“The Co paid too much for that helicopter!”

Earlier this year, James sat down with Legalsites' founder and law grad turned legal firm marketer, Brendan Kelso. Hope you enjoy their conversation!

A link to the Legalsites website is here: https://legalsites.com.au/social-media-101-w-james-dapice-facebook-instagram-linkedin-tiktok-and-twitter-which-is-best-for-law-firms/

“Wind up the company that runs this pub!”

An uncle, and his Co, (“P” or “the Ps”) sued a nephew and his Co (“D” or “the Ds”) to wind up a Co that operated a pub and the T’ee that owned the land it was on: [1]

James had a chance to chat with the legend, Mike Bromley, from Team BB earlier this year.

You can catch what the Beyond Billables team are up to here: https://www.beyondbillables.com

In September 2021 James d'Apice spoke with Susanna Lobez from TVED about one of James' pet topics: derivative actions.

You can find TVED's content here: https://www.tved.net.au

"No trust? No confidence? No company."

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B and G founded the Co and entered into a shareholders agreement.

The Co provided in-car cameras for race cars to be used in TV broadcasts.

In 2015 the Co agreed to provide cameras for 5 years: 2016 - 2020: [6]

B transferred valuable camera equipment (and later loaned other equipment) to the Co for the Co to use: [9], [60]

At the end of 2020 B wanted to terminate, and G wanted to keep it going: [15]

On termination, B and G had rights to buy back equipment from the Co: [16]

B commenced proceedings seeking to wind up the Co on the just and equitable basis, s461(k): [17]

The broadcaster sought EOIs for the next 5 year period and the Co didn’t respond (though B’s parent company did): [63], [64]

After the last race in October 2020 B came to take back its equipment, but G prevented that: [81] - [84]

B’s later requests for info about its equipment were met with no response: [88], [96]

Later in 2020, the broadcaster, having not named anyone else, asked the Co to provide its services for 2021: [89]

G pressed for the Co to do it. B refused: [91] - [102]

B sought confirmation G would not use B’s equipment. Instead, G sent it to racing venues in January 2021 without B’s knowledge or consent: [105] - [112], [122], [208]

B wanted to buyback the camera equipment from the Co to meet its other contractual commitments: [128]

B said the substratum of the Co’s business had failed and so it should be wound up: [187]

G disagreed, saying the Co’s substratum was not limited to 2016-2020, but that it could continue (with an offer on the table): [188]

The Court found the Co couldn’t do what it was meant to do because of the war between the shareholders, meaning the Co’s substratum failed: [192]

Reasons’s included: broadcaster’s offer was a mere agreement to agree, with terms to be worked out later; the loss of trust and confidence meant the prospects of successfully continuing the Co were “so remote as to be fanciful”: [195], [196]

The Court found B had justifiably lost confidence in G: [198]

The Co was solvent, and there was no prejudice to creditors of employees (there were none) if it was wound up: [139], [228]

Due to (i) breakdown in cooperation and trust, (ii) B’s justified loss of confidence in G, (iii) G’s improper deployment of B’s equipment, the Co’s substratum failed meaning it would be just and equitable to wind up the Co in the absence of an alternative remedy: [232]

There being no appropriate alternative remedy (including by way of dispute resolution clauses in the shareholder agreement), the winding up orders were made: [233], [244]

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If you'd like to contact me my please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!

“You moved the Co’s money, so let’s wind it up!”

The As, spouses and owners of 45% of the shares in a Co, came to Court to try to wind up the Co including pursuant to s461 of the Corporations Act 2001 (Cth).

James had the chance to sit down with Jerome Doraisamy in September 2021 to have a fantastic chat about James' views on the profession and his suggestions for other practitioners.

Please check out Laywers Weekly here: https://www.lawyersweekly.com.au/podcast/32455-blending-contemporary-branding-with-traditional-practice-approaches

James had a great chat with Anvita Nair of Monash University's Monash Future Thinkers podcast.

Why not check out what Monash Future Thinkers are up to by heading here: https://www.futurethinkers.org.au

"I didn't agree to sell you shares. I agreed to sell you other stuff!"

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A successful Co was founded by D and their spouse in the 1970s. At all relevant times, they were its sole shareholders.

Two Ps worked for the Co, and were later appointed directors with D.

In 2005 there was an oral agreement between D and the Ps. Each had a different version what it meant.

The Ps said they paid $150K to each take an 8.33% share in the Co: [5]

D said the Ps paid for 8.33% of the Co’s “plant and equipment” and that, after 10 years, D would make the Ps shareholders in the Co: [6]

(The Court acknowledged the conceptual difficulty of owning a proportion of a Co’s plant and equipment: [45])

There were some failed attempts to negotiate a shareholders agreement over a number of years: [36] - [62]

Later, there were increasingly formal meetings to finalise and record the arrangement: [63] - [81]

(This included a tense meeting where the parties could not agree on the use of a tape recorder: [70])

One of the Ps commenced proceedings in 2014: [11]

In 2015 a big entity offered D $80m for their shares in the Co. D did not disclose this offer to the Ps: [85] - [88]

After negotiations, the parties agreed to settle all the Ps’ claims in exchange for D and the Co paying ~$2m to each to the Ps: [89] - [92]

The D went ahead with the sale of their (and their spouse’s) shares to the big entity for $90m: [95]

The P’s said that D (i) owed them a duty to disclose the offer, and (ii) held their 8.33% stakes on trust and breached trust by buying their shares at an undervalue: [18]

In addition to paying their money, the Ps gave personal guarantees for the Co’s benefit, served as directors, and undertook the Co’s work for some years away from their home state: [80], [100]

The Court found that *if* the Ps were shareholders, then an inference arises that $2m was an undervalue: [97]

The Court considered the well-known principle that where a party seeks to rely on spoken words to found their claim, the Court must feel actual persuasion of those words having been spoken: [108]

The Court felt actual persuasion of D’s version: [112], [113]

The Court considered the Ps’ evidence was plainly coloured by resentment at being excluded from knowledge of the sale: [114]

The value of 8.33% of the plant and equipment as at 2005 was about $150K. The Court found D was too shrewd to have given away a full equity stake for just the plant and equipment cost, ignoring goodwill: [115]

The Ps failed to establish the agreement they contended for, meaning the proceedings were dismissed: [133]