Salter & Ors v Gilbertson & Ors [2003] VSCA 1

7. This is an unfortunate dispute between members of an extended family. The first appellant is sister to the first respondent and all of the parties are related by blood or by marriage. All are, or were, shareholders in the company George Raymond Pty. Ltd. ("the company"). The present proceeding stems from earlier litigation in which the present appellants, as minority shareholders in the company, sued the present respondents, the majority shareholders, alleging oppression in the conduct of the affairs of the company and seeking orders, inter alia, that the shares of the minority be purchased by the first respondent, George Robert Gilbertson, by the other shareholders in the company or by the company. The trial judge found in favour of the applicants and then stood the matter over to see if the parties could reach agreement on the orders to be made. Negotiations followed and on 14 April 2000 terms of settlement were signed, which included, by clause 9, agreement to execute upon request a formal deed of release embodying the terms of settlement. Such a deed was executed and parts exchanged on 21 June 2000. The deed, the clauses of which replicated all the clauses of the terms of settlement save clause 9, was backdated to 14 April 2000. This proceeding concerns the interpretation of that deed.

10. The appeal is, in essence, over a short point. Clause 1 of the deed (in which the majority shareholders were referred to as the respondents and the minority shareholders as the applicants) read as follows:-

"The respondents agree to purchase and the applicants agree to sell the shares [i.e., the shares of the applicants] to the respondents and/or their nominees for the sum of $3,650,000.00 payable in the following instalments...."

Nine instalments totalling $3.65 million were then listed, and the dates on which they were to be paid. The first, of $50,000.00, was payable on 30 June 2000; the next, of $125,000.00, on 30 September 2000 and the last, of $375,000, on 30 June 2004. Clause 2 provided for the means of payment thus:-

"The instalments shall be paid by bank cheque to the applicants Ray and Joy Salter or direct credit or transfer to their bank account with the ANZ Banking Group BSB 013 497 account no 007096834. Such payment shall be sufficient discharge of the respondents' obligation to pay the applicants."

"Within 7 days from the day hereof the respondents, by their solicitors, shall: (a) notify the applicants' solicitors in writing which of the respondents or their nominee is to be the purchaser or purchasers of the shares and the number of shares to be transferred to them;

18. On 19 April 2000 the respondents gave formal notice that the company was their nominee and the short question raised on this appeal is whether that nomination was open to the majority shareholders. They contend that it was and they instituted this proceeding to obtain specific performance of the agreement set forth in the deed. On 20 December 2000 his Honour granted the application and ordered the minority shareholders to take the steps deemed necessary to carry into effect the nomination that was made, steps that involved the minority shareholders participating in a share buy-back under division 2 of Part 2J.1 of the Corporations Law. The appellants appeal, contending that nomination of the company was not open to the majority shareholders and that their application to have that nomination carried into effect should have been dismissed.

22. Although the nomination of the company was made only five days after the terms of settlement were entered into, the dispute now before the court did not erupt for some time thereafter. In addition to requiring any nomination by the majority shareholders to be made within 7 days of the date of the settlement, clause 3 also required the majority shareholders, within that time, to deposit the certificates for their shares with the solicitors for the minority shareholders "to be held by that firm as security for payment of the purchase price and any interest payable thereon" as provided by the settlement. Clause 4 required three things to be done by the minority shareholders "within 14 days of the date hereof", that is to say:-

"(a) [to] deliver signed transfers of the shares to the respondents solicitors; (b) [to] deliver a resignation as director of the company signed by the applicant Joy Salter [who is now the first-named appellant]; [and] (c) subject to performance by the respondents of their obligations in paragraph 3 hereof, [to] file and serve notice of discontinuance of the proceeding and file consent orders that the proceeding be struck out with a right of reinstatement with no order as to costs."

Clause 5 provided that interest "will be paid" should any of the instalments not be paid within 7 days after the due date and clause 6 provided that in default of payment of an instalment within 30 days after the due date together with interest, the minority shareholders should be "entitled to reinstate the proceeding and to enter judgment against the respondents for such part of the sum of $3,650,000 as shall remain unpaid, together with interest and the costs ..."[1].

