Coffee and a Case Note

In the matter of ICB Medical Distributors Pty Ltd [2018] NSWSC 1315


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[Forgive the poor audio on this one - I was yet to invest in my current microphone!]

“I’m not being oppressive. You are!”  

A and B were directors and shareholders in a company that owned an orthotics business.  

A brought a claim against B in oppression. A succeeded on bases including: B was paid as a consultant but caused the company to record a debt to him for unpaid annual leave: [116], B raised invoices without a proper basis: [139], B recording poorly debts owed by the company to entities associated with him under the description “sundry creditors”: [161]; all of which had the reduced the value of the company.  

B brought a counter claim against A and was partially successful on bases including: A ran his own business, using similar techniques to the company, which competed with the company: [180].   (This is, of course, also a breach of his directors duties.)  

So! 2 bad guys. A was oppressive and B was oppressive. What’s the Court to do? At [224] the relief ordered was for B buy out A’s shares, following an exchange of valuation evidence.  

A share purchase is seen by some as the Court’s preferred outcome to an oppression suit. It allows the company to keep trading. Here the Court anticipated a valuation dispute and set up an architecture to deal with it.  What do you think happened with costs? (Trick question FYI.)

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Coffee and a Case NoteBy James d'Apice

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