Reported Decision : (2003) 45 ASCR 53 New South Wales Supreme Court CITATION : Yazbek v Aldora Holdings [2003] NSWSC 330 HEARING DATE(S) : 15 April 2003 JUDGMENT DATE : 17 April 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Declarations and orders in terms of paragraphs 2, 3, 4, 5, 6 and 7 of the Summons CATCHWORDS : CORPORATIONS - oppression and unfair prejudice - unlawful and unauthorised convening of meeting - invalid decisions - no ground for curative order under s 1322 LEGISLATION CITED : Corporations Act 2001 (Cth) ss 232, 233, 1322 Australian Innovation v Petrovski (1996) 21 ACSR 218 AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450 CASES CITED : DCT v Abberwood Pty Ltd (1990) 19 NSWLR 530 Howard v Mechtler (1999) 30 ACSR 434 Martin v Australian Squash Club (1996) 14 ACLC 452 Malek Yazbek (P) Aldora Holdings Pty Ltd (D1) PARTIES : Hyhonie Holdings Pty Ltd (D2) Leila Mare Yazbek (D3) Annette Mare Yazbek (D4) Paul Leroy as trustee of the Bankrupt Estate of Robert Lewis Yazbek (D5) FILE NUMBER(S) : SC 1128/03 COUNSEL : B Connell (P) R Powell (D1-D4) SOLICITORS : Snelgrove Boyle Neilson (P) Bowring Stone, Lawyers (D1-D4) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J THURSDAY 17 APRIL 2003 1128/03 MALEK YAZBEK v ALDORA HOLDINGS PTY LTD & ORS JUDGMENT 1 HIS HONOUR: On 23 May 2002 there was a purported general meeting of the first defendant ("Aldora Holdings"), at which resolutions were purportedly adopted for the removal of the plaintiff as a director, the appointment of the third defendant ("Leila") as a director, and ratification of two share transfers. The plaintiff contends that these decisions were invalid and ineffective, and seeks declarations to that effect and for the rectification of the company's share register and the records of the Australian Securities and Investments Commission (proposed orders 3-7 of the Summons). The plaintiff also says that the course of conduct of the affairs of Aldora Holdings, of which the purported meeting of 23 May 2002 was a part, was oppressive or unfairly prejudicial to him, or unfairly discriminatory against him, and he seeks a declaration to that effect (proposed order 2). He also seeks a declaration that the purported meeting of 23 May 2002 was convened for an improper purpose (proposed order 1). The case has come before me for hearing on an expedited basis, because the plaintiff has a terminal illness. 2 The plaintiff is the father of Robert Lewis Yazbek ("Robert"), who is now a bankrupt represented in this proceeding by his trustee in bankruptcy, who has filed a submitting appearance. Robert's wife is the fourth defendant ("Annette"). His daughter is the third defendant, Leila. Robert and Aldora Holdings engaged Peter White of Bentleys MRI (Sydney) Pty Ltd as their accountant in 2000, and he remained in that position at all relevant times. 3 The case revolves around a meeting held on 23 May 2002, purportedly as a meeting of the shareholders of Aldora Holdings, and some share transfers purportedly made in April 2002 and ratified at the meeting. I am satisfied, for reasons I shall give, that no valid decisions were made at the meeting, and therefore the plaintiff is entitled to some relief. The evidence before me has revealed some quite disturbing deficiencies of documentation in respect of Aldora Holdings. Those responsible for preparing the documents for the company have at best acted in abysmal ignorance of the requirements of company law. However, the evidence before the Court is obviously incomplete with respect to a series of litigated disputes between the parties, which would be relevant to any decision about the motives or purposes of Robert and Leila. I have therefore found it impossible to reach any conclusion as to whether there has been intentionally fraudulent or misleading conduct going beyond mere ignorance. This general conclusion imposes some limits on the relief to be granted to the plaintiff, as I shall explain. Facts 4 In March 1997 the plaintiff and Robert negotiated a business joint venture with a company called The Kensington Fund Ltd, and also with companies associated with Michael Sanchez. Under the terms of the arrangements, a joint venture company was constituted, called Doncaster Development (NSW) Pty Ltd, having an issued share capital of 300 A shares and 300 B shares. The 300 B shares were issued to one of the co-venturers, The Kensington Fund Ltd. The 300 A shares were divided between Vitarni Pty Ltd, a company associated with Mr Sanchez, which took 195 shares, and Aldora Holdings which took 105 shares. 5 Aldora Holdings was acquired by the plaintiff and Robert at that time, as a shelf company. The plaintiff and Robert were appointed as its directors and joint secretaries. 1000 shares were allotted to Robert, and 5 shares were allotted to the plaintiff. The only asset of Aldora Holdings is its shareholding in the joint venture vehicle Doncaster Development (NSW). 