Re SP Private Holdings Pty Ltd - [2021] VSC 142

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 03824

IN THE MATTER of SP PRIVATE HOLDINGS PTY LTD (ACN 612 916 122) and SP PRIVATE PTY LTD (ACN 612 619 104)

SUZAN IRENE BLAKE	Plaintiff
- v -
SEAN PAUL DULLARD (and others according to the attached schedule)	Defendants

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23 March 2021
DATE OF JUDGMENT:	23 March 2021 (ex tempore, revised)
CASE MAY BE CITED AS:	Re SP Private Holdings Pty Ltd
MEDIUM NEUTRAL CITATION:	[2021] VSC 142

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CORPORATIONS – Application by shareholder in closely held companies for relief from alleged oppression by co-shareholder – Plaintiff fifty per cent shareholder in companies with first defendant holding the other fifty per cent of the issued shares – Plaintiff and first defendant the only directors of the companies – Application amended to seek winding up on the just and equitable ground pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) and for the appointment of a provisional liquidator – Court determined to proceed to consider the application for the appointment of a liquidator rather than provisional liquidator – Evidence pointed to clear deadlock and dysfunction within the management of the companies – Deadlock was intractable and not amenable to any other remedy than a winding up order – Orders made for winding up on the just and equitable ground - Re Docklands Chiropractic Clinic Pty Ltd [2020] VSC 364.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Kohn	MGA Lawyers
For the First Defendant	In person

HIS HONOUR:

This proceeding was commenced by originating process filed 6 October 2020. Initially, the primary relief sought by the plaintiff, Suzan Blake, claimed relief under s 233 of the Corporations Act 2001 (Cth) (‘the Act’) in respect of alleged oppressive conduct on the part of the first defendant, Sean Dullard. On 15 October 2020, the proceeding was referred by Connock J for management under Practice Note SC CC 8 – Oppressive Conduct in the Affairs of a Company (Second Revision), more commonly known as the Oppression Proceeding Program.

As will be seen, the proceeding assumed a different complexion when, on 25 February 2021, Ms Blake sought an order for the appointment of a provisional liquidator by interlocutory process filed that date. The ground for winding up relied upon was the just and equitable ground under s 461(1)(k) of the Act. Ms Blake relies on her status as contributory to make that application.

The originating process was served on Mr Dullard on 22 October 2020. Prior to the first hearing there were several communications from the plaintiff’s solicitors, MGA Lawyers, by email to Mr Dullard reminding him of the forthcoming hearing, to which there was no response.

The matter first came before me for an initial conference conducted under the auspices of the Oppression Proceeding Program on 26 November 2020 and Mr Dullard, who was not represented at that time, sought an…

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: [2021] VSC 142
Decision Date: 23 March 2021 (ex tempore, revised)

CaseChat Overview and Summary

The case of Re SP Private Holdings Pty Ltd involved a dispute between two shareholders, each holding fifty per cent of the shares in a closely held company. The plaintiff, who owned half of the shares, sought relief from what was alleged to be oppressive conduct by the co-shareholder, the first defendant, who also held fifty per cent of the shares and was the other director of the companies. The plaintiff's initial application was to seek winding up of the companies on the just and equitable ground under section 461(1)(k) of the Corporations Act 2001 (Cth) and for the appointment of a provisional liquidator. However, the court decided to consider the application for the appointment of a liquidator rather than a provisional liquidator.

The central legal issue was whether the deadlock and dysfunction within the management of the companies warranted a winding up order. The plaintiff argued that the co-shareholder's conduct was oppressive and that the companies could not be effectively managed due to the deadlock. The court had to determine whether the deadlock was intractable and if the winding up order was the appropriate remedy. The evidence presented indicated a clear and persistent deadlock that had rendered the companies ungovernable.

In reaching its decision, the court found that the deadlock was indeed intractable and not amenable to any other remedy. The evidence supported the plaintiff's claim that the companies could not function effectively due to the deadlock between the two shareholders. Given the unresolvable nature of the deadlock, the court concluded that the appropriate course of action was to wind up the companies on the just and equitable ground. The court made orders for winding up the companies and appointed a liquidator to manage the process. The case of Re Docklands Chiropractic Clinic Pty Ltd [2020] VSC 364 was cited in support of the court's decision.

Orders