Pettaras v Pettaras & Ors [2004] NSWSC 1212

New South Wales Supreme Court

CITATION : Pettaras v Pettaras & Ors [2004] NSWSC 1212 HEARING DATE(S) : 25 November, 2004 JUDGMENT DATE : 25 November 2004 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Interlocutory injunction granted.

CATCHWORDS : CORPORATIONS - DIRECTORS - REMOVAL - INJUNCTIONS - Whether interlocutory order should be made restraining shareholders from voting at shareholders' meeting to remove a director in breach of shareholders agreement. LEGISLATION CITED : Corporations Act 2001 (Cth) - Carr Boyd Minerals Limited v Ashton Mining Limited (1989) 15 ACLR 599 CASES CITED : - Hopkins Professional Services Pty Limited v Foyster Holdings Pty Limited (2001) 39 ACSR 519 - NWL Limited v Woods (1979) 1 WLR 1294 - Tang v Bongreen Pty Limited (2003) 47 ACSR 400 Steven Pettaras - Plaintiff PARTIES : Theodore Pettaras - First Defendant Nicholas Pettaras - Second Defendant Pettaras Press Pty Ltd - Third Defendant FILE NUMBER(S) : SC 6314/04 COUNSEL : A. Spencer - Plaintiff M. Walton SC, E.A. Collins - Defendants SOLICITORS : Doherty Partners - Plaintiff Freidman Reeves - Defendants

JUDGMENT – Ex tempore

1 Yesterday the Plaintiff applied for leave to serve, on short notice, an Originating Process seeking an order that the Third Defendant (Pettaras Press Pty Limited) be wound up. At the same time the Plaintiff filed an Interlocutory Application seeking an interlocutory order restraining each of the First and Second Defendants, who are the other directors of Pettaras Press, from conducting a general meeting of members of Pettaras Press convened by Notice of General Meeting dated 4 November 2004. 2 The purpose of the meeting, as indicated by the notice convening it, is to remove the Plaintiff as a director and secretary of Pettaras Press. Short service was ordered and the matter has come back this afternoon. Mr Spencer appears for the Plaintiff and Mr Walton SC appears for the Defendants. 3 The circumstances briefly are as follows. The Plaintiff and his two brothers are shareholders and directors of Pettaras Press. The Defendant brothers hold between them a majority of the shares in the company. The three brothers have clearly fallen out and indeed, from the evidence filed on both sides, it appears that there is now a very considerable degree of hostility between them. 4 The Defendants together seek removal of the Plaintiff as a director on the ground that his presence in the company's affairs is causing dissension and loss to the company. The Plaintiff says that, on the contrary, his removal as director will occasion the company loss. I am prepared to accept that there has been a considerable degree of personal animosity between the Plaintiff on the one hand and the two Defendants on the other. This, in fact, emerges clearly enough from a shareholders' agreement executed between them in October 2001, one of the provisions of which was to refer disputes between them involving acts of personal aggression to some third party/arbitrator, as it were. 5 The Plaintiff says that the holding of the proposed general meeting and the voting thereat by the First and Second Defendants so as to remove him as a director would be a breach of two shareholders' agreements entered into by the three brothers. There is no contest that the meeting has otherwise been validly convened in accordance with the provisions of the Corporations Law. The contest is whether the voting at the meeting by the two Defendants in such a way as to remove the Plaintiff as director would contravene the terms of the two shareholders' agreements which he relies upon. 6 The first is an agreement which was entered into in about December 1995. Clause 3 of the agreement provides: "During continuation of this agreement, the parties shall be directors of the Company, unless otherwise determined by the shareholders at a shareholders meeting of the Company."