SMCR directors fail in appeal
The directors of SMCR Financial Planning have failed in their Federal Court appeal against a ruling that requires them to pay $737,000 to former managing director, Joseph Martis.
Justice Carr ruled last year that the May 2002 exclusion of Mr Martis from management of the West Perth company was “commercially unfair and hence oppressive”.
The original ruling said Mr Martis’ former partners, namely Graham Smith, Patrick Cork and Suresh Rajan, had not offered to acquire his shares in the business at fair value.
Mr Cork and several other staff subsequently left SMCR to join Grange Securities. The two remaining directors of SMCR, Messrs Smith and Rajan, proceeded with an appeal. They did not challenge the finding of oppression but appealed against the valuation of Mr Martis’ stake in the business.
The Full Court ruled there was no error of principle in Justice Carr’s original decision and dismissed the appeal. Central to the appeal was SMCR’s practice of paying 80 per cent of gross fees (less direct expenses) to its authorised representatives.
When the court valued Mr Martis’ shares, the gross payments were reduced to the industry standard of 40 per cent.
