O'Connor v O'Connor - [2021] NSWSC 1056

Supreme Court

New South Wales

Medium Neutral Citation: O’Connor v O’Connor [2021] NSWSC 1056
Hearing dates: 2, 3, 4, 5 and 9 August 2021
Decision date: 24 August 2021
Jurisdiction: Equity - Commercial List
Before: Hammerschlag J
Decision:
Summons dismissed

Catchwords:
EQUITY – Fiduciary duties – Whether by oral agreement the defendant shareholder and director of a company agreed to transfer to each of the plaintiffs an 8.33% shareholding in the company – Where plaintiffs allege that by virtue of their being (or being entitled to be) shareholders the defendant had a fiduciary duty to inform them of a proposal by a third party to purchase all of the shares in the company for a very substantial sum of money prior to the parties executing a Deed of Settlement and Mutual Release under which the plaintiffs sold whatever interest they had in the company to the defendant – HELD – Oral agreement alleged not established – Fiduciary duty not established

Cases Cited:
Briginshaw v Briginshaw (1938) 60 CLR 336
Brunninghausen v Glavanics (1999) 46 NSWLR 538
Coleman v Myers [1977] 2 NZLR 225
Helton v Allen (1940) 63 CLR 691
Jones v Dunkel (1959) 101 CLR 298
Rejfek v McElroy (1965) 112 CLR 517
Watson v Foxman (1995) 49 NSWLR 315

Category: Principal judgment
Parties: Morgan Benedict O’Connor – First Plaintiff
Michael Stack – Second Plaintiff
John Joseph O’Connor – Defendant
Representation:
Counsel:
B. DeBuse with I. Chatterjee – Plaintiffs
D. Studdy SC with T. Boyle – Defendant
Solicitor:
Coleman Greig – Plaintiffs
Webb Henderson – Defendant

File Number(s): 2019/236226

JUDGMENT

INTRODUCTION AND SYNOPSIS

HIS HONOUR: Diona Pty Limited (Diona or the Company), at all material times, provided earth-moving services for the construction of infrastructure. It was founded by the defendant, John Joseph O’Connor (John), in 1980, together with his then wife Margaret. John immigrated to this country from Ireland in 1972. Diona was successful.
The first plaintiff is Morgan Benedict O’Connor (Morgan), John’s younger brother. He immigrated to this country from Ireland in 1993 and worked for Diona. He was appointed a director and remained so until 2000. He was re-appointed on 9 January 2006. He was removed on 1 August 2013.
The second plaintiff is Michael Stack (Michael), who came to this country from Ireland in 1995. He worked for Diona as an excavator operator. He went back to Ireland temporarily, but returned to Australia in 1998 and carried on working for Diona. He was appointed a director in 2005. He was removed as a director on 30 July 2013.
I have used the parties’ first names. No disrespect is intended.
Morgan and Michael each say that in 2005 he entered into an oral agreement with John (who held 75% of the shares in Diona – the remainder being held by Margaret) that John would transfer to him an 8.33% shareholding in Diona, for $150,000. Each paid his money but was never issued with any shares in Diona or entered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading O'Connor v O'Connor

Details

AGLC: O'Connor v O'Connor [2021] NSWSC 1056
Case: [2021] NSWSC 1056
Decision Date: 24 August 2021

CaseChat Overview and Summary

The case of O'Connor v O'Connor involved a dispute between family members, specifically the defendant shareholder and director of a company and the plaintiffs, who were also shareholders. The plaintiffs sought to establish that they were entitled to an 8.33% shareholding in the company by virtue of an oral agreement with the defendant. They further argued that the defendant had a fiduciary duty to inform them of a third-party proposal to purchase all shares in the company before the parties executed a Deed of Settlement and Mutual Release, under which the plaintiffs sold their interests in the company to the defendant.

The primary legal issues before the court were whether the plaintiffs could establish the existence of an oral agreement granting them an 8.33% shareholding in the company and whether the defendant owed the plaintiffs a fiduciary duty to inform them of the third-party proposal. The court had to determine if the evidence supported the existence of such an oral agreement and whether the defendant's actions fell under the scope of fiduciary duties.

The court found that the plaintiffs failed to establish the existence of an oral agreement granting them the claimed shareholding. Consequently, the court concluded that no fiduciary duty existed in this context. Given the absence of a proven oral agreement, the court ruled that the plaintiffs could not rely on any alleged breach of fiduciary duty. The court dismissed the plaintiffs' claims, holding that the fiduciary duty was not established, and the oral agreement was not proven.

The court ordered the plaintiffs to pay the defendant's costs of the proceeding. This outcome effectively concluded the dispute, with the plaintiffs unable to establish their claims regarding the alleged oral agreement or the fiduciary duty.

Orders