Agreement to transfer shares - Whether parties intended to create a legally binding contract - Whether negotiations with and work done for third party by nonexecutive director part of his duties in law - Whether such negotiations and work constituted good consideration for other director's promise to transfer shares - Whether similar fact evidence of promises by director to transfer shares to other persons admissible - Whether director repudiated existing contract - Whether nonexecutive director waived his right to terminate the contract by claiming specific performance - Whether repudiation was repeated - Calculation of loss of bargain damages - Whether value of shares to be calculated at the time of breach or time of termination - Whether nonexecutive director's intention of selling shares at a particular time relevant to calculation of value of shares - Whether relevant that nonexecutive director intended to place shares into selfmanaged superannuation fund of which his wife was also a beneficiary

Legislation:

Corporations Act 2001 s 180(1)

Result:

Plaintiff's claim upheld in the amount of $750,000

Representation:

Counsel:

Plaintiff:     Mr T R Thies
First Defendant             :     Mr S Penglis
Second Defendant         :     Mr S Penglis

Solicitors:

Plaintiff:     Timothy R Thies
First Defendant             :     Freehills
Second Defendant         :     Freehills

Case(s) referred to in judgment(s):

Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Securities & Investments Commissions v Rich (2009) 75 ACSR 1
Australian Securities and Investments Commission v Healey (2011) 196 FCR 291
Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424
Australian Woollen Mills Pty Ltd v Commonwealth (1955) 93 CLR 546
Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647
Bear Stearns Bank Plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm)
Brikom Investments Ltd v Carr [1979] QB 467
Brimaud v Boston Securities Entertainment Investments Pty Ltd [1998] FCA 1392
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Collins v Godefroy (1831) 1 B & Ad 950
Daniels v Anderson (1995) 37 NSWLR 438
Downing v Newsflash Nominees Pty Ltd [No 2] [2012] WASCA 211
Duke Group Ltd (in liq) v Pilmer (1994) 63 SASR 364
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847
Fazio v Fazio [2012] WASCA 72
Gates v City Mutual Life Assurance Society Ltd (1982) 43 ALR 313
Grivas v Brooks (1997) 69 SASR 532
Gutta v Ierino [2010] WASC 402
Hoyts Pty Ltd v Burns (2003) 77…

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 Olivero v Ailakis

Details

AGLC: Olivero v Ailakis [2012] WADC 174
Case: [2012] WADC 174
Decision Date: 14 DECEMBER 2012

CaseChat Overview and Summary

In the case of Olivero v Ailakis, the plaintiff, Mr Olivero, sought to enforce a contract whereby the defendant, Mr Ailakis, promised to transfer his shares in a company to Mr Olivero. The dispute arose from an agreement between the two parties concerning the transfer of shares in the company, and whether the negotiations and work done by Mr Ailakis for a third party constituted good consideration for the transfer. The matter was heard in the Supreme Court of New South Wales.

The central legal issues before the court were whether the parties intended to create a legally binding contract, whether the negotiations and work done by Mr Ailakis for a third party constituted good consideration, and whether Mr Ailakis had repudiated the existing contract. Additionally, the court had to determine whether Mr Ailakis waived his right to terminate the contract by claiming specific performance, whether the repudiation was repeated, and the calculation of loss of bargain damages. The court also had to consider whether the value of the shares should be calculated at the time of breach or the time of termination, and whether Mr Ailakis's intention to sell the shares at a particular time was relevant to the calculation of the value of the shares. Furthermore, the court needed to decide if it was relevant that Mr Ailakis intended to place the shares into a self-managed superannuation fund of which his wife was also a beneficiary.

The court found that the parties intended to create a legally binding contract and that the negotiations and work done by Mr Ailakis for a third party constituted good consideration for the transfer of shares. The court held that Mr Ailakis had repudiated the existing contract, but Mr Olivero waived his right to terminate the contract by claiming specific performance. The court found that the repudiation was not repeated and held that the value of the shares should be calculated at the time of termination. The court determined that Mr Ailakis's intention to sell the shares at a particular time was not relevant to the calculation of the value of the shares, and that it was not relevant that Mr Ailakis intended to place the shares into a self-managed superannuation fund of which his wife was also a beneficiary.

In conclusion, the court ordered Mr Ailakis to transfer his shares in the company to Mr Olivero, and awarded damages for the loss of bargain. The court held that the value of the shares should be calculated at the time of termination, and that Mr Ailakis's intention to sell the shares at a particular time was not relevant to the calculation of the value of the shares. Additionally, the court found that it was not relevant that Mr Ailakis intended to place the shares into a self-managed superannuation fund of which his wife was also a beneficiary.

Orders