William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 [2013] NSWSC 902

Supreme Court New South Wales

Medium Neutral Citation: William McCausland v Surfing Hardware International Holdings Pty Ltd ACN 090 252 752 [2013] NSWSC 902 Hearing dates: 10, 11, 12, 14, 17, 18, 20, 21, 24, 25, 26, 27 & 28 October 2011, 11 & 23 November 2011 Decision date: 09 July 2013 Jurisdiction: Equity Division Before: Slattery J Decision: Parties ordered to bring in short minutes of order to give effect to these reasons and to deal with issues of interest and costs. Catchwords: CONTRACT - contract interpretation - sale of shares under the compulsory sale (drag along) provision in a shareholders agreement - shareholders agreement provided for a compulsory sale (drag along) process activated by an offer from a "bona fide buyer" of the "share capital" - whether an existing shareholder was a "bona fide buyer" of the "share capital", meaning all the issued shares and could validly initiate the compulsory sale process - HELD - on the proper construction of the shareholders agreement an existing shareholder could not be a "bona fide buyer" of the "share capital" - an existing shareholder cannot validly initiate the compulsory sale process under the shareholders agreement. CONTRACT - breach of contract - whether purchase of shares by the shareholder under the compulsory sale provisions of the shareholders agreement was a breach of contract - plaintiffs claim the shareholders agreement breached when their shares purchased - whether the compulsory sale provision a condition precedent and no breach of contract occurred, if it was not satisfied - HELD - defendant in breach of the shareholders agreement. CONTRACT - breach of contract claim - causation of loss - whether the plaintiffs could have sought an injunction against the sale of shares in breach of the shareholders agreement - whether a waiver of rights to seek damages for breach of contract because the injunction not sought - HELD - no waiver. CONTRACT - damages - assessment of damages - plaintiffs awarded damages measured by the difference between the market value of the plaintiffs' shares and the price at which they were compulsorily acquired. CORPORATIONS - oppression claim by shareholder/director under Corporations Act 2001 ss 232 and 233 - whether prior relationships between directors may ground oppression claim - whether termination of plaintiff's employment contract oppressive - whether aggressive conduct of board meetings oppressive - whether allegations of plaintiff's improper conduct made at board meetings oppressive - whether other shareholders' offer to buy plaintiffs' shares oppressive - whether use of drag-along provisions resulting in sale at less then market value is oppressive - whether act done in accordance with contract may be oppressive - whether quick mobilisation of the shareholders' bidding consortium oppressive - whether breach of drag along provision and directors' misuse of confidential information oppressive - whether oppression claim should fail because plaintiffs could have obtained injunction to restrain use of drag along provision. EMPLOYMENT - claim under Industrial Relations Act s 106 - plaintiff co-founded surfing hardware business and operated it for 16 years - no written employment contract at that time- business restructured by the defendants - plaintiff employment terms not fully formalised during restructure - plaintiff seeks variations of his employment contract - whether Industrial Relations Act s 108A claim cap applies - whether making or performance of plaintiff's employment contract unfair - whether term of plaintiff's employment contract should be extended - whether notice of termination period not reasonable - whether plaintiff entitled to severance payment - whether plaintiff continuously employed before restructure and entitled to long service leave - usual entitlement under Long Service Leave Act 1955 discussed - whether contract unfair because 'success fee' agreed as part of restructure not fully paid - principles of action for account stated discussed. EQUITY - INTELLECTUAL PROPERTY - moral rights - Copyright Act 1968 Part IX - right of attribution of authorship - first plaintiff claims to be a joint-author of a computer drawing of the profile of a surf fin - first defendant manufactured such fins overseas and sold and promoted them in Australia without recognising first plaintiff's authorship - whether drawing an original artistic work in which copyright subsist - whether the first plaintiff a joint author of the drawing - whether first plaintiff's contribution to drawing was trivial - whether any attributable acts under Copyright Act 1968 s 194 occurred - whether drawing reproduced in manufactured 3-dimensional fins, and/or their 2-dimensional images - requirements of resemblance and causal connection in the s 194 attributable act "to reproduce" discussed - whether drawing "published"- whether drawing "exhibited" - whether indirect infringement under Copyright Act 1968 s 195AU or s 195AV by importation or sale of overseas manufactured fins properly pleaded - knowledge requirement for s 195AU and s 195AV infringement discussed - when first defendant had requisite knowledge it may be importing or selling infringing articles within s 195AU or s 195AV - distinction between direct and indirect infringements under Part IX discussed - defence under Copyright Act 1968 s 195AR that reasonable not to identify the author discussed. Legislation Cited: Berne Convention for the Protection of the Literary and Artistic Work, Art. 6bis Copyright Act 1968 (Cth), s 10, s 14, s 29, s 32, s 53, s 189, s 193, s 194, s 195, s 195AN, s 195AO, s 195AR, s 195AU, s 195AV, s 195AX, s 195AZA Corporation Act 2001 (Cth), s 232, s 233 Industrial Relations Act 1996, s 106 Long Service Leave Act 1955 s 3, s 4, s7, s12 Cases Cited: A&M Thomson Pty Ltd v Total Australia Limited (1980) 2 NSWLR 1 Advance Bank Australia Limited v FAI Insurances Limited (1987) 9 NSWLR 464 Alliance Motor Auctions Pty Limited v Industrial Relations Commission of NSW (2005) 146 IR 99 Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 ASIC v Fortescue Metals Group Ltd (No.5) (2009) 264 ALR 201 Austin v NF Importers Pty Limited [2005] NSWIRComm 353 Australian Securities Commission v Multiple Scleroris Society (Tas) (1993) 11 ACLC 461, 10 ACSR 489 Avel Pty Ltd v Multicoin Amusements Pty Ltd and Another (1990) 171 CLR 88 Bakers Delight Holdings Limited v Industrial Court of New South Wales (2009) 186 IR 361 Baltic Shipping Company v Dillon (The Mikhail Lermontov") (1991) 22 NSWLR 1 Barrett Property Pty Ltd v Metricon Homes Pty Ltd [2007] FCA 1509 BGL Operations Pty Limited v Allied Express Transport Pty Limited [2011] NSWCA 41 Buck v Hurst (1866) L.R.1 C.P. 297 Byrnes v Kendle [2011] HCA 26, (2011) 243 CLR 253 Camillo Tank Steampship Co Ltd v Alexandria Engineering Works (1921) 38 TLR 134 Campbell v Bankoffice Investments Pty Ltd (2009) 238 CLR 304, [2009] HCA 25 Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 Catto v Hampton Australia (in liq) [No 3] (2004) 89 SASR 234, [2004] SASC 242 Corby v Allen & Unwin Pty Limited [2013] FCA 370 Darkinjung Pty Ltd v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1217 De Tocqueville Private Equity Pty Ltd v Linden & Conway Ltd [2006] FCA 1309 Donaldson v Beckett (1774) 1 ER 837 Dynamic Supplies Pty Ltd v Tonnex International Pty Ltd [2011] FCA 362 Encyclopaedia Britannica Australia Ltd v Campbell [2009] NSWCA 286 Fairfax Media Publication Pty Ltd v Reed International Books Australia [2010] FCA 984 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 19 ACLC 856, 37 ACSR 672, [2001] NSWCA 97 Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180 Global Partners Fund Limited v Babcock & Brown [2010] NSWCA 196 Gow v Cronulla Sutherland Leagues Club Ltd (2002) 119 IR 122 Huskisson RSL Sub-branch Club Ltd v Sullivan (1990) 20 NSWLR 332 Jenkins v Enterprises Gold Mines NL (1992) 10 ACLC 136, 6 ACSR 539 Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc. [2011] NSWCA 137 John J. Starr (Real