Reuther v Wallace (No 2)

[2022] SASCA 62

SUPREME COURT OF SOUTH AUSTRALIA

(Court of Appeal: Civil)

REUTHER & ANOR v WALLACE (No 2)

[2022] SASCA 62

Judgment of the Court of Appeal  

(The Honourable Chief Justice Kourakis, the Honourable Justice Doyle and the Honourable Justice Bleby)

29 June 2022

CORPORATIONS - MANAGEMENT AND ADMINISTRATION - FINANCIAL INFORMATION AND AUDIT - FINANCIAL REPORTS - RELIEF FROM REQUIREMENTS AS TO ACCOUNTS AND RECORDS OR FINANCIAL REPORTS

CORPORATIONS - MEMBERSHIP, RIGHTS AND REMEDIES - MEMBERS' REMEDIES AND INTERNAL DISPUTES - OPPRESSIVE OR UNFAIR CONDUCT - WHAT CONSTITUTES - CONDUCT OF OR RELATING TO DIRECTORS

On 12 May 2022, the Court of Appeal allowed an appeal from a single Judge of this Court and found that a direction given by Mr Wallace pursuant to s 293 of the Corporations Act 2001 (Cth) (the Act) would have the result that Australian Wind Services Pty Ltd (AWS) would act, or conduct its financial affairs, in a way which was prejudicial to, or would unfairly discriminate against, Ms Reuther.

The Court was satisfied that an order should be made pursuant to s 233 of the Act and sought further submissions on the form of the order.

Held (by the Court):

1.Mr Wallace is to withdraw the directions given pursuant to s 293 on 29 June 2020 and 1 July 2020 by giving AWS written notice to that effect within seven days.

2.      The respondent is to pay the first appellant’s costs, to be agreed or taxed.

Corporations Act 2001 (Cth) ss 233, 293, referred to.

REUTHER & ANOR v WALLACE (No 2)
[2022] SASCA 62

Court of Appeal – Civil:  Kourakis CJ, Doyle and Bleby JJA

1. THE COURT: On 12 May 2022 the Court of Appeal allowed an appeal from a single Judge of this Court and found that directions given by Mr Wallace pursuant to s 293 of the Corporations Act 2001 (Cth) (‘the Act’) would have the result that Australian Wind Services Pty Ltd (‘AWS’) would act, or conduct its financial affairs, in a way which was prejudicial to, or would unfairly discriminate against, Ms Reuther. The Court was satisfied that an order should be made pursuant to s 233 of the Act and sought further submissions on the form of that order.

2. In a joint submission the parties agreed that the appropriate order was to relieve AWS of its obligation to prepare the financial statements in accordance with Mr Wallace’s directions.

3. Section 233 of the Act empowers the Court to make an order which it considers appropriate in relation to the company, including, relevantly, an order regulating the conduct of a company’s affairs, an order restraining a person from engaging in specified conduct or from doing a specified act, and an order requiring a person to do a specified act.

4. Despite the breadth of the power conferred by s 233 of the Act, it is not obvious that it extends to empowering a court to dispense with compliance with a statutory provision of general application.

5. On the other hand, we would construe s 293 of the Act as, by implication, allowing a shareholder to withdraw a direction after it has been given. The section should be allowed a practical operation such that if a company addresses the shareholder’s concerns by more expedient and efficacious means than preparing a financial statement, the direction can be withdrawn. For that reason, we order that Mr Wallace withdraw the directions given pursuant to s 293 of the Act on 29 June 2020 and 1 July 2020 by giving AWS written notice to that effect within seven days.

6. We also order that the Respondent pay the First Appellant’s costs of and incidental to FDN 31 in SCCIV-18-775, the Appeal in CIV-21-000540, the First Appellant’s application for leave to Appeal and the Appeal to be taxed if not agreed.