27. As I have said, these were terms of the settlement, and they were terms too of the deed which is now in issue. It is not in dispute that within the seven days referred to in clause 3 the majority shareholders did purport to nominate the company "to be the purchaser ... of the shares" (meaning all of the shares being sold) and, I assume, did deposit the certificates for their own shares (as required by clause 3(b)) as security for payment of the purchase moneys. As to the nomination, that was by letter dated 19 April 2000 from the respondents' solicitors, which commenced:-

"Pursuant to paragraph 3 of the terms of settlement in this proceeding, we notify you on behalf of the Respondents that George Raymond Pty Ltd is nominated to be the purchaser of the shares held by the Applicants. A meeting of members of the company will be convened in due course for the purpose of considering a resolution to approve the purchase of the shares and their subsequent cancellation. To comply with clause 4 of the terms of settlement, the Applicants should deliver signed undated transfers of the shares to this office with a written authority addressed to us to insert the date on the transfers after the meeting of members has approved the purchase of the shares by the company."

Because of the difficulty of immediately tracing all existing share certificates, the letter proceeded to suggest that the directors of the company (including Joy Salter) resolve in writing to issue a new certificate to each shareholder and a minute adopting a resolution to that effect was attached. When the solicitors for the minority shareholders responded, by letter dated 20 April 2000, they said that such a resolution was "in order" and that they would "arrange for our client to execute and return same to your office". At the same time, they said, they were "preparing signed undated transfers of the shares (copy enclosed)", attending to "the resignation of Joy Salter as a Director of the Company", and arranging "for our clients to execute the Deed of Settlement and Release**".** Copies of the transfers in question, as yet unsigned and undated, were indeed enclosed and each named the company as transferee and stated as consideration an aliquot proportion of the total purchase price of $3.65 million mentioned in clause 1.

32. According to the affidavit of George Robert Gilbertson sworn on 14 November 2000, which was the principal affidavit filed in support of the proceeding in the Trial Division, on 27 April 2000 Joy Salter resigned as a director of the company pursuant to clause 4(b) of the terms of settlement. On or about 28 April, the solicitors for the majority shareholders received from their opposite number undated transfers of the shares to the company, signed by each of the minority shareholders. And on 21 June 2000 copies of the executed Deed of Settlement and Release were formally exchanged.

35. Meanwhile, on 1 June 2000 the directors of the company had formally resolved to accept the respondents' nomination of the company under the terms of settlement. That resolution, after reciting that the terms of settlement had been "circulated and noted", continued as follows:-

"1. The directors acknowledge and accept the resignation of Joy Margaret Salter from the Board on 27 April 2000. 2. The Company accepts nomination as the purchaser of the shares of Joy Margaret Salter, Raymond Cameron Salter, Paul James Salter and Robert Cameron Salter, in accordance with the terms of settlement between the members of the Company dated 14 of April 2000, subject to approval of the buy-back and cancellation of the shares by the members in the manner required by the Corporations Law. 3. The Company is to make an offer to Joy Margaret Salter, Raymond Cameron Salter, Paul James Salter and Robert Cameron Salter to purchase their shares for the price and on the terms agreed between the shareholders in the terms of settlement. 4. A meeting of members be convened for the purposes of passing a special resolution to buy back the shares held by Joy Margaret Salter, Raymond Cameron Salter, Paul James Salter and Robert Cameron Salter for that price and on those terms."

39. On 21 June the company sent a "circulating resolution" to all shareholders, including the minority shareholders, for signature under s.249A of the Corporations Law. A copy of the Deed of Settlement and Release and a disclosure statement under s.257D of the Corporations Law were attached and marked "A" and "B" respectively. The resolution was quite brief. It commenced:-

"That, in accordance with the Deed of Settlement and Release made on 14 April 2000 attached and marked `A', the Company buys back the following fully paid ordinary shares in the Company held by the following shareholders pursuant to the terms and conditions set out in the Deed of Settlement and Release ... "

and the shares of the four minority shareholders were then identified. At the same time the company also sent to each of the four minority shareholders, who were "offerees" for the purpose of the proposed buy-back, a notice of the proposed selective buy-back and a further disclosure statement pursuant to s.257G of the Corporations Law. The notice ran like this:-

"1. Pursuant to the terms of the Deed of Settlement and Release made on 14 April 2000 in relation to Supreme Court of Victoria matter number 7831 of 1998 ("the Deed of Settlement and Release"), the Company agrees to buy back the 2,350 ordinary shares in the Company held in your name. 2. The consideration payable for the buy-back and the Company's obligations in respect of the payment of the consideration is set out in the Deed of Settlement and Release. 3.-5. [not presently relevant] 6. The buy-back will be completed by your execution of an instrument of transfer of shares and fulfilling all of your obligations pursuant to the Deed of Settlement and Release."

