Oppression remedy s232

Activity 4.3.2

This activity provides an opportunity for you to do exam summaries for members’ remedies Follow the process outlined in lectures and assess the shareholder remedies by identifying: •  standing (who can bring an action) •  grounds (what grounds need to be satisfied) and •  orders sought

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Source of legal remedies available to members

Figure 14.1 – Balancing Interests, Text 10th ed page 426

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Key Terms

Source: Text [14.40] 10th ed page 427

Key Terms

Table 14.1: Text [14.40] 10th ed p 427

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Members’ remedies re breach of directors’ duties Figure 14.2 Text 10th ed p 461; 9th ed p 381

Activity 4.3.2

Examine remedies mentioned in the study guide (4.7 Remedies available to minority shareholders) See also text and lecture material to decide which ones would apply

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Activity 4.3.2 • General law - apply the fraud on the minority doctrine – if behaviour of majority is also damaging minority shareholders

• Statutory oppression remedies sections 232-235 (oppression remedy = very important)

• Statutory derivative action in sections 236 & 237 to control the behaviour of the directors which is damaging Ripitout Mining NL

• ? section 461 (winding up) is applicable. • Consider an injunction under section 1324

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Guide to problem solving

•  See text 10th ed pages 460-464

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Fraud on the minority

Source: Glossary Text 10th ed page 768

General law: fraud on minority Examples of ‘fraud on minority’ include: •  Expropriation of company property Menier v Hooper’s Telegraph Works (1874) 9 Ch App 350

•  Improper ratification of directors’ breach of duty Ngurli Ltd v McCann (1953) 90 CLR 425

•  Expropriation of members’ property : Gambotto v WCP Ltd (1995) 13 ACLC 342 (revise topic 3)

The test in Gambotto > expropriation of minority shares – a valuable proprietary right – only lawfully when it is:

(i) for a proper purpose and (ii) fair in all the circumstances See examples in textbook [14.80] page 428

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Members’ statutory remedies

•  Part 2F.1 sections 232-234 Oppression •  Part 2F.1A sections 236-242 Statutory derivative action

•  Section 461 Winding up •  Section 1324 Injunction •  Section 1322 Procedural irregularities

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HIRAC (approach 1) Heading: ‘Members’ Remedies’ Issue 1: Statutory Oppression Remedy (Corporations Act) Rule 1: Standing; s 234 Grounds, s 232; Orders, s 233 Issue 2: Winding Up; Rule 2(S/G/O) Issue 3: Injunction; Rule 3(S/G/O); Issue 4: Stat Derivative Action; Rule 4 (S/G/O);

Application (Issues 1,2,3 & 4) Conclusions (Issues 1,2,3 & 4)

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HIRAC (approach 2) Heading: ‘Members’ Remedies’ Issue 1: Statutory Oppression Remedy (Corp Act) Rule 1: Standing; s 234 Grounds, s 232; Orders, s 233

Application (Issues 1) Conclusions (Issues 1)

Issue 2: Winding Up; Rule 2(S/G/O); Application; Conc. Issue 3: Injunction; Rule 3(S/G/O); Application; Conc. Issue 4: Stat Deriv Action; Rule 4 (S/G/O); Application; Conc

Application (Issues 1,2,3 & 4) Conclusions (Issues 1,2,3 & 4)

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HIRAC (approach 3) Heading: ‘Members’ Remedies’ Issue 1: Statutory Oppression Remedy (Corp Act) Rule 1: Standing; s 234 Grounds, s 232; Orders, s 233

Application (Issues 1) Issue 2: Winding Up; Rule 2(S/G/O); Application 2; Issue 3: Injunction; Rule 3(S/G/O); Application 3; Issue 4: Stat Derivative Action; Rule 4 (S/G/O); Application 4

Conclusions (Issues 1,2,3 & 4)

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Oppression Source: Popovic v Tanasijevic (No 5) [2000] SASC 87 [503] (Olsson J) (cited Study Guide p 89) ‘the word ‘oppression’ connotes the exercise of authority or power in a burdensome or unjust manner. … from authorities … … What is in contemplation is a notion of unfairness, according to ordinary standards of reasonableness and fair dealing.