6 There is in evidence an instrument of declaration of trust made by Robert and dated 14 March 1997, by which Robert declares a trust of the 1000 shares in Aldora Holdings for the second defendant ("Hyhonie Holdings") as trustee for the Robert Yazbek Family Trust. The document is endorsed with payment of an amount of New South Wales duty on 28 February 2001. As I shall explain, there is controversy as to whether the instrument reflects a genuine and valid declaration of trust. 7 On 10 July 1998 Robert, Hyhonie Holdings and "Aldora Pty Ltd" (alleged to be Aldora Holdings) executed a deed of agreement with Mr Sanchez and Vitarni, by which they brought into operation heads of agreement set out in a letter dated 8 July 1998 which was annexed to the deed of agreement. Amongst other things, the heads of agreement asserted that "Aldora Pty Ltd" held 100 A shares and Vitarni held 200 A shares in Doncaster Development (NSW), and it provided that Vitarni would transfer 50 A shares to "Aldora Pty Ltd" so that each of the two companies would then hold 150 A shares. At present, as I have said, Aldora Holdings has 105 A shares and Vitarni has 195 A shares. 8 The plaintiff gave evidence, which I accept, that on several occasions after the joint venture agreement was entered into, he had conversations with Robert in which he told Robert that he had spent money for Aldora Holdings and the joint venture and that he wanted a greater share of Aldora Holdings. The plaintiff said his son replied, "I'll consider transferring to you some of my shares." It appears that thereafter the plaintiff came to regard his son's shareholding in Aldora Holdings as an asset of his son available to meet the plaintiff's claims. 9 On 18 February 2002 Aldora Holdings and Robert instituted proceeding No 1570 of 2002 in this Division of the Court against Vitarni and Mr Sanchez, seeking specific performance of the deed of agreement. It appears that this proceeding is inactive for the time being, perhaps because of Robert's bankruptcy. 10 Early in the year 2000 a dispute arose between the plaintiff and interests associated with him, on one hand, and on the other hand Robert and Mr Sanchez and their respective interests, under which the former sought recovery from the latter under guarantees for money lent. Attempts were made to settle the dispute, in which the plaintiff's solicitor, Mr Snelgrove, was involved. Through correspondence and discussions for the purposes of settling the dispute, Mr Snelgrove became aware of the existence of Hyhonie, but according to his evidence (which I accept) there was not any claim by Robert until about June 2001 that his shares were held in trust or that Robert held the shares for Hyhonie as trustee of his family trust. 11 Mr Snelgrove gave evidence of a meeting he had with Robert and Mr Sanchez on 25 October 2000, to discuss a settlement proposal. During that meeting, Robert told him that Hyhonie did not hold his interest in the Kensington project. Robert said that his interest was held through Aldora Holdings, and although his father had some shares, he (Robert) owned "just about all the shares". Robert also said, "everything I've got is tied up in my shares in Aldora", but he agreed that he would give a charge over the shares. Robert gave evidence denying parts of Mr Snelgrove's evidence of this conversation, but I found Robert's evidence to be unreliable on this and other matters, and I prefer Mr Snelgrove's account. 12 Mr Snelgrove gave evidence of further settlement discussions at a meeting on 5 June 2001. According to his account of the meeting, Robert agreed to charge his shares in Aldora for the purposes of settlement. In response to a question by Mr Snelgrove, Robert explained that "Aldora was to hold its interest in Doncaster for Hyhonie, but it never did." 13 In a proceeding in the Commercial List of this Court, No 50025 of 2001, the present plaintiff and a company associated with him, called Dronlane Management Pty Ltd, sued Robert and Mr Sanchez and two companies called MacMahon Plaza Pty Ltd and Benchmark Apartments Pty Ltd, in relation to some real property mortgages and related guarantees. McMahon, Benchmark and Mr Sanchez filed a defence denying liability, and also a cross-claim against Dronlane, the present plaintiff and Robert. 14 After the dispute reflected in these proceedings arose, the plaintiff had several discussions with his son about possible settlement of the proceeding. According to the plaintiff, he offered to settle on the basis that Robert would transfer his shares in Aldora Holdings to the plaintiff. He said that Robert replied that he would think about it. These settlement negotiations failed. On 5 February 2002 the plaintiff visited a medical oncologist, who subsequently confirmed that the plaintiff suffered from an inoperable and terminal cancer. 15 The present plaintiff and Dronlane agreed with McMahon, Benchmark and Sanchez to settle the claim and the cross-claim, on the terms of a deed a settlement dated 11 March 2002 (shortly after the commencement of proceeding No 1570 of 2002). An effect of the agreed settlement was to remove the Sanchez interests from proceeding No 50025 of 2001, leaving it as a claim by Dronlane and the present plaintiff against Robert. 