Wallfire Pty Ltd v Andwendrod Services Pty Ltd - [2003] VSC 348

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 4305 of 2003

WALLFIRE PTY LTD	Plaintiff
v
ANDWENDROD SERVICES PTY LTD & Ors	Defendants

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JUDGE:	Hansen J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 August 2003
DATE OF JUDGMENT:	24 September 2003
CASE MAY BE CITED AS:	Wallfire Pty Ltd v Andwendrod Services Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2003] VSC 348

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Corporations – Oppression – Reference to special referee to determine the fair value of the plaintiff's shares – Report – Alleged errors - Application to remit – Supreme Court Rules 0 50, r 50.03(2)(b),

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr F G A Beaumont Q.C. with Mr A P Young	Phillips Fox
For the Defendants	Mr P H Clarke	Harwood Andrews

HIS HONOUR:

Wallfire Pty Ltd, the plaintiff, holds 125, or 25%, of the issued shares in Metro 5 Gallery Pty Ltd ("Metro 5"). On 30 January 2003, after differences arose between the plaintiff and the other shareholders in relation to the conduct of Metro 5, the plaintiff filed an application for relief under the oppression provisions of the Corporations Act. The plaintiff sought orders for the acquisition of its shares or the winding up of Metro 5, and for the repayment of a loan of $100,000. At the first directions hearing on 21 February 2003 the parties sought orders referring to a special referee the question of the fair value of the plaintiff's shares. Following discussion with counsel as to the form of the orders, counsel, a few days later, provided written minutes of consent orders dated 24 February 2003. An order was made, dated 21 February 2003, in the terms provided. The parties duly appointed Michael John Humphris, an accountant, to undertake the valuation pursuant to the order. He provided a report, addressed to the Court, dated 30 May 2003. The report is 13 pages in length and contains further material in attached annexures. The annexures include reports of experts, two on behalf of the plaintiff and one on behalf of the defendants.

In his report, Mr Humphris states that he valued the business of Metro 5 as a whole and then applied the plaintiff's shareholding to that value to determine the fair value of the plaintiff's shares. The result was that the fair value of the plaintiff's 25% interest was $31,065. Mr Humphris did not consider a discount appropriate for the minority interest, which was, in my view, a correct judgment.[1] The present application is made by the plaintiff, which seeks to remit the report to the special referee to consider certain matters and, in light of them, recalculate the value of the plaintiff's shares.
[1]See In re Bird Precision Bellows Ltd [1986] CH 658; Re D G Brims and Sons (1995) 16 ACSR 559 at 594-595; O'Neill v Phillips [1999] 1 WLR 109 at 1107.

In view of the arguments raised on the application, and to enable an understanding of them…

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: [2003] VSC 348
Decision Date: 24 September 2003

CaseChat Overview and Summary

In the Federal Court of Australia, Wallfire Pty Ltd, the plaintiff, initiated legal proceedings against Andwendrod Services Pty Ltd, the defendant. The dispute centred around allegations of oppression against the plaintiff by the defendant, including unfair treatment and disregard of the plaintiff's minority shareholder rights. The case involved a request for a reference to a special referee to determine the fair value of the plaintiff's shares, followed by an application by the plaintiff to remit the referee's report due to alleged errors. The legal issues that the court was required to decide included whether the referee's report contained errors that warranted the remittal of the matter and whether the plaintiff's application was made within the required timeframe.

The court considered the applicable legal principles and the arguments presented by both parties. It examined the alleged errors in the referee's report, focusing on whether they were significant enough to warrant remittal. Additionally, the court assessed whether the plaintiff's application to remit was made within the timeframe stipulated by the Supreme Court Rules, specifically rule 50.03(2)(b). The court found that there were errors in the referee's report, but they did not warrant remittal. Furthermore, the court held that the plaintiff's application was not made within the required timeframe, thus dismissing the application.

Consequently, the Federal Court dismissed Wallfire Pty Ltd's application to remit the special referee's report. The court held that the errors identified in the referee's report did not justify remittal, and the application was not made within the required timeframe. As a result, the report remained in effect, and the parties were bound by its findings regarding the fair value of the plaintiff's shares. The court's decision brought finality to the dispute concerning the alleged oppression and the fair value of the plaintiff's shares in the context of the legal proceedings between Wallfire Pty Ltd and Andwendrod Services Pty Ltd.

Orders