Frauenstein v Farinha [2009] FCA 55

Frauenstein v Farinha [2009] FCA 55

The Court does not at this stage preclude the possibility of making orders against the Farinhas personally; however, the precise nature of any such order depends on further examination of evidence concerning the benefit derived by them and their connection to relevant companies. Section 233 provides broad remedial powers where s 232 is satisfied, enabling flexible relief, including compensation or buyout orders, but the exercise and scope of such power for non-member directors remains open pending exploration.

Parties
First Plaintiff: Carl Frauenstein; Second Plaintiff: Carpe Diem Initiatives Pty Ltd ACN 091 071 359; First Defendant: Tobias Farinha; Second Defendant: Miguel Farinha; Third Defendant: Marco Zagato; Fourth Defendant: San Marco Bondi Junction Pty Ltd ACN 108 118 878; Fifth Defendant: San Marco Piccolo Pty Ltd ACN 109 829 665; Sixth Defendant: San Marco World Square Pty Ltd ACN 109 408 620; Seventh Defendant: Cockle Bay San Marco Pty Ltd ACN 084 902 545; Eighth Defendant: Equal 54 Ltd ACN 063 125 477; Ninth Defendant: James Panagopoulos; Tenth Defendant: Toby Bondi Junction Pty Ltd ACN 109 904 396; Eleventh Defendant: Marco Bondi Junction Pty Ltd ACN 110 713 981; Twelfth Defendant: Miguel Bondi Junction Pty Ltd ACN 110 714 013; Thirteenth Defendant: Cine San Marco Pty Ltd ACN 087 777 357; Fourteenth Defendant: Andrew Alan Johnson
Jurisdiction
Australia
Judgment Date
06 February 2009
Procedural Posture
Civil / Further Reasons After Initial Judgment; Directions for Further Conduct
Outcome
No substantive orders made at this stage; directions to parties to propose further conduct.
Legal Topics
Oppressive Conduct, Remedial Powers Under S 233 Corporations Act, Shareholder Remedies, Buyout Orders, Compensation Orders
Corporations Law Equity Oppressive Conduct Remedial Powers Under S 233 Corporations Act Shareholder Remedies Buyout Orders Compensation Orders

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Parties

Carl Frauenstein

First Plaintiff

Carpe Diem Initiatives Pty Ltd ACN 091 071 359

Second Plaintiff

Tobias Farinha

First Defendant

Miguel Farinha

Second Defendant

Marco Zagato

Third Defendant

San Marco Bondi Junction Pty Ltd ACN 108 118 878

Fourth Defendant

San Marco Piccolo Pty Ltd ACN 109 829 665

Fifth Defendant

San Marco World Square Pty Ltd ACN 109 408 620

Sixth Defendant

Cockle Bay San Marco Pty Ltd ACN 084 902 545

Seventh Defendant

Equal 54 Ltd ACN 063 125 477

Eighth Defendant

James Panagopoulos

Ninth Defendant

Toby Bondi Junction Pty Ltd ACN 109 904 396

Tenth Defendant

Marco Bondi Junction Pty Ltd ACN 110 713 981

Eleventh Defendant

Miguel Bondi Junction Pty Ltd ACN 110 714 013

Twelfth Defendant

Cine San Marco Pty Ltd ACN 087 777 357

Thirteenth Defendant

Andrew Alan Johnson

Fourteenth Defendant

Procedural Posture

Civil / Further Reasons After Initial Judgment; Directions for Further Conduct

Legal Issues

  1. 1 Whether s 233 of the Corporations Act authorises orders against persons who are not members of the company to purchase shares or pay compensation
  2. 2 Whether it is possible or appropriate to make orders against the Farinhas personally for compensation or purchase of shares given current status of companies (winding up, administrators)
  3. 3 Nature and scope of the Court’s remedial powers under s 233

Ratio Decidendi

The Court does not at this stage preclude the possibility of making orders against the Farinhas personally; however, the precise nature of any such order depends on further examination of evidence concerning the benefit derived by them and their connection to relevant companies. Section 233 provides broad remedial powers where s 232 is satisfied, enabling flexible relief, including compensation or buyout orders, but the exercise and scope of such power for non-member directors remains open pending exploration.

Court Disposition

No substantive orders made at this stage; directions to parties to propose further conduct.

Orders

  • Court directs parties to bring short minutes of directions for the further conduct of the proceeding after considering these reasons.