Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd (No 3) [2022] FCA 1302

Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd (No 3) [2022] FCA 1302

There was no ongoing equality understanding governing shareholdings which survived or qualified the express terms of the Shareholders' Deed; the Deed provided for possible inequality of shareholdings and superseded any prior understandings. Most of the impugned conduct—regarding exclusion of the plaintiff from management, issuing shares and options, and alleged marginalisation—was not oppressive, nor established fraud on the power or breach of contract. However, certain share issues (Second Share Issue in June 2020 and Third Share Issue in July 2021) to the benefit of the Majority Interests, without offering the same to CDO, were unfairly prejudicial and discriminatory against CDO under s...

Jurisdiction
Australia
Judgment Date
03 November 2022
Procedural Posture
Corporations Proceeding; Oppression Remedy Application / Judgment After Trial
Outcome
Oppression established in respect of certain share issues; otherwise claims dismissed. Court's discretion to order relief under s 233 of the Corporations Act enlivened for the contravening share issues only. Further submissions to be made as to appropriate relief.
Legal Topics
['oppression Remedy' "shareholders' Rights" 'breach of Contract' "directors' Duties" 'unconscionable Conduct' 'fraud Upon the Power to Issue Shares' 'corporations Act S 232' 'relief Under S 233']
['corporations Law'] ['oppression Remedy' "shareholders' Rights" 'breach of Contract' "directors' Duties" 'unconscionable Conduct' 'fraud Upon the Power to Issue Shares' 'corporations Act S 232' 'relief Under S 233']

Case Brief

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Procedural Posture

Corporations Proceeding; Oppression Remedy Application / Judgment After Trial

Legal Issues

  1. 1 ["Whether an ongoing equality understanding between founders as to equal shareholdings existed and survived the Shareholders' Deed" 'Whether conduct towards the plaintiffs, including forced resignation as CEO/director and share/options issues, was oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member under s 232(e) of the Corporations Act' 'Whether issues of shares and options were for an improper purpose (fraud on the power to issue shares)' "Whether the acts complained of constituted unconscionable conduct under s 12CB of the ASIC Act or breach of directors' duties and/or contract"]

Ratio Decidendi

There was no ongoing equality understanding governing shareholdings which survived or qualified the express terms of the Shareholders' Deed; the Deed provided for possible inequality of shareholdings and superseded any prior understandings. Most of the impugned conduct—regarding exclusion of the plaintiff from management, issuing shares and options, and alleged marginalisation—was not oppressive, nor established fraud on the power or breach of contract. However, certain share issues (Second Share Issue in June 2020 and Third Share Issue in July 2021) to the benefit of the Majority Interests, without offering the same to CDO, were unfairly prejudicial and discriminatory against CDO under s...

Court Disposition

Oppression established in respect of certain share issues; otherwise claims dismissed. Court's discretion to order relief under s 233 of the Corporations Act enlivened for the contravening share issues only. Further submissions to be made as to appropriate relief.

Orders

  • ['By 18 November 2022, the parties are to confer on appropriate orders for relief to give effect to the reasons for judgment and provide to the Court: (1) a joint set of orders for consent; (2) if not agreed, competing orders and timetable for further submissions.' 'Proceeding listed for a case management hearing...