16 At about the time of the settlement with the Sanchez interests, Mr Sanchez told the plaintiff that he wanted to reach a settlement with Robert on the basis that he would purchase Robert's shares in Aldora Holdings, but Robert was not prepared to sell. 17 The deed of settlement contained a provision (clause 4.4) by which Mr Sanchez and the two defendant companies agreed that they would, at the request of the present plaintiff and Dronlane, provide all reasonable assistance (including giving evidence) to the present plaintiff and Dronlane in their claim against Robert in Proceeding No 50025 of 2001. By clause 4.5 the present plaintiff agreed not to give any affidavit or statement in support of any court process or action brought by Robert against Sanchez, or in defence of any court process brought by Sanchez against Robert. 18 According to his affidavit, Robert found out about the deed of settlement on 2 April 2002. He referred to clause 4.4 and said that he "formed the view that it was not in the interests of Aldora Holdings Pty Ltd for Malek Yazbek to remain a director". He was cross-examined about this matter. Having listened to that cross-examination, I have formed the view that clauses 4.4 and 4.5 of the deed of settlement cannot be regarded as providing any rational basis for Robert to reach the conclusion that it would not be in the best interests of Aldora Holdings for the plaintiff to remain a director of that company. Robert seems to have confused proceeding No 50025 of 2001 with proceeding No 1570 of 2002, by reading clauses 4.4 and 4.5 as if they authorised or obliged the present plaintiff to give evidence against Aldora Holdings' claim for specific performance. On their plain construction, these clauses had nothing to do with proceeding No 1570 of 2002, and as far as I can see, they had nothing to do with the interests of Aldora Holdings, which is not party to the deed of settlement. 19 On 17 April 2002 Robert consented to judgment for the present plaintiff and Dronlane against him in proceeding No 50025 of 2001, in the sum of $2,654,398.25, execution of the judgment being stayed until 15 July 2002. 20 The evidence includes two curious documents in similar terms, purporting to be records of decisions taken by the company secretary of Aldora Holdings on 22 and 23 April 2002. Both are signed by Robert. The first document notes resolutions by Robert as company secretary that · share transfer documents which detail the transfer of 1000 ordinary shares from Robert Lewis Yazbek to Leila Marie Yazbek be noted as received; · the transfer of the shares be approved; · 1000 ordinary shares be and were thereby transferred from Robert Lewis Yazbek to Leila Marie Yazbek; and · when the share transfer documents were duly stamped by the Office of State Revenue, the necessary entries were to be made in the register of members, the share certificates of the transferor were to be cancelled, and fresh certificates were to be prepared and issued under the common seal of the company. 21 The document of 23 April 2002 is in identical terms except that it relates to the transfer of one ordinary share from Leila Marie Yazbek to Annette Yazbek, as nominee for Leila Marie Yazbek. 22 Leila wrote a letter to Robert as company secretary of Aldora Holdings, dated 24 April 2002, by which she purported to requisition an extraordinary meeting of the shareholders of the company. She purported to do so as the holder of 999 ordinary shares, evidently relying upon Robert's "company secretary resolutions". The letter said that the meeting was to be convened to consider the following matters: (a) her appointment as a director; (b) the removal of the plaintiff as a director; (c) acceptance of Robert's resignation from the office of director; (d) ratification of the transfer of shares from Robert to her; (e) ratification of the transfer of a share from her to Annette, as nominee for her. 23 It seems unlikely that there were any written instruments of transfer in existence at the time of the "company secretary resolution", the requisition for the meeting, or even the date of the meeting itself. A letter from Mr White to Robert on 17 September 2002, purports to enclose a share certificate and standard transfer form for signature by Leila and Robert. There is in evidence a copy of a standard transfer form relating to the transfer of 1000 shares in Aldora Holdings from Robert to Leila. The instrument has been signed by the transferor and the transferee, but they have not filled in the spaces for stating the dates of their signatures. In the space for stating the date of the transfer, "23/05/2002" has been typed in but "23/05/" has been deleted by hand and "22/4/" has been written above it. There is an endorsement dated 12 June 2002 which appears to certify a dutiable amount of zero dollars. There is no explanation for the fact that the endorsement on the instrument predates the letter by several months, but it seems to me appropriate to infer, even without any explanation for that matter, that the instrument was not created until after the events of April and May 2002. 