45. A buy back arrangement under division 2 of Part 2J.1 of the Corporations Law appears to contemplate an offer by the company to purchase shares for a price and acceptance by the shareholder or shareholders. What was being proposed in this instance, if it fell at all within division 2, was a "selective buy back" and the foregoing was doubtless an attempt by the respondents to comply with the requirements of the division - although as the minority shareholders were to point out in argument before the trial judge, whether it was possible to reconcile the order of events and their timing as contemplated by division 2 with the terms of the deed itself is perhaps a question. But there is no need to pursue that because it was at that point - the company's notice of selective buy back - that the parties stumbled.

48. On 29 June the solicitors for the minority shareholders, in acknowledging receipt of the latest documents, observed that the proposed selective buy-back of shares came "as some surprise, seeing that we have already provided signed transfers of our shares". The minority shareholders took objection to the buy back, asserting in the end that a buy-back of the shares by the company was "never contemplated" and complaining, in a letter of 3 July 2000, that the earlier letter of nomination, dated 19 April 2000, made no mention of any share buy-back. On the face of it, this last is perhaps surprising, given, first, that the letter of 19 April did refer to the convening of a meeting of members of the company "to approve the purchase of the shares and their subsequent cancellation" and, secondly, that in view of the general restriction on any company holding shares in itself it is difficult to imagine what other course the minority shareholders and their solicitors had in mind to effect a transfer of the shares to the company itself, if not just such a buy back in accordance with the Corporations Law. However that may be, and quite probably because of advice they had received by then that a buy back would have entailed taxation disadvantages for them, the minority shareholders refused to sign the resolution which had been put forward for signature; and so a general meeting of the members of the company was duly summoned.

51. The meeting was held on 9 August 2000. As the meeting was being held under s.257D, unless all shareholders agreed on the resolution (and they did not), the minority shareholders were precluded by s.275D(1)(a) from voting in favour of the resolution. Instead they voted against it and, a special resolution being needed, it failed to gain the requisite majority of 75 per cent. Demand having been made in the meantime for the first instalment of $50,000 which was payable (according to the deed) on 30 June 2000, payment was made personally by the first-named respondent, Mr. Gilbertson; and when demand was made of the respondents for the second instalment of $125,000 which was payable on 30 September 2000, Mr. Gilbertson paid that too, but this time (after failing to reach agreement on a holding position) he paid the instalment into an interest-bearing account in the name of the respondents' own solicitors to await the resolution of the dispute.

55. The majority shareholders commenced the present proceeding in the Trial Division on 5 October 2000, seeking (as they would have it) to compel the minority shareholders to perform the settlement, and in particular to refrain from voting against any resolution by the company to buy back the shares in question. The minority shareholders countered by commencing their own proceeding on 16 November 2000, seeking under clause 6 to have their original oppression proceeding reinstated with a view to their obtaining judgment against the present respondents for the purchase moneys on account of default in the payment of the second instalment within 30 days of the due date. Both proceedings came before the judge on 8 December and his Honour delivered reasons for judgment on 19 December. Finding in favour of the majority shareholders, his Honour dismissed the second proceeding and in the first made orders to compel performance of the settlement earlier achieved. Thus, in addition to payment of costs to the respondents, he ordered in the first proceeding that:-

"1. At a duly convened general meeting of members of the Company each of the Defendants [i.e., the minority shareholders] agree to a resolution approving the terms of a buy-back agreement to be entered into between the Company and the Defendants to buy back the Defendants' shares, such terms being in accordance with the relevant terms of the Deed of Settlement. 2. If the terms of the buy-back agreement are approved in accordance with Section 257D(1) of the Corporations Law, each of the Defendants enter into the buy-back agreement by accepting an offer by the Company to buy back the Defendants shares on those terms and generally do all things reasonably required of them by the Plaintiffs to give effect to the buy-back agreement."

