Morris, John and Paul are directors and shareholders of Noosa Property Developments

Pty Ltd (NPD), a property development company which owns and operates a

restaurant. Morris and John are brothers. John and Paul are friends and partners in an

accounting firm. Morris is an unemployed artist and sole parent of three young

children. The total number of issued shares in NDP is 6,000 ordinary shares. Each

shareholder has 2,000 shares. All the shares are fully paid. NPD has been very

successful but has not paid any dividends to its members for the last two years. Profits

have instead been invested in further development projects. Morris’ wife has recently

died and he is very short of money to look after his family. He approaches John and

Paul and asks them to consider whether NPD could begin to pay dividends again to its

members. John and Paul refuse to consider Morris’ request as it would upset the “long-

term goals of NPD.” Morris is upset by this response and announces that he wants to

sell his shares. John and Paul refuse to buy him out and demand that Morris resign as a

director because he has lost his objectivity. Morris resigns reluctantly. He asks to see

NPD’s most recent set of financial statements. John and Paul refuse to provide the

information. Morris discovers accidentally that NPD has been paying large

“management fees” to John and Paul’s accounting firm. Morris consults you as his

legal adviser. He wants to know:

(i) Should he bring a derivative or personal action against John and Paul? What

factors should he take into account in making this decision? Identify whether there is

a derivative action (proceedings on behalf of the company) and explain the relevant

law applicable.

(ii) If he brings a personal action, should he bring it under the general law or make an

oppression claim under S.232? What factors influence your recommendation? What

evidence in the question is relevant to deciding if oppression exists?

(iii) What orders should he seek?

what are Morris’ rights?