24 The documentary evidence also includes a standard transfer form for the transfer of one share in Aldora Holdings from Leila to Annette on 23 April 2002. The document is signed by the transferor and the transferee but the dates of signature are not given. There is an endorsement to the effect that New South Wales stamp duty, but no fine, was paid on 16 August 2002, suggesting that the instrument was brought into existence well after the transfer was purportedly approved by Robert as company secretary and by the shareholders at their meeting. 25 Robert signed a document purporting to be a notice of an extraordinary meeting of the members of Aldora Holdings on 29 April 2002. The document gave notice that the meeting of the company would be held at 5 Harrison Ave Maroubra (Robert's address) on 23 May 2002. The business of the meeting was to be as expressed in Leila's purported requisition. 26 It appears that the two "resolutions of company secretary", the requisition and the notice of meeting were all prepared by Mr White. There is some inconsistent evidence as to the posting of the notice. On 12 August 2002 Robert executed on oath a document headed "affidavit of posting", in which he said that on 29 April 2002 he "attended to the preparation, collation and posting" of the notice of meeting. He said that the addresses to which the notice was forwarded were the addresses of the shareholders as recorded on the company's register of members, and where addresses recorded in the records of the Australian Securities and Investments Commission were different from the register of members, the notice was sent to both addresses. The "affidavit of posting" listed only a single address for each of the persons to whom the notice was sent, suggesting that there was no discrepancy between the company's register and the Commission's records, notwithstanding the text of the affidavit. He said that the notice was sent to Leila and Annette at his own address of 5 Harrison Ave Maroubra, and it was sent to the plaintiff at 11 The Mall, South Hurstville. 27 Mr White gave evidence that it was he who addressed the envelopes and placed the notices in them, after they had been signed by Robert. He said he posted a copy of the notice to the plaintiff at 11 The Mall, South Hurstville. In cross-examination he purported to explain the affidavit of posting, which he said he had prepared for Robert to sign, on the basis that Robert had attended to the posting of the notice by instructing him to do so. That explanation is, in my view, flatly inconsistent with the wording of the affidavit of posting. 28 Robert's affidavit prepared for the purposes of this proceeding was to the effect that he instructed Mr White to send a copy of the notice to the plaintiff. At a much later time, in August 2002, Mr White told him that he had obtained the plaintiff's address from an ASIC search. I reject that evidence, to the extent that it claims that Robert was unaware that Mr White used the South Hurstville address until August 2002. 29 Robert's affidavit of posting is inconsistent with the evidence given by him and Mr White at the hearing. It may well have been that Mr White rather than Robert put the notices in the envelopes, but more importantly, it is more probable than not that Robert was aware that the notice to his father was addressed to 11 The Mall, South Hurstville. The plaintiff had not lived at that address for some time prior to April 2002, as Robert well knew. Robert intentionally caused the notice of meeting to be sent to his father at an address that Robert knew to be incorrect. 30 There is in evidence a document purporting to be minutes of extraordinary meeting of shareholders of Aldora Holdings held at 5 Harrison Ave Maroubra at 1 pm on 23 May 2002. According to the minutes, Leila and Annette were present and Robert was in attendance as company secretary. It was resolved "that it be noted that notwithstanding due notice being given of the meeting, that Mr Malek Yazbek was not yet in attendance at the meeting and that the meeting would be declared open notwithstanding his absence". Then the business set out in the notice was dealt with: that is to say, Leila was appointed as a director, the plaintiff was removed as a director, Robert's resignation as a director was accepted, and the two share transfers were ratified. 31 There is also in evidence a document purporting to be a record of a decision by Leila as sole director of Aldora Holdings made at 2 pm on 23 May 2002 at 5 Harrison Ave Maroubra. The document records a series of resolutions having the effect of accepting Robert's resignation as secretary, removing the plaintiff as secretary, appointing Leila as secretary, and authorising the preparation and lodgement of forms with the Commission. On 24 May 2002 Leila signed a Notification of Change to Officeholders stating that the plaintiff ceased to be a director and secretary on 23 May 2002. 