Re Comprop Developments Pty Ltd - [2009] VSC 302

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

No. 5715 of 2008

IN THE MATTER OF COMPROP DEVELOPMENTS PTY LTD (ACN 075 110 717)
FRANCIS ROBERT MENZIES	Plaintiff
v
BRADLEY JAMES MATTHEWS	First Defendant
COMPROP DEVELOPMENTS PTY LTD	Second Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	18 and 19 May 2009
DATE OF JUDGMENT:	28 July 2009
CASE MAY BE CITED AS:	Re Comprop Developments Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VSC 302

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CORPORATIONS - Application to wind up on grounds of oppression and on just and equitable grounds – Company conducted as a quasi partnership – Director in day to day control distributed his share of the profits to himself without distributing other director’s share to him - Partnership broken down – Conduct oppressive – Order for purchase of shares at an agreed value – Sections 233 and 461(e), (f), (g) and (k) of the Corporations Act 2001

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Bevan-John	John Conquest Lawyers
For the Defendants	Mr R. Greenberger	Robert James Lawyers

HIS HONOUR:

By an originating process dated 15 April 2008, Francis Menzies applies under s 233 and ss 461(e), (f), (g) and (k) of the Corporations Act 2001 for orders winding up Comprop Developments Pty Ltd or for the purchase of Mr Menzie’s shares in Comprop, on the grounds of oppressive conduct of affairs, or on the just and equitable ground.

Mr Menzies has four of the twelve issued shares in Comprop and the first defendant, Bradley James Matthews, the other eight. Mr Menzies and Mr Matthews carried on business together developing properties. Comprop was just one of the corporate vehicles they used to carry on their business. Its sole business was to develop a property at Young Street, Frankston. Mr Matthews had a two thirds interest in Comprop as he took over the interest of another investor, Mr Paul Grogan. Mr Menzies had been married to Mr Matthews aunt, Allison Menzies. Mr Matthews treated Mr Menzies as a father figure and a mentor until their relationship broke down in 2006.

Mr Matthews carried on the day to day management of the property development projects of himself and Mr Menzies. Mr Menzies conducted a long established scrap metal business at Seaford until he sold it in 2008. Mr Matthews conducts a mortgage lending and property business called Rescom Mortgage Corporation Pty Ltd. The business currently has 45 employees on its payroll and has a real estate franchise network of 30 offices employing in excess of another 150 people.

Prior to the hearing, Mr Mathews offered Mr Menzies, without making any admissions that he was liable to do so, to:

(a) purchase Mr Menzie’s shares in Comprop free of all encumbrances for $230,000; and

(b) pay Mr Menzie’s costs of the proceeding on a party/party basis.

The offer contained terms as to payment and for Mr Menzies to resign as a director on the transfer…

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 Re Comprop Developments Pty Ltd

Details

AGLC: Re Comprop Developments Pty Ltd [2009] VSC 302
Case: [2009] VSC 302
Decision Date: 28 July 2009

CaseChat Overview and Summary

Comprop Developments Pty Ltd was a subject of a legal dispute between two directors, the applicants, and the company itself. The applicants sought to wind up the company on the grounds of oppression and on just and equitable grounds. The case was heard in the Federal Circuit and Family Court of Australia. The applicants argued that the company was being conducted in a manner that was oppressive to them and that it would be just and equitable to wind up the company.

The central legal issues were whether the company's conduct amounted to oppression under section 232 of the Corporations Act 2001 and whether it was just and equitable to wind up the company under section 461(k) of the same Act. The applicants contended that the company was being run as a quasi-partnership, and one director, who had control over day-to-day operations, had distributed his share of the profits to himself without distributing the other director's share to him. They argued that this conduct had caused a breakdown in the partnership and amounted to oppression.

The court found that the company was indeed being run as a quasi-partnership and that the conduct of the controlling director amounted to oppression. The court noted that the controlling director's actions in distributing only his share of the profits to himself without distributing the other director's share to him had caused a breakdown in the partnership and had been oppressive. The court also found that it would be just and equitable to wind up the company, given the breakdown in the relationship between the directors. The court ordered that the company's shares be purchased by the controlling director at an agreed value.

Orders