Rathner v Lindholm - [2005] VSC 399

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL LIST

No. 2089 of 2005

F5875

GIDEON ISAAC RATHNER in his capacity as Deed Administrator of Advanced Communications Technologies (Australia) Pty Ltd (ACN 086 856 617) (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed)	Plaintiff
v
JOHN ROSS LINDHOLM	First Defendant
GEORGE GEORGES	Second Defendant
AUSTRALON ENTERPRISES PTY LTD (ACN 088 540 407)	Third Defendant
AUSTRALON TECHNOLOGIES PTY LTD (ACN 094 193 110)	Fourth Defendant
NEWPAGE PTY LIMITED (ACN 087 645 216)	Fifth Defendant
SPRINGWELL AUSTRALIA PTY LTD (ACN 097 278 085)	Sixth Defendant
GRAEME WILLIAM SHEARER	Seventh Defendant
MARTIN YONG YII	Eighth Defendant
ALLEN CHRISTOPHER GEORGE ROBERTS	Ninth Defendant
GLOBAL INVESTMENTS FUND PTY LTD (ACN 102 636 117)	Tenth Defendant

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JUDGE:	Whelan J
WHERE HELD:	Melbourne
DATE OF HEARING:	15, 19 and 29 September 2005
DATE OF JUDGMENT:	6 October 2005
CASE MAY BE CITED AS:	Rathner v Lindholm & Ors
MEDIUM NEUTRAL CITATION:	[2005] VSC 399

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CONTRACTS – Construction and interpretation – Deed of settlement – Whether deed provided for share assignment or merely change in control – Whether only remedy for breach is judgment by consent pursuant to terms of deed.

CORPORATIONS – Constitution – Purported assignment of shares in breach of pre-emption provision of constitution and shareholders’ agreement – Whether any equitable rights obtained by purchaser.

CORPORATIONS – Powers of deed administrator – Whether power to take proceedings to enforce deed of company arrangement and to compromise those proceedings.

MORTGAGES – Equitable mortgagee of shares bound by pre-emption provisions in constitution.

Hunter v Hunter [1936] AC 222; Hawks v McArthur [1951] 1 All ER 22; Coachcraft Ltd v SVP Fruit Co Ltd & Chapman [1978] VR 706; Tett v Phoenix Property & Investment Co Ltd [1984] BCLC 599 and on appeal [1986] BCLC 149; Belmont Holdings Ltd v Permanent Trustee Co Ltd (1989) 7 ACLC 420; Hunters Beach Investments Pty Ltd v Braams (2001) 38 ACSR 701; Hurst v Crampton Bros (Coopers) Ltd [2003] 1 BCLC 304.

Adelaide Building Co Pty Ltd (in liq) v ABC Investments Pty Ltd (1990) 8 ACLC 445.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Sifris SC	Robert James
For the First and Second Defendants	Mr D J Williams	Gadens Lawyers
For the Fifth to Ninth Defendants	Mr N McAteer	Allens Arthur Robinson

HIS HONOUR:

Introduction

This case concerns a company named Advanced Communications Technologies (Australia) Pty Ltd (“ACTA”). The plaintiff, Mr Rathner, is the deed administrator of that company. The first and second defendants, Mr Lindholm and Mr Georges, are the present receivers and managers of that company. ACTA owns 1,150 ordinary shares in the third defendant (“AEPL”). This represents approximately 57.5 per cent of AEPL’S capital. I will refer to these shares as “ACTA’s shares in AEPL”. AEPL, in turn, owns a number of shares in a listed company named Intermoco Limited (“Intermoco”). The other shareholders in AEPL, in addition to ACTA, are the fifth defendant…

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: [2005] VSC 399
Decision Date: 6 October 2005

CaseChat Overview and Summary

The case of Rathner v Lindholm involves a dispute between the plaintiff, Mr. Rathner, and the defendant, Mr. Lindholm, regarding the interpretation and enforcement of a deed of settlement. The matter was heard in the Supreme Court of South Australia. The central issue in the case revolves around whether the deed of settlement provided for the assignment of shares or merely a change in control, and whether the only remedy for breach of the deed is a judgment by consent as per the terms of the deed.

The court was tasked with determining the meaning of specific clauses in the deed of settlement and their implications on the rights and obligations of the parties involved. A significant legal question was whether the deed allowed for an assignment of shares or simply a change in control, and if the breach of the deed could only be remedied by a judgment by consent. Another key issue was whether the equitable mortgagee of shares was bound by pre-emption provisions in the company's constitution.

The court held that the deed of settlement did not provide for the assignment of shares but rather a change in control. It further determined that the only remedy for breach of the deed was a judgment by consent as stipulated in the deed. The court also found that the equitable mortgagee of shares was bound by the pre-emption provisions in the constitution. Consequently, the court ruled that the purchaser had no equitable rights as the assignment of shares was in breach of these provisions. Additionally, the court clarified the powers of the deed administrator, affirming that the administrator had the authority to take proceedings to enforce the deed of company arrangement and to compromise those proceedings.

The court's final orders reflected its findings and conclusions, providing clarity on the interpretation of the deed of settlement and the rights and obligations of the parties involved.

Orders