CORPORATIONS – Oppression – Where one director of a company carrying on an aviation business held (via a controlled entity) a substantial minority shareholding, and the other director held (personally and through a controlled entity) a majority shareholding – Where, in practice, the minority shareholder was responsible for operations and the majority shareholder was responsible for administration – Where minority shareholder’s operational role ceased following a falling out between him and the majority shareholder, and he was subsequently removed from the board of directors by the majority shareholder – Where family members were employed at the company and were a cause of concern to the minority shareholder – Whether there was an agreement between the two shareholders prohibiting interference by the majority shareholder in operations and entitling the minority shareholder to a seat on the board – Whether the minority shareholder reasonably expected that the majority shareholder would not interfere in operations and that the minority shareholder would be entitled to a seat on the board – Whether any expectation changed over time – Whether actions of the majority shareholder’s family members constituted oppression – Whether the cessation of the minority shareholder’s operational role constituted oppression – Whether the removal of the minority shareholder from the board constituted oppression – Whether aspects of the financial management of the company constituted oppression – Whether failure to provide certain documentation and information constituted oppression – Whether exclusion from premises and digital systems constituted oppression – No oppression – Corporations Act 2001 (Cth) ss 232, 233.
CORPORATIONS – Winding up on just and equitable grounds – Where company solvent and profitable – Where there has been a falling out between shareholders, but no practical deadlock in the conduct of the affairs of the company – Whether buyout order could be made under s 467(4) of the Corporations Act 2001 (Cth) – No basis to conclude it would be just and equitable for the company to be wound up – Jurisdiction to make a buyout order not enlivened – Corporations Act 2001 (Cth) ss 461, 467.
CORPORATIONS – Winding up on just and equitable grounds– Whether buyout order falls within the scope of an ‘other order’ identified in s 467(1)(c) of the Corporations Act 2001 (Cth) and could therefore be made under that subsection where winding up jurisdiction not enlivened – Where winding up jurisdiction not enlivened and winding up application has failed, s…
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.
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AGLC
Re Skytraders Pty Ltd [2022] VSC 416
Case
[2022] VSC 416
Decision Date
CaseChat Overview and Summary
The case of Re Skytraders Pty Ltd involved the dispute between two directors of a company involved in the aviation business. The minority shareholder, holding his shares via a controlled entity, was responsible for the company's operations, while the majority shareholder, who held his shares personally and through a controlled entity, was responsible for administration. A disagreement led to the minority shareholder being removed from his operational role and subsequently from the board of directors. The minority shareholder claimed there was an agreement between the shareholders that he would not be interfered with in his role and would retain his seat on the board. The minority shareholder sought relief under the oppression provisions of the Corporations Act 2001 (Cth) and also sought a winding up order on just and equitable grounds.
The court considered whether there was an agreement or an expectation between the shareholders that the minority shareholder would not be interfered with in his operational role and would retain his seat on the board. The court also considered whether the actions of the majority shareholder's family members, the cessation of the minority shareholder's operational role, his removal from the board, certain aspects of financial management, and the failure to provide documentation constituted oppression. The court found that there was no agreement or reasonable expectation that the minority shareholder would not be interfered with or would retain his seat on the board. The court also found that none of the actions complained of amounted to oppression.
The court then considered the minority shareholder's application for a winding up order on just and equitable grounds. The court found that the company was solvent and profitable and that there was no practical deadlock in the conduct of the company's affairs. The court found that there was no basis to conclude it would be just and equitable for the company to be wound up. The court also found that the buyout order provision in s 467(4) of the Corporations Act 2001 (Cth) could not be used to make a buyout order in circumstances where the winding up jurisdiction had not been enlivened. The court dismissed the minority shareholder's application for relief.