O'Brien v O'Brien & Nicholls Pty Ltd - [2001] VSC 411

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 5495 of 2000

JOHN PATRICK O'BRIEN and FOURTH TALJAN PTY LTD (ACN 007 107 628)	Plaintiffs
v
O'BRIEN & NICHOLLS PTY LTD (ACN 005 707 246) and ORS	Defendants

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JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 September and 5 October 2001
DATE OF JUDGMENT:	25 October 2001
CASE MAY BE CITED AS:	O'Brien and Fourth Taljan Pty Ltd v O'Brien & Nicholls Pty Ltd and Ors
MEDIUM NEUTRAL CITATION:	[2001] VSC 411

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Corporations Act – s.233 – oppression proceeding.

Terms of settlement – party seeking to re-open.

Valuation – parties agreed to be bound by valuation.

Orders – setting aside order striking out proceeding with right of reinstatement - jurisdiction - discretion to reinstate.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr G.D. Bloch	Holding Redlich
For the Defendants	Mr J.D. Mattin	Macpherson & Kelley

HER HONOUR:

The proceeding was struck out with a right of reinstatement upon the parties agreeing to terms of settlement. Differences arose as to the effect and outcome of the terms. The defendants O'Brien & Nicholls Pty Ltd ("the company"), Douglas Nicholls, Gregory Kilner, Renlik Nominees Pty Ltd, Margaret Nicholls, Roclee Pty Ltd and Keith Popovitz and Karen Popovitz (as trustees of the Keith Popovitz Family Trust) wish to enforce the terms of settlement. The plaintiffs, John Patrick O'Brien and Fourth Taljan Pty Ltd bring an application on summons to reinstate the proceeding.

Background

O'Brien was a former executive director of the company as were Nicholls and Kilner. The company owns and operates real estate businesses under the franchise known as "LJ Hooker" in Berwick, Cranbourne, Packenham and Narre Warren. O'Brien, Nicholls and Kilner owned or controlled through their individual entities over 90 per cent of the shares in the company. O'Brien owned 30.28 per cent, Nicholls 33.96 per cent and Kilner 25.86 per cent respectively. In the case of O'Brien, his corporate vehicle for ownership of shares was the second plaintiff, "Fourth Taljan".

In late 1999 differences arose between O'Brien on the one part and Nicholls and Kilner as to the other part regarding the management of the company. Ultimately, all parties agreed that O'Brien should cease his involvement with the company and that the parties would enter into certain agreements. First, an exit agreement was agreed upon on 16 December 1999 that specified the terms and conditions for the departure of O'Brien from the company. Secondly, a legal costs agreement was made orally on or about 25 January 2000 in which the company agreed to reimburse O'Brien for his legal costs incurred in taking action to recover his superannuation entitlements under the exit agreement. Thirdly, a share agreement whereby shares held by Fourth Taljan on behalf of O'Brien in the company were to be sold pursuant to a shareholders' agreement determined between the shareholders in 1996. The earlier shareholders' agreement outlined to whom the shares were to be offered in the…

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: [2001] VSC 411
Decision Date: 25 October 2001

CaseChat Overview and Summary

In the case of O'Brien v O'Brien & Nicholls Pty Ltd, the dispute arose between the plaintiff, a shareholder in a family company, and the defendants, the company and one of its directors. The plaintiff sought to have an earlier settlement agreement set aside on the grounds of oppression, arguing that the settlement did not properly address his concerns. The matter was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether the court had the jurisdiction to set aside an order that had previously struck out the oppression proceeding and whether it was appropriate to exercise its discretion to reinstate the proceeding. Additionally, the court had to consider the enforceability of the settlement agreement, particularly the valuation clause, which the parties had agreed to be bound by.

The court found that it did have the jurisdiction to set aside the order and reinstate the oppression proceeding. It reasoned that the settlement agreement was not binding on the plaintiff due to the oppression claim, which was a matter of public policy. Furthermore, the court noted that the valuation clause was not binding as it was not part of the original settlement agreement but rather a subsequent document. The court exercised its discretion to reinstate the proceeding, considering the oppression claim and the need for fairness in the proceedings.

The court's final orders were to set aside the earlier order that struck out the oppression proceeding and to reinstate the proceeding, allowing the plaintiff to pursue his claims. The court also noted that the defendants could raise any defences or counterclaims in the reinstated proceeding.

Orders