William Buck (WA) Pty Ltd v Faulkner [No 6]

William Buck (WA) Pty Ltd v Faulkner [No 6] involved a dispute between the minority shareholder, Faulkner, and the majority shareholders of the company. The crux of the dispute was the oppressive conduct by the majority shareholders, which included the exclusion of Faulkner from management, the payment of dividends to all other shareholders but not to Faulkner, and the refusal to pay him dividends. Faulkner sought relief under the Corporations Act, arguing that the conduct of the majority was unfairly prejudicial to him. The court was tasked with determining whether the conduct of the majority shareholders constituted oppressive conduct and what remedy, if any, should be granted.

The legal issues before the court were whether the actions of the majority shareholders amounted to oppressive conduct under section 232 of the Corporations Act and what relief, if any, should be granted to the minority shareholder. The court considered whether the exclusion of Faulkner from management and the payment of dividends to others but not to Faulkner constituted oppressive conduct. Additionally, the court examined the appropriateness of various remedies, including a buy-out order, a buy-back order, or a winding-up order.

The court held that the conduct of the majority shareholders did amount to oppressive conduct under section 232 of the Corporations Act. The exclusion from management and the unequal distribution of dividends were found to be unfairly prejudicial to Faulkner. However, the court found that neither a buy-out nor a buy-back order was appropriate, given the circumstances. A winding-up order was also deemed inappropriate as Faulkner's shareholding was unmarketable. The court also considered an employment agreement clause that allowed termination on notice, and the alleged serious misconduct by Faulkner, but found that the employer had repudiated the employment agreement by attempting a summary dismissal, which was accepted by Faulkner. Regarding the restraint covenant, the court found that while there was a breach, it was not established that Faulkner's restricted activity caused a loss of clients, and thus, nominal damages were awarded without proof of causation.

The court's final orders included the declaration that the conduct of the majority shareholders was oppressive and that Faulkner was entitled to nominal damages for the breach of the restraint covenant. The court also noted that the employer had repudiated the employment agreement, and Faulkner's acceptance of the repudiation was valid. The winding-up order was declined, and no other remedy was found suitable under the circumstances.