Reuther v Wallace

This matter concerned an appeal to the Full Court of the Supreme Court of Western Australia, brought by Ms Reuther against Mr Wallace. The dispute centred on whether Mr Wallace, as a director of AWS, had acted oppressively or unfairly in directing the company to prepare audited financial statements, and whether relief should be granted from these directions.

The court was required to determine two primary legal issues. Firstly, whether the circumstances constituted conduct that was oppressive, unfairly prejudicial, or unfairly discriminatory under sections 232(d) and (e) of the Corporations Act 2001 (Cth). Secondly, if such conduct was established, whether the court should exercise its discretion under section 233 of the Act to grant relief from the consequences of Mr Wallace's directions.

The Full Court disagreed with the primary judge's conclusion that sections 232(d) and (e) were not engaged. It found that the circumstances did indeed warrant the exercise of discretion under section 233. The court reasoned that there was no personal benefit to Mr Wallace in the company preparing audited financial statements, and therefore no detriment to him if the directions were set aside. Furthermore, in light of a mediated agreement between the parties, the directions offered little material benefit to the company and imposed a significant cost, which would ultimately be borne by Ms Reuther. Consequently, the court concluded that it should exercise its discretion to grant relief.

The Full Court allowed the appeal and made orders pursuant to section 233(1) of the Corporations Act 2001 (Cth) to relieve AWS of the consequences of the directions given by Mr Wallace on 29 June 2020 and 1 July 2020. The parties were to be heard further on the specific form of those orders.