9 The respondents submitted that 'the only paragraphs in Part B of the proposed further summons which are tied to the prayer for relief in paragraphs 25 to 28, are paragraphs 106, 107 and 108(t) to (w)'. These paragraphs make allegations concerning the applicant's status as a shareholder of the second respondent and the manner in which he was treated in that capacity.
10 The summary of matters of fact and law in the summons asserts that the applicant was an employee of either the first or second respondent and a director and shareholder of the second respondent. He was a founder of the business in which he had worked for some 18 years. In 2003, his two partners sold their shares to investors, who included a Macquarie Bank consortium and a second consortium. The applicant retained his shareholding and continued working in the business.
11 It is also asserted that in the course of the negotiations about this transaction and subsequently, various representations were made to the applicant about the transaction and his ongoing employment and entitlements, as an employee, director and shareholder. Those representations were not honoured and the respondents embarked upon a course of conduct which resulted in the applicant's dismissal from his employment and the compulsory acquisition of his shareholding.
12 The conduct complained of included the reduction of the applicant's remuneration from $250,000 to $150,000, on the basis of a representation that shareholders, including he, would be enriched by a multiple of the sum he had foregone, with the result that the value of his shareholding would thereby be significantly increased. The respondents excluded the applicant from information about the business and involvement in business decisions. His resignation was sought under threat of dismissal and it was proposed that instead, he provide consultancy services. When he declined, he was dismissed and his shares compulsorily acquired.
13 The summons complains that there was, effectively, a single contract or arrangement between the parties which included the contract of employment and the shareholders' agreement. The summons seeks relief of various kinds, including in relation to the price at which the applicant's shares were compulsorily acquired from him under the shareholders' agreement, pursuant to what is called a 'drag-along clause'.
14 While the respondents placed reliance upon the approach of the Court of Appeal in Solution 6 and McDonalds, to support the view that it would be futile to permit the amendment, as being beyond jurisdiction, I am unable to come to that conclusion.
15 I am unable to see why, in the context of the amended summons as here sought to be advanced, it is not possible that the applicant could make out the claim that there was effectively a single contract or arrangement, which was unfair, as claimed, in whole or in part. Such a claim was made out in MMAL Rentals Pty Limited v Bruning [2004] NSWCA 451. There Spigelman CJ accepted the conclusions reached by Young CJ in Eq at first instance pursuant to s 106, that the contract 'whereby work was performed in an industry' in that case, was a single contract or arrangement comprised of a management agreement and a share allotment agreement (at [126]). One of the issues in the case was whether Mr Bruning received lower compensation as part of his remuneration package, by reason of the fact that he was an investor and was to receive a return on capital by dividends or capital gains. (See [127]) Similar claims are advanced here by the applicant.
16 It was in that context that Spigelman CJ concluded that the power in s 106 extended to permit variation of the price determination formula provided in the contract. At [143], his Honour observed;
What is required is a close relationship between the performance of work and the aspect of the relevant contract that the Court is called upon to declare void or to vary. (See Solution 6 supra at [83]-[95].) I reiterate the view I there expressed at [94] that:
"It is not appropriate ... to take a narrow approach to the total package of benefits, conditions, rights and obligations which relate to performance of work."
17 Mason P and Hodgson JA agreed with the conclusions the Chief Justice reached.
18 In this case, the respondents' objections go to that part of the amended summons where the applicant seeks to attack the fairness of the shareholders' agreement, which permitted the compulsory acquisition of the applicant's shares at a price of 67c per share. In parts of the summons not pointed to by the respondents, but which are plainly relevant to the claims advanced, the applicant complains that the price he received was unfair, in circumstances where his remuneration under his contract of employment was reduced by $100,000, so that the value of the shares, including his own, would be increased. One of the complaints advanced was that the result was that he lost the benefit both of the remuneration he had foregone and the increase in the value of the shares which it was represented to him would result, when his shares were compulsorily acquired.
19 In that context, I am satisfied that to accept the approach urged by the respondent would be to take a narrow approach to the 'total package of benefits, conditions, rights and obligations which relate to the performance of work', which the Chief Justice warned against in Solution 6 and MMAL.
20 I am satisfied, in those circumstances, that justice requires that the leave sought to amend the summons must be granted. I am unable to conclude that the amendment sought would be obviously futile, as the respondent submitted. Nor was it suggested that any injustice would flow to the respondents, if the leave sought be granted. Indeed, given the stage which the proceedings have reached, no such suggestion was available. The amendment will assist in ensuring that the real matter in controversy between the parties is put before the Court in these proceedings.