French & Ors v Smith & Ors

[2004] VSCA 207

Victorian Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Corporations
2. › Company property and assets
3. › Beneficial ownership of business conducted through company
4. › Whether company conducted quarry business for own benefit or on behalf of controlling shareholder
5. › Capacity in which company operated
6. › Surrounding circumstances including conduct of parties, accounting treatment, and ownership of assets
1. Corporations
2. › Oppression of minority shareholders
3. › Conduct of affairs oppressive, unfairly prejudicial or discriminatory
4. › Breach of fiduciary duty by director
5. › Whether agreement not to pursue breach constitutes oppression of minority member
6. › Whether loans to directors without consent of all shareholders constitute oppression
7. › Whether competing business set up by director constitutes oppression
8. › Corporations Law, ss 246AA, 461
1. Corporations
2. › Winding up
3. › Just and equitable ground
4. › Breakdown in relationship between directors
5. › Whether company reflected quasi-partnership
6. › Whether substratum of company failed
7. › Whether claimant's unclean hands deprive entitlement to equitable remedy
8. › Corporations Law, s 461
1. Appeal
2. › New points on appeal
3. › Whether party bound by conduct of case at trial
4. › Whether new arguments may be raised on appeal when not put below
5. › Whether further evidence could have been called to meet the point

Quick Take

Where a company conducts a business using assets entirely owned by another party, with no arrangement for the company to have the benefit of those assets, and the parties' conduct is consistent with the business belonging to the asset owner, the company will be treated as conducting the business on behalf of the asset owner rather than for its own benefit. The making of loans by a company to its working directors at commercial rates, documented in written agreements, does not constitute oppression of a non-consulted minority shareholder. A breach of fiduciary duty by one director to the company does not necessarily constitute oppression of another shareholder.