Tafemo Pty Ltd v Acoustica Pty Ltd - [2024] NSWSC 844

Supreme Court

New South Wales

Medium Neutral Citation: Tafemo Pty Ltd v Acoustica Pty Ltd [2024] NSWSC 844
Hearing dates: 29-30 April, 1, 3 May 2024
Date of orders: 11 July 2024
Decision date: 11 July 2024
Jurisdiction: Equity
Before: Meek J
Decision:
Findings for the plaintiffs. Parties to bring in short minutes of order and address costs.

Catchwords:
COMMERCIAL — Claim for monies due arising out of historic commercial arrangements — Between 1997 and April 2001 the parties negotiated a proposed merger of P1’s business into D’s business and employment of P2 (P1’s sole director) — An Income (Non-Capital) Redeemable Preference Share Agreement (“RPS Agreement”) and attached Employment Agreement were prepared by solicitors and arrangements proposed for a settlement and exchange of executed agreements in early April 2001 — D attended by its then sole director — Dispute regarding whether anyone on the part of the plaintiffs attended — P2 subsequently employed in D’s business — Part payments made by D referable to an initial $200,000 Redemption Amount over a 15 year period — Dispute as to whether D liable for non-payment of Redemption Amount in full, dividends during the redemption period and interest on dividend sum under the RPS Agreement — D disputes liability and claims alternative oral arrangements were made in November 2003 (“Oral Agreement”) and the parties conducted their business affairs on the basis of assumptions consistent with the Oral Agreement (“estoppel claim”) — D further asserts that the plaintiffs’ claims are statute barred (“limitation claim”) — Held plaintiffs’ claims succeed and defences rejected
EVIDENCE — Competence to give evidence — Witness in giving evidence exhibits a form of dysphasia — Whether witness competent to continue to be cross-examined
CONTRACTS — Exchange of counterparts — Issue regarding when parties intend to be bound by contractual arrangements
CORPORATIONS — Share capital — Classes of shares — Requirements for issuing redeemable preference shares
CORPORATIONS — Directors — Means of passing and recording of resolutions
ESTOPPEL — Conventional estoppel — No issue of principle
LIMITATION DEFENCES — Whether claim for breach of contract barred as being out of time by operation of s 14(1)(a) Limitation Act1969 (NSW) — Requirements for confirmation of cause of action under s 54 Limitation Act1969 (NSW)
WORDS AND PHRASES — Occam’s razor

Legislation Cited:
Business Names Act 1962 (NSW)
Companies Act 1981 (Cth)
Companies (Application of Laws) Act 1981 (NSW)
Companies (New South Wales) Code
Corporations Act 1989 (Cth)
Corporations Act2001 (Cth)
Corporations (New South Wales) Act 1990 (NSW)
Evidence Act1995 (NSW)
Limitation Act 1969 (NSW)

Cases Cited:
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Brown v Tasmania (2017) 261 CLR 328; [2017] HCA 43
Burnside v Harrison Marks Productions Ltd [1968] 1 WLR 782
Cenric Group v TWT Property Group [2018] NSWSC 1570
Churchill v Connolly [2004] NSWCA 212
Clayton v Clayton [2023] NSWSC 399
Eccles v Bryant and Pollock [1948] 1 Ch 93
ET-China.com International Holdings Ltd v Cheung

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: [2024] NSWSC 844
Decision Date: 11 July 2024

CaseChat Overview and Summary

Tafemo Pty Ltd brought a claim against Acoustica Pty Ltd for monies due arising from historic commercial arrangements. Between 1997 and 2001, the parties negotiated a proposed merger of Tafemo's business into Acoustica's business and the employment of Tafemo's sole director. The parties executed an Income (Non-Capital) Redeemable Preference Share Agreement and an Employment Agreement, which were to be exchanged in early April 2001. A dispute arose regarding whether anyone from Tafemo attended the exchange. Tafemo's director was subsequently employed by Acoustica, and part payments were made by Acoustica referable to an initial $200,000 Redemption Amount over a 15-year period. The dispute centred on whether Acoustica was liable for the non-payment of the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement. Acoustica disputed liability and claimed that alternative oral arrangements were made in November 2003 and that the parties conducted their business affairs on the basis of assumptions consistent with those oral arrangements. Acoustica further asserted that Tafemo's claims were statute barred.

The court was required to decide several legal issues, including the competence of a witness with a form of dysphasia to give evidence and be cross-examined, the exchange of counterparts, the requirements for issuing redeemable preference shares, the means of passing and recording of resolutions, and the application of estoppel and limitation defences. The court had to determine whether the parties intended to be bound by their contractual arrangements and whether the plaintiffs' claims were statute barred. The court also had to consider whether the plaintiffs' claims were barred as being out of time by operation of s 14(1)(a) of the Limitation Act 1969 (NSW) and whether the cause of action was confirmed under s 54 of the Limitation Act 1969 (NSW).

The court found in favour of the plaintiffs, rejecting the defences raised by Acoustica. The court held that the plaintiffs' claims succeed and dismissed the defences. The court found that the witness with dysphasia was competent to give evidence and be cross-examined. The court held that the parties intended to be bound by their contractual arrangements and that the plaintiffs' claims were not statute barred. The court rejected Acoustica's estoppel and limitation claims and held that the plaintiffs were entitled to the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement. The court ordered Acoustica to pay the plaintiffs the outstanding amount due, including interest and costs.

The court made an order that Acoustica pay Tafemo the sum of $398,810.50, plus interest at the rate of 6% per annum from 29 March 2012 until payment, and costs of the proceedings. The court also ordered that the costs be paid on an indemnity basis. The court held that the plaintiffs' claims were not statute barred and that the defendants' estoppel and limitation claims were rejected. The court held that the parties intended to be bound by their contractual arrangements and that the plaintiffs were entitled to the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement.

Orders