Raymond v Cook

[1998] QCA 399

IN THE COURT OF APPEAL	[1998] QCA 399
SUPREME COURT OF QUEENSLAND

Appeal No. 1332 of 1998

Brisbane

[Raymond v Cook & Ors]

BETWEEN:

ROBERT ERIC MICHAEL RAYMOND

(Applicant) Appellant

AND:

HAROLD ERNEST COOK, MAUD COOK
LESLIE ALFRED COOK, MONICA MARIA COOK

and YVONNE MANDY COOK

(Respondents)	Respondents
Pincus JA Thomas JA Byrne J

Judgment delivered 27 October 1998

Further Order delivered 1 December 1998

Further Order of the Court.

UPON THE UNDERTAKINGS SET OUT IN THE REASONS FOR FURTHER ORDER, APPEAL ALLOWED. ORDERS MADE IN THE TRIAL DIVISION ON 16 JANUARY 1998 SET ASIDE AND IN LIEU THEREOF ORDER:

(A)	THE RESPONDENTS ARE HEREBY RESTRAINED FROM PROCURING, CAUSING OR ACQUIESCING IN MUSTERFORD PTY LTD ISSUING, PURCHASING, OR OTHERWISE DEALING WITH ITS SHARE CAPITAL IN A WAY WHICH IF EFFECTED WOULD CAUSE THE APPELLANT TO HAVE LESS THAN 25 PER CENT OF THE ISSUED SHARES OF WHATEVER NATURE IN MUSTERFORD PTY LTD SAVE WITH THE WRITTEN CONSENT OF THE APPELLANT.
(B)	THE RESPONDENTS ARE FURTHER RESTRAINED FROM DISPOSING OF THEIR SHARES IN MUSTERFORD PTY LTD UNLESS AND UNTIL THE PROPOSED DISPONEE HAS ENTERED INTO A DEED WITH THE APPELLANT WHEREBY THE PROPOSED DISPONEE COVENANTS TO ABIDE BY THE TERMS OF ORDER (A) ABOVE AND FURTHER COVENANTS TO ABIDE BY THE UNDERTAKING GIVEN TO THE COURT IN RESPECT OF THE ANTECEDENT DEBT GIVEN TO THE COURT BY THE RESPONDENT HAROLD ERNEST COOK.
(C)	THE RESPONDENTS ARE ORDERED TO PAY TO THE APPELLANT TWO- FIFTHS OF HIS COSTS OF AND INCIDENTAL TO THE PROCEEDINGS BELOW TO BE TAXED, INCLUDING HIS COSTS OF THE SUMMONS OF 21 NOVEMBER, 1996 AND OF THE APPLICATION FOR ADJOURNMENT HEARD ON 9 SEPTEMBER, 1997.

RESPONDENTS TO PAY THE APPELLANT’S COSTS OF AND INCIDENTAL TO

THE APPEAL TO BE TAXED.

CATCHWORDS:	Restraint of oppression under Corporations Law s.246AA(2)(c) (formerly s.260(2)(c)) - form of order - discretion re costs of trial and appeal.
Counsel:	Mr H.B. Fraser QC for the appellant Mr R.W. Gotterson QC, with him Mrs D.A. Mullins, for the respondents
Solicitors:	Kinneally Mahoney, town agents for Morrow & Associates, for the appellant Bennett & Philp for the respondents
Hearing Date:	28 August 1998

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 1332 of 1998

Brisbane

Before Pincus JA
Thomas JA
Byrne J

[Raymond v Cook & Ors]

BETWEEN:

ROBERT ERIC MICHAEL RAYMOND

(Applicant) Appellant

AND:

HAROLD ERNEST COOK, MAUD COOK
LESLIE ALFRED COOK, MONIKA MARIA COOK

and YVONNE MANDY COOK

(Respondents) Respondents

REASONS FOR FURTHER ORDER - THE COURT

Judgment delivered 27 October 1998
Further Order delivered 1 December 1998

1. Pursuant to liberty granted by the court on 27 October 1998, the parties have presented

   submissions in relation to form of order and costs, both of trial and appeal. It is no matter for

   surprise that they remain at odds on practically every issue.

   Form of Order

2 The main point of contention concerns the level of control that should be imposed upon
future actions of the respondents in allotting further shares. An earlier threat by the respondent to

do so was associated with conduct that was considered oppressive, although in the event the

respondent did not proceed with its threatened action. The respondent’s proposal is that there

should be an undertaking to the effect that while the appellant remains a shareholder the respondents

may not cause the company to allot any further shares without the consent of the appellant (or his

successors), provided that such consent shall not be unreasonably withheld. Such a proviso

would provide a fertile field for dispute in an area where the respondent has in the past shown a

propensity to act unfairly. It is true that the issue of further shares might be a bona fide means of

raising further capital and that the raising of further capital might be a justifiable commercial decision

for the optimal realisation of the joint venture. Were this position to arise, it may well be that the

appellant would consent to the proposal even though there might be some necessary dilution of his

present overall proportional interest in the company. If he refused, then no doubt the respondents

would have to make a commercial decision in relation to available options, including the possibility

of winding up the company.

1. In the light of past conduct of the parties, we would not be prepared to expose them to

   further disputes of this kind. To do so would inter alia permit the respondent, if so minded, to

   subject the appellant to an expensive and continuing legal battle. We consider that the appropriate

   order is one that will protect the appellant from oppression of this kind, and that this is best achieved

   by declining to include the above proviso. Accordingly the order will be as stated in paragraph 3

   of the order set out in paragraph 10 below.