32 Mr White gave evidence that he recorded the two transfers after the close of business on 22 May 2002. He has produced a copy of the register of members of Aldora Holdings as at 17 March 2003, but nothing to persuade me that instrument of transfer was in existence on 22 May 2002. 33 Robert became bankrupt, upon the presentation of his debtors petition, on 11 June 2002. On 19 June 2002 Aldora Holdings through its solicitors wrote to Doncaster Developments (NSW) asking for the substitution of Leila for Robert as a director of the company. Robert's trustee in bankruptcy issued a notice to creditors on 5 July 2002, disclosing as the bankrupt's assets a motor vehicle valued at $80,000 and small amounts of cash, superannuation and tools of trade, and liabilities to unsecured creditors of $3,408,003. 34 On 28 June 2002 the plaintiff swore an affidavit on behalf of the defendants, Mr Sanchez and Vitarni, in proceeding No 1570 of 2002. The affidavit said, amongst other things, that the plaintiff was not informed in advance of Robert's intention to resign as a director on 23 May 2002, that no meeting of the board of directors of the company was convened and no resolution was passed to accept Robert's resignation and appoint Leila in his place, and that he has never attended any meeting of directors of Aldora Holdings or participated in any resolution approving the commencement or maintenance of proceeding No 1507 of 2002, a proceeding of which he only became aware on about 21 June 2002. He was asked in cross-examination to explain why he provided this affidavit to the opponents of the company. He was not able to give any coherent explanation. It seems to me, however, that the provision of this affidavit does not suggest, of itself, any failure to act in the best interests of the Aldora Holdings. The affidavit might have led to some challenge to the authority of those purporting to sue on the company's behalf, but if they lacked authority to do so, it was in the interests of Aldora Holdings that the question of authority be properly addressed. 35 The plaintiff said in cross-examination that he would discontinue that proceeding if he were successful in the present proceeding. Again, however, I do not regard this evidence as establishing a failure to consider or act in the best interests of Aldora Holdings. In particular, it is not self-evident that proceeding No 1507 of 2002 will be successfully prosecuted, although I am in no position to take any view as to the prospects of success of that litigation. 36 On 5 July 2002 a form was filed with ASIC advising of the plaintiff's removal as a director of Aldora Holdings. On 15 July 2002 the plaintiff's judgment against Robert became enforceable. 37 On 18 July 2002 Mr Snelgrove wrote to Leila. He said it had come to the attention of the plaintiff that Leila had been appointed a director of Aldora Holdings on 23 May 2002. He asked her who made the appointment, and under what power, and he asked for copies of documents relating to the appointment. He also inquired about the location of the books and records of Aldora Holdings and he asked to be told what litigation the company was involved in and who were the solicitors who acted for it. When there was no response, he sent a follow-up letter on 26 July 2002. 38 The defendant's solicitors replied briefly on 26 July 2002 and then more fully on 31 July 2002. Their letter asserted that the plaintiff was not at that time a director of Aldora Holdings, and said that if the plaintiff wanted to inspect any document he should contact Mr White, whose address was given. The letter referred to the plaintiff's affidavit of 28 June 2002 in proceeding No 1570 of 2002, complaining that his action in swearing the affidavit was "somewhat surprising and disappointing to the board and shareholders of Aldora". The letter proposed a general meeting of shareholders of Aldora Holdings on 16 August 2002, to discuss any issues that the plaintiff wished to raise. It appears that a meeting was held on that day but the plaintiff did not attend. 39 Mr Snelgrove replied on 1 August 2002, seeking to refute allegations in the letter of 31 July 2002 and asserting that the plaintiff was a director and secretary of the company as well as a shareholder. When he did not receive a reply, he wrote another letter on 13 August 2002, in which he asked for copies of all relevant correspondence and records. On the same day he wrote to Mr White seeking access to the company's books and records. Mr Snelgrove experienced some difficulty in obtaining access to documents. Mr White was away for a week, and the defendants' solicitor wrote on 15 August to say he believed that the questions raised by Mr Snelgrove in his letters of 1 August and 13 August had already been addressed. 