Estate) Pty Ltd v Robert R. Andrew (Australasia) (1991) 9 ACLC 1372, 6 ACSR 63 Joint v Stephens (2007) 62 ACSR 309, [2007] VSC 145 Jones v Dunkel (1959) 101 CLR 298 King Features Syndicate Incorporated v O and M Kleeman Ltd [1941] AC 417 Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, (2011) 243 CLR 361 Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 Leenaars v Howe & Bainbridge (Aust) Pty Ltd (1987) 24 IR 297 Lozevski v Goodman Fielder Consumer Foods Pty Limited [2004] NSWIRComm 314 Lucy v Lomas [2002] NSWSC 448 Martello & Ors v Walton, Supreme Court of Western Australia (unreported) 4 February 1999, Ipp J Merchant-Adventurers Ltd v M Grew & Co Ltd [1971] 3 WLR 791 Meskenas v ACP Publishing Pty Ltd [2006] FMCA 1136 Millar v Taylor [1558-1774] All ER Rep 119 Morgan v 45 Fleurs Avenue Pty Ltd (1986) 5 ACLC 222, 10 ACLR 692 Ogawa v Spender (2006) 233 ALR 29 Pacific Carriers Ltd v BNP Paribus (2004) 218 CLR 451, [2004] HCA 35 Paul Fishlock v the Campaign Palace Pty Ltd [2013] NSWSC 531 Payne v Parker [1976] 1 NSWLR 191 Perez and Ors v Fernandez [2012] FMCA 2 Port Macquarie Golf Club Ltd v Stead (1996) 64 IR 53 Raben Footwear v Polgram Records Inc (1997) 37 IPR 417 Re D.G. Brims & Sons Limited (1995) 16 ACSR 559 Re George Raymond Pty Ltd; Salter v Gilbert (2000) 18 ACLC 85, [1999] VSC 460 Re Legal Costs Negotiators Limited [1999] 2 BCLC 171 Re Spargos Mining NL (1990) 8 ACLC 1218, 3 ACSR 1 Re Tivoli Freeholds Limited (1972) VR 445 Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 Reich v Client Server Professionals of Australia Pty ltd [2000] NSWIRComm 143 Robinson v Harman (1848) 1 Ex. 850, 154 ER 363 Rutter v Brookland Valley Estate Pty Ltd and Anor (2009) 81 IPR 549 Schwartz v Central City Area Health Service [2002] NSWIRComm 79 Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517, [2001] WASC 8 Shelton v NRMA Ltd (2004) 51 ACSR 278 [2004] FCA 1393 Stevenson v Barham (1977) 136 CLR 190 SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) (2004) 61 NSWLR 661 TD Preece & Co Pty Limited v Industrial Court of NSW (2008) 177 IR 172; [2008] NSWCA 285 Telstra v Phone Directories Telstra [2010] FCAFC 149 The Commonwealth v Amman Aviation Pty Limited (1991) 174 CLR 64, [1991] HCA 54 Thomson v Societe Generale Australia Limited [2006] NSWIRC 24 Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 Turnbull v NRMA Ltd (2004) 186 FLR 360, [2004] NSWSC 577 United Group Rail Service Limited v Rail Corporation New South Wales (2009) 74 NSWLR 618 Vawdrey Australia Pty Ltd v Krueger Transport Equipment Pty Ltd (2009) 83 IPR 1 Victoria Park Racing and Recreation Grounds Co Ltd v Taylor [1937] HCA 45, (1937) 58 CLR 479 Wayde v NSW Rugby League Limited (1985) 180 CLR 459 Westfield Holdings v Adams (2001) 114 IR 241 White v Australian & New Zealand Theatres Ltd (1943) 67 CLR 266 Texts Cited: Copinger and Skon James on Copyright, K Garnett QC, G. Davies, G. Harbottle 15th ed Sweet & Maxwell Fowlers Modern English Usage, 2nd Edition, Sir Ernest Gowers, Oxford, Clarendon Press, 1968 Law of Unfair Contracts in New South Wales, J Phillips and M Tooma, Law Book Co, 2004 Moral Rights: Principles Practice and New Technology, Mira T Sundara Rajan Oxford University University Press, 2011 The Law of Intellectual Property: Copyright Designs & Confidential Information, S Ricketson and C Creswell, Law Book Co, Second Edition, Melbourne, 2002 Category: Principal judgment Parties: Plaintiffs:- William McCausland and Yvonne McCausland Defendants:- Surfing Hardware International Holdings Pty Ltd, SHI Holdings Pty Limited, Surf Hardware International Pty Limited, Timothy Arthur Bosher, Timothy John Ford, Crescent Capital Partners Limited, MDC Development Capital II Pty Limited, TMX Pty Limited, Michael Alscher and Robert Arthur Richard Lee Representation: Plaintiff:- T. Alexis SC, R. Hardcastle Defendant:- A.Sullivan QC, D. Robertson, T.Saunders Plaintiffs:- Bill Henry, Turtons Lawyers Defendant:- Peter Thompson, Thompson, Eslick Solicitors File Number(s): 2009/00290594 Publication restriction: No