New practice note to drive increased efficiency in the Oppression Proceeding Program in the Supreme Court of Victoria

Last year, we published an article on the Oppression Proceeding Program (OPP) within the Supreme Court of Victoria, where we set out the process by which an applicant may commence a claim and the circumstances in which an application is likely to be managed in the OPP.

Since then, the Supreme Court has published a revised Practice Note on oppressive conduct of company affairs (New Practice Note). The Practice Note had last been revised on 18 May 2018 (2018 Practice Note).

The New Practice Note provides a more detailed prescription of the process and requirements imposed on parties. It gives effect to the intended purpose of the OPP – to provide a streamlined, efficient and cost-effective case management process for applications.

Supporting affidavits

In accordance with Rule 2.4 of the Supreme Court (Corporation) Rules 2013 (Vic) (Rules), an originating process and affidavit in support must be filed to commence the proceeding.

As a result of the New Practice Note, the Court has made clear precisely what it expects to be included in the supporting affidavit.

Under the 2018 Practice Note, the supporting affidavit was required to:

• be no more than three pages in length
• set out a clear and succinct summary of the facts alleged to constitute the acts of oppression
• set out a preliminary estimate of the value of the shares in the company (where practicable)
• exhibit a current ASIC search of the company
• have no other exhibits.

Under the New Practice Note, in addition to these requirements, an affidavit in support must also now:

• identify the shares, business, assets, or other property that it is said should be the subject of valuation, and, where practicable, set out a preliminary estimate of the value of the same
• exhibit a list on a single page that succinctly sets out each act or omission relied upon, and when each act or omission is said to have occurred.

Referral to the OPP

As was previously the case, once an application is filed, the Corporations List Judge will review the proceeding to decide whether it is a matter which lends itself to management under the OPP.

If it is considered appropriate for referral to the OPP, the Corporations List Judge will make a Referral Order on the papers. The orders will:

• refer the matter to the OPP
• set a date for the filing of a responsive affidavit
• set a date for the return of the application at the initial conference before a Judicial Registrar.

Responsive affidavits

The Supreme Court has also now specified that it expects an affidavit in response to be filed by the defendant at least one week prior to the initial conference. The affidavit ought to:

• be confined to three pages
• set out a clear and succinct summary of the defendant’s response to the plaintiff’s summary of the facts alleged to constitute the oppressive conduct
• identify the shares, business, assets, or other property that it is said should be the subject of valuation, and, where practicable, set out a preliminary estimate of the value of the same
• identify the facts which support any possible counterclaim or offsetting claim
• exhibit a list on a single page succinctly responding to the plaintiff’s list of acts and omissions
• have no other exhibits other than an ASIC search of any related entities referred to in the affidavit.

Access to books of the company

At the first return of the initiating process in OPP matters, it is common for orders to be made by the Court for inspection and copying of the books of the company, for valuation of the shares and for mediation.

Section 247A of the Act provides an avenue for a member of a company to initiate an application for the above, provided they are acting in good faith and for a proper purpose. 

The Court has now clearly stated that an order made under section 247A in OPP matters will generally be an efficient way for all parties to have access to documents necessary for the purpose of preparation of a valuation and to mediate the dispute. Parties may also be required to exchange ‘critical documents’ under section 26 of the Civil Procedure Act 2010 (Vic). 

Noting that these orders will often be made in the OPP, the Court notes that parties should, in advance of such an order being made, have identified where the books of the company are held, whether they are in hard copy or electronic format, and how inspection can occur most efficiently.

Joint valuation by court-appointed expert

The Court has also provided further guidance in relation to expert reports, including that:

• its strong preference is for the appointment of a single expert to prepare a joint valuation in respect of shares business, assets, or other property to be valued
• competing valuations prepared by each party are explicitly discouraged
• parties are advised to consider the scope of the joint valuation and what is required for the purpose of preparing for mediation.

Parties are required to give serious attention to cooperating with respect to these matters, as the Court will only refer a matter to mediation without a valuation in exceptional circumstances.

Orders to be made at initial conference

Parties are directed to a template form of orders usually made. Parties are expected to confer in relation to these in advance of the initial conference, although consent orders will note be made in advance of the initial conference.

The Judicial Registrar is unlikely to make orders for points of claim, points of defence or more detailed affidavits prior to the mediation.

Key takeaways for clients and practitioners

The OPP was created to provide a more streamlined, efficient and cost-effective case management process for applications seeking relief under section 233 of the Act and imposes obligations on parties to ensure this aim is fulfilled.

The Practice Note draws on the Court’s experience from the conduct of proceedings in the OPP since 2018. It expressly identifies for both parties exactly what information is required to be set out in affidavit material by both parties and how the proceeding is to then be conducted pragmatically to ensure efficiency.

If you have any questions regarding the Oppression Proceeding Program or the new practice note, please contact us here. 

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Jessica Tilbury

Rebecca Cleary, Aidan Croucher

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