Dungowan Manly Pty Ltd v McLaughlin

In *Dungowan Manly Pty Ltd v McLaughlin*, the New South Wales Court of Appeal considered a dispute between a company that owned a residential unit building and two shareholders, the McLaughlins, who held rights to occupy one unit. The company had undertaken a major redevelopment of the building without the consent of the McLaughlins. The McLaughlins alleged that this redevelopment constituted a variation of their class rights, a breach of contract contained within the company's articles of association, and oppression due to unequal treatment regarding a levy.

The central legal issues before the Court of Appeal were whether the redevelopment materially altered the characteristics of the building and the McLaughlins' unit, whether the company had validly amended its articles of association to permit such redevelopment, and whether the McLaughlins had suffered oppression. The court was also required to consider the assessment of damages for breach of contract and oppression, including the concept of loss of chance and the appropriateness of discounts.

The Court of Appeal found that the redevelopment did not constitute a variation of the McLaughlins' class rights, as the articles of association did not require their consent for such works. However, the court determined that the company had breached its contractual obligations under the articles by undertaking the redevelopment without proper authorisation and that the McLaughlins had been oppressed by the unequal treatment in the imposition of a levy. The court dismissed the company's appeal but allowed the McLaughlins' cross-appeal, setting aside an earlier order regarding damages. The court directed the parties to agree on the amount of interest payable to the McLaughlins, representing a sum of $513,129.45 plus interest, or to make submissions on the matter if agreement could not be reached. The company was ordered to pay the McLaughlins' costs of the appeal and cross-appeal.