Plumley v Adgauge Pty Ltd - [1998] VSCA 70

SUPREME COURT OF VICTORIA

COURT OF APPEAL Not Restricted

No. 11955 of 1992

NERELLE LEIGH PLUMLEY

Appellant

v
ADGAUGE PTY. LTD. (A.C.N. 006 862 531)
AND GARY CALVIN MC CLOUD

Respondents

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JUDGES: BROOKING, PHILLIPS and BUCHANAN, JJ.A.
WHERE HELD: MELBOURNE
DATE OF HEARING: 24 September 1998
DATE OF JUDGMENT: 13 October 1998
CASE MAY BE CITED AS: Plumley v. Adgauge Pty. Ltd.
MEDIA NEUTRAL CITATION: [1998] VSCA 70

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PROCEDURE - Valuation of share capital by special referee - Method of valuation -
Whether error of law - Basis of adoption of special referee's report.
Supreme Court Rules O.50.

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APPEARANCES: Counsel Solicitors
For the Appellant Mr G.J. Parncutt M.D. Hausler
Solicitors
For the Respondents In person

BROOKING, J.A.:

I concur in the judgment of Buchanan, J.A.

PHILLIPS , J. A.:

I also concur in the judgment of Buchanan, J.A.

BUCHANAN, J. A.:

The first-named respondent ("Adgauge") holds 13 per cent of the shares in Markbys Renaissance Pty. Ltd. ("Markbys"). Adgauge is controlled by the second- named respondent. The remainder of the issued capital of Markbys is owned by Typographique Holdings Pty. Ltd. ("Typographique"), a company controlled by the appellant and her husband, the third-named respondent ("the Plumleys"). Markbys is the trustee of a unit trust in which the units are held by Adgauge and Typographique in the same proportions as they hold the shares in Markbys. Two other companies, Renaissance Communications Pty. Ltd. ("Communications") and Independent Systems Integration Services Pty. Ltd. ("ISIS"), also controlled by the Plumleys, operate with Markbys as a group of companies.
In 1992 Adgauge instituted proceedings pursuant to the provisions of s.260 of the Corporations Law alleging that the affairs of Markbys were being conducted by the Plumleys in a manner that was oppressive to Adgauge. By deed made 1 December 1994 the proceedings were settled upon terms which, inter alia, required Typographique and the Plumleys to purchase the shares and units in Markbys and the unit trust held by Adgauge. The Deed provided that the parties would seek an order by consent in the proceeding that the Court appoint a person pursuant to Order 50 of the Supreme Court Rules as an expert to determine the amount to be

paid as the price for the shares and units. Clause 4(c) of the Deed provided that the
expert was to proceed on the basis:

"(i) that the relevant date of valuation of the Adgauge shares and
units is 30 November 1994;
(ii) that the valuation take account of: -

(A) the assets (including the goodwill) and the liabilities of
the Markbys Renaissance Unit Trust and Markbys;
(B) the assets (including the goodwill) and the liabilities of
ISIS;
(C) the assets (including the goodwill) and the liabilities of
Communications;
as if they all form part of the assets undertaken in liabilities of
Markbys; ...”

On 8 December 1994 an order was made by consent under R.50.01(1)(a) referring the questions in clause 4 of the Deed to a special referee acting as an expert for…

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 Plumley v Adgauge Pty Ltd

Details

AGLC: Plumley v Adgauge Pty Ltd [1998] VSCA 70
Case: [1998] VSCA 70
Decision Date: 13 October 1998

CaseChat Overview and Summary

The case of Plumley v Adgauge Pty Ltd involved a dispute between the parties over the valuation of share capital within the context of a corporate restructuring. The matter was heard in the Supreme Court of New South Wales. The plaintiff, Plumley, challenged the valuation conducted by a special referee appointed under the Supreme Court Rules, arguing that there was an error in the method used to determine the value of the shares in Adgauge Pty Ltd.

The court was required to determine whether the special referee had erred in law by adopting a particular method for valuing the share capital. The central legal issue was whether the special referee had exercised their discretion correctly in selecting the method of valuation and whether this selection constituted an error of law. The plaintiff contended that the referee's choice of valuation method was inappropriate and had resulted in an undervaluation of the shares, which adversely affected the outcome of the proceedings.

In delivering the judgment, the court examined the relevant provisions of the Supreme Court Rules, specifically Order 50, which governs the appointment of referees and their powers. The court considered the extent of the referee's discretion and whether any errors in the valuation process amounted to an error of law. The court found that the referee had not erred in law in selecting the method of valuation and that there was no basis to reject the referee's report. The reasoning was grounded in the principles of judicial deference to the expertise of the special referee and the absence of any clear legal error in the valuation process.

The court ultimately upheld the valuation conducted by the special referee, dismissing the plaintiff's challenge. As a result, the court's decision affirmed the basis on which the referee had conducted the valuation and rejected the plaintiff's contention that there had been an error of law. This ruling concluded that the special referee's report should stand, and no further valuation was required.

Orders