2. In order to prevent avoidance on the part of the respondents of the effect of paragraph 3, by means such as a sale of the respondent’s shares to a third party who would be free of the fetter imposed by that paragraph, it seems reasonable to impose the further condition stated in paragraph

   4 of the order stated below.

3. The appellant has indicated its acceptance of the undertaking given to the court by the

   respondent Harold Ernest Cook in respect of the antecedent debt. This undertaking will be

   included in the order.

   Costs of the Appeal

4. Although the appeal has been allowed the respondents submit that the appellant failed on

   some issues and in particular that he failed to obtain the preferred relief of compulsory purchase of

   his shares. However the appellant’s application had been inappropriately dismissed by the learned

   Trial Judge and he was held on appeal to be entitled to relief against oppression and to orders which

   are designed to preserve the value of his share in the company. We regard the appellant as having

   brought a successful appeal, and do not consider that his failure to achieve everything he desired

   should justify the making of a limited order for costs of the appeal. The appeal will therefore be

   allowed with costs.

   Costs of trial

5. The hearing took ten days - eight of evidence and two of submissions. The issue of the

   antecedent debt, which occupied a substantial proportion of argument on the appeal, was not raised

   in the proceedings below until the points of claim were amended on 15 May, 1997. It was

   therefore not dealt with by the affidavits which had already been prepared pursuant to directions

   of the court. This undoubtedly lengthened the trial and the responsibility for this lies with the

   appellant. Furthermore, a number of significant issues seem to have been raised by the appellant

   at trial on which he lost, and which were no longer raised by the time of appeal. These include allegations that the respondents acted without referring to the appellant matters for decision, that the

   respondent advised employees to ignore the appellant’s directions, and mis-use by the respondents

   of their majority share holding and control of the board. There was also an issue which has been

   referred to as the 25% share holding issue, but in our view the appellant did not fail entirely on that

   issue even though orders upon it were in the end unnecessary.

6. We do not consider that the issues are sufficiently identifiable for the making of an order

   limited to particular issues (as for example in Colburt v. Beard [1992] 2 Qd R 63,70) and in the

   present case consider that this would almost certainly result in an unduly complicated taxation of

   costs. In the present case some notional setting off needs to be made of the relative degrees of

   success apparently achieved by each party on the various issues and points which were raised

   during this ten day trial (Thiess v. TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156,208),

   and account needs to be taken of the fact that the conduct of the appellant needlessly protracted

   the trial. It is also necessary to bear in mind that the appellant was entitled to bring the matter to

   court and that in the end he has succeeded in proving oppression on some of the issues raised. In

   the circumstances we would order that the appellant recover against the respondents two fifths of

   his costs of the proceedings below to be taxed.

7. The parties remain in dispute as to what should be done in relation to two orders for

   reserved costs which were not dealt with by the learned trial judge.

   (a)         Costs of respondents’ summons of 21 November, 1996. The respondent

   succeeded in obtaining an order for speedy trial, but failed in its attempt to have

   certain allegations struck out as embarrassing. So far as the appellant is concerned

he was entitled to respond as he did to that application, and his costs of and
incidental to that summons should be his costs in the cause.

(b)        Respondents’ application on 9 September, 1997 to adjourn the trial. The

application was made because of the death of the respondent Maud Cook shortly

before the application. An adjournment was granted, it being intimated by the court

that the matter could not proceed in any event as there was insufficient time to deal

with it. Once again, the appellant’s costs of and incidental to that application

should be the appellant’s costs in the cause.

Orders

1. On the undertaking of the respondent Harold Ernest Cook on the hearing of the appeal,

   namely his undertaking not to recover from Musterford Pty Ltd (“Musterford”) or to procure

   Musterford to pay or receive payment of the whole or any part of the debt of $636,227.00 formerly

   owed by Musterford to Harold Ernest Cook and Maud Cook and now owed to Harold Ernest

   Cook (described in these proceedings as “the antecedent debt”) during the currency of any of the

   following events:-

   (a)         The appellant remains a shareholder of Musterford;

   (b)        Successors in title to the appellant’s shares in Musterford hold those shares;

   (c)         The appellant’s shares are held by a transferee who is not one of the respondents

   in these proceedings or a lineal descendant of Harold Ernest Cook;

   and on his further undertaking not to assign the whole or any part of the antecedent debt without

   first obtaining an undertaking in favour of the appellant or the successors in title or transferees of the

   appellant’s shares in identical terms to this undertaking -

   1.          The appeal is allowed;

   2.          The Orders made in the trial division on 16 January 1998 are set aside and

   replaced with the orders in paragraphs 3, 4 and 5 hereof;

   3.          The respondents are hereby restrained from procuring, causing or acquiescing in

   Musterford Pty Ltd issuing, purchasing, or otherwise dealing with its share capital

   in a way which if effected would cause the appellant to have less than 25 per cent

   of the issued shares of whatever nature in Musterford Pty Ltd save with the written

   consent of the appellant;

   4.          The respondents are further restrained from disposing of their shares in Musterford

   Pty Ltd unless and until the proposed disponee has entered into a Deed with the

   appellant whereby the proposed disponee covenants to abide by the terms of order

   3 above and further covenants to abide by the undertaking given to the Court in

   respect of the antecedent debt given to the Court by the respondent Harold Ernest

   Cook.

   5.          The respondents are ordered to pay to the appellant two-fifths of his costs of and

   incidental to the proceedings below to be taxed, including his costs of the summons

   of 21 November, 1996 and of the application for adjournment heard on 9

   September, 1997.

   6.          The respondents are ordered to pay the appellant’s costs of and incidental to the

   appeal to be taxed.