In re Wondoflex Textiles Pty Ltd: 1951

The court contrasted the literal meaning of the company’s articles with the true intentions of the parties: ‘It is also true, I think, that, generally speaking, a petition for winding up, based upon the partnership analogy, cannot succeed if what is complained of is merely a valid exercise of powers conferred in terms by the articles . . . To hold otherwise would enable a member to be relieved from the consequences of a bargain knowingly entered into by him . . . But this, I think, is subject to an important qualification. Acts which, in law, are a valid exercise of powers conferred by the articles may nevertheless by entirely outside what can fairly be regarded as having been in the contemplation of the parties when they became members of the company; and in such cases the fact that what has been done is not in excess of power will not necessarily be an answer to a claim for winding up. Indeed, it may be said that one purpose of [the just and equitable provision] is to enable the court to relieve a party from this bargain in such cases.’

Judges:

Smith J

Citations:

[1951] VLR 458

Jurisdiction:

Australia

Cited by:

ApprovedEbrahimi v Westbourne Galleries Ltd and Others (on Appeal from In Re Westbourne Galleries Ltd) HL 3-May-1972
Unfair Prejudice to Minority Shareholder
A company had operated effectively as a partnership between two and then three directors. No dividends had been paid, but the directors had received salaries. One director was removed and sought an order for the other to purchase his shares, or . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 30 November 2022; Ref: scu.182289