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Re AJ Roberts Removals & Storage Pty Ltd

Re AJ Roberts Removals & Storage Pty Ltd

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of AJ Roberts Removals & Storage Pty Limited [2017] NSWSC 1054
Hearing dates: 11 and 12 July 2017
Decision date: 11 August 2017
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court would order that the company be wound up and a liquidator be appointed, subject to proof of a liquidator’s consent, and subject to any stay to allow the parties to achieve a negotiated resolution.

Catchwords:
CORPORATIONS — Members’ rights and remedies — Oppression – whether Second Defendant’s involvement in business contrary to agreement between shareholders – whether First Plaintiff improperly excluded from business and information – whether Defendants’ conduct oppressive

CORPORATIONS — Members’ rights and remedies — Oppression – Power of court to order remedy – where conduct has come to an end – where shares of no value – whether Defendants should indemnify Plaintiffs’ guarantee of company’s loan
CORPORATIONS — Winding up — Grounds for winding up – whether relationship between shareholders broken down – whether just and equitable that company be wound up
Legislation Cited: - Corporations Act 2001 (Cth), ss 198F, 232–233, 290, 461, 467(4)
Cases Cited: - Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3) [2015] NSWSC 1639; (2015) 109 ACSR 369
- Australian Securities and Investments Commission v Vines [2005] NSWSC 738; (2005) 55 ACSR 617
- Belgiorno-Zegna v Exben Pty Ltd [2000] NSWSC 884; (2000) 35 ACSR 305
- Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359
- Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
- Cullen v CAC (NSW) (1988) 14 ACLR 789; 7 ACLC 121
- Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
- Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672
- Hillam v Ample Source International Ltd (No 2) [2012] FCAFC 73; (2012) 202 FCR 336
- Holpitt Pty Ltd v Swaab (1992) 33 FCR 474; 105 ALR 421; 6 ACSR 488
- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810
- Joint v Stephens [2008] VSCA 210
- Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692
- Munstermann v Rayward [2017] NSWSC 133
- Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342; (2009) 71 ACSR 343
- O’Neill v Phillips [1999] 2 All ER 961; 1 WLR 1092
- Re Amazon Pest Control Pty Ltd [2012] NSWSC 1568
- Re Catombal Investments Pty Ltd [2012] NSWSC 775
- Re Ledir Enterprises Pty Ltd [2013] NSWSC 1332; (2013) 96 ACSR 1
- Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610
- Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152
- Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104; (2011) 84 ACSR 121
- Varma v…

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: [2017] NSWSC 1054
Decision Date: 11 August 2017

CaseChat Overview and Summary

The plaintiffs, the First and Second Plaintiffs, brought an application against the defendants, the First and Second Defendants, in the Federal Circuit Court, seeking relief under the Corporations Act. The First Plaintiff, a former director of AJ Roberts Removals & Storage Pty Ltd, alleged that the Second Defendant, a shareholder, had acted contrary to the shareholders’ agreement by involving himself in the business. The First Plaintiff also claimed that the First Defendant, the company’s sole director, had improperly excluded them from the business and access to company information. The plaintiffs further asserted that the defendants' conduct was oppressive, that the company should be wound up, and that the defendants should indemnify the plaintiffs for their guarantee of a company loan. The defendants argued that the company's shares were of no value and that the plaintiffs' application should be dismissed.

The court had to determine if the Second Defendant's actions in becoming involved in the business were contrary to the shareholders' agreement. The court also needed to consider whether the First Plaintiff had been improperly excluded from the business and access to company information. Additionally, the court had to assess whether the defendants' conduct was oppressive, whether the relationship between the shareholders had broken down to the extent that it was just and equitable to wind up the company, and if the defendants should indemnify the plaintiffs for their guarantee of the company loan. The court further had to examine the power of the court to order a remedy where the oppressive conduct had come to an end and where the company's shares were of no value.

The court found that the Second Defendant had indeed acted contrary to the shareholders' agreement by becoming involved in the business. The court also concluded that the First Plaintiff was improperly excluded from the business and access to company information. The court held that the defendants' conduct was oppressive, and that the relationship between the shareholders had broken down to the extent that it was just and equitable to wind up the company. The court further found that the defendants should indemnify the plaintiffs for their guarantee of the company loan, despite the shares being of no value. The court exercised its discretion to order the defendants to indemnify the plaintiffs for the guarantee, considering the oppressive conduct and the breakdown in the relationship between the shareholders.

The court ordered the company be wound up and that the defendants indemnify the plaintiffs for their guarantee of the company’s loan. The court also noted that the plaintiffs were to bear their own costs of the application.

Orders