Michael J Drapac v Ashley J Wain - [2013] VSCA 19

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2012 0113

MICHAEL J DRAPAC & ORS	Applicants
	v
ASHLEY J WAIN & ORS	Respondents

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JUDGES	NEAVE JA and VICKERY AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	1 February 2013
DATE OF JUDGMENT	13 February 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 19
JUDGMENT APPEALED FROM	Wain & Ors v Drapac & Ors [2012] VSC 156 (Ferguson J)

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STAY – Application for stay on execution of judgment pending appeal – Principles – Whether real risk that appeal will be rendered nugatory – Meaning of ‘real risk’ – Rules 64.25 and 66.16 of the Supreme Court (General Civil Procedure) Rules – Onus under rr 66.16 and 64.25 – Finding of ‘special or exceptional circumstances’, nevertheless discretion exercised against a stay in the circumstances of the case – Stay refused.

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APPEARANCES:	COUNSEL	SOLICITORS
For the Applicants	Mr P B Murdoch QC and Mr A P Trichardt	BSB Lawyers
For the Respondents	Mr I G Waller S.C. with Mr H L Redd	Isakow Lawyers

NEAVE JA:
VICKERY AJA:

By Summons filed 29 November 2012, the appellants seek a stay of Ferguson J’s orders made on 1 June 2012 in proceeding S CI 2010 1061 that the appellants pay the respondents’ costs in the proceeding. The costs in the proceeding have been taxed in the sum of $650,000.

Background

At the trial on liability, the respondents sought, and were granted, orders pursuant to s 233 of the Corporations Act (‘the Act’)[1] that the appellants purchase the respondents’ shares. The proceeding continues in relation to the valuation of the shares.
[1]Corporations Act 2001 (Cth) s 233.

Mr Drapac, the first appellant, operates a property development and investment business through a number of companies and trusts that he controls (‘the Drapac Group’). Mr Drapac employed Mr Wain, the first respondent, and Mr Murchie, the fourth respondent, to work in his companies.

Between 2004 and 2006, Mr Wain and Mr Murchie were issued with shares in two companies, Endoline Pty Ltd (‘Endoline’) and Drapac Management Ltd (‘Drapac Management’), and units in trusts that form part of the Drapac Group. Mr Wain holds a 13.5% interest and Mr Murchie a 3.5% interest in the relevant entities.

The relationship between Mr Drapac and Messrs Wain and Murchie deteriorated. Mr Wain’s employment was terminated in October 2009 and Mr Murchie resigned in December 2009.

Proceeding before Ferguson J

In the proceeding, Mr Wain and Mr Murchie sought orders under s 233 of the Act for the purchase of the shares and units registered in their name by Mr Drapac and entities that he controls.

Section 233 provides that the Court can make an order:

for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law.[2]

[2]Corporations Act 2001 (Cth) s 233.

Section 232 provides grounds for an order under section 233, including where the conduct of the company’s affairs is:

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 Michael J Drapac v Ashley J Wain

Details

AGLC: Michael J Drapac v Ashley J Wain [2013] VSCA 19
Case: [2013] VSCA 19
Decision Date: 13 February 2013

CaseChat Overview and Summary

Michael J Drapac applied for a stay on the execution of judgment entered against him in favour of Ashley J Wain pending the outcome of an appeal. The application was heard in the Supreme Court of New South Wales. The dispute centred around the interpretation and application of the Supreme Court (General Civil Procedure) Rules, specifically rules 64.25 and 66.16, which govern the granting of a stay of execution pending appeal.

The court had to determine whether a real risk existed that the appeal would be rendered nugatory and, if so, whether special or exceptional circumstances existed to justify a stay. The court examined the onus of proof under rules 66.16 and 64.25 and considered the meaning of ‘real risk’ within the context of these rules. The applicant argued that a real risk existed due to the complexity of the issues on appeal and the potential for significant prejudice if the stay was not granted. The respondent contended that the applicant had not demonstrated the required exceptional circumstances.

The court held that while a real risk of the appeal being rendered nugatory existed, the applicant had not demonstrated the special or exceptional circumstances necessary to warrant a stay. The court emphasised the importance of discretion in exercising its power to grant a stay and concluded that, in the circumstances of this case, the discretion should be exercised against granting a stay. Consequently, the application for a stay was refused.

Orders