In the matter of Rafic Pty Limited [2017] NSWSC 1013

In the matter of Rafic Pty Limited [2017] NSWSC 1013

Rafic Pty Ltd was a family company with quasi-partnership characteristics: the shareholders' association involved mutual confidence, the sons were expected to participate in the business, and the plaintiff could not realistically sell his minority shares. Because ordinary shareholders had historically derived benefits through employment and emoluments rather than dividends, terminating the plaintiff's employment and removing him from management excluded him from the only practical benefit of his shareholding. Although the company was legally entitled to dismiss him and his conduct contributed to difficulties, the breakdown could not fairly be attributed solely to him. Fairness required...

Jurisdiction
Australia
Judgment Date
09 November 2017
Procedural Posture
Corporations List Proceeding Seeking Winding Up or Compulsory Purchase Order on Grounds of Oppression / Principal Judgment After Hearing; Final Orders Made
Outcome
The plaintiff obtained oppression relief by way of a compulsory purchase order; the first defendant was ordered to purchase the plaintiff's shares and pay his costs.
Legal Topics
["members' Rights and Remedies" 'oppression' 'family Owned Proprietary Company' 'quasi Partnership' 'exclusion From Employment and Management' 'compulsory Purchase of Shares' 'share Valuation']
['corporations Law' 'equity'] ["members' Rights and Remedies" 'oppression' 'family Owned Proprietary Company' 'quasi Partnership' 'exclusion From Employment and Management' 'compulsory Purchase of Shares' 'share Valuation']

Case Brief

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Procedural Posture

Corporations List Proceeding Seeking Winding Up or Compulsory Purchase Order on Grounds of Oppression / Principal Judgment After Hearing; Final Orders Made

Legal Issues

  1. 1 ['Whether the affairs of Rafic Pty Ltd were conducted in a manner oppressive to, unfairly prejudicial to, or unfairly discriminatory against the plaintiff within s 232.' "Whether termination of the plaintiff's employment and removal as director deprived him of the means by which shareholders traditionally derived benefit from the company." 'Whether the plaintiff should be denied oppression relief because his own conduct was responsible for the breakdown in the relationship.' "Whether relief should be by compulsory purchase of the plaintiff's shares by the company or by Paul Fred Essey, and at what price."]

Ratio Decidendi

Rafic Pty Ltd was a family company with quasi-partnership characteristics: the shareholders' association involved mutual confidence, the sons were expected to participate in the business, and the plaintiff could not realistically sell his minority shares. Because ordinary shareholders had historically derived benefits through employment and emoluments rather than dividends, terminating the plaintiff's employment and removing him from management excluded him from the only practical benefit of his shareholding. Although the company was legally entitled to dismiss him and his conduct contributed to difficulties, the breakdown could not fairly be attributed solely to him. Fairness required...

Court Disposition

The plaintiff obtained oppression relief by way of a compulsory purchase order; the first defendant was ordered to purchase the plaintiff's shares and pay his costs.

Orders

  • ["Pursuant to Corporations Act s 233(1)(e), the first defendant Rafic Pty Ltd purchase the shareholding of the plaintiff Joseph Fred Essie for a price of $2,388,129.40 and that the company's share capital be reduced accordingly." "There be liberty to apply by arrangement with my associate on three days' notice for...