 2010 Mr Hillam caused an arrangement to be made between BMG and Wentworth. In both companies he and Ms Teeranukul were either the sole shareholders or held the majority interest. The arrangements were set out in “Terms Sheets” relating to each tenement. On 15 February 2010 Mr Hillam on behalf of BMG, and Mr Brennan on behalf of Wentworth, signed “binding” Terms Sheets which contemplated the exploration of the three mining tenements held by Wentworth in South Australia (“the Wentworth tenements”) with funds to be provided by BMG. The Terms Sheet for one of the tenements (which is agreed to be representative of them all) provided:Binding Terms Sheet – Farm-In for ELA 300/09 owned by Wentworth Metal Group Pty Ltd ACN 139 532 719 (“Wentworth Metal Group”) by Bonython Metals Group Pty Ltd ACN 141 257 293 (“Bonython”)Wentworth has applied to the Department of Primary Industries and Resources South Australia (“PIRSA”) and is the registered holder of exploration licences application 300/09 applied for under the Mining Act 1971 (SA) (“Mining Act”) (“Tenements”) for the purposes of undertaking exploration, evaluation and development work on the Tenements, primarily with respect to the potential development of Iron ore reserves.The purpose of this letter is to set out the essential terms and conditions upon which Bonython [BMG] will earn a participating interest in the rights to base metals (including iron minerals) which may exist on the Tenements (“Project”) under a farm-in and joint venture arrangement (“Terms Sheet”).This Terms Sheet is binding on the parties to it (“Parties”) notwithstanding that the Parties intend to re-state the terms and conditions in this Terms Sheet in a formal farm-in and joint venture agreement and a Co-operation Deed (to govern the conduct of exploration and mining by the Parties on the Tenements and the exercise of their respective rights in and under each of the Tenements) (“Formal Agreements”). This Terms Sheet is binding on the Parties and the Parties intend to re-state the terms and conditions in this Terms Sheet in a formal farm-in agreement in accordance with industry standards. The parties agree to execute a formal farm-in agreement by no later than 31st May 2010.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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