Kirralee Young succeeds in a shareholder dispute regarding new Bunnings kitchen benchtop product roll out
The decision relates to a dispute between the plaintiff and the first defendant relating to the meaning and operation of certain provisions in a shareholders agreement. The agreement regulated their rights as equal shareholders in a company that carries on the business of developing, designing, manufacturing and marketing kitchen bench tops. In broad terms, the first defendant provided the intellectual property and expertise for the business and the plaintiff provided its funding. The shareholders have now fallen out over the company’s trading and financial position and the plaintiff is unwilling to provide further funding.
Among their respective arguments is the first defendant’s contention that the shareholders’ agreement is void and ineffective because the provisions relating to the plaintiff’s funding obligation either impose an illusory obligation or they are uncertain. These questions raised issues of general application in the law of contract.
His Honour found in favour of the plaintiff that the consideration was not illusory consideration despite the fact that certain conditions were required to be satisfied before the shareholder was required to provide funding and ultimately that the shareholders agreement was valid.