Re Wyndham Park Estate Pty Ltd - [2019] VSC 92

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2018 00029

ANTONIO DI GIOACCHINO

HYDRILL PTY LTD (ACN 006 239 318)

First Plaintiff

Second Plaintiff

UMBERTO DI GIOACCHINO

DI GIOACCHINO & SONS PTY LTD (ACN 006 855 009)

WYNDHAM PARK ESTATE PTY LTD (ACN 088 965 324)

First Defendant

Second Defendant

Third Defendant

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JUDGE:	Sifris J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 February 2019
DATE OF JUDGMENT:	28 February 2019
CASE MAY BE CITED AS:	In the Matter of Wyndham Park Estate Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 92	(First Revision 6 March 2019)

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CORPORATIONS – Deadlock – Rival claims of oppressive conduct – Oppression jurisdiction enlivened – Winding up refused – Alternative remedy of a buy-out available and desirable – Solvent company - Party acting unreasonably in moving for winding up where buy-out offer made – Value to be determined by expert appointed by the Court – Corporations Act 2001 (Cth) ss 53(c), 232(d), 233, 467(4) – Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd & Ors [2018] QCA 48.

PRACTICE AND PROCEDURE – Overarching purpose – Where trial inutile – Civil Procedure Act 2010 (Vic) ss 7, 8(1)(a), 19, 22, 23, 24, 25.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	B J Murphy	Strongman Crouch
For the First and Second Defendants	D C Harrison	Lewis Holdway Lawyers

HIS HONOUR:

Introduction

The first plaintiff, Antonio Di Gioacchino (Antonio) and the first defendant, Umberto Di Gioacchino (Umberto) each hold 50 per cent of the shares in the third defendant, Wyndham Park Estate Pty Ltd (WPE). They are also directors of WPE which acts as trustee of the Di Gioacchino (Wyndham) Unit Trust (DGW Trust). The unitholders of the DGW Trust are their corporate entities, the second plaintiff (Hydrill Pty Ltd) and the second defendant (Di Gioacchino & Sons Pty Ltd) respectively.

WPE does not trade or carry on business. Aside from cash in the sum of about $9,000 and an amount held in a solicitor’s trust account in the sum of about $143,958, its main asset comprises the holding of 500,000 units in the Bundaberg BGC 2011 Trust (Bundaberg Trust). The primary asset of the Bundaberg Trust is a homemaker centre in Bundaberg. According to Antonio the estimated value of WPE’s interest in the Bundaberg Trust is between $500,000 to $600,000. WPE receives dividends from the Bundaberg Trust in respect of its holding of less than 10 per cent of the total units. It has no liabilities of any substance.[1] The assets and liabilities of WPE and the DGW Trust have been assessed and calculated by an expert, Mr Paul Lom (Lom), as referred to below.
[1]The assets are extracted from Antonio’s affidavit sworn 14 February 2018. In addition, Antonio states that there are tax losses of about $1,091,500 as at 30 June 2016. Umberto agrees about the holding of the…

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: [2019] VSC 92
Decision Date: 28 February 2019

CaseChat Overview and Summary

The matter before the court involved a dispute among shareholders of Wyndham Park Estate Pty Ltd. The shareholders were in a deadlock over the management and direction of the company, leading to one shareholder seeking the court's intervention under the oppression provisions of the Corporations Act 2001. The applicant argued that the conduct of the other shareholders amounted to oppressive conduct, warranting the court to make orders for relief under s 232(d) or to wind up the company under s 233. The respondents, however, sought a buy-out of the applicant's shares under s 467(4) of the Act. The court had to determine whether the oppression jurisdiction was enlivened, whether a winding up was appropriate, and if an alternative remedy such as a buy-out was more suitable.

The primary legal issues for the court were to assess whether the oppression jurisdiction of the Act was activated due to the deadlock and whether the applicant's actions in seeking a winding up were reasonable, given the availability of a buy-out remedy. The court also had to consider the overarching purpose of the Civil Procedure Act 2010 (Vic), particularly in the context of whether a trial would be futile, and the implications of that on the case's progression. The court needed to weigh the oppressive conduct against the practicality and fairness of ordering a buy-out, particularly in a solvent company.

The court found that the oppression jurisdiction was indeed activated by the deadlock and oppressive conduct among the shareholders. However, it concluded that a winding up was not appropriate, as the company was solvent and the deadlock could be resolved through an alternative remedy. The court emphasised the importance of the overarching purpose of the Civil Procedure Act 2010 (Vic), which guided the court towards a resolution that avoided a futile trial. The court held that ordering a buy-out was the most suitable remedy, with the value of the shares to be determined by an expert appointed by the court. It also noted that the applicant's insistence on a winding up was unreasonable given the availability of a buy-out offer.

The court ordered that the value of the applicant's shares be determined by an expert appointed by the court and that the respondents purchase the applicant's shares at that determined value. The court further found that the applicant's conduct in seeking a winding up was unreasonable, and thus it was not appropriate to award costs against the respondents. This decision highlighted the importance of considering alternative remedies in shareholder disputes, particularly in cases where a company is solvent and a deadlock exists.

Orders