Breach of duties as oppression – Our Jim & Felicja Superfund v Lindenfels

The case of Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 (Superfund v Lindenfels) is a reminder that shareholder oppression under section 232 of the Corporations Act 2001(Cth) (Corporations Act) must be established on its own terms, particularly where a claimant seeks to rely on alleged breaches of equitable or statutory breaches of fiduciary duties.

Background to Superfund v Lindenfels

In 2016, Batchfire Resources Pty Ltd (Batchfire) acquired the Callide Mine.  An investment from Avra Commodities Pte Ltd (Avra) via its special purpose vehicle, Lindenfels Pte Ltd (Lindenfels), made it Batchfire’s majority shareholder.  As an investment condition, Batchfire entered into an Agency Agreement (appointing Avra as exclusive marketing agent) and an Offtake Agreement (allowing Avra to purchase coal directly).  The plaintiffs, who were minority shareholders, alleged that Avra and its nominee director, Ben Burgess, implemented a plan to make Batchfire a “captive producer” for Avra’s profit and then used dilutive rights issues to seize control of the company.

The case involved multiple causes of action including:

• an alleged breach of a fiduciary duty by Avra;
• an implied term claim;
• a claim of statutory oppression under section 232 and 233 of the Corporations Act; and
• a breach of statutory and equitable directors’ duties by Ben Burgess.

Breach of fiduciary duty

The plaintiffs alleged that Avra had breached fiduciary duties which it owed to Batchfire:

• not to take advantage of an opportunity or knowledge derived from its fiduciary position without informed consent (no profit rule); and
• not to advance its interests when there was a conflict, or a real or substantial possibility of conflict, between the interests of Avra and the interests of Batchfire (no conflict rule).^[1]

An issue discussed was whether Avra owed fiduciary duties.  The following findings applied:^[2]

• The Court held that Avra did not owe fiduciary obligations regarding its contractual duties to provide “Marketing Activities”.  The relationship between parties was commercial.
• Clause 4.1(a) of the Agency Agreement explicitly permitted Avra to elect to purchase Export Coal “instead of providing Marketing Activities”.  Imposing a fiduciary duty would have inconsistently altered the operation of this right.
• Even if a duty existed, the Explanatory Statement provided to shareholders before the investment was sufficient to constitute informed consent regarding the potential conflict of interest.

This cause of action was ultimately dismissed.

Implied term claim

The Plaintiff raised a legal issue as to whether an implied term existed in the Agency Agreement which would require Avra to offer a fair market price for coal purchased under the Offtake Agreement. The Court found that the alleged term failed all five (5) criteria which would constitute an implied term as:^[3]

1. the Agency Agreement was the result of an arm’s length commercial negotiation;^[4]
2. the Implied Term was not necessary to give business efficacy to the Agency Agreement;^[5]
3. it would make no commercial sense for Avra to purchase Export Coal from Batchfire at “a fair market price” and then sell it to end-users at that same “fair market price”;^[6]
4. the Implied Term was not formulated in a way that was clearly expressed;^[7] and
5. it was not inconsistent with the terms of the Agency Agreement to achieve a fair market price because purchases under the Offtake Agreement would be “instead of” conducting the Marketing Activities.^[8]

It was found that the implied term was not necessary for business efficacy given Batchfire could have refused to agree on a price, which would then trigger Avra’s obligation to market the coal as an agent.  Further, the term was not capable of clear expression as “fair market price” in the context was deemed imprecise.  Finally, it was not “so obvious it goes without saying” as both parties knew that Avra would seek to purchase at a wholesale price to allow for its own margin in the circumstances of a future sale.[9]

This cause of action was dismissed.

Statutory oppression

Under section 232 of the Corporations Act, the Court may make an order under section 233 if:

• “the conduct of a company’s affairs; or
• an actual or propose act or omission by or on behalf of a company; or
• a resolution, or a proposed resolution, of members or a class of members of a company;
  is either:
  contrary to the interests of the members as a whole; or
  oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity”.^[10]

In this case, it was discussed whether the Coal Trading Contract, which involved the purchase of coal at an undervalue, and the 2019 and 2020 issues of rights, constituted conduct that was “commercially unfair” or contrary to the interests of members.^[11] The Court found that:

• The Coal Trading Contract was not oppressive as it was undertaken pursuant to express contractual rights.  The prices had been approved by Batchfire’s CEO and were higher than those in the domestic supply contracts.^[12]
  Batchfire had a genuine and urgent need for capital due to operational failures and under-capitalisation independent of Avra’s contract, meaning the 2019 and 2020 “rights issues” were not engineered.^[13]
  A dilutive rights issue is not oppressive if it is deemed a commercially necessary response to a company’s financial distress.^[14]

This cause of action was dismissed.

Breach of director’s duties

An issue was raised as to whether Mr Burgess breached his duties of care and diligence, good faith, and a proper use of position under sections 180, 181, and 182 of the Corporations Act.^[15]  This surrounded an alleged failure to disclose Avra’s profit margins and on-sale contracts to the Batchfire board.  The Court found that:

• While nominee directors owe the same duties as other directors, their obligations must accommodate the commercial reality of the relationship between the company and their appointer.^[16]
• Mr.  Burgess was not required to disclose Avra’s specific on-sale contracts or profit margins.  This information was commercially sensitive, and the Batchfire board already knew Avra was making a profit as part of the “price” for its investment.^[17]
  The Amended Constitution specifically permitted nominee directors to communicate Batchfire’s information to their appointer.  There was no evidence Burgess used Batchfire’s financial distress to secure an improper advantage for Avra.^[18]
  The existence of Avra’s long-term contracts was disclosed in board papers in January 2019.^[19]

This cause of action was dismissed.

Principles of Relief and Valuation

Although the claims were dismissed, the Court noted:

• An order cannot be made under section 233 for a director to compensate the company for a breach of statutory duties, as such claims must typically be brought as derivative actions under section 236.^[20]
• If oppression had been established, the Adjusted DCF Valuation (discounted cash flow) would be the starting point, but an 80% discount would be applied to reflect the extreme risks and operational challenges Batchfire would have faced regardless of the conduct.^[21]

Further information

If you need advice on shareholder oppression and its overlap with coercive control as a minority shareholder, contact us for a confidential and obligation‑free discussion.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances

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[1] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [7].

[2] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [12].

[3] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [352].

[4] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [353].

[5] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [354].

[6] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [355].

[7] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [356].

[8] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [357].

[9] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [352]-[357].

[10] Corporations Act 2001 (Cth) s 232.

[11] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [358]-[362].

[12] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [335]-[337].

[13] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [338].

[14] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [491].

[15] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [549].

[16] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [588].

[17] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [636]-[637].

[18] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [599].

[19] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [621].

[20] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [821].

[21] Our Jim & Felicja Superfund Pty Ltd as trustee for the Jim & Felicja Superannuation Fund v Lindenfels Pte Ltd [2026] FCA 307 at [799]-[801].

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