McCausland v Surfing Hardware International Holdings Pty Ltd

The case of McCausland v Surfing Hardware International Holdings Pty Ltd involves a dispute between the plaintiffs, who were minority shareholders of the defendant company, and the defendant company. The dispute primarily revolves around the interpretation and enforcement of the shareholders agreement, breach of contract, and the assessment of damages. Additionally, the plaintiffs brought forward claims under the Corporations Act 2001, the Industrial Relations Act, and the Copyright Act 1968.

The primary legal issues before the court were whether an existing shareholder could validly initiate the compulsory sale (drag along) process under the shareholders agreement, whether the purchase of shares by the shareholder under the compulsory sale provisions constituted a breach of contract, and if so, whether the plaintiffs could have sought an injunction against the sale. Furthermore, the court considered the causation of loss and the assessment of damages in relation to the breach of contract, as well as the various claims brought under the Corporations Act, Industrial Relations Act, and Copyright Act.

In determining the issues, the court held that on the proper construction of the shareholders agreement, an existing shareholder could not be a "bona fide buyer" of the "share capital" and therefore could not validly initiate the compulsory sale process. The court found that the defendant was in breach of the shareholders agreement, and that the plaintiffs were not required to seek an injunction against the sale of shares before bringing a claim for breach of contract. The court also held that the plaintiffs were entitled to damages measured by the difference between the market value of their shares and the price at which they were compulsorily acquired.

The court further found that the plaintiffs' oppression claim under the Corporations Act should fail, as the plaintiffs could have obtained an injunction to restrain the use of the drag along provision. However, the court did find that the plaintiffs were entitled to various remedies under the Industrial Relations Act and the Copyright Act, including variations to their employment contract, severance payment, and recognition of their moral rights as joint authors of a computer drawing. The court also considered the application of the cap on damages under the Copyright Act and the defence of reasonable steps to identify the author.