40 There was further correspondence and eventually on 21 August 2002 Mr White wrote to Mr Snelgrove enclosing a copy of the documentation relating to what he called "the formal removal" of the plaintiff as a director. Mr White declined to provide the plaintiff with access to the books and records of the company, on the ground that he was no longer a director. There was further correspondence in which Mr Snelgrove alleged that the documents sent by Mr White on 21 August were a sham, and in due course the present proceeding was commenced. 41 The plaintiff's difficulty in obtaining access to documents did not end after commencement of the proceeding. Further evidence has been provided by Mr Snelgrove showing that there was considerable delay on the part of the defendants and Mr White in responding to requests for production of documents, and ultimately the plaintiff made an application, shortly before the hearing, for orders that a subpoena and notice to produce be issued. Some documents were produced to the Court on the day before the hearing, and others were produced on the hearing day, and still others were produced after the luncheon adjournment on the hearing day. The ownership of 1000 shares in Aldora Holdings 42 The plaintiff has invited the Court to find that the declaration of trust of Robert's shares in Aldora Holdings is invalid or inoperative and that at all relevant times, Robert has been the beneficial owner of the shares. The plaintiff submits that the trust "pops up" whenever it is convenient for Robert at any particular time, and that the document appears to have been created or resuscitated in about March 2001 in response to the proceeding issued by the plaintiff against Robert at that time, which led to the bankruptcy of Robert with no assets of substance except his car. I have decided not to make any decision on that matter, for three reasons. 43 First, the evidence before me is extremely unclear. I shall set the evidence out, because it might be helpful for me to do so, the matter having been argued before me, in the context of a possible proceeding by Robert's trustee in bankruptcy with respect to the ownership of the shares. 44 Most of the evidence before me points to the conclusion that the shares were never held in trust or ever treated by Robert or Hyhonie Holdings as trust property. First, there is the assertion by the plaintiff, corroborated by the evidence of Mr Snelgrove, that until June 2002 Robert never informed the plaintiff that he was other than the beneficial owner of the shares, and that he conducted various negotiations on the basis that he was the beneficial owner. Secondly, the annual returns for Aldora Holdings completed by Robert record that he held the 1000 shares beneficially as at 27 November 1997, 1 September 1999, 16 January 2000 and 31 August 2001. It is only the 2000 return that shows non-beneficial ownership. An entry was made in that return, evidently on 28 March 2002, by handwritten alteration from "Y" to "N" in the column under the words "Are shares beneficially owned (Y/N)". Importantly, the 2002 annual return dated 1 November 2002, the first to show Leila as the holder of 999 shares and Annette as the holder of one share, a document signed by Leila, states that the shares are beneficially owned. 45 There is some evidence in favour of the existence of the trust. There is, first, the document itself. Secondly, an affidavit in proceeding No 1507 of 2002 by Anthony Alexandrou, the former accountant for Aldora Holdings, has been tendered in the present proceeding. In it Mr Alexandrou says that he witnessed the declaration of trust, a copy of which he annexes to his affidavit. The copy annexed to his affidavit, unlike the copy annnexed to the affidavit of Leila, does not bear any evidence of stamping. But there are reasons for not placing any great reliance on that affidavit. Mr Alexandrou did not file any similar affidavit in the present proceeding. He has therefore not been available for cross-examination on this matter. Moreover, in his very short affidavit Robert did not give any evidence about the existence of a trust, although he gave some evidence on the subject in cross-examination. Leila, in her affidavit, did not assert that a trust exists, annexing the declaration of trust for another, obviously confused, purpose. It may also be of relevance that the address of Robert shown on the declaration of trust differs from his address as at the date it bears, disclosed in a Notice of Change of Officeholders signed by him on the same day and lodged by Mr Alexandrou, and on the notice of allotment of shares to him. 46 Clause 23.9 of the constitution of Aldora Holdings required disclosure to the company of any trust, but no such disclosure appears to have been made, at any rate to the plaintiff as co-director and co-secretary of the company. While the declaration of trust is dated 14 March 1997, it was stamped only on 28 March 2001, at around the time the plaintiff took proceedings against Robert. Finally, Mr White's files, produced half way through the hearing, include the financial statements of the Robert Yazbek Family Trust for the year to 30 June 2001, which show as an asset of the trust an investment in 195 A class shares in Doncaster Developments (NSW), brought to account at $195. That is particularly confusing, because other evidence indicates that Vitarni held 195 A class shares in Doncaster, and Aldora Holdings held 105 A class shares, but it claimed to be entitled to 150. 