Case: Turnbull v National Roads &amp; Motorists Association Ltd [2004] NSWSC 577 ; (2004) 186 FLR 360
Outcome: considered
J in Turnbull v National Roads &amp; Motorists Association Ltd [2004] NSWSC 577 ; (2004) 186 FLR 360 at 365 370 ( 'Turnbull' ) discussed the background to ss 232 and 233 . In Turnbull , his Honour discussed the proper construction of those provisions and said at 370, amongst other things: An action is capable of being "contrary to the interests of the members as whole" in ways other than being commercially unfair. Being pointlessly wasteful is one example...The ground of being "contrary to the interests of the members as a whole" in s 232 is intended to be an independent one to the ground of being oppressive to, unfairly prejudicial to or unfairly discriminatory against, a member or members whether in that capacity or any other capacity. Campbell J also considered the heading that precedes s 232 and said, amongst other things, at 371: The deliberate change in the law which Parliament has made by enacting s 232 [of the Act] in its present form, with the differences which I have earlier identified from the previous legislation, are such that it is so clear that "contrary to the interests of the members as a whole" is a ground on which the Court could make an order under s 233 , independently of whether conduct, etc, is oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member or members, that the Part heading cannot be used to limit the meaning of s 232(d). In Shelton v National Roads &amp; Motorists Association Ltd (2004) 51 ACSR 278 ( 'Shelton' ), Tamberlin J agreed with the conclusions reached by Campbell J in Turnbull in respect of the proper construction of ss 232(d) and (e) of the Act. Also in Shelton , when speaking particularly of s 232(e) of the Act, Tamberlin J said, amongst other things at [23], that: It is not practicable to delineate the numerous ways in which oppressive conduct may be established. The Court will generally look at the overall course of conduct and consider whether it is so unfair that reasonable directors would not consider it fair. If directors exercise a power so as to impose a disability or burden on a member that is unfair according to ordinary standards of reasonableness and fair dealing, then such conduct may be described as oppressive...The test of unfairness is objective: see Wayde v NSW Rugby League Ltd [1985] HCA 68 ; (1985) 180 CLR 459 at 472 per Brennan J; Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573. The Court should not take a narrow approach to cases of oppression. It is necessary for the Court to come to a conclusion that there has been conduct unfairly prejudicial to or unfairly discriminatory or oppressive to a member before it makes an order to this effect: see John J Starr (Real Estate) Pty Ltd v Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63. His Honour then went on to say, at [24]: The onus of establishing unfairness rests on the applicant asserting the conduct that is contrary to the interests of the members as a whole, or that is oppressive, unfairly prejudicial or discriminatory. An applicant must actually prove oppression before obtaining relief. It is not established simply by showing that the majority are in control of the company, or that the applicant is consistently out-voted, or that the majority have made some questionable decisions from a business point of view. The mere disadvantage of being in a minority does not in itself constitute oppression. It is necessary for each single allegation in an oppression case to be pleaded clearly in order to assess whether the totality may amount to oppression: see Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 873. Disagreement with a decision by a majority of shareholders and directors on the part of a minority shareholder does not entitle that shareholder to relief under the section: Re Bountiful Pty Ltd (1994) 12 ACLC 902.