MMAL Rentals Pty Limited (ACN 008 293 490) & Ors v Bernard John BRUNING [2004] NSWCA 451

MMAL Rentals Pty Limited (ACN 008 293 490) & Ors v Bernard John BRUNING [2004] NSWCA 451

The clause 'fair market value' in the contract required an objective exchange-based valuation acknowledging special value to Mitsubishi in its acquisition of the minority shareholding. No minority discount was appropriate. The original trial judge's valuation was correct. Offers by Mitsubishi were admissible as signposts for minimum value. The contract became unfair under s106 due to disparity between Mitsubishi's substantial commercial advantage and Mr Bruning's minimal financial benefit, justifying that the formula be varied to 'fair value', leading to a higher award.

Jurisdiction
Australia
Judgment Date
09 December 2004
Procedural Posture
Appeal and Cross Appeal / Judgment
Outcome
Appeal dismissed; cross appeal allowed
Legal Topics
['share Valuation' 'fair Market Value' 'minority Discount' 'greenmail Value' 'unfair Contract' 'jurisdiction Under S106' 'oppression Suits' 'remuneration Linked to Shares' 'disparity Between Expected and Actual Financial Benefit']
['contract' 'industrial Law' 'corporations Law'] ['share Valuation' 'fair Market Value' 'minority Discount' 'greenmail Value' 'unfair Contract' 'jurisdiction Under S106' 'oppression Suits' 'remuneration Linked to Shares' 'disparity Between Expected and Actual Financial Benefit']

Case Brief

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Procedural Posture

Appeal and Cross Appeal / Judgment

Legal Issues

  1. 1 ["Proper meaning of 'fair market value' for share valuation" 'Whether special potentiality or special value to purchaser is relevant' 'Application of minority discount' 'Use of offers as evidence of value in valuation' 'Whether contract was unfair within s106 Industrial Relations Act' 'Jurisdiction under s106 Industrial Relations Act' 'Relationship between s106 and oppression provisions']

Ratio Decidendi

The clause 'fair market value' in the contract required an objective exchange-based valuation acknowledging special value to Mitsubishi in its acquisition of the minority shareholding. No minority discount was appropriate. The original trial judge's valuation was correct. Offers by Mitsubishi were admissible as signposts for minimum value. The contract became unfair under s106 due to disparity between Mitsubishi's substantial commercial advantage and Mr Bruning's minimal financial benefit, justifying that the formula be varied to 'fair value', leading to a higher award.

Court Disposition

Appeal dismissed; cross appeal allowed

Orders

  • ['Set aside orders 1 and 2 made on 31 March 2004.' "Amend Share Allotment Agreement clause 11.2.3 to substitute 'fair value' for 'fair market value'." 'Second Defendant to pay Plaintiff $2,000,000 within 28 days.' "Amend order 4 made on 31 March 2004 to insert '$2,000,000' in place of '$1,059,750'; reference to...