Soulos v Pagones; Soulos v Soulos; Soulos v Soulos; Soulos v Pagones; Kristallis v Soulos; Kristallis v Soulos; Kristallis v Pagones [2023] NSWCA 243
Hearing dates:
4 – 6 April 2023
Date of orders:
13 October 2023
Decision date:
13 October 2023
Before:
Ward P at [1]; Meagher JA and Mitchelmore JA at [688]
Decision:
(1) Grant leave for the filing of the Executors’ amended notice of appeal in the Executors’ Dennis Appeal.
(2) Dismiss with costs the Executors’ appeals in proceedings 2022/369112 (the Executors’ James Appeal); 2022/369130 (the Executors’ Maria Appeal); and 2022/369139 (the Executors’ Dennis Appeal).
(3) Refuse leave for the proposed amendment of Nick’s notice of appeal in the Succession Act appeals.
(4) Dismiss with costs the appeals by Nick in proceedings 2022/370862 (Nick’s James Appeal); 2022/370852 (Nick’s Maria Appeal); and 2022/370837 (Nick’s Dennis Appeal).
(5) Set aside Orders 1 to 8 made by Lindsay J on 24 November 2022 in proceedings 2021/00108316 (the Oppression Proceeding).
(6) Otherwise dismiss the appeal by Nick and John in proceedings 2022/370857 (the Oppression Appeal).
(7) Direct that any brief submissions as to costs of the proceedings at first instance be filed within 14 days, to be dealt with on the papers.
(8) Direct that any brief submissions as to the costs of the Oppression Appeal be filed within 14 days, to be dealt with on the papers.
Catchwords:
CORPORATIONS – Members’ rights and remedies – Oppression – Where one shareholder has control over family company through management shares and position as Governing Director – Whether no oppression if self-dealing transaction was necessary to bring about acquisition of property accepted to be in the best interests of the company – Whether primary judge erred in finding oppressive conduct in relation to omission of demolition clause in lease by company to entity associated with director – Whether relief granted went beyond that necessary to bring end to continuing effect of oppressive conduct.
EQUITY – Proprietary estoppel – Encouragement – Detrimental reliance – Where a property had been purchased by parents for the benefit of their son – Where the son had been promised ownership of the property and had expended time and money renovating the property – Whether sufficient detriment had been suffered to establish an estoppel – Whether the relief granted by the primary judge was proportionate to the detriment suffered.
SUCCESSION – Family provision – claims made for provision under the Succession Act 2006 (NSW) by three of the deceased’s four adult children – Where the deceased had engendered an expectation in her children that they would share equally in the assets of the family company – Whether provision made for the respective children was proper and appropriate for their advancement or maintenance in life – Where large portion of estate assets held through shares in family company and deceased’s last will left all management (voting) shares to one child – Whether primary judge erred in failing…
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
AGLC
Soulos v Pagones [2023] NSWCA 243
Case
[2023] NSWCA 243
Decision Date
CaseChat Overview and Summary
The case of Soulos v Pagones involved appeals from decisions made by Lindsay J concerning a family company, proprietary estoppel, and succession. The primary dispute revolved around allegations of oppressive conduct by one shareholder, Nick, who controlled the family company through management shares and his position as Governing Director. This conduct was alleged to have occurred in relation to a lease agreement and the omission of a demolition clause. Additionally, claims were made under the Succession Act 2006 (NSW) by three adult children of the deceased, who alleged that the deceased had engendered an expectation of equal sharing of company assets, which was not met by the will leaving all management shares to Nick.
The Court of Appeal was required to determine whether the primary judge erred in finding oppressive conduct by Nick, particularly concerning the lease omission, and whether the relief granted was proportionate to the oppression. It also had to consider whether the primary judge had properly assessed the claims for provision under the Succession Act, taking into account the financial needs of the children and the expectations engendered by the deceased, especially in light of the unequal distribution of management shares. Furthermore, the court considered proprietary estoppel claims arising from a property purchased for a son, who had allegedly been promised ownership and had expended time and money on renovations.
The Court of Appeal, comprising Ward P, Meagher and Mitchelmore JJA, ultimately dismissed the appeals by the Executors and Nick in relation to the oppression proceedings and the Succession Act claims, with costs. However, it set aside the specific orders made by the primary judge in the oppression proceeding. The court also refused leave for Nick to amend his notice of appeal in the Succession Act matters. The reasoning involved a re-evaluation of the primary judge's findings on oppression and succession, with the court finding that the relief granted in the oppression proceeding was not appropriate. The proprietary estoppel claims were also addressed within the broader context of the appeals.
Orders
Orders of the court
(1) Grant leave for the filing of the Executors’ amended notice of appeal in the Executors’ Dennis Appeal.
(2) Dismiss with costs the Executors’ appeals in proceedings 2022/369112 (the Executors’ James Appeal); 2022/369130 (the Executors’ Maria Appeal); and 2022/369139 (the Executors’ Dennis Appeal).
(3) Refuse leave for the proposed amendment of Nick’s notice of appeal in the Succession Act appeals.
(4) Dismiss with costs the appeals by Nick in proceedings 2022/370862 (Nick’s James Appeal); 2022/370852 (Nick’s Maria Appeal); and 2022/370837 (Nick’s Dennis Appeal).
(5) Set aside Orders 1 to 8 made by Lindsay J on 24 November 2022 in proceedings 2021/00108316 (the Oppression Proceeding).
(6) Otherwise dismiss the appeal by Nick and John in proceedings 2022/370857 (the Oppression Appeal).
(7) Direct that any brief submissions as to costs of the proceedings at first instance be filed within 14 days, to be dealt with on the papers.
(8) Direct that any brief submissions as to the costs of the Oppression Appeal be filed within 14 days, to be dealt with on the papers.