Corbett v Corbett Court Pty Ltd

Corbett v Corbett Court Pty Ltd involved a dispute among the shareholders of a company established by parents for the benefit of their eight children. One child held half of the shares and was appointed as a director, along with both parents. The other seven children held the other half of the shares. The parents died intestate, and the company, which had built a supermarket and shopping mall, faced financial difficulties due to vacancies. The sole director refused to appoint an independent director and instead appointed his wife as a director. The company sought to raise capital to fund building work for a second anchor tenant, but the shareholders refused or ignored two offers to subscribe for shares. Seven minority shareholders refused to attend meetings after the wife was appointed as a director. Shares were issued to the directors, and loans were made by them to fund the building work. The legal issues before the court were whether the share issue was oppressive, unfairly prejudicial, or unfairly discriminatory against the minority shareholders, whether the share issue was valid under the company's constitution, and whether the conduct of the company prior to the parents' deaths gave rise to a legitimate expectation that the shareholding proportions would be maintained. The court found that the share issue was oppressive, unfairly prejudicial, and unfairly discriminatory against the minority shareholders, as it resulted in a massive diminution of their capacity to share distributions and the power to veto resolutions at shareholders' meetings. The court also found that the share issue was not commercially fair and that the minority shareholders had the right to be properly informed and treated equally with the directors. The court ordered the resolution to issue the shares be rescinded and set aside, the issue price paid for the shares to be considered a debt by the company to the directors, and the directors to take steps to rectify the register of members and notify the Australian Securities and Investments Commission accordingly. The court also dismissed the cross-claim filed by the directors and Corbett Court. Costs were reserved, and the parties were required to file and serve any submissions they wished to make as to costs by a specified date.