In the matter of Bio Health Pharmaceuticals Pty Ltd [2020] NSWSC 1790

In the matter of Bio Health Pharmaceuticals Pty Ltd [2020] NSWSC 1790

The Second Share Issue was oppressive because it diluted Hilly Woodland's 70% majority shareholding to 15% for no demonstrated advantage to BHP, without evidence that BHP received consideration, and with the purpose of denying CHM control following default under the facility. In the exceptional circumstances, including the powerful evidence and prior informed consent of the active defendants to the substantive relief, the Court declared the issue invalid, set it aside under s 233, and removed the Third, Fourth and Fifth Defendants as directors.

Jurisdiction
Australia
Judgment Date
10 December 2020
Procedural Posture
Corporations Oppression Proceeding / Final Hearing; Principal Judgment
Outcome
Orders made declaring the Second Share Issue invalid and of no effect, setting it aside, removing the Third, Fourth and Fifth Defendants as directors of BHP, and ordering costs against the First, Third, Fourth and Fifth Defendants.
Legal Topics
['oppression' 'share Issue' 'dilution of Majority Shareholder' 'improper Purpose' 'removal of Directors' 'corporations Act S 233 Relief']
['corporations Law' 'equity'] ['oppression' 'share Issue' 'dilution of Majority Shareholder' 'improper Purpose' 'removal of Directors' 'corporations Act S 233 Relief']

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Procedural Posture

Corporations Oppression Proceeding / Final Hearing; Principal Judgment

Legal Issues

  1. 1 ['Whether the Second Share Issue on 17 June 2019 was invalid and of no effect.' "Whether the issue of shares diluting Hilly Woodland's shareholding from 70% to 15% was oppressive within the meaning of s 232 of the Corporations Act." 'Whether orders should be made under s 233 setting aside the Second Share Issue and removing the Third, Fourth and Fifth Defendants as directors of BHP.' 'Whether the Court should make a declaration that the Fifth Defendant was not validly appointed as a director of BHP.']

Ratio Decidendi

The Second Share Issue was oppressive because it diluted Hilly Woodland's 70% majority shareholding to 15% for no demonstrated advantage to BHP, without evidence that BHP received consideration, and with the purpose of denying CHM control following default under the facility. In the exceptional circumstances, including the powerful evidence and prior informed consent of the active defendants to the substantive relief, the Court declared the issue invalid, set it aside under s 233, and removed the Third, Fourth and Fifth Defendants as directors.

Court Disposition

Orders made declaring the Second Share Issue invalid and of no effect, setting it aside, removing the Third, Fourth and Fifth Defendants as directors of BHP, and ordering costs against the First, Third, Fourth and Fifth Defendants.

Orders

  • ['A declaration that, in all the circumstances, the Second Share Issue was invalid and of no effect.' 'An order pursuant to section 233 of the Corporations Act setting aside the Second Share Issue.' 'An order pursuant to section 233 of the Corporations Act removing the Third, Fourth and Fifth Defendants as directors...