Alan Davis Group v Rivkin Financial Services [2005] NSWSC 369

Alan Davis Group v Rivkin Financial Services [2005] NSWSC 369

Clause 4.2 was an absolute and essential promise that Rivkin's directors would recommend that shareholders vote in favour of the Davis Group buy-back. The meeting documents did not satisfy that obligation because the majority recommendation was conditional on the Drillsearch share price and one director recommended against approval. That breach went to the root of the agreement and entitled Davis Group to terminate. Clause 4.2 also constituted a representation on which Davis Group relied, and the later facts made it misleading or deceptive for the purposes of Australian Securities and Investments Commission Act 2001 (Cth), s 12DA. Although termination lifted any statutory suspension of...

Jurisdiction
Australia
Judgment Date
26 April 2005
Procedural Posture
Equity Proceeding Concerning a Selective Share Buy Back Agreement, Declarations, Injunctions and Damages / Judgment on Validity of Termination, Voting Entitlement and Liability Issues; Damages to Be Determined Separately
Outcome
Plaintiff entitled to a declaration that the buy-back agreement was validly terminated and may be entitled to damages for breach of contract and under Australian Securities and Investments Commission Act 2001 (Cth), s 12GM, with damages to be determined separately; plaintiff not entitled to declarations or...
Legal Topics
['selective Share Buy Back' 'conditions and Warranties' 'termination for Breach of Contract' 'misleading or Deceptive Conduct in Relation to Financial Services' 'shareholder Voting Rights' 'asx Listing Rules' 'associates Acting in Concert']
['corporations Law' 'contract Law' 'australian Consumer and Financial Services Law'] ['selective Share Buy Back' 'conditions and Warranties' 'termination for Breach of Contract' 'misleading or Deceptive Conduct in Relation to Financial Services' 'shareholder Voting Rights' 'asx Listing Rules' 'associates Acting in Concert']

Case Brief

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Procedural Posture

Equity Proceeding Concerning a Selective Share Buy Back Agreement, Declarations, Injunctions and Damages / Judgment on Validity of Termination, Voting Entitlement and Liability Issues; Damages to Be Determined Separately

Legal Issues

  1. 1 ['Whether Alan Davis Group Pty Ltd validly terminated the share buy-back agreement because Rivkin Financial Services Ltd breached cl 4.2 by failing to procure an unconditional recommendation from its directors that shareholders vote in favour of the buy-back.' 'Whether the buy-back agreement should be declared void under Australian Securities and Investments Commission Act 2001 (Cth), s 12GM.' 'Whether cl 4.2 constituted misleading or deceptive conduct in breach of Australian Securities and Investments Commission Act 2001 (Cth), s 12DA.' 'Whether Alan Davis Group Pty Ltd was entitled to vote at the forthcoming general meeting after termination of the buy-back agreement.' 'Whether Alan Davis Group Pty Ltd was an associate of IWL for the purposes of the ASX listing rule voting exclusion statement because it had acted in concert with IWL.']

Ratio Decidendi

Clause 4.2 was an absolute and essential promise that Rivkin's directors would recommend that shareholders vote in favour of the Davis Group buy-back. The meeting documents did not satisfy that obligation because the majority recommendation was conditional on the Drillsearch share price and one director recommended against approval. That breach went to the root of the agreement and entitled Davis Group to terminate. Clause 4.2 also constituted a representation on which Davis Group relied, and the later facts made it misleading or deceptive for the purposes of Australian Securities and Investments Commission Act 2001 (Cth), s 12DA. Although termination lifted any statutory suspension of...

Court Disposition

Plaintiff entitled to a declaration that the buy-back agreement was validly terminated and may be entitled to damages for breach of contract and under Australian Securities and Investments Commission Act 2001 (Cth), s 12GM, with damages to be determined separately; plaintiff not entitled to declarations or...

Orders

  • ['Davis Group is entitled to a declaration that the share buy-back agreement between it and Rivkin of 7 February 2005 was validly terminated.' 'No alternative order is required under Australian Securities and Investments Commission Act 2001 (Cth), s 12GM declaring the agreement void.' 'Davis Group is not entitled to...