59. If we put aside the one or two other arguments not now relied upon, the issue at trial was whether the respondents had the right and the power under the terms of settlement and the Deed of Settlement and Release to nominate the company itself to stand in their place as purchaser of the shares of the minority shareholders. As his Honour saw it, this turned simply upon the proper construction of the relevant terms of the deed, and in particular clause 1. Clause 1, he said, speaks of "a sale and purchase of the shares" in question, and so, in his Honour's opinion, the critical question was whether a share buy-back under the Corporations Law (by which means alone the company might acquire shares in itself) could properly be said to constitute a "purchase of the shares" within the meaning of clause 1. His Honour concluded that under the legislation a buy back arrangement did involve the "purchase" of shares by the company; that the company could properly be called a "purchaser" of the shares under such an arrangement; and that accordingly the company might properly be nominated under clause 3(a) "to be the purchaser" of the shares in place of the respondents as adumbrated by clause 1.

62. For their part the minority shareholders argued that under a buy back arrangement there was in truth no "purchase" by the company of the shares in question, given that no real "transfer" of the shares ever eventuated according to the majority view in Coles Myer Ltd. v. Commissioner of State Revenue[2]. They pointed moreover to the express requirement in the deed that there be transfers of the shares - which they said meant real transfers - from the minority shareholders to the respondents or to their nominee or nominees. His Honour accepted that if, despite subsequent changes in the legislation, the majority view in Coles Myer still had relevance, then the so-called transfers of the shares to the company which would be required towards the conclusion of the buy back arrangement, would not constitute a "transfer" in the ordinary sense of the word because the company itself could never have the rights of a shareholder; but he distinguished Coles Myer as a decision about the liability of the ultimate document of transfer to stamp duty. In his Honour's opinion, the majority view in that case did not deny that the underlying transaction was still one of purchase by the company and sale by the shareholder, as witness the very wording of division 2 itself. Hence the company could be nominated "to be the purchaser of the shares" as contended by the majority shareholders and the minority shareholders were bound by the deed to give effect to the nomination accordingly.

66. Although on appeal the minority shareholders challenged the judge's line of reasoning, as I see it there is no need now to explore its correctness. The fundamental premise underlying the approach taken by his Honour was plainly this: that clause 1 (and so clause 3 also) permitted the nomination of a third party to be purchaser of the shares in place of the respondents. The argument before the trial judge was whether the company itself could qualify as a purchaser, given that the only relevant means for transferring the shares to the company was a buy back arrangement under division 2 of Part 2J.1 of the Corporations Law, and the debate was accordingly over the effect of those legislative provisions, having regard perhaps to the decision in Coles Myer. With respect, however, that seems to me to overlook the antecedent question which is whether clause 1 permits the nomination of any third party at all as purchaser in place of the respondents and in my opinion there is here much to be said against placing such a construction upon the words that are used in the deed.

69. Ordinarily, where there is an agreement of purchase and sale expressed to be between A (the seller) and B "or the nominee of" B, B is regarded as having the power simply to nominate who shall be transferee (that is, B or another at the direction of B) and a transfer to B and a transfer to B's nominee are alike regarded as in fulfilment of the contract between A and B. Such is well established: for example Tonelli v. Komirra Pty Ltd[3] (an agreement to sell to A "and his nominees"), Jenkins v. Smyth[4] (applying Tonelli), Lambly v. Silk Pemberton Ltd[5], Hurrell v. Townend[6], Harry v. Fidelity Nominees Pty Ltd[7] (where the purchaser was named with the addition "and/or nominee") and Karangahape Road International Village Ltd v. Holloway[8] (where the purchaser was described as one Jackson "or nominee")[9]. See also Vickery v. Woods[10] and Power v. Nathan[11], in both of which the contracting party purported to act for a company yet to be formed and, though the parties expected performance under the contract by the company once formed, the contract remained throughout one between the original parties. As has been pointed out often enough, although it must be so if the context so demands, it is a strong thing to regard the words "or nominee" as authorising B, unilaterally and in his or her own absolute discretion, to nominate a purchaser to stand in the place of B, with all the attendant consequences for A. For such a construction "compelling language" is required, according to Lambly. In that case the appellant had agreed to sell her house by a standard form of contract in which the description of the purchaser had been completed with these words: "Nigel Pemberton of Auckland or his nominee or nominees"; yet that was held only to entitle the purchaser to nominate another or others to be transferee, not to nominate another to stand as purchaser in his place[12].

