“You can have their shares, even though they’re worth nothing!”
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P commenced oppression proceedings seeking buyout orders, or a windup.
Co1 was owned 50-50 between P and D2, and bought a site for $4.6m: [4]
Co2 was owned 50-50 between P and D2, and bought a site for $2.9m: [5]
P said they contributed $1.3m to finance and D1 and D2 ~$700K between themselves: [6] Further funds were also contributed to all Cos by both.
Co3 was owned 50-50 between P and D2, and agreed to buy a site for $6.1m in future: [7]
During the hearing P showed debts owed by Co1 needed urgent payment, revealing the Cos needed P to meet their debts: [24]
D1 said D2, their spouse, was little more than a figurehead. D1 said that they operated in the Cos day to day: [31]
D1 said P agreed to provide additional funding for the Cos’ projects without Ds needing to contribute: [33] - [37]
The Court did not accept D1’s evidence, and D2 did not give evidence; the inference arising that it would not have assisted the Ds: [47]
The parties did not record their arrangement: [48]
P said the parties agreed to share the Cos’ expenses and profits 50-50: [51]
Neither P nor D1 proved the agreement they said was made: [56], [60], [62]
In late 2022, D1 instructed the Cos’ builders to stop work on the Cos’ projects, and stopped a finance application: [67]
P said Ds’ failure to pay 50%, the purported termination of the alleged agreement, and the Ds instructing some construction and a finance application to cease were contrary to s232: [76]
The Court found the Ds failure to contribute their 50% was enough to support either a buyout order or a winding up: [77]
The breach of the alleged agreement was not seen as oppressive as the agreement was not proved as pleaded, nor was the ceasing of construction and finance: [77]
The Ds also said, unsuccessfully: P caused inaccurate books to be prepared, and that P breached their directors duties. The Ds also said the relationship had broken down. This was made out, but not a defence to P’s claim: [78]
The next issue was: should relief be a share sale or a winding up (noting that a buyout order can be made for no consideration)?: [79]
P made various submissions in support of a buyout order: [79] - [85]
The Ds accepted the relationship had broken down, but pressed for a winding up: [86]
On balance, the Court found a buyout order was appropriate for Co1, Co2 and Co3: [99], [102]
Noting the indebtedness of each of the Cos to P and the Ds, the value of each Co as nil making the value of the Ds shares in each Co nil: [80], [84], [104], [106]
Having found buyout orders were appropriate, the Court did not need to consider P’s claim for a winding up: [107]
Noting the nil value of the Ds’ shares, the Court ordered that P had to pay certain amounts into Court on account of the Cos’ debts to the Ds and, once paid, cause the transfer of the shares to P: [125]
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