Gambotto v Samantha Gold- Gambotto & Ors v Beach Petroleum Nl

Gambotto and Gambotto (the applicants) sought to restrain Beach Petroleum NL (the respondent) from proceeding with a proposed scheme of arrangement that would compulsorily acquire their shares. The applicants were minority shareholders in Beach Petroleum NL and alleged that the scheme was oppressive and unfairly prejudicial to their interests. The application was heard by Gummow J in chambers.

The primary legal issue before the court was whether the proposed scheme of arrangement constituted oppressive conduct under section 260 of the Companies (Acquisition of Shares) Act 1980 (Cth) (the Act). Specifically, the court had to determine if the scheme, by forcing the compulsory acquisition of minority shares at a price the applicants considered inadequate, amounted to conduct that was contrary to the interests of the applicants as members of the company, or unfairly prejudicial to them.

Gummow J considered the principles established in *Howard Smith Ltd v Ampol Petroleum Ltd* and *Re Bright Pine Timber Co Ltd*, which relate to the proper exercise of powers by companies and the protection of minority shareholders. His Honour noted that while a company has the power to acquire shares under certain circumstances, such power must be exercised for a proper purpose and not in a manner that is oppressive. The court examined the terms of the scheme and the circumstances surrounding its proposal to ascertain if it was designed to achieve a legitimate corporate purpose or if it was primarily intended to disadvantage the minority shareholders.

The court ultimately found that the applicants had not established a sufficient case for interlocutory relief. The application for an injunction to restrain the scheme was therefore dismissed.