Re Venture Capital Group Pty Ltd (No 3) - [2018] VSC 513

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COPORATIONS LIST

S CI 2012 03857

IN THE MATTER OF VENTURE CAPITAL GROUP PTY LTD (ACN 111 119 914)
(in its own right and as trustee of the VCG Trust)

ALPHATER CONSULTING ENGINEERS PTY LTD (ACN 107 954 629)	Plaintiff
v
MILES ROZMAN and ORS	Defendants

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATE OF HEARING:	18 July 2018
DATE OF JUDGMENT:	12 September 2018
CASE MAY BE CITED AS:	Re Venture Capital Group Pty Ltd (No 3)
MEDIUM NEUTRAL CITATION:	[2018] VSC 513

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CONTRACT – Plaintiff a minority interest holder in a café business – Agreement by the defendant to buy out minority interest holder at market valuation under the terms of a dispute resolution agreement – Dispute as to construction of the agreement – Orders sought on the construction of the agreement and for performance of the dispute resolution agreement – Specific performance – Whether Court had power to appoint a valuer that required agreement of both parties and where parties could not agree.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D B Clough	Lennon Mazzeo
For the Defendants	Mr M S Osborne QC with Mr K R Hickie	B2B Lawyers

TABLE OF CONTENTS

Introduction.......................................................................................................................... 1
Interlocutory process.......................................................................................................... 2
Minority interest.................................................................................................................. 3
Resolution of the minority interest issue......................................................................... 8
Appointment of Mr Stout................................................................................................... 9
Specific performance of the dispute resolution agreement........................................ 13
Damages.............................................................................................................................. 14
Costs.................................................................................................................................... 14
Conclusions........................................................................................................................ 15

HIS HONOUR:

Introduction

Mr Parisi (through Alphater Consulting Engineers Pty Ltd (Alphater)) and Mr Rozman (and companies of his) own Venture Capital Group Pty Ltd and other entities, known as the VCG Group, that conducted the Café Moderno and the Bite Franchise businesses. Mr Parisi and Mr Rozman fell out and entered into a dispute resolution agreement (DRA), under which Mr Rozman and his companies were to acquire Mr Parisi’s 25.5 per cent interest in the VCG Group at their market valuation. I will refer to Mr Rozman and his companies simply as Mr Rozman.

Under the DRA, Mr Rozman and Alphater were to each nominate their own valuer to complete valuations of the VCG Group. In the event that the valuers disagreed, the valuers were to meet and identify the matters in issue between them and those matters were then to be referred to an independent expert who would resolve the issues in dispute and complete the valuation.

The parties each appointed valuers which reached different valuations. The parties were unable to agree on the terms of the DRA that governed the role of the independent expert which led to the originating process being issued on 6 July 2012 by Alphater. The Court was asked to answer certain questions relating to the construction of the DRA. I did so and made orders accordingly.[1]
[1]Re Venture Capital Group Pty Ltd [2012] VSC 654.

The valuations had been carried out by Mr Richardson on behalf of Alphater, and Mr Bala on behalf of Mr Rozman.…

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: [2018] VSC 513
Decision Date: 12 September 2018

CaseChat Overview and Summary

Venture Capital Group Pty Ltd, a minority shareholder, sought a determination of their rights under a business agreement and sought specific performance against the majority shareholder. The matter was heard in the Supreme Court of New South Wales. The dispute centred on the interpretation of a dispute resolution agreement and the minority shareholder's entitlement to be bought out at market valuation. The minority shareholder contended that they were entitled to have the court appoint a valuer to determine the market valuation, while the majority shareholder opposed this on the basis that the dispute resolution agreement required the parties to agree on a valuer.

The court considered whether it had the power to appoint a valuer under the terms of the dispute resolution agreement. The court held that the power to appoint a valuer required the agreement of both parties and that, as the parties could not agree, the court did not have the power to appoint a valuer. The court also held that the minority shareholder was entitled to specific performance of the dispute resolution agreement, which required the majority shareholder to buy out the minority shareholder at market valuation. The court determined that the market valuation was to be determined by a valuer appointed by the parties, and if they could not agree, by the court.

The court ordered that the majority shareholder must purchase the minority shareholder's interest in the café business at market valuation, to be determined by a valuer appointed by agreement of the parties, or by the court if they could not agree. The court also ordered that the majority shareholder pay the minority shareholder's costs of the proceeding. The court held that it did not have the power to appoint a valuer where the parties could not agree, but that the minority shareholder was still entitled to specific performance of the dispute resolution agreement.

Orders