JUDICIAL REGISTRAR:	Hetyey JR
WHERE HELD:	Melbourne
DATE OF HEARING:	6 June 2019
DATE OF JUDGMENT:	6 June 2019 (given ex tempore, revised)
CASE MAY BE CITED AS:	In the matter of TM Fresh Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 383

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CORPORATIONS – Corporations Act 2001 (Cth) – Part 5.4A – s 461(1)(k) - Winding up on just and equitable ground – Deadlock – Quasi-partnership - Irretrievable breakdown of relationship - Lack of confidence in the conduct and management of the affairs of the company – No other appropriate remedy – Pronouncement of winding up order delayed to allow parties further opportunity to resolve dispute.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	G S J Berlic	Belleli King & Associates
For the Second Defendant	Self-represented

JUDICIAL REGISTRAR:

Introduction

The principal question before the Court is whether TM Fresh Pty Ltd (“the Company”) should be wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) (“the Corporations Act”) on the basis that it is just and equitable to do so.

Background

The Company was established on 16 June 2017 in order to purchase and operate a fruit and vegetable stall at the Dandenong Market.[1] Mr Francesco Tripodi (the plaintiff) and Mr Michael Margheriti (the second defendant) are directors of the Company and each hold 50% of its shares. At the time of the Company’s incorporation, Mr Tripodi and Mr Margheriti agreed they would both be involved in its management and day-to-day operation.[2] In essence, the relationship between the shareholders, through the Company, was a quasi-partnership.
[1]Affidavit of Francesco Tripodi sworn 12 July 2018 [4] and exhibit FT-1 to that affidavit.
[2]Ibid [3].

In the second half of August 2017, the Company entered into a contract to purchase a business trading at certain stalls at the Dandenong Market. Around the same time, the Company also entered into a licensing arrangement with Dandenong Market Pty Ltd and another entity. The purchase price of the business was $210,000, with each director contributing $105,000. Mr Tripodi says he made further financial contributions to the business in the order of approximately $92,000, including in respect of equipment, fittings, a security deposit and stock.[3]
[3]Ibid [6].

Settlement of the sale of business took place on or about 31 August 2017 and the Company commenced operating from that time. However, the Company had only traded for a few months before the relationship between Mr Tripodi and Mr Margheriti deteriorated dramatically. The circumstances surrounding the breakdown in that relationship are dealt with further below. For present purposes, it is enough to note that since 21 December 2017, Mr Tripodi ceased to have any role in the Company’s management and operations.

Procedural…

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 TM Fresh Pty Ltd

Details

AGLC: In the matter of TM Fresh Pty Ltd [2019] VSC 383
Case: [2019] VSC 383
Decision Date: 6 June 2019 (given ex tempore, revised)

CaseChat Overview and Summary

In the matter of TM Fresh Pty Ltd, the dispute arose between the shareholders of the company, leading to an application for the winding up of the company under section 461(1)(k) of the Corporations Act 2001. The case was heard by the Federal Circuit and Family Court of Australia. The applicants sought to wind up the company on the grounds of deadlock, alleging an irretrievable breakdown in the relationship between the shareholders, which had rendered the company unable to continue its operations effectively.

The legal issues before the court involved determining whether the circumstances justified the winding up of the company as a just and equitable remedy. The applicants argued that the company had become a quasi-partnership with a fundamental breach of the partnership agreement, resulting in a lack of confidence in the conduct and management of the company's affairs. The respondents, on the other hand, contended that there were other remedies available that could resolve the impasse without resorting to winding up.

The court considered the evidence and submissions from both parties. It found that the relationship between the shareholders had indeed deteriorated to a point of deadlock, which was affecting the company's ability to function effectively. The court acknowledged that the company was more akin to a quasi-partnership, where the personal relationship between the shareholders played a significant role in the company's operations. Given the irretrievable breakdown of trust and confidence, the court determined that winding up was the appropriate remedy, as no other measures could effectively address the situation. However, the court decided to delay the pronouncement of the winding up order to allow the parties an opportunity to explore other potential resolutions.

Orders