47 In summary, the evidence is so confused that it would be difficult to make any confident conclusions and I would avoid doing so unless it were necessary. 48 Secondly, it is of concern that some important evidence on this matter emerged very late, indeed some of it during the course of the final hearing. Add to that the fact that the final hearing was an expedited hearing because of the plaintiff's terminal illness. It may be that, if a proceeding to test the beneficial ownership of Robert's shares was taken in circumstances allowing more time for pre-trial investigation, further evidence would be unearthed and the position would become clearer. 49 Thirdly, the beneficial ownership of Robert's shares in Aldora Holdings is not a subject upon which it is necessary for me to make any decision, in reaching my conclusions on the prayers for relief set out in the plaintiff's summons. The relief claimed in the summons is directed towards invalidating the resolutions purportedly passed on 23 May 2002. It is clear that those resolutions relate to transfers of Robert's shares, but transfers of those shares might have been valid whether or not Robert held the shares in trust. Findings 50 I shall consider, first, the resolutions purporting to approve the transfer of 1000 shares from Robert to Leila on 22 April 2002, and the transfer of one share from Leila to Annette as nominee for Leila on 23 April 2002, both by way of "company secretary's resolution". 51 In my opinion, the "company secretary's resolution" were of no legal effect for the following reasons: (1) Robert was one of two company secretaries at the time, the other being the plaintiff, who is not informed of the transaction and did not participate in it; (2) the company secretaries of Aldora Holdings had no power to approve the transfer of shares, either under the constitution of the company or otherwise; (3) I have held that it is likely that there were no instruments of transfer in existence on 22 and 23 April 2002. 52 The first and third of these points are self-explanatory. As to the second, the constitution of the company provided (clause 29.1) that shares were transferable by written instrument in such form as the directors may accept. The transferor remained the holder of the shares until the name of the transferee was entered in the register. Under clause 29.2, the directors were empowered in their discretion, and without assigning any reason, to decline to register a transfer of shares. In my opinion the effect of these provisions was to vest in the board of directors the power to resolve that a transfer of shares be registered or not registered, as the case may be. Only if the power to approve registration was vested in them could the directors have any meaningful power to decline to register. The company secretary's role in the process of share transfer was merely to administer and implement the decisions of the directors, by (for example) causing any instrument of transfer approved by them to be stamped and registered, and by having new share certificates issued. 53 A consequence of my decision on that point is that at the date of the meeting, 23 May 2002, the shareholders of the company were Robert, who was at the meeting, and the plaintiff, who was not. By clause 6.1 of the constitution of the company the quorum for a meeting of members was two. Therefore the meeting of 23 May 2002 was an inquorate meeting. 54 Leila's purported requisition of a meeting of shareholders, dated 24 April 2002, could have no operative effect under the Corporations Act and the constitution of Aldora Holdings because, notwithstanding her claim to the contrary, she was not at that time a shareholder in the company. Nevertheless, in my opinion the notice of meeting issued by Robert on 29 April 2002 was on its face a valid notice of meeting. Clause 5.1 of the constitution of the company authorised any director to convene an extraordinary general meeting. Robert was a director and he exercised the discretion conferred upon him by the clause in issuing the notice of meeting. The plaintiff submitted that the notice of meeting was ineffective because Robert proceeded in response to Leila's requisition, which was invalid. But it appears from the evidence that Robert signed the notice of meeting and gave instructions for its despatch with the intention of giving a notice of the meeting. The fact that he signed as company secretary does not entitle the conclusion that he was not, at the time, bringing to bear whatever power he had as director as well. 55 Clause 20.1 of the constitution of the company stated that notice may be given by the company to any member either personally or by sending it by post to him at his registered address within Australia supplied by him to the company for the giving of notices to him. It is not clear from the evidence whether the South Hurstville address was supplied by the plaintiff to the company for the purposes of clause 20.1. In any event, in my view clause 20.1 would not render valid a notice despatched to an address known by the sending party to be an incorrect address for the person to whom the notice was directed: see, by analogy, AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450, 456; DCT v Abberwood Pty Ltd (1990) 19 NSWLR 530, 533. I have found that the notice was sent to the plaintiff at an incorrect address and that Robert was aware that the address was incorrect. The notice was not properly served on the plaintiff, notwithstanding clause 20.1. 