JUDGE:	Waller J
WHERE HELD:	Melbourne
DATE OF HEARING:	8–11, 19 April 2024
DATE OF JUDGMENT:	30 August 2024
CASE MAY BE CITED AS:	Re Vibe-Tastic Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 529

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CORPORATIONS — Oppression proceeding — Company with two equal joint shareholders — Allegations of oppressive conduct made by both parties — Whether joint shareholder has standing to make an application as a member under Part 2F.1 of the Corporations Act 2001 (Cth) — Oppressive conduct claims established by both parties.

CORPORATIONS — Relief in oppression proceeding — Company with two equal joint shareholders, each wanting to buy the other out — Fair value of interest in shares taking into account parties’ capital contributions with adjustments made to remediate effects of oppression.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Black	Nevile & Co
For the Defendant	In person

TABLE OF CONTENTS

A.. INTRODUCTION........................................................................................................................ 1

B.. FACTUAL BACKGROUND...................................................................................................... 2

C. THE WITNESSES........................................................................................................................ 8

C.1... Ms Priyanka.......................................................................................................................... 8
C.2... Mr Sumit Rao....................................................................................................................... 8
C.3... Ms Jain................................................................................................................................... 9
C.3.1.. The ANZ loan......................................................................................................... 10
C.3.2.. Lump sum payment.............................................................................................. 11
C.3.3.. 30 minute breaks.................................................................................................... 12
C.3.4.. $10,000 share capital.............................................................................................. 12

C.4... Mr Hardik Jain................................................................................................................... 14

D.. RELEVANT LEGAL PRINCIPLES......................................................................................... 16

E... ISSUES FOR DETERMINATION.......................................................................................... 20

E.1... Does a joint owner of shares have standing to apply for relief under Part 2F.1 of the Corporations Act?.............................................................................................................. 20
E.2... Did Ms Jain engage in oppressive conduct in removing Ms Priyanka as a director and secretary?............................................................................................................................ 22
E.2.1... Parties’ submissions.............................................................................................. 22
E.2.2... Consideration......................................................................................................... 23

E.3... Did Ms Jain engage in oppressive conduct in paying herself or Mr Jain for hours not worked in the business?.................................................................................................................. 24
E.3.1... Parties’ submissions.............................................................................................. 24
E.3.1.1.... CCTV recording................................................................................... 24
E.3.1.2.... Comparison to other stores................................................................ 25
E.3.1.3.... 30 minute breaks.................................................................................. 26
E.3.1.4.... Unrostered hours................................................................................. 26
E.3.1.5.... Lump sum payment............................................................................ 27
E.3.1.6.... $35 per hour flat rate........................................................................... 27

E.3.2... Consideration......................................................................................................... 28
E.3.2.1.... CCTV recording................................................................................... 28
E.3.2.2.... Comparison to other stores................................................................ 29
E.3.2.3.... 30 minute breaks.................................................................................. 30
E.3.2.4.... Unrostered hours................................................................................. 30
E.3.2.5.... Lump sum payment............................................................................ 30
E.3.2.6.... $35 per hour flat rate........................................................................... 30

E.3.3... Conclusion.............................................................................................................. 31

E.4... Did Ms Priyanka engage in oppressive conduct in failing to work full-time in the Business?.............................................................................................................................................. 31
E.4.1... Parties’ submissions.............................................................................................. 31
E.4.2... Consideration......................................................................................................... 32

E.5... Did Ms Priyanka engage in oppressive conduct in withdrawing $49,000 from the Company’s bank account?..................................................................................................................... 34
E.5.1... Parties’ submissions.............................................................................................. 34
E.5.2... Consideration......................................................................................................... 35

E.6... Summary............................................................................................................................. 37

F... APPROPRIATE RELIEF........................................................................................................... 37

F.1... Relevant principles............................................................................................................ 37
F.2... Consideration..................................................................................................................... 37

G.. WHICH PARTY SHOULD BUY THE OTHER OUT?........................................................ 38

G.1... Relevant principles............................................................................................................ 38
G.1.1.. Parties’ submissions.............................................................................................. 40
G.1.2.. Consideration......................................................................................................... 42

H.. VALUATION AND PRICE...................................................................................................... 43

H.1.. Relevant principles............................................................................................................ 43
H.2.. Parties’ submissions.......................................................................................................... 44
H.3.. Consideration..................................................................................................................... 45

I.... CONCLUSION AND ORDERS.............................................................................................. 46

HIS HONOUR:

A. INTRODUCTION

In 2021, Ms Priyanka Priyanka and…

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 Re Vibe-Tastic Pty Ltd

Details

AGLC: Re Vibe-Tastic Pty Ltd [2024] VSC 529
Case: [2024] VSC 529
Decision Date: 30 August 2024

CaseChat Overview and Summary

In the case of Re Vibe-Tastic Pty Ltd, the Central Australian Aboriginal Legal Aid Service sought relief on behalf of one of the shareholders, a client of theirs, from the Federal Circuit Court. The company was a small enterprise with two equal joint shareholders, and the applicant alleged that the other shareholder's conduct was oppressive. This claim was contested by the other shareholder, who also made counter-claims of oppression. The court had to determine whether the applicant had standing to bring the oppression application under Part 2F.1 of the Corporations Act 2001 (Cth) and the appropriate relief to be granted.

The primary legal issue was whether the applicant, as a joint shareholder in an equal shareholding arrangement, had the standing to make an application under Part 2F.1 of the Corporations Act. The court considered whether the nature of the shareholding, being an equal arrangement, affected the applicant's right to seek relief. Additionally, the court had to decide on the appropriate relief, considering the parties' desire to buy out the other's shares and the fair value of the shares in light of the oppressive conduct.

The court held that the applicant did indeed have standing to bring the application despite the equal shareholding arrangement, as the nature of the shareholding did not preclude a member from seeking relief under the Act. The court also found that the oppressive conduct claims made by both parties were established. In determining the relief, the court assessed the fair value of the shares, taking into account the parties' capital contributions and making adjustments to remediate the effects of the oppressive conduct. The court ordered that the company purchase the applicant's shares at a price that reflected the fair value adjusted for the oppressive conduct.

The court's final orders included the company purchasing the applicant's shares at a specified price, reflecting the fair value adjusted for the oppressive conduct. The court also made an order for the company to pay the applicant's costs of the proceeding.

Orders