Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd (No 4) [2023] FCA 25

Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd (No 4) [2023] FCA 25

A declaration should be made that Laava ID Pty Ltd engaged in oppressive conduct by issuing shares to majority parties without giving the same conversion opportunity to the minority; a buy-out order is not appropriate as it would be disproportionate and go beyond remedying the specific oppression found. Because less intrusive relief was available (offering conversion to shares), and the minority did not seek or accept such a remedy, the proceeding is otherwise dismissed.

Parties
First Plaintiff: Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust; Second Plaintiff: Iain James McDonald; First Defendant: Patrick Michel; Second Defendant: Anthony Surtees; Third Defendant: Wilemich Pty Ltd as Trustee for the Path Family Trust; Fourth Defendant: Mortgage Company of Australia Pty Limited as Trustee for the Surtees Family Trust; Fifth Defendant: Laava ID Pty Ltd; Sixth Defendant: Gavin Ger; Seventh Defendant: Wyargine Group Pty Ltd; Eighth Defendant: Lufrapa Pty Ltd as Trustee for the Lucette Michael Family Trust; Ninth Defendant: Robert Fitzpatrick
Jurisdiction
Australia
Judgment Date
30 January 2023
Procedural Posture
Corporations – Oppression Proceedings / Final Judgment With Orders
Outcome
Declaration made regarding oppressive conduct; proceeding otherwise dismissed; directions given regarding costs.
Legal Topics
Oppressive Conduct, Remedies Under Corporations Act S 233, Conversion of Loans to Equity, Shareholder Remedies
Corporations Law Oppressive Conduct Remedies Under Corporations Act S 233 Conversion of Loans to Equity Shareholder Remedies

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Parties

Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust

First Plaintiff

Iain James McDonald

Second Plaintiff

Patrick Michel

First Defendant

Anthony Surtees

Second Defendant

Wilemich Pty Ltd as Trustee for the Path Family Trust

Third Defendant

Mortgage Company of Australia Pty Limited as Trustee for the Surtees Family Trust

Fourth Defendant

Laava ID Pty Ltd

Fifth Defendant

Gavin Ger

Sixth Defendant

Wyargine Group Pty Ltd

Seventh Defendant

Lufrapa Pty Ltd as Trustee for the Lucette Michael Family Trust

Eighth Defendant

Robert Fitzpatrick

Ninth Defendant

Procedural Posture

Corporations – Oppression Proceedings / Final Judgment With Orders

Legal Issues

  1. 1 Whether the affairs of the fifth defendant (Laava ID Pty Ltd) were conducted in a manner unfairly prejudicial to or discriminatory against the first plaintiff within the meaning of s 232 of the Corporations Act 2001 (Cth)
  2. 2 Appropriate remedy under s 233 of the Corporations Act 2001 (Cth) for oppressive conduct

Ratio Decidendi

A declaration should be made that Laava ID Pty Ltd engaged in oppressive conduct by issuing shares to majority parties without giving the same conversion opportunity to the minority; a buy-out order is not appropriate as it would be disproportionate and go beyond remedying the specific oppression found. Because less intrusive relief was available (offering conversion to shares), and the minority did not seek or accept such a remedy, the proceeding is otherwise dismissed.

Court Disposition

Declaration made regarding oppressive conduct; proceeding otherwise dismissed; directions given regarding costs.

Orders

  • Declaration that the affairs of the fifth defendant have been conducted in a manner unfairly prejudicial to, or discriminatory against, the first plaintiff under s 232 of the Corporations Act 2001 (Cth) in relation to two share issues.
  • The proceeding otherwise be dismissed.