McLaughlin v Dungowan Manly Pty Ltd

The plaintiffs were members of Dungowan Manly Pty Ltd, a company that owned a block of units. The defendants, the company and its director, undertook extensive redevelopment of the block of units. This redevelopment was opposed by the plaintiffs. The plaintiffs brought a derivative action alleging that the re-development project, including the striking of levies, entering into loans to fund the re-development, the selective buy-back of shares, and a remuneration payment to a director, constituted a breach of the company's articles of association and amounted to oppression under the Corporations Act. The plaintiffs sought an assessment of damages, leave to commence a derivative suit, and an order for the company to pay their legal costs. The central issues were whether the conduct of the re-development, including the striking of levies and entering into loans to fund the re-development, the selective buy-back of shares and a remuneration payment to a director, were capable of valid resolution and undertaken according to the company's articles of association or amounted to oppression. The court had to determine if the re-development project constituted a breach of the articles of association and if the resolution to remunerate the director was valid. The court also had to decide if the decision to undertake the re-development in a particular manner was oppressive and if the unequal treatment of the plaintiffs in respect of a special levy constituted oppression.

The court found that the re-development project constituted a breach of the articles of association. The resolution to remunerate the director was invalid due to inadequate notice. The decision to undertake the re-development in a particular manner was not oppressive. However, the unequal treatment of the plaintiffs in respect of a special levy constituted oppression. The court granted leave to commence a derivative suit for breach of statutory duties. The court held that the re-development project was a proper exercise of the company's powers, and the decision to undertake the re-development in a particular manner was not oppressive. However, the unequal treatment of the plaintiffs in respect of a special levy constituted oppression, as it was a misuse of power for an improper purpose. The court held that the plaintiffs were entitled to damages for the breach of the articles of association and oppression. The court also held that the plaintiffs were entitled to leave to commence a derivative suit for breach of statutory duties. The court ordered the company to pay the plaintiffs' legal costs.

The court made orders that the defendant company pay the plaintiffs' costs of the proceeding, and that leave be granted to the plaintiffs to commence a derivative suit against the defendant company and its director for breach of statutory duties under the Corporations Act. The court also ordered the company to pay damages to the plaintiffs for the breach of the articles of association and oppression.