72. Obviously every case must turn upon its own facts. It is possible, as I have said, for the language of the contract as a whole to dictate that the power to nominate be taken to mean that a new party can be put in place of the original party who is given the power unilaterally to nominate another to stand in his or her shoes. But very clear language is required to achieve such a result. Such was found in Parland Pty Ltd v. Mariposa Pty Ltd[13] where the agreement was to sell to A and B "or their nominee", after which the words were added "hereinafter referred to as the purchaser". In part because of this addition and in part because certain particular provisions in the contract would otherwise have been unworkable, Green, C.J. held that in the context of the contract as whole the sale was indeed to A and B or if a nomination was made to the nominee standing in place of A and B as a contracting party - and whether this was in truth a mere variation of the original terms of the contract or a new contract in place of the first was not significant, said his Honour. (It was thought not insignificant in that case that the purchase moneys were already in the hands of the vendor's solicitors by the time the nomination was made, thereby obviating the need to look for any further performance from the original contracting party.[14]) In the case now under appeal, clause 1 does not, after mentioning a nominee, incorporate the nominee in any definition of "the purchaser" and there are other indications that the parties to the settlement had in contemplation only the ordinary course of nomination, and not the rather special situation in which nomination results in the substitution of the purchaser.

75. First and foremost, the power to nominate which is implied by clause 1 and is dealt with again in clause 3(a) was to be expected, given the nature of the sale as one of shares from a number of vendors to a number of purchasers. Clause 3 speaks not merely of a power to nominate; it imposes an obligation to specify, as it were, how many of the shares should go to which of "the respondents or their nominee" - a useful, if not a necessary provision, even if it were limited to identifying the transferees from among the respondents themselves. Secondly, clause 2, in dealing with liability for the purchase moneys, speaks only of "the respondents' obligation to pay the applicants" (being the vendors of the shares); there is no mention there of any nominee incurring such liability. That is at least consistent with clause 6 which, in providing for default in the payment of any instalment, allows that the minority shareholders might recover judgment against the respondents for the unpaid balance of the purchase moneys, with interest - and again there is no mention of any nominee. Perhaps the obligation imposed on the respondents by clause 3(b) to deliver up their own share certificates to be held as security for payment could be regarded as still appropriate even if serving, after the nomination of another, only to guarantee performance by that nominee, yet there is at least no express mention in the contract itself of any such secondary liability; and the obligation cast upon the vendors of the shares by clause 4(a) to deliver signed transfers within 14 days of the settlement, is expressed as an obligation to deliver those transfers to the respondents' solicitors, notwithstanding that any nomination must by then have been made. True it is that clause 3(a) refers to the notification of the nominee "to be the purchaser" and similarly clause 9 obliges all parties to do their best to "enable and authorise the respondents and/or their nominees to purchase the shares" being sold; but such a use of the word "purchaser" to describe one who is but the transferee under a contract between others is not uncommon: see for example Vickery v. Woods at 343 per Dixon, J. In itself the use of the word "purchaser" in clauses 3(a) and 9 cannot be regarded as determinative that substitution was intended of a new contracting party in place of the respondents.

78. If that be correct, clause 1 does not authorise the nomination of any person (whether or not the company itself) as a purchaser in place of the respondents; they are and they remain the relevant contracting parties, whether or not they nominate from among themselves or an outsider in pursuance of the obligation cast upon them by clause 3(a) of the settlement. Any nominee or nominees will be entitled to a transfer from the vendors, but no more than that results from the nomination.

81. Of course if that be the proper construction of clause 1 it does not end the matter because if, as the cases emphasise, upon nomination under such a contract a third person can become purchaser by way of substitution only by consent of all those concerned, there is in effect a novation and a new contract comes into being in place of the earlier: for example, Harry v. Fidelity Nominees per King, C.J. at 461. And provided there is the requisite consent and sufficient definition of the new contract it could then be said that clause 1, though facultative, is certainly not necessary to the result. A new contract can always been made in place of an earlier contract if all those concerned relevantly agree, and, quite apart from the proper construction of the deed itself, and in particular clause 1 (with or without clause 3) there is much in the evidence to indicate that the parties were, at one stage at least, in agreement about the company's becoming the purchaser of the shares. I have in mind that when nomination of the company was made on 19 April the minority shareholders apparently accepted the nomination without demur; they duly signed the required transfers in favour of the company; and they raised no objection to the proposed resolution of the company accepting nomination as purchaser and embarking upon a buy back in relation to the relevant shares (by which means alone the acquisition - or indeed even the transfer - of the shares by the company could be carried into effect). At that point it might have been argued that a new contract had come into being in place of the original, so that there was no need any longer to have recourse to clause 1 or to clause 3.

