Joint v Stephens (No 2) - [2008] VSC 69

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST

No. 9176 of 2004

PETER JOINT	Plaintiff
v
JASON JOHN STEPHENS	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 February 2008
DATE OF JUDGMENT:	7 February 2008
CASE MAY BE CITED AS:	Joint v Stephens No 2
MEDIUM NEUTRAL CITATION:	[2008] VSC 69

CORPORATIONS – Winding up – Application to wind up on just and equitable ground – Quasi partnership – Partners fallen out and one excluded from business – Court determines fair value of shares – Jurisdiction of court to value shares under s 467(4) of the Corporations Act - Court determines shares have no value - Nominal offer for shares refused by applicant to wind up – Refusal to accept offer reasonable – Court determines no injustice to applicant to remain shareholder - Application to wind up refused - Sections 461(1)(f),(g) and (k), s 467(4) Corporations Act (Cth)

PRACTICE AND PROCEDURE – Costs – Calderbank offer to plaintiff – Whether or not unreasonable for plaintiff to reject – Lack of explanation by defendant of the basis of the value offered for the plaintiff’s shares – Lack of warning by the defendant to plaintiff of consequences of non acceptance of the defendant’s offer – Not unreasonable for the plaintiff not to accept the defendant’s offer - Order for costs on indemnity basis denied

Ebrahimi v. Westbourne Galleries Ltd[1972] 2 All ER 492

Hazeldene Chicken Farm v. VWA No.2 (2005) 13 VR 435
Nolan v. Nolan [2003] VSC 136
PCR Investments Pty Ltd v. National Gold Holdings Ltd [2002] VSC 824

Re A Company [1983] 2 All ER 854

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C R Northrop	Goldsmiths
For the Defendant	Mr R Randall	Rigby Cooke

HIS HONOUR:

INTRODUCTION AND JURISDICTION

Before me today is a continuation of the hearing of the matter in which Dodds-Streeton J gave reasons on 14 May 2007. Dodds-Streeton J did not make any orders as a consequence of those reasons. Her Honour was elevated to the Court of Appeal of the Supreme Court of Victoria before she was able to do so.

In her detailed written reasons for judgment, Dodds-Streeton J rejected the plaintiff’s claim that he was entitled to relief for oppressive conduct under ss 232 and 233 of the Corporations Act. She did not make a finding on the plaintiff’s application that the company be wound up under the just and equitable ground.

Dodds-Streeton J was informed that the defendant might buy the plaintiff's shares in the company at valuation in order to avoid a winding up of the company under the just and equitable ground. Accordingly, the parties agreed her Honour should make directions for the valuation of the company which has resulted in a joint report prepared by an expert on behalf of the plaintiff and an expert on behalf of the defendant, which is now part of Exhibit P18.

The matter previously came…

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 Joint v Stephens (No 2)

Details

AGLC: Joint v Stephens (No 2) [2008] VSC 69
Case: [2008] VSC 69
Decision Date: 7 February 2008

CaseChat Overview and Summary

Joint v Stephens [2008] VSC 69 was a case in the Supreme Court of Victoria where the plaintiff, Peter Joint, sought relief under the Corporations Act in relation to his exclusion from the management of a company and the valuation of his shares. The defendant, Jason John Stephens, had offered to buy Joint’s shares at a nominal value to avoid a winding up of the company on the just and equitable ground. The court considered whether it had the jurisdiction to determine the fair value of the shares and whether it would be just and equitable to wind up the company.

The court found that it had the jurisdiction to determine the fair value of the shares under section 467(4) of the Corporations Act. It heard evidence from experts appointed by both parties and found that the company had no value as its liabilities exceeded its assets. The court rejected the defendant's offer to buy the shares at a nominal value, finding that it was unreasonable for the plaintiff to accept such an offer given the circumstances. The court also found that it would not be just and equitable to wind up the company as the plaintiff would not suffer any injustice by remaining a shareholder.

Finally, the court considered the defendant's application for costs on an indemnity basis in relation to a Calderbank offer made by the defendant to the plaintiff. The court found that the plaintiff was not unreasonable in rejecting the offer as it lacked adequate explanation as to why the offer was reasonable and did not warn the plaintiff of the consequences of rejecting the offer. The court ordered costs on the ordinary party/party basis in favour of the defendant.

The final order of the court was that the plaintiff's application seeking relief under the Corporations Act be dismissed with costs, including the costs of a previous hearing.

Orders