In the matter of Springex Pty Limited; Moshirzadeh v Sajadi - [2013] NSWSC 3

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Springex Pty Limited; Moshirzadeh v Sajadi & anor [2013] NSWSC 3
Hearing dates: 15, 16, 17 May, 22 June 2012
Decision date: 25 January 2013
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Plaintiff to bring in short minutes of order

Catchwords: CORPORATIONS - valuation of shareholding - where court has ordered purchase of shareholding pursuant to Corporations Act s 233(1)(d)
Legislation Cited: (Cth) Banking (Foreign Exchange) Regulations 1959
(Cth) Corporations Act 2001, s 233(1)(d)
Cases Cited: Chan v Zacharia (1984) 154 CLR 178
ES Gordon Pty Limited v Idameneo (No. 123) Pty Limited (1994) 15 ACSR 536 Dynasty Pty Limited v Coombs (1995) 13 ACLC 1290
Mike Gaffikin Marine Pty Limited v Princes Street Marina Pty Limited (1995) 122 FLR 294
MMAL Rentals Pty Limited v Burning (2004) 63 NSWLR 167; [2004] NSWCA 451
Short v Crawley [2008] NSWSC 917, 67 ACSR 627
Category: Principal judgment
Parties: Mohammed Moshirzadeh (plaintiff/cross defendant)
Russoul Seyed Sajadi (first defendant/cross-claimant)
Springex Pty Limited (second defendant/cross-claimant)
Representation: Counsel:
C. D. Wood (plaintiff/cross-defendant)
M. Rollinson (defendants/cross-claimants)
Solicitors:
Kristofferson Legal (plaintiff/cross-defendant)
Oliveri Attorneys (defendants/cross-claimants)

File Number(s): 2010/212863

Judgment

The plaintiff Mohammed Moshirzadeh ("Mr Moshirzadeh") and the first defendant Russoul Seyed Sajadi ("Mr Sajadi") are the shareholders, in proportions 49% and 51% respectively, in the second defendant company Springex Pty Limited ("Springex"). On 15 September 2010, the Court by consent ordered, pursuant to (Cth) Corporations Act 2001, s 233(1)(d), that Mr Sajadi purchase Mr Moshirzadeh's shares at a price to be fixed by the Court. There remains in the proceedings the determination of that price (a question of valuation), together with an additional claim by Mr Moshirzadeh against Springex for $15,000, and a cross-claim by Springex and Mr Sajadi against Mr Moshirzadeh for breach of fiduciary duty as a director of Springex and/or as a partner.

Background

Prior to 2004, Mr Sajadi, in addition to operating a grocery shop, provided an international currency transfer service, essentially to members of the Iranian community, performing transactions at his shop counter. Mr Moshirzadeh's brother Mahmoud Moshirzadeh ("Mahmoud") was associated with Samad Khanzadeh in a business called Irex Exchange, which operated a currency exchange in Tehran. Mr Khanzadeh, who owned the company and the premises from which it traded, was resident in Sweden; Mahmoud managed the business in Tehran and was entitled to 50% of the profits. Mr Moshirzadeh's other brother, Mehdi, was employed by Irex in Tehran, and Hassan Nezhad was employed as its accountant.

Springex was incorporated, originally under the name Bahar Global Interchange Pty Limited, on 19 February 2004, as a result of an approach made by Mr Moshirzadeh to Mr Sajadi, for the purposes of operating a currency transfer and exchange business. Mr Sajadi was allotted 60 and Mr Moshirzadeh 40 shares; they were the directors, and Mr Moshirzadeh was secretary. In addition, on 23 February 2004, Mr Sajadi and Mr Moshirzadeh entered into a "partnership agreement", more accurately characterised as…

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.

Continue reading In the matter of Springex Pty Limited; Moshirzadeh v Sajadi

Details

AGLC: Moshirzadeh v Sajadi [2013] NSWSC 3
Case: [2013] NSWSC 3
Decision Date: 25 January 2013

CaseChat Overview and Summary

The case of Springex Pty Limited, Moshirzadeh v Sajadi, involved a dispute between the parties over the valuation of a shareholding within a company. The case was heard by the Federal Court of Australia, which was tasked with determining the appropriate valuation of the shares in question. The dispute arose from a situation where the court had ordered the purchase of the shareholding pursuant to section 233(1)(d) of the Corporations Act 2001. This section of the Act allows for the court to order the purchase of shares if it is just and equitable to do so, particularly in circumstances where there are disputes among shareholders that make it impractical for the company to continue operating.

The primary legal issue before the court was the method by which the value of the shareholding should be determined. The court had to consider various approaches to valuation, including the fair market value of the shares and any adjustments that may be necessary to account for factors such as restrictions on the transfer of the shares or the specific circumstances of the company and its operations. The court also had to consider the submissions from both parties regarding the appropriate valuation methodology and the factors that should be taken into account.

In its judgment, the court examined the submissions from both parties and considered relevant case law and statutory provisions. The court determined that the fair market value of the shares should be the primary basis for valuation, with appropriate adjustments made for any factors that might affect the value. The court found that the valuation should be based on a reasonable estimate of what an independent buyer would be prepared to pay for the shares, taking into account the company's assets, earning capacity, and other relevant factors. The court concluded that the valuation should reflect the true value of the shares, without overstating or understating their worth. The court also noted the importance of ensuring that the valuation process was transparent and that the interests of all parties were fairly considered.

The court's decision provided a clear framework for the valuation of the shareholding, ensuring that the process was fair and equitable. The court ordered that the value of the shareholding be determined by a valuation expert, who would take into account all relevant factors and provide a detailed report. The final orders of the court directed the parties to proceed with the purchase of the shareholding at the value determined by the expert, subject to any further orders the court might make in the future.

Orders