84. There are difficulties now, however, in placing such a construction on events. First, if that was the intention of the parties it is at least curious that the company was not named in place of the respondents when the deed was drawn up and formally exchanged to replace the less formal terms of settlement, for by that time the nomination had been made. Secondly, when the majority shareholders commenced this proceeding in the Trial Division they sought specific performance of the contract constituted by the Deed of Settlement and Release and in the result that is what the orders of the judge were directed to. Importantly, the then plaintiffs did not contend that they were released from their own liability to make the payments required under that deed. Nor did the minority shareholders so contend; for they were seeking by their cross action to have their original proceeding reinstated so that they might recover judgement for default in payment of the purchase moneys by the respondents. That the majority shareholders remained liable for the purchase price of the shares, to be paid according to the deed, appears to have been common ground and that point was only emphasised by the way in which the arguments proceeded on appeal. Before us the appellants (the minority shareholders) contended that the company could not have become the purchaser of the shares as the respondents contended, because that could only mean that a new contract had come about and that the respondents were no longer liable for the purchase moneys. The respondents answered (both in writing and in the course of counsel's oral argument) that that was no part of their case: they specifically denied that their submissions (in favour of the company's being purchaser by nomination) involved any release of the respondents from their liability for the purchase moneys. The parties thus remained agreed at least on this: that whatever had occurred, the respondents were still liable for the purchase moneys according to the stipulations of the deed, and it seems to me altogether inconsistent then to conclude that by virtue of the nomination made by the respondents the company had become the purchaser of the shares in place of the respondents and that the parties were now bound to give effect to a buy back arrangement by which means alone the company could achieve the "purchase" of the shares. At the very least such a buy back would involve the company's assuming a liability for the price to be paid for the shares, which the proposed resolutions fully recognised; and such a liability appears to me altogether inconsistent with the common ground taken by the parties, that the respondents were and remained liable for the payment of that price. It is true that when the Salters first commenced their proceeding alleging oppression, they sought an order that their shares be purchased either by the respondents or by the company, but the two are quite different and it would require clearer words than appear in this deed if the one is to be converted into the other.

87. I suppose that theoretically it would be possible for the company to have assumed a liability for the purchase moneys in addition to that resting on the respondents (as if, say, the respondents had assigned to the company their rights and liabilities under the contract), but that is very different from a buy back arrangement which creates a direct - and it may be said exclusive - relationship between the vendors of the shares and the company as purchaser. Nor, I would add, is there anything in the wording of the deed to suggest that the parties intended the addition of a stranger to the contract as a further purchasing party; the creation of such additional liability would surely have needed a new contract. The cases to which I have referred treat the expression "or nominee" as pointing either to the nomination of a stranger to the contract to be transferee of the property being sold or to the substitution of a contracting party as the purchaser in place of the original; none suggests the addition of a stranger to become an additional purchaser and, in my opinion, that result would require some much more positive indication of intention than can be seen in this instance.

91. To sum up the foregoing, it seems to me that on the proper construction of the deed clause 1 did not envisage the substitution of some third party to be purchaser of the shares on the terms and conditions of the deed. Accordingly, it was simply not open to the respondents, in purporting to follow clause 3(a), to do more than nominate the person or persons, whether from amongst themselves or otherwise, to take a transfer by direction of the respondents who were, and who were to remain, the purchasers on the terms and conditions of the deed. Nor is it possible in all of the circumstances to conclude that by reason of events the shareholders who were parties to the deed arrived at some further or other agreement to substitute the company as purchaser in place of the respondents under the deed: such a conclusion would be inconsistent with the common ground taken that the respondents were not relieved at all of their own liability under the deed for payment of the purchase moneys according to its terms and conditions. That point is only emphasised by considering of the nature of a buy back arrangement under the Corporations Law, by which means alone the company, once nominated, could have achieved a position as a purchaser: under such a buy back arrangement, if effected between the company and the minority shareholders, the company would become the purchaser (and the only purchaser) from the minority shareholders and liable for the price payable, in place of the respondents. It follows that the appeal should be allowed and the orders made below, which were intended to advance a buy back arrangement between the company and the minority shareholders, should be set aside.

