Plaintiffs v Defendants

Plaintiffs v Defendants - [2009] VSC 95 - VSC 2009 case summary — Zoe

[148]

**Part 2F.1-**Oppressive conduct of affairs

232 Grounds for Court order

The Court may make an order under section 233 if:

(a) the conduct of a company's affairs; or

(b) an actual or proposed act or omission by or on behalf of a company; or

(c) a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d) contrary to the interests of the members as a whole; or

(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.

Note: For affairs, see section 53.

233 Orders the Court can make

(1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

(a) that the company be wound up;

(b) that the company's existing constitution be modified or repealed;

(c) regulating the conduct of the company's affairs in the future;

(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;

(e) for the purchase of shares with an appropriate reduction of the company's share capital;

(f) for the company to institute, prosecute, defend or discontinue specified proceedings;

(g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;

(h) appointing a receiver or a receiver and manager of any or all of the company's property;

(i) restraining a person from engaging in specified conduct or from doing a specified act;

(j) requiring a person to do a specified act.

Order that the company be wound up

(2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply:

(a) as if the order were made under section 461; and

(b) with such changes as are necessary.

Order altering constitution

(3) If an order made under this section repeals or modifies a company's constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless:

(a) the order states that the company does have the power to make such a change or repeal; or

(b) the company first obtains the leave of the Court.

[253]

I put to you that you initially agreed that dividends should be paid; this is at 4 July 2006?---Correct.

But then subsequently you went back on that, is that right?---Would you like to hear the story why?

Same process; we will establish what happened first and then I may ask you some further questions. But before the 7/06 directors/meeting at Wedderburn, you and Mr Holt were both there?---We were.

The resolution was that there would be a dividend, I think of $20,000 per share?---It wasn't a resolution, it was a discussion and we agreed upon it.

It was also the same discussion where it was agreed on the $130,000 for two years?---Correct. It had always been a sore in Reg's side of the money. It was the first time I have heard him come to a reasonable amount of money for my salary.

So now let's look at what happened to this agreement between the two directors of Hollen Australia Pty Ltd. One of the things you agreed on was essentially primarily to your benefit, the wage, and the other thing was something that would benefit Mr Holt and you; is that fair?---Correct.

What happened after this was you took the $130,000 salary?---Correct.

But you reneged on the dividend?---Correct.

Why did you do that?---I'm glad you asked that question.

Just answer it?---No, no, no. I've got to explain the story. Reg came in and I said to him, "It is your money as much as mine." It was sitting in Macquarie bank. I said, "It's fine, you're (indistinct) the same as I am." I said, "The trouble is, Reg, we're not getting on. Everything is going against us. We have to start again. If you're happy to start again, we'll start right from scratch again, wipe all our problems out and we'll start again. Yeah, I'm happy with that. I'll go home and draw up the plan, that's fine." Off he goes, draws up the plan, comes back and I think it is in one of the affidavits. I have the pen in my hand I'm ready to sign the paper to say "Yes, okay, here we go" and I said, "Before I sign it, Reg, I expect you to go to Justin's, sort out the financial, sign all the paperwork so we can start again as agreed." "I'm not going to do that." I said, "You and I see it different ways, but if that's the way you feel, stick the paper up your arse and piss off."

That's the sort of language you use, isn't it, Mr Burnside?---It is, because he makes me that wild.

None of those conditions that you sought to apply after the meeting were put forward to the meeting, were they?---Which conditions?

The conditions you have just talked about, what you asked Mr Holt to do that you said he refused to do, go to McErvale?---Exactly. Why didn't he?

Why didn't you put that condition on it when you agreed to it at the meeting?---I did. I said to start again, "We're going to start again from scratch. Forget all our past problems. Let's start again from scratch."

Just concentrate, Mr Burnside. At the meeting you didn't apply a condition that you've got to go to McErvale. That occurred later when you were asked to sign. That is your evidence?---That was part of the condition of starting again. If his main bone of contention is signing all the financials, wouldn't you say starting again would be fixing up the financial?

If the agreement at the meeting is not going to be observed, is it fair to say that you were discriminating in the part of the agreement that you sought to give effect to, discriminating in that you took the $130,000 salary as you've agreed, didn't you?---Yes.

And then you reneged on the dividends?---For that reason. Reg reneged

on - - -

The company could afford it?---Correct. It was just sitting there.

You just sought to impose a condition, an additional condition?---It wasn't an additional condition, it was a condition I asked Reg to do at the start. I said, "If we're going to keep going with this business, you've got to start again and we've got to start from scratch." It is almost mediation. Let's start from scratch and start again.

[265]

The award of costs is in the discretion of the Court or Judge: s 24 Supreme Court Act 1986.
The discretion must be exercised judicially: Donald Campbell & Co v Pollak;[106] Cretazzo v Lombardi.[107]
The discretion cannot be exercised arbitrarily or capriciously and it cannot be exercised on grounds unconnected with the litigation: Cretazzo v Lombardi;[108] or the circumstances leading up to the litigation: Oshlack v Richmond City Council.[109]
Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. The order is not made to punish the unsuccessful party: Latoudis v Casey.[110]
As a general rule, costs should follow the event, and a successful party should obtain all of the costs of the action even though it failed to establish some of the alternative heads of its claim: Ritter v Godfrey;[111] McFadzean v CFMBEU.[112]
Rule 63.04(1) permits the Court, in its discretion, to make an order not only as to a distinct question or issue in the pleading sense, but also to any part of the proceeding: Woolf v Burmon;[113] Cretazzo v Lombardi.[114]
The court may, in its discretion, decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim: McFadzean v CFMBEU.[115]
It is not necessary that the issue concerned was raised unreasonably by the party: Rosniak v GIO.[116] Although, a relevant consideration may include whether the issue was raised unreasonably: Mickelberg v Western Australia.[117]
The court may, in its discretion, make an order that is a single order, fixing what proportion of a party's costs should be paid by another party, thus obviating cross-orders or particular orders as to particular costs: Byrns v Davie;[118] McFadzean v CFMBEU;[119] Nolan v Nolan.[120]
The caveat referred to by Jacobs J in Cretazzo v Lombardi[121] may have less weight today than when it was decided: Primcom Pty Ltd v Sqarioto;[122] Mickelberg v Western Australia;[123] and Victoria v Master Builders Association of Victoria.[124]
Although the quantum of damages recovered compared to that claimed may be a relevant consideration to the court in exercising its discretion, greater emphasis should be given to the failure or loss on discrete claims or issue and the time occupied in relation to them.

At a glance

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Cases Cited (20)