Re SRW Nominees Pty Ltd (No 2)

In the matter of Re SRW Nominees Pty Ltd (No 2), the plaintiffs brought an action against the defendants under section 232 of the Corporations Act 2001 (Cth), alleging that the defendants had oppressed them. The case was heard by the Supreme Court of Victoria, which had to decide whether the defendants had indeed oppressed the plaintiffs, and if so, what remedy would be appropriate. The defendants admitted to holding themselves out as the directors and officers of a corporation, and that they had failed to distribute profits to the plaintiffs as required by their shareholding agreement. They also admitted to improperly voting to remove one of the plaintiffs as a director of the corporation.

The primary legal issue before the court was whether the defendants had indeed oppressed the plaintiffs and, if so, what remedy would be appropriate. The court also had to consider the valuation of the plaintiffs’ shares in the corporation, as well as the interest that should be paid on the profits withheld from the plaintiffs. The court heard competing expert evidence on the valuation of the corporation and had to resolve this issue in order to make an appropriate order. The court also had to consider whether the interest payable under section 233 of the Corporations Act 1986 fell within sections 58 or 60 of the Supreme Court Act 1986.

The court found that the defendants had indeed oppressed the plaintiffs by failing to distribute profits as required by their shareholding agreement and by improperly voting to remove one of the plaintiffs as a director of the corporation. The court ordered that the defendants purchase the plaintiffs’ shares in the corporation and pay compensation for the profits not distributed to the plaintiffs and interest on the profits withheld. The court considered authorities on the principles to be applied when valuing an oppressed shareholder’s shares for the purpose of ordering the oppressor to purchase the oppressed shareholder’s shareholding. The court also considered the competing expert evidence on the valuation of the corporation and resolved the issue by accepting the evidence of one of the experts. The court found that the interest payable under section 233 of the Corporations Act 1986 fell within section 58 of the Supreme Court Act 1986, and ordered that interest be paid from the date of the oppression proceedings.