- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Application No 7534 of 1998 and Application No 7533 of 1998
IN THE MATTER OF THE CORPORATIONS LAW
IN THE MATTER OF SPEEDY GANTRY HIRE PTY LTD (A.C.N. 010 593 414)
IN THE MATTER OF THE CORPORATIONS LAW
IN THE MATTER OF JOHNDEN ENGINEERING PTY LTD (A.C.N. 010 211 720)
HER HONOUR: The applicants in these matters, sought relief from oppression. The applicants were the minority shareholders in two companies, Speedy Gantry Hire Pty Ltd and Johnden Engineering Pty Ltd.
The respondents to that oppression application, were the companies themselves and the majority shareholder, Vacentia Pty Ltd. The parties mediated their dispute on 17th September 2001. The mediation was successful.
The terms of the settlement, were reduced to writing at the time of the mediation. Subsequent to the mediation, however, the parties documented those terms of settlement in a deed of settlement, that has since been stamped.
That deed of settlement is at page 239 of the Exhibit RTC1 to Mr Cowen's affidavit, filed by leave today. On the hearing of this application, Ms. Skennar of counsel appeared for the applicants. Solicitor, Mr Conomos, appeared for the companies and solicitor, Mr Cowen, appeared for the respondent, Vacentia Pty Ltd.
This application was brought as a result of the dispute which has arisen between the parties in carrying out the terms of settlement. The relief sought by the application, filed on 20 May 2002, is in the following terms:
“An order that a dispute between the applicants and the respondents as to the terms of a mortgage debenture, to be executed by Speedy Gantry Hire Pty Ltd, pursuant to heads of agreement between the applicants and the respondents, dated 17 September 2001, be referred to Mr R G Bain, QC, for determination by Mr Bain, acting as an independent expert.”
That relief is reflective of a provision in the deed of settlement, clause 4.13, by which the parties had agreed on a mechanism of resolving a dispute as to the terms of any particular documents to be executed in consequence of the agreements reached at the mediation.
There is no real issue between the applicants and the respondent, and by “respondent” I am referring to Vacentia Pty Ltd, as to the need to refer the disagreement about the terms of the mortgage debenture to Mr Bain.
Although the companies themselves are respondents to the application filed on 20 May 2002, they have maintained a neutral stand in relation to the dispute between the shareholders. I will therefore use the term “respondent” to refer to Vacentia Pty Ltd.
What is in issue is the timing of the obligation of the applicants to sign transfers of shares held by them in Speedy Gantry Hire Pty Ltd in favour of that company. The applicants have adopted the position that those share transfers are not required to be signed and handed over to the respondent, until the fixed and floating charge that is referred to in the deed of settlement, has been finalised as to terms and executed.
The respondent contends that the applicants are not entitled to insist upon the matter being referred to Mr Bain, unless they deliver the share transfers to the company. The issue is therefore described in Ms. Skennar's submissions, as to whether the applicants are entitled to withhold the share transfers, until the terms of the fixed and floating charge are resolved.
The only application before me to determine, is that which I have already referred to, filed by the applicants on 20 May 2002. When Mr Cowen made submissions, he handed up a draft order, which I will mark as Exhibit 3, in which the applicants are seeking, in effect, specific performance of the deed of settlement, by asking for an order that the applicants forthwith deliver up to the respondent in accordance with clause four of the deed of settlement, executed transfer forms for the transfer of the shares in Speedy Gantry Hire Pty Ltd owned by the applicants, to Speedy Gantry Hire Pty Ltd.
I raised with Mr Cowen during the course of submissions, whether an application was strictly required in order to obtain that relief. He informed me that if it were, he would seek to make an oral application. Ms. Skennar properly conceded that all outstanding issues between the parties should be resolved in connection with the application and did not object to that course.
What I perceive I am being asked to do on this application, is to construe the deed of settlement. Although Ms. Skennar's submissions referred me to the heads of agreement that are found as Exhibit LJD1 to Mr Davidson's affidavit, filed on 20 May 2002, it appears that the document which should be construed, is the formal deed of settlement that was executed by the parties subsequently and intended to embody the terms set out in the heads of agreement and which has been expanded upon with some machinery provisions.
In order to deal with the construction issue, I should summarise what the settlement deed provides for in relation to the transfer of these shares. In effect, the applicants were withdrawing from the two companies and, in exchange for their shares in Speedy Gantry Hire Pty Ltd, were receiving from that company the sum of $1,067,785.24. Under clause 4.3 of the deed, $267,785.24 was payable and was paid on 1 October 2001. Further payments of $300,000 are due on each of 1 October 2002 and 2003, and a payment of $200,000 is due on 1 October 2004.
To better secure payment of the amounts referred to in clause 4.3, Speedy Gantry Hire Pty Ltd is required to execute and grant to the applicants a fixed and floating charge over the assets and undertaking of that company in such form as may be reasonably required by the solicitors for the applicants. A guarantee was also to be given by Messrs Foy and Montgomery, persons associated with the respondent, and that apparently has been done. The fixed and floating charge has not been executed as the parties have not agreed on all its proposed terms. It appears that there are about 12 items on which agreement has not been able to be reached.
The deed of settlement is silent as to when the share transfers should be executed by the applicants and delivered to Speedy Gantry Hire Pty Ltd. It is a matter of ascertaining the intention of the parties from the terms of their deed of settlement. Although it is a matter one would have expected the parties to have turned their minds to expressly, they did not do so.
