Re Renex Founder Hold Co Pty Ltd - [2024] VSC 244

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 02995

IN THE MATTER of RENEX FOUNDER HOLD CO PTY LTD (ACN 609 623 887)

BETWEEN:

CREATE ENVIRONMENT PTY LTD (ACN 604 342 154)	Plaintiff
v
RENEX FOUNDER HOLD CO PTY LTD (ACN 609 623 887) and MSA RENEX CORP PTY LTD (ACN 133 138 593) (according to attached Schedule)	Defendants

---

JUDGE:	Matthews J
WHERE HELD:	Melbourne
DATE OF HEARING:	13-16, 20-22, 24 November 2023
DATE OF JUDGMENT:	17 May 2024
CASE MAY BE CITED AS:	Re Renex Founder Hold Co Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 244

---

CORPORATIONS – Oppression proceeding – Twelve instances of oppression alleged by plaintiff, seven of which were made out – Four of five alleged breaches of director’s duties constitute oppressive conduct – Two instances of oppression alleged by second defendant, none of which were made out – Corporations Act 2001 (Cth) ss 232, 233.

PRACTICE AND PROCEDURE – Pleadings – Whether required to plead matters going to valuation of the company’s business in an oppression proceeding – Whether required to plead matters relied upon to give rise to adjustments in value to remedy the effects of oppression – Wain & Ors v Drapac & Ors (No 2) [2013] VSC 381 considered.

CORPORATIONS – Oppression proceeding – Relief – Company with two equal shareholders, each wanting to buy the other out - Slea Pty Ltd v Connective Services Pty Ltd (No 9) [2022] VSC 136, [518] – Millsave Holdings Pty Ltd v Connective Group Pty Ltd [2023] VSCA 326.

CORPORATIONS – Oppression proceeding – Valuation of shares in the face of competing expert reports – Court determines fair value and is not constrained by traditional valuation methods – Relevance of open offers made by the parties to determining value – Adjustments to remediate effects of oppression – Wain & Ors v Drapac & Ors (No 2) [2013] VSC 381 – Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd (2004) 207 ALR 136 – Re SRW Nominees Pty Ltd (No 2) [2020] VSC 323.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr CR Northrop with Ms AR Singh	KHQ Lawyers
For the Second Defendant	Mr JP Slattery KC with Ms C Jones	Clayton Utz

TABLE OF CONTENTS

A.. Introduction.................................................................................................................................. 1

B.. Factual background..................................................................................................................... 2

B.1... History of the Renex business and corporate structure................................................. 2
B.2... The current Renex business............................................................................................... 6
B.3... The properties at Laverton, Victoria................................................................................. 7
B.4... Disputes between Angelodemou and Create/Pulitano................................................ 8
B.5... Relevant procedural history............................................................................................. 12

C.. Pleadings...................................................................................................................................... 12

D.. Evidence and witnesses............................................................................................................ 17

D.1... Lay evidence....................................................................................................................... 17
D.2... Expert evidence.................................................................................................................. 25

E... Relevant legal principles.......................................................................................................... 26

E.1... Oppression claims............................................................................................................. 26
E.1.1... Legislative provisions........................................................................................... 26
E.1.2... Key applicable principles – s 232 of the Act...................................................... 27

E.2... Just and equitable winding up........................................................................................ 31
E.2.1... Legislative provisions........................................................................................... 31
E2.2.... Key applicable principles..................................................................................... 32

F... Identification of the key issues regarding the claims pursuant to s 232…

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.

Keep reading for free

Create a free CaseChat account to read Re Renex Founder Hold Co Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2024] VSC 244
Decision Date: 17 May 2024

CaseChat Overview and Summary

In the case of Re Renex Founder Hold Co Pty Ltd, the dispute arose between two equal shareholders who each sought to buy out the other. The plaintiff alleged twelve instances of oppressive conduct, seven of which were substantiated, and the second defendant alleged two instances of oppression, none of which were substantiated. The legal issues before the court included whether certain matters must be pleaded in an oppression proceeding regarding the valuation of the company’s business and the adjustments needed to remedy the effects of oppression. The court was also required to determine the fair value of the shares amidst conflicting expert reports and to decide on the appropriate relief to provide.

The court held that in an oppression proceeding, it is not necessary to plead matters relating to the valuation of the company’s business or those relied upon to adjust the value to remedy the effects of oppression. This was consistent with the decision in Wain & Ors v Drapac & Ors (No 2). In determining the fair value of the shares, the court was not bound by traditional valuation methods and considered open offers made by the parties. The court found that adjustments should be made to remediate the effects of oppression, following the precedent in Wain & Ors v Drapac & Ors (No 2) and Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd.

The court found that four out of the five breaches of director's duties constituted oppressive conduct. The court determined the fair value of the shares based on the open offers made by the parties and ordered adjustments to remedy the effects of the oppressive conduct. The final orders included a declaration that the oppressive conduct had occurred, an order for the purchase of the plaintiff's shares, and an adjustment to the purchase price based on the findings of oppression.

Orders