“We can’t order a share sale. Decide yourselves, or it’s getting wound up!”

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A number of plaintiffs applied for relief in relation to a shareholder dispute.

Through the litigation the issues in dispute narrowed.Both the plaintiffs and defendants preferred for the Ds to buy out the Ps. A winding up order was all parties’ second preference: [1] - [6], [19]

Commencing in 2014, the Ps and Ds incorporated Co1 and Co2 to (i) operate a GF bakery and (ii) own the land the bakery was situated on: [8] - [10]

Evidentiary wrinkles included one of the Ds seeking a higher salary, one of the Ps resisting, the Ds causing the salary to be paid, the P then causing the same amount to be paid to their entity, and the Ds causing *that* payment to be recorded as a loan: [11]

The Court exercised caution in relation to a winding up, noting the Cos likely had more value as a going concern, than as assets sold via liquidation: [25]

All parties accepted that the relationship between themselves had failed such that an order winding up the Cos on the just and equitable basis would be appropriate: [29]

The Court accepted that it would be appropriate for the Cos to be wound up on the just and equitable ground (and the appointment of a receiver to the Cos’ property held on trust: [30]) unless (noting s467) the Court was satisfied a buyout order could be made instead: [29]

s467(1) grants the Court the power to make various orders on the hearing of a winding up application.

The Court considered at length whether this power was broad enough to impose a forced share sale on litigants, eventually finding “with a degree of hesitation” it was not sufficiently broad: [37] - [51]

The Ds sought a buyout order on the s233 “oppression” basis: [52]

The Ds argued the Ps’ failure to agree to Co1 entering into a formal lease with Co2 was oppressive. Noting a lease had not previously been required, with no formal advice and with the risk of a conflict of interest arising, the Ds were not able to show a failure to enter into a lease was oppressive: [62], [63]

Taken together: whether pursuant to s467 or s233 there was no basis for the Court to make a buyout order.

Though not strictly necessary (as no buyout order was made) the Court considered the expert evidence placed before it in relation to the value of both Cos - the trading entity and the property owning entity: [64] - [78]

The Court ordered that the Cos be wound up, but stayed the order for 14 days to allow possible negotiation of a share sale: [80]

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