The 2020 case of Snell v Glatis (Snell v Glatis (No 2)  NSWCA 166), where Chamberlains Law Firm represented the Appellants, saw a successful appeal of the primary judge’s orders for a compulsory buy-out of an oppressed minority’s shareholdings in a group of companies and instead ordered a winding up.
The Appeal centred on whether a buy-out order was appropriate or whether it would only give rise to further complications. Their Honors considered these practical difficulties pointed powerfully in favour of winding-up, and a winding-up order was accordingly made.
The Court of Appeal considered a previous judgment where the following principles can be applied:
- Oppression can be cured by the oppressor being ordered to acquire the oppressor’s shares at fair value;
- The share buy-out order should seek to put the company back on the rails and avoid the causes of conflict;
- Compared to a share buy-out, winding up should be seen as a last resort; and
- Winding up a profitable and operating company is an extreme step and requires a solid case to be made.
In considering the above, the Court of Appeal confirmed that any relief in an oppression dispute with be on a “case by case” basis. The context in which the particular company or companies operate together with their structure and history will always be relevant to what form of relief is appropriate.
The purpose to be achieved by a buy-out order is to return to a minority shareholder the value of his, her or its shareholding.
In this case, given that the corporate assets were substantially realisable and there was minimal active trading, many of the considerations tending against ordering winding up did not apply. Winding up was a realistic means of securing the respondent’s share of the value of the relevant corporate group, which would also prevent ongoing oppression.
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