Mudgee Dolomite & Lime Pty Ltd v Murdoch

Mudgee Dolomite & Lime Pty Ltd sued Murdoch and two other directors, alleging breaches of fiduciary duties, diversion of corporate opportunities, and seeking relief on grounds of oppression and unjust and equitable winding up. The company's shareholders intended to split the company but had not yet implemented this plan when the directors allegedly diverted opportunities to other companies associated with them. The shareholders further alleged that one director's refusal to attend board meetings or sign financial statements irretrievably broke down the relationship between the shareholders and directors.

The court had to determine whether the directors breached their fiduciary duties by diverting corporate opportunities to other companies, whether the disclosure made to the shareholders constituted fully informed consent, and if the directors were knowingly involved in the breaches given that the associated companies were their alter egos. The court also needed to decide if the relationship between the shareholders and directors had irretrievably broken down, and if so, whether less extreme remedies were available. Additionally, the court had to consider if the company could be wound up on the just and equitable ground and whether an account of profits was appropriate, taking into account the discretionary nature of the remedy.

The court found that the directors breached their fiduciary duties by diverting corporate opportunities to other companies, which were essentially their alter egos. The disclosure made to the shareholders did not constitute fully informed consent because it did not adequately inform them of the directors' involvement in the associated companies. The directors were knowingly involved in the breaches, and the relationship between the shareholders and directors had indeed irretrievably broken down. The court found that less extreme remedies were not available, and the shareholders could not afford to buy out the other shareholder's shares. Consequently, the company could be wound up on the just and equitable ground, and the directors were liable for an account of profits. The court did not allow for the defendants' skill and effort in calculating the profits, considering the lack of honesty in their conduct.

The court ordered the winding up of the company on the just and equitable ground and held the directors liable for an account of profits, less any allowance for their skill and effort. The directors were also ordered to pay costs.