Bodikian v Sproule

The case of Bodikian v Sproule was heard in the Supreme Court of South Australia. The dispute arose between the plaintiffs, the Bodikians, and the defendants, the Sproules. The Bodikians claimed they were entitled to become directors and one-third shareholders of a company due to prior agreements with the Sproules, who were the existing directors and shareholders. The defendants argued against the plaintiffs' claims, asserting that the necessary formalities for the appointment and share issuance were not met.

The legal issues central to the case were whether the informal unanimous assent of the shareholders was sufficient to appoint directors and issue shares under the Corporations Act, and whether such informal assent was present in this instance. Additionally, the court had to determine if estoppel by convention or promissory estoppel applied, given the defendants' representations and the plaintiffs' reliance on those representations to their detriment.

The court found that the informal unanimous assent of the shareholders was not sufficient to appoint directors or issue shares under the Corporations Act. However, it was determined that the defendants' representations and conduct did give rise to estoppel by convention and promissory estoppel, which precluded them from denying the plaintiffs' entitlement to become directors and one-third shareholders. The court applied the principles from General Steel Industries to conclude that the defendants' conduct amounted to a representation that the plaintiffs would become directors and shareholders upon completion of the financing arrangements. As a result, the plaintiffs were entitled to the positions and shares they were promised.

The final orders of the court were that the defendants were estopped from denying the plaintiffs' entitlement to become directors and one-third shareholders of the company. The court declared that the plaintiffs were to be treated as directors and shareholders in accordance with the original agreement. This decision was grounded in the principles of estoppel and the defendants' conduct, which led to the plaintiffs' reasonable reliance to their detriment.