Clifford Chance

Grayson Richardson, paralegal at Clifford Chance contributed to the writing of this article.

A Federal Court ruling confirms shareholder oppression remedies can extend to private equity fund and partnership management rights, protecting investors with legitimate management expectations under shareholders’ agreements.

A recent Federal Court decision has significant implications for private equity and fund structures, confirming that the scope of shareholder oppression remedies under section 232 of the Corporations Act 2001 (Cth) can extend to the management of sub-funds and partnerships where there is a legitimate expectation of participation in management. The judgment underscores the importance of carefully drafted shareholder arrangements and highlights the risks for investors where internal management rights are altered.

Background

The dispute arose from the breakdown of the business relationship between Ms Alexandra Commins (the second plaintiff) and Mr James Angelis (the third defendant), and their respective corporate vehicles: WIJOAV Services Pty Ltd (WIJOAV) and Angel Holdco Pty Ltd (Angel Holdco). The parties were joint participants in the Goldstone Private Equity Fund (the Goldstone Fund), which was structured through two sub-funds, Goldstone PE and Goldstone FM, governed by a Shareholders' Deed.

The structure of the Goldstone Fund was complex. Shares in the internal companies—VCLP and VCMP—were held 50:50 by WIJOAV and Angel Holdco. Goldstone PE acted as the manager of VCLP, while Goldstone FM was the general partner of VCMP. The limited partners of VCMP were three trusts, with Ms Commins and Mr Angelis acting as trustees.

Ms Commins served as Managing Director of Goldstone PE and Goldstone FM from November 2023. Her employment was terminated in February and April 2025, purportedly for serious misconduct. The dispute was fuelled by disagreements over the management of portfolio companies, including Ms Commins’ refusal to transfer insurance broking requirements to a business associated with Mr Angelis’ family.

Following her dismissal, WIJOAV and Ms Commins commenced proceedings in the Federal Court alleging unfair termination and oppressive conduct. Mr Angelis responded by seeking to wind up VCMP and by removing Goldstone PE and Goldstone FM from their management roles, replacing them with entities under his control.

Key legal issues

The central issue was whether the conduct of the affairs of Goldstone PE and Goldstone FM, including the removal of WIJOAV’s management rights, amounted to oppression under section 232 of the Corporations Act. The case also raised the question of whether a 50% shareholder could seek relief under the oppression provisions, particularly where control could be exercised through partnership mechanisms rather than shareholding alone.

Jackman J confirmed that sections 232 and 233 apply to companies, but not directly to partnerships that are not registered under the Corporations Act. However, the Court recognised that the affairs of a company, as defined in section 53, can extend to the management of partnerships and sub-funds where the company has an executive or managerial role pursuant to a shareholders’ agreement.

The Court also addressed whether a 50% shareholder is precluded from seeking oppression relief. Jackman J found that there is no such bar, especially where the shareholder does not have effective control. In this case, Angel Holdco was able to exercise control through rights reserved in the partnership deed, rather than by virtue of its shareholding.

Decision and reasoning

Jackman J held that Ms Commins’ dismissal was not justified and that the removal of WIJOAV’s management role constituted oppressive conduct. The Shareholders’ Deed provided WIJOAV with a legitimate expectation of participation in the management of the Goldstone Fund’s sub-entities. The unfair exclusion of WIJOAV from management, following Ms Commins’ dismissal, was found to be oppressive within the meaning of section 232.

The Court’s reasoning followed established principles:

• The definition of a company’s 'affairs' is broad and can encompass the management of partnerships and sub-funds where the company has a managerial role.
• Oppression is concerned with commercial unfairness, assessed objectively.
• Conduct may be oppressive even if otherwise lawful.
• Exclusion from management, where there is a legitimate expectation of participation, is a common basis for oppression.
• The Court will generally prefer remedies that avoid winding up, such as buy-outs or capital reductions.

The Court found that the removal of WIJOAV’s management rights, and the transfer of control to entities associated with Mr Angelis, left Goldstone PE and Goldstone FM with no meaningful role. This exclusion was compounded by the improper motives behind Ms Commins’ dismissal.

Implications for private equity and fund structures

This decision confirms that the oppression remedy is not confined to the internal management of companies, but can extend to the management of partnerships and other structures where the company has a substantive executive role. Investors and fund managers should be aware that changes to internal management arrangements—particularly where there is a shareholders’ agreement conferring management rights—may give rise to oppression claims if those rights are unfairly removed.

However, not all changes to internal management will amount to oppression. The key factor is whether the shareholder has a legitimate expectation of participation in management, as set out in the relevant agreements. Where such expectations exist and are unfairly denied, the courts are prepared to intervene.

This judgment serves as a timely reminder for private equity sponsors and investors to review their fund documentation and governance arrangements to ensure that management rights and expectations are clearly defined and protected.

Ongoing case developments

Following the judgement regarding liability but preceding an upcoming hearing regarding damages set for November 2025, two further notable judgements have been delivered.

The first was a judgement on costs made by Jackman J on 18 July 2025 as a lump-sum order for the applicant's legal costs. The total for the applicant's costs of solicitors' fees, counsel's fees, and the costs application itself came to $1,659,372.63. The 'quantum' hearing set for November 2025 will deal with the additional costs related to any buy-out orders under s 233 of the Corporations Act and for any pecuniary remedies the plaintiff may be entitled to.

The second judgement, delivered by Moshinsky J on 29 July 2025, regarded an application for leave to appeal. Angel Holdco, Mr Angelis and Goldstone Capital filed an application for leave to appeal from Jackman J's judgement on liability. In response, WIJOAV Services, Ms Commins and Goldstone PE filed an application for expedition of the appeal so that it might be decided prior to the upcoming quantum hearing in November. Both applications were denied. First, Moshinsky J found there were not sufficient reasons to justify expedition, even if Ms Commins was facing potential financial hardship due to prolonged proceedings. Second, the leave to appeal was refused on the basis that the applicants would not suffer substantial injustice if the leave to appeal was refused. This is because those parties still have the ability to appeal liability once the final orders have been made, and the extra costs of the quantum hearing (which might prove unnecessary should the appeal be successful) would not be sufficient to reach the higher bar of substantial injustice. Any further application for leave to appeal will be considered once final orders have been made by Jackman J.

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