The Food Improvers Pty Limited v BGR Corporation Pty Ltd (No 3) [2007] FCA 97

The Food Improvers Pty Limited v BGR Corporation Pty Ltd (No 3) [2007] FCA 97

The majority shareholders (Gulson/Triad and Cordato) conducted the affairs of BGR in a manner contrary to the interests of members as a whole and oppressive to the minority (Food Improvers/Bax), particularly by excluding the minority from management, terminating consultancy entitlements, using company funds for personal litigation costs, and failing to act on the basis of the parties' quasi-partnership. The breakdown in mutual trust and confidence justified winding up BGR on the just and equitable ground; there was no binding contract to distribute in accordance with 'option B', but oppression required orders for payment of consultancy fees and proper distribution, appointment of a...

Jurisdiction
Australia
Judgment Date
12 February 2007
Procedural Posture
Corporations – Oppression and Just and Equitable Winding Up / Final Judgment After Trial
Outcome
For the applicants: Declarations of oppressive conduct; orders for payment to Food Improvers of $500,000 plus GST for consultancy fees; repayment by Triad of excess consultancy fees; setting aside interim distribution; winding up BGR ordered and appointment of liquidator to be determined; costs orders against Triad...
Legal Topics
['oppression of Minority Shareholders' 'quasi Partnerships' 'just and Equitable Winding Up' 'solicitor Conflict and Right of Audience' 'use of Company Funds in Litigation']
['corporations Law' 'equity' 'legal Practice'] ['oppression of Minority Shareholders' 'quasi Partnerships' 'just and Equitable Winding Up' 'solicitor Conflict and Right of Audience' 'use of Company Funds in Litigation']

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Procedural Posture

Corporations – Oppression and Just and Equitable Winding Up / Final Judgment After Trial

Legal Issues

  1. 1 ['Whether majority shareholder engaged in oppressive conduct within s 232 of the Corporations Act 2001 (Cth)' 'Whether winding up of BGR Corporation Pty Ltd is just and equitable under s 461(1)(k)' 'Whether the removal and exclusion from management of a minority partner in a quasi-partnership company amounts to oppression' 'Entitlement to unpaid consultancy fees and proper distribution upon sale of assets' 'Whether company funds were improperly used to pay legal costs of majority shareholders' 'Whether a solicitor acting as a material witness can continue to act as a solicitor on record']

Ratio Decidendi

The majority shareholders (Gulson/Triad and Cordato) conducted the affairs of BGR in a manner contrary to the interests of members as a whole and oppressive to the minority (Food Improvers/Bax), particularly by excluding the minority from management, terminating consultancy entitlements, using company funds for personal litigation costs, and failing to act on the basis of the parties' quasi-partnership. The breakdown in mutual trust and confidence justified winding up BGR on the just and equitable ground; there was no binding contract to distribute in accordance with 'option B', but oppression required orders for payment of consultancy fees and proper distribution, appointment of a...

Court Disposition

For the applicants: Declarations of oppressive conduct; orders for payment to Food Improvers of $500,000 plus GST for consultancy fees; repayment by Triad of excess consultancy fees; setting aside interim distribution; winding up BGR ordered and appointment of liquidator to be determined; costs orders against Triad...

Orders

  • ['Affairs of BGR conducted contrary to the interests of members and oppressive to Food Improvers since 29 May 2005.' 'Resolutions of BGR on 1 July 2005 removing Bax, ratifying consultancy/employment terminations, were oppressive/unfairly prejudicial/unfairly discriminatory to Food Improvers.' 'Second defendant...