ATH Air Transport v JAS (International) [2002] NSWSC 1121

New South Wales Supreme Court

CITATION : ATH Air Transport v JAS (International) [2002] NSWSC 1121 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4832/02 HEARING DATE(S) : 10/10/02, 11/10/02, 15/10/02, 17/10/02, 18/10/02, 01/11/02, 21/11/02 Written submissions: 22/10/02, 23/10/02, 25/10/02 JUDGMENT DATE : 26 November 2002

PARTIES : ATH Air Transport Holding SA - Plaintiff JAS (International) Australia Pty Limited JUDGMENT OF : Barrett J

COUNSEL : Mr D E Grieve QC/Ms P E McDonald/Ms P Ryan - Plaintiff Mr M L D Einfeld QC/Mr K L Andronos - Defendant SOLICITORS : Blessington Judd - Plaintiff Cara Marasco & Company - Defendant CATCHWORDS : CORPORATIONS - winding up - just and equitable and related grounds - no question of principle LEGISLATION CITED : Corporations Act 2001 (Cth) Embrahimi v Westbourne Galleries Ltd [1973] AC 360 CASES CITED : Loch v John Blackwood Ltd [1924] AC 783 O'Neill v Phillips [1999] 1 WLR 1092 Riviana (Aust) Pty Ltd v Laospac Trading Pty Ltd (1986) 10 ACLR 865 DECISION : Application dismissed

- 43 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

TUESDAY, 26 NOVEMBER 2002

4832/02 – ATH AIR TRANSPORT HOLDING SA v JAS INTERNATIONAL (AUSTRALIA) PTY LIMITED JUDGMENT

JAS Australia and its activities 1 JAS International (Australia) Pty Limited ("JAS Australia") was incorporated in New South Wales on 14 May 1987. There were, at inception, three shareholders, Teresa Paroli a resident of Sydney, Marino Pizzuto also resident in Sydney and the plaintiff, ATH Air Transport Holdings SA of Lugarno, Switzerland. These three remain the shareholders today. Each holds 400 shares. The shares are of different classes. All shares have equal voting and capital rights. There is provision in the constitution for dividends to be paid at different rates on shares of different classes and for dividends to be paid on shares of one or two classes to the exclusion of the others or other. 2 JAS Australia carries on a business of air freight forwarding. It arranges consignments of air freight to and from Australia and arranges ancillary services such as transportation and warehousing at the Australian end. Consignors of freight from Australia wishing to have services of that kind at the foreign port of destination may make the necessary arrangements through JAS Australia. It, in turn, gives appropriate instructions to a correspondent at the foreign port. 3 Contacts with reliable organisations in other countries are thus important to JAS Australia. In order to be associated with such organisations, JAS Australia is a "member" of the JAS worldwide "group", which is co-ordinated by the plaintiff and consists of companies with some common threads of ownership. The plaintiff has an ownership interest in all but one of these JAS group companies. The shareholding arrangement varies from country to country. In some countries, local restrictions on foreign ownership dictate that the plaintiff's interest is a minority interest. In others (such as Australia), the plaintiff has a minority interest by choice. In others it has a majority interest. The plaintiff is not involved in the active administration of any of the companies in the group. 4 Membership of the JAS worldwide group entails, for each group member, acceptance of certain contractual arrangements with all other group members. These involve the group members providing services to one another in their respective countries to ensure the efficient transportation of cargo from a customer in one country to a destination in another. As part of the contractual arrangements, sums payable to and receivable by the respective companies are subjected to a netting system administered by a separate accounting administration company based in London, JAS Financial Services PLC ("JAS London"). As a result of this system, each group company either makes a single monthly payment to or receives a single monthly payment from JAS London which acts as a clearing house accordingly. The single monthly payment to or by each individual company causes all debts due as between individual companies to be satisfied. 5 The commercial relationship between JAS Australia and JAS Italy became the subject of an agreement entered into between the two companies on 1 August 1987. Each undertook to the other certain service obligations in relation to carriage of goods between the two countries. This agreement provided for a sharing of the gross profit realised by each of them from such carriage. The agreement was for an initial term of ten years and was expressed to be terminable thereafter by either party "for any cause or reason whatsoever on giving to the other party six (6) months' prior written notice". There was also a provision allowing termination for unremedied breach. 6 A separate agreement also dated 1 August 1987 was made between the plaintiff, JAS Australia, Mr Pizzuto and Ms Paroli. By this agreement, the plaintiff was granted a right of first refusal in the event of the receipt by JAS Australia of an offer to purchase its business. In return, the plaintiff agreed that JAS Australia would have the exclusive right to the "JAS" name and logo for use in its business. 7 The present proceedings arise from disputes that have arisen between the plaintiff and the other two shareholders in JAS Australia, being Mr Pizzuto and Ms Paroli. The disputes concern a number of specific matters to which I shall come. They have arisen in a context where Mr Pizzuto and Ms Paroli have worked full time in the business in Australia. Mr Pizzuto is the sole director of JAS Australia. Ms Paroli was previously a director but resigned in about June 2000. Mr Pizzuto and Ms Paroli are the senior managers, Mr Pizzuto being the financial controller and Ms Paroli being the operations manager. The plaintiff, for its part, has played no direct role in the day to day affairs of JAS Australia. 8 The principal representative of the plaintiff is Mr Biagio Bruni, based in Milan. He is also the principal of JAS Jet-Air Service SPA ("JAS Italy"), the JAS group member in Italy. Mr Bruni has acted for both those companies in the events relevant to these proceedings. A subsidiary role has been played by Mr Sergio Bariviera, the JAS group's vice-president for Asia. Both these gentlemen gave evidence. 9 The plaintiff – or, more particularly Mr Bruni – does, however, keep an eye on the financial performance of JAS Australia. For quite some time up to about September 1998, the monthly management reports of JAS Australia were sent regularly to Mr Bruni. Since then, a different reporting system has applied. Under that system, JAS Australia makes monthly reports to JAS London in connection with the netting system. The integrity of that system depends on the maintenance of financial stability in the respective operating companies and it is natural for the plaintiff to concern itself with those matters. Each participating company submits to London a monthly report known as a "frango". The plaintiff's claims 10 By its originating process filed on 26 September 2002, the plaintiff seeks an order for the winding up of JAS Australia under s.461(1)(e), s.461(1)(f) or s.461(1)(k) of the Corporations Act 2001 (Cth) on the footing that