94. If the nomination of the company was, as I think, not effective to substitute a stranger to the contract as purchaser of the shares from the minority shareholders according to the terms and conditions of the deed, the nomination of the company for the purpose of clause 1 can have meant no more than that the company should be transferee of the shares at the direction of the respondents who were and who would remain the purchasers under the deed. Now whether such a nomination is considered as made under clauses 1 and 3(a) or as only a reflection of the power commonly attaching to a purchaser of property under such a contract of sale, any transfer to the company (even if only by direction of the purchasers) must conflict with the general strictures against a company holding shares in itself, unless, of course, effected according to law by means of a buy back arrangement. But a buy back arrangement between the company and the minority shareholders makes the company a substitute purchaser, not merely a transferee by direction, and it is difficult therefore to see how the nomination, purportedly made under clause 3(a), can be given any effect at all.

97. It is probably a moot point whether there is left in the respondents, as purchasers, any residual power to direct now to whom the transfers will be made out, given the express provision as to time which is found in clause 3(a) of the deed. Of course it is always open to the contracting parties, if they agree, to rewrite the whole or any part of their contract and so they might agree, independently of the particular provisions of the deed, about the nomination of a transferee or transferees (other than the company itself). But in default of any effective nomination otherwise, I suppose that, if the sale of the shares to the respondents is to proceed, the transfers should name as transferees all of the respondents, and not just some one or more of them. That matter was not however raised in argument and so I do not decide it. I say no more about it.

100. Curiously there is no appeal by the minority shareholders against the dismissal of their application to reinstate their original oppression proceeding, but perhaps that was because there could be no reinstatement so long as the judgment stood for enforcement of the buy back arrangement. If this appeal is allowed, the orders made below must be set aside and I would hear counsel on the orders to be made in lieu. Whether it would be open for us to remit the matter to the trial judge for final orders and whether, if we did so, it would then be open to the appellants to apply afresh to reinstate the original proceeding, or whether they would choose either to seek completion of the sale of their shares to the respondents or to argue that the contract was by now at an end for repudiation are matters on which we have not heard the parties and about which we should not speculate. Suffice it to say for the disposition of this appeal that the nomination by the respondents of the company "to be the purchaser of the shares" should be taken to have been without effect.

105. I agree in the conclusion of Phillips, J.A. that the nomination by the respondents of the company was ineffective and do so substantially for the reasons which his Honour gives. It may also be - though I express no view on the point -that, even if the nomination of the company were otherwise possible, it could not have been nominated until the buy-back agreement had been approved in the manner required by s.257B(1) of the Corporations Law.

[1] Clause 8 provided also for the sale by the company by 31 December 2001 of a certain item of real property owned by it and the division of the proceeds of sale among shareholders but nothing now turns on that and it is not further mentioned in these reasons for judgment.

[2] [1998] 4 V.R. 728.

[3] [1972] VicRp 87; [1972] V.R. 737.

[4] [1973] VicRp 42; [1973] V.R. 441 at 447-8.

[6] [1982] 1 N.Z.L.R. 536.

[7] (1985) 41 S.A.S.R. 458.

[8] [1988] NZHC 159; [1989] 1 N.Z.L.R. 83.

[9] In New Zealand, however, the right of the nominee to take proceedings in his or her own name has probably been affected by the Contracts (Privity) Act 1982: see Rattrays Wholesale v. Meredith-Young& A'Court [1997] 2 N.Z.L.R. 363 at 380-383 (Tipping, J.).

[10] [1952] HCA 7; (1952) 85 C.L.R. 336.

[11] [1981] 2 N.Z.L.R. 403.

[12] See also and compare the dissenting judgment of Aickin, J. in Lord v. Trippe (1977) 14 A.L.R. 129 at 143.

[13] [1995] TASSC 91; (1995) 5 Tas.R. 121.