McEwen v Combined Coast Cranes Pty Ltd - [2002] NSWSC 1227

Reported Decision:
44 ACSR 244

New South Wales

Supreme Court

CITATION: McEwen v Combined Coast Cranes Pty Ltd [2002] NSWSC 1227

CURRENT JURISDICTION: Equity Division
Corporations List

FILE NUMBER(S): SC 2924/01

HEARING DATE(S): 2 & 3 December 2002

JUDGMENT DATE: 20 December 2002

PARTIES :

David Alan McEwen (P1)
Permsit Pty Limited (P2)
Combined Coast Cranes Pty Limited (D1)
Trevor John Troy (D2)
Terry Ronald Pearce (D3)
Ronald Thomas Pearce (D4)
Wyong Crane Services Pty Limited (D5)
Abbatroy Pty Limited (D6)
Tuggerah Lakes Cranes Pty Limited (D7)

JUDGMENT OF: Young CJ in Eq

COUNSEL : H Packer (P)
M J Cohen (D)

SOLICITORS: Finn Roache (P)
Yandell Wright Stell (D)

CATCHWORDS: CORPORATIONS [34]- Oppression- Service company trustee of unit trust- Minor breaches of duty by directors- Failure to observe pre-emption provisions- Remedy available to plaintiff in compulsory buy-out provisions of trust deed- No order made.

LEGISLATION CITED: Corporations Act 2001, ss 232, 233

CASES CITED: Bath v Standard Land Co Ltd [1911] 1 Ch 618
Felton v Mulligan (1971) 124 CLR 367
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688; on appeal (2001) 37 ACSR 672
Glandon Pty Ltd v Strata Consolidated Pty Ltd (No 3) (Young J, 4.6.1990)
Hurley v BGH Nominees Pty Ltd (1982) 1 ACLC 387
In re Wondoflex Textiles Pty Ltd [1951] VLR 458
Kizquari Pty Ltd v Prestoo Pty Ltd (1993) 10 ACSR 606
Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457
Re James [1949] SASR 143
Re Polyresins Pty Ltd (1998) 145 FLR 141
Re Wakim (1999) 198 CLR 511

DECISION: Proceedings to be dismissed with no order as to costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

YOUNG CJ in EQ

Friday 20 December 2002

2924/01 – McEWEN v COMBINED COAST CRANES PTY LTD

JUDGMENT

1 HIS HONOUR: The basic claim by the plaintiffs in this case is for relief under ss 232 and 233 of the Corporations Act 2001 against alleged oppression by the second to seventh defendants in connection with the affairs of the first defendant, Combined Coast Cranes Pty Ltd (the Company). The Company is a service company and a trustee company and in its latter role has issued 100 units in a unit trust. There are associated claims connected with this unit trust.

2 The plaintiffs are David McEwen (Dave) and a company currently controlled by Dave, Permsit Pty Ltd (Permsit). The second defendant is Trevor Troy (Trevor) and the company controlled by him, Abbatroy Pty Ltd (Abbatroy), the sixth defendant. The third defendant is Terry Pearce (Terry) and the seventh defendant is a company controlled by him, Tuggerah Lakes Cranes Pty Ltd. The fourth defendant is Ronald Pearce (Ron) and the company controlled by him, the fifth defendant, Wyong Crane Services Pty Ltd. Ron is the father of Terry and also of Alan Pearce (Alan).

3 It will become apparent that I have used the first names of the various actors in this case because…

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: [2002] NSWSC 1227
Decision Date: 20 December 2002

CaseChat Overview and Summary

The case of McEwen v Combined Coast Cranes Pty Ltd involved the plaintiff, McEwen, who brought a claim against Combined Coast Cranes Pty Ltd, a service company trustee of a unit trust. McEwen alleged that the directors of the defendant company had breached their duties by failing to adhere to the pre-emption provisions outlined in the trust deed. The plaintiff sought relief under the compulsory buy-out provisions of the trust deed. The matter was heard in the court, which needed to determine whether the breaches were of a nature that warranted the plaintiff’s requested remedy.

The central legal issues the court needed to address were whether the breaches by the directors were sufficiently minor to warrant no more than a remedy available under the trust deed and whether the plaintiff's entitlement to a compulsory buy-out was validly exercised under the circumstances. The court had to consider the extent to which the breaches affected the plaintiff's rights as a unit holder and whether these breaches justified the requested remedy. Furthermore, the court was required to examine the enforceability of the compulsory buy-out provisions in the trust deed.

The court concluded that the breaches by the directors, although present, were minor and did not justify the remedy of compulsory buy-out sought by the plaintiff. The court found that the breaches did not substantially affect the plaintiff’s rights or the value of the units held. Consequently, the court ruled that the plaintiff was not entitled to the remedy under the trust deed. The court's decision hinged on the relatively minor nature of the breaches and the lack of substantial detriment to the plaintiff as a result of those breaches.

In light of the findings, the court did not make any orders in favour of the plaintiff. The court held that the breaches did not warrant the compulsory buy-out remedy and that the plaintiff's claims were accordingly dismissed. The court's reasoning underscored the importance of assessing the severity of breaches in the context of the overall rights and interests of unit holders in a unit trust.

Orders