Hickey v Aselford & Anor [2003] NSWSC 185

New South Wales Supreme Court

CITATION : Hickey v Aselford & Anor [2003] NSWSC 185 HEARING DATE(S) : 19/03/03 JUDGMENT DATE : 20 March 2003

JUDGMENT OF : Gzell J DECISION : Summons for declarations that directors removed from office and resolution for placement in administration void, dismissed with costs

CATCHWORDS : CORPORATIONS - Voluntary administration - construction of combined constitution and shareholders' agreement - Whether power to remove a director appointed by a person extends to a director appointed by a general meeting attended by that person - Whether directors removed from office - Whether directors delegate powers or incumber assets when resolving to place a company in voluntary administration - Whether meeting of directors convened on reasonable notice - Whether meeting of directors held prematurely - Whether directors entitled to the opinion that the company was, or was likely to become, insolvent LEGISLATION CITED : Corporations Act 2001 (Cth) CASES CITED : Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Colin Joseph Hickey - Plaintiff PARTIES : David Aselford - 1st Defendant James Canterbury 2nd Defendant Michael John Morris Smith - 3rd Defendant FILE NUMBER(S) : SC 1892/03 Mr A Radojev - Plaintiff COUNSEL : Mr J Stevenson - 1st and 2nd Defendants Mr J Johnson - 3rd Defendant SOLICITORS : Herbert Greer & Rundle Lawyers Bryan Killalea Solicitor

- IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

GZELL J

THURSDAY 20 MARCH 2003

1892/03 COLIN JOSEPH HICKEY v DAVID ASELFORD AND OTHERS JUDGMENT 1 On 19 March 2003 I dismissed the plaintiff's summons with costs. I indicated that I would give reasons for my judgment subsequently. That I now do. 2 The summons sought a declaration that the first and second defendants ceased to be directors of Tradementors Pty Ltd ("Tradementors") on 10 March 2003 and sought an order that they be restrained from representing themselves as directors of Tradementors. A declaration was also sought that a purported resolution placing the company in administration said to have been passed by the first and second defendants on 14 March 2003 was void and of no effect and an order setting it aside was sought. 3 At a shareholders' meeting of Tradementors held on 19 September 2001 at which the plaintiff was present in his personal capacity and as the representative of Dyltax Pty Ltd ("Dyltax"), it was resolved that the defendants be appointed directors of the company. 4 The plaintiff and the defendants were parties to a shareholders' agreement dated 28 Februaries 2002. The constitution of Tradementors was set out in a schedule. The agreement recited that the parties had agreed, as from the date of the agreement, that it should be the only document governing their relations. Clause 15(8) provided that if its provisions were inconsistent with the constitution, the provisions of the agreement would prevail. Clause 5(1)(f) provided that the board would initially comprise the persons listed in a schedule. Those persons were the plaintiff, the defendants and Mark Roche. Clause 5(1)(a) provided that the parties were to ensure that the directors were appointed under the constitution. Clause 5(1)(c) required the parties to ensure that meetings of the board were convened and held under the constitution. Clause 5(1) also included the following provisions: "(d) a Director appointed and nominated by Shareholder One is Chairman of the Directors. Colin Joseph Hickey shall be the first Chairman of the Company and may vote in accordance with the Constitution and this Agreement and, in the case of an equality of votes for and against any resolution, shall have a casting vote; (e) a Director appointed and nominated by Shareholder One is Managing Director of the Company."