Case Study Analysis: Pure Nature Sydney Pty Ltd [2018] NSWSC 914

This case study analyzes the legal issues in the Pure Nature Sydney Pty Ltd [2018] NSWSC 914 case, focusing on the application of sections 232 and 233 of the Corporations Act 2001 (Cth). The case involves a quasi-partnership where both shareholders engaged in oppressive conduct, seeking a buy-out. The court, however, found irreconcilable differences leading to the company's liquidation under section 461 due to the breakdown of confidence between the parties. The analysis examines legal principles, including the grounds for oppression, discrimination, and unfair prejudice, and the significance of the decision for people doing business, emphasizing the need for ethical conduct among shareholders and directors to avoid liquidation. The case study includes relevant case laws, journals, and legislations.

Running Head: CASE STUDY
Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914
Name Of the Student
Name Of the University
Author’s Note

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CASE STUDY
ISSUE:
The legal issue in the case is whether the plaintiff and the defendant are entitled to buy
out the other party in circumstances where both the parties have been involved in oppressive
conduct as explained under sections 232 and 233 of the Corporations Act 2001 (Cth).
FACTS:
The company was of the quasi partnership nature. The plaintiff and the defendant both
held the shares of the company and hence, were the designated shareholders of the company. It
has been alleged that both the parties have been involved in oppressive act against each other.
Thus, the case has been filed by the parties to seek the order of the Court regarding the buy-out
of the company as explained under sections 232 and 233 of the Corporations Act 2001 (Cth).
LEGAL PRINCIPLES:
Section 232 of the Corporations Act 2001 (Cth) lays down the provision for the grounds
available to the court under which it can order if the conduct of the company’s trade, any act or
proposed act which has ben acted or proposed to be acted upon, or any resolution that has been
passed by the company or has been under the proposal to be passed relates to the matters
involving members or class of members of the company amounts to the interests in contradiction
with that of the members (as a complete group of members), or oppressive or unfair prejudice or
discriminatory against any member of the company in any capacity.
Section 233 of the Act explains an exclusive variety of powers and remedies related to
oppression and provide relief against the same issues1. The provision of the Act entitles the Court
1 Re Spargos Mining NL (1990) 3 ACSR 1, 50–1.

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CASE STUDY
with the powers to interfere in the subject matter relating to oppression by the members of the
company towards fellow members along with the acts relating to discrimination and unfair
prejudice2.
There have been a lot of cases filed regarding the oppressive behaviour of the
shareholders along with the behavioural patterns amounting to discrimination and unfair
prejudice3. But the relief as provided by the court is not based on the mere assumption of
agreement or disagreement of the members against the decision of the management. It can
further be explained that the differences amounting to irreconcilable circumstances leads to the
winding up and liquidation of the company but the grounds for such order shall only be on the
grounds of oppressive behaviour, discriminatory behaviour, or unfair prejudice of the
shareholders towards fellow members4. Thus, oppression, discrimination or unfair prejudice acts
like an independent framework for relief which is not based on the consideration of assumptions
arising from the differences between the parties as irreconcilable.
Section 461 of the Act explains the provision for winding up or liquidation of the
company. If a company is in the situation of being wound up and chooses to do it, it shall
provide ASIC with a written notice of the same for a period of at least not less than 1month
notice of the intention of the company to do the same. It also provides the ground that the court
may also order for the liquidation of the company if the court is satisfied with the prima facie of
the case.
2 Ari Bergman, Unitholder Rights Compared to Shareholder Rights in the Context of Oppression (SJD Thesis,
Monash University, forthcoming) 119–20
3 Brockett, Richard. "The Valuation of Minority Shareholdings in an Oppression Context-A Contemporary
Review." Bond L. Rev. 24 (2012): 101.
4 Fexuto Pty Ltd vs. Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, [89].

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CASE STUDY
:
The Supreme Court of New South Wales refused the petition filed by the parties for
buying out the other party in case all the parties are found to be oppressive to each other. Instead,
the court found that irreconcilable differences leads to the breakdown of the confidence
established between the parties resulting in conflicting interests and opinions of the parties.
Therefore, the court ordered for the winding up or the liquidation of the parties.
SIGNIFICANCE OF DECISION ON PEOPLE DOING BUSINESS:
The provision of section 461 of the Corporation Act 2001 (Cth) lays down that the
court shall order for the liquidation of the company on just and equitable grounds. In the given
case study, the court established the just and equitable grounds on the basis of the breakdown of
the confidence between the parties due to the oppressive behaviour of both the parties towards
each other and hence, the court ordered for liquidation of the company.
People doing business are bound to follow such just and equitable grounds to
maintain their behaviour at par to avoid oppression, discrimination and unfair prejudice. Failure
to comply with such behaviour shall lead to the liquidation of the company and hence the
company shall no longer be existent for the continuous earning and making profits. Thus, the
directors, shareholders and other members of the company are expected to work in unity as the
members of a single company and such unity shall stand as the framework for the determination
of existing cooperation between the members and hence, the interest of the company is
preserved.

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CASE STUDY
BIBLIOGRAPHY:
CASE LAWS:
Fexuto Pty Ltd vs. Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, [89].
Re Spargos Mining NL (1990) 3 ACSR 1, 50–1.
Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914
JOURNALS AND SCHOLARS:
Ari Bergman, Unitholder Rights Compared to Shareholder Rights in the Context of
Oppression (SJD Thesis, Monash University, forthcoming) 119–20
Brockett, Richard. "The Valuation of Minority Shareholdings in an Oppression Context-A
Contemporary Review." Bond L. Rev. 24 (2012): 101.
LEGISLATIONS:
The Corporation Act 2001 (Cth).