Ms. Skennar likened the grant of the fixed and floating charge as an obligation that had to be performed at the same time as the delivery of the executed share transfers on the basis that these obligations were mutually dependent. Even if that were not the correct construction of the settlement agreement, Ms. Skennar submitted that the obligation to provide the fixed and floating charge was specifically referable to the acquisition of the shares, as clause 3 of the heads of agreement provides that the company will require the applicants' shares and the purchase price will be paid by way of four annual instalments, and clause 7 of the heads of agreement provides that the fixed and floating charge is to “better secure payment of the amounts referred to in paragraph 3.” This is also reflected by clauses 4.3 and 4.8 of the settlement deed.
I have looked at a number of the clauses in the deed of settlement and concluded that I should answer the question:
“Did the parties intend that share transfers of the shares in Speedy Gantry Hire Proprietary Limited were not to be signed pending the resolution of the terms of the fixed and floating charge and the execution of that charge?”
I find that a number of the subclauses of clause 4 of the deed of settlement are consistent with the obligation of the applicants being to transfer the shares as soon as possible after the entry into of the settlement agreement. I particularly find that by reference to clauses 4.5, 4.7, 4.8 and 4.12 and also to clause 7.1. Clause 4.7 is a covenant by Speedy Gantry Hire Pty Ltd and Messrs Foy and Montgomery that, for so long as any of the amounts referred to in clause 4.3 remain unpaid, the company must not, without the applicants' consent, declare any dividend which exceeds 25 per cent of the company's previous years' after tax profit. That clause makes sense only if the shares in Speedy Gantry Hire Pty Ltd had been transferred.
Clause 4.8 is an agreement to grant the mortgage which, in itself, has given the applicants rights that are immediately enforceable. The point was made by Ms. Skennar that there is no fixed and floating charge until the terms are agreed, but the intent of the deed is that the terms shall be agreed as soon as possible. Not only was it the applicants' solicitor's responsibility to propose a form of fixed and floating charge, and the terms of that charge, but a mechanism was provided in clause 4.13 to effect an expeditious result of any deadlock over the terms of the agreement.
I am not satisfied that it is appropriate to characterise each of the obligations under the terms of the deed of settlement as mutually dependent. The intention of the parties was that each of the steps would be taken as soon as possible.
In response to the question that I have posed, which needs to be answered in order to resolve the construction question, I have concluded that the parties did not intend that the share transfers not be signed pending the resolution of the terms and the execution of the fixed and floating charge. I am therefore proposing to make an order in terms of paragraph 1 of the application filed on 20 May 2002.
In respect of the order sought by the respondent, I am not proposing to make an order in terms of that sought by the respondent in paragraph 1 of the respondent's draft order. Consistent with my reasons, there is no order in time that applies to the execution of the share transfers and the referral of the dispute about the terms of the fixed and floating charge to Mr Bain. What I propose to do is to make a declaration as to the construction of the terms of the deed of settlement consistent with the reasons that I have just given.
HER HONOUR: The orders which I make are therefore:
1.The dispute between the applicants and the respondent, Vacentia Pty Ltd, as to the terms of a mortgage debenture to be executed by Speedy Gantry Hire Pty Ltd pursuant to the Deed of Settlement dated 17 September 2001 a copy of which is Exhibit LJD2 to the affidavit of Mr Davidson filed on 20 May 2002 be referred to Mr R G Bain QC for determination by Mr Bain acting as an independent expert;
2.The settlement deed dated 17 September 2001, a copy of which is Exhibit LJD2 to the affidavit of Mr Davidson filed on 20 May 2002, does not require the terms of the fixed and floating charge provided for in clause 4.8.1 of the deed to be resolved before the execution and delivery by the applicants of the transfers of the shares in Speedy Gantry Hire Pty Ltd pursuant to clause 4.1 of the deed.
HER HONOUR: In relation to costs, I will deal firstly with the issues between the applicants and Vacentia Pty Ltd
Although the applicants have been successful in obtaining the order which they sought in their application, the issue which appears to have been the source of the dispute between the parties that resulted in that application being made has also been resolved as a result of the position taken by the respondent.
I can say, however, that the ultimate result is really one that was not contended entirely for by either the applicants or Vacentia Pty Ltd.
After hearing the submissions in relation to costs, it confirms the view that I had formed during the hearing of the substantive application that the bringing of this matter to Court today was as a result of entrenched attitudes exhibited by both sets of parties. I am therefore not satisfied that either party should be the beneficiary of a costs order. I therefore order that as between the applicants and Vacentia Pty Ltd there be no order as to costs.
The position of the companies Speedy Gantry Hire Pty Ltd and Johnden Engineering Pty Ltd which were represented by Mr Conomos, is different. Those companies were named as respondents to the application and the interlocutory relief that was sought in the applicants' application was framed in terms of a dispute involving those companies and an order for costs was sought against those companies in addition to an order against Vacentia Pty Ltd.
The correspondence that passed between Mr Conomos and the applicants' solicitors does not persuade me that it was unnecessary for Mr Conomos to appear today to protect the interests of the companies.
I therefore consider that both the applicants and Vacentia should be responsible for the costs of the companies consistently with how I have disposed of the costs between those parties.
I therefore order that the applicants on the one part and the respondent, Vacentia Pty Ltd, on the other each pay one half of the costs of Speedy Gantry Hire Pty Ltd and Johnden Engineering Pty Ltd in respect of the application filed on 20 May 2002.
- Published Case Name:
In the matter of the Speedy Gantry Hire Pty Ltd
- Shortened Case Name:
Re Speedy Gantry Hire Pty Ltd
 QSC 194
04 Jun 2002
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QSC 211||20 Jun 2001||Leave to amend applications; order applications 7533 and 7534 of 1998 be consolidated: Mackenzie J|
|Primary Judgment|| QSC 194||04 Jun 2002||Dispute referred to expert determination in accordance with terms of settlement deed; declaration as to construction of deed: Mullins J|