56 According to the minutes, the meeting held on 23 May 2002 was a meeting of Leila and Annette as shareholders. Neither of them was a shareholder. Robert was a shareholder and was in attendance but, according to the minutes, he did not purport to participate in the decisions taken at the meeting. Those decisions were ineffective, quite apart from questions of lack of quorum and insufficient notice, because the persons purporting to take the decisions were not shareholders. Moreover, insofar as the decisions purported to ratify transfers in their favour, they were not in a position to do so. Therefore, apart from the deficiencies of convening the meeting, the decisions purportedly taken were not valid decisions of the members in general meeting. 57 It follows that the purported meeting of directors on the same day (23 May 2002), being a decision by Leila concerning the office of company secretary, cannot have been valid because Leila was not a director of the company at the time. 58 Relying on Australian Innovation v Petrovski (1996) 21 ACSR 218, 222, the plaintiff submitted that in giving notice of the meeting and attending it, Robert exercised his powers as a director not for the benefit of the shareholders as a whole, but for his own benefit and the benefit of outsiders, Leila and Annette. I agree with that submission. 59 However, I cannot accept, of the evidence before me, the submission by the plaintiff that in implementing the plan that culminated in the meeting of 23 May 2002, Robert acted for an improper purpose. My difficulty in accepting this submission is that it is clear, as I mentioned earlier in these reasons for judgment, that there is rather more evidence going to the motivation of Robert and others, including evidence with respect to the various sets of legal proceedings, than has been adduced in this case. It is unnecessary for me to reach the conclusion urged upon me by the plaintiff in order to give the plaintiff the substantive relief that he seeks, the matter being relevant only to the declaration sought in order 1 in the summons. My view is that the plaintiff is not entitled to order 1, having regard to the state of the evidence. 60 The plaintiff submits that the evidence as a whole constitutes strong evidence that the affairs of Aldora Holdings have been conducted, at least since April 2002, in a manner oppressive to the plaintiff or unfairly prejudicial to him. Apart from the evidence relating to the purported share transfers and the invalid meeting, the plaintiff draws attention to the fact that since April/May 2002, Robert, Annette and Leila have purported to control the affairs of Aldora Holdings so as to exclude the plaintiff from management and to keep him away from financial information in relation to the company. The information from which he was excluded extended to information as to the litigation in proceeding No 1507 of 2002, and information as to the purported disposal of Robert's shares, which Robert knew the plaintiff regarded as his primary asset for the purpose of negotiating and settling their litigation. I agree with these submissions. In my opinion a strong case of oppression and unfair prejudice has been made out: see Martin v Australian Squash Club (1996) 14 ACLC 452. 61 In his thoughtful submissions, counsel for the defendants said that the fairness of impugned conduct is not to be assessed in a vacuum, and that the Court should take into account the fact that the share transfers did not affect the plaintiff's shareholding, and that Robert as the holder of most of the shares could easily have called a meeting of shareholders and caused the plaintiff to be removed as a director himself. It seems to me, however, that these submissions do not fully take into account some matters which are now the subject of findings by me. The transfer of Robert's shares took place shortly after his father had entered judgment against him for over $2.5 million, execution of the judgment being stayed until 15 July 2002. There were discussions between the plaintiff and Robert, according to the plaintiff's evidence which I have accepted, in which it was made clear to Robert that his father looked to the shareholding as an asset from which full or partial recovery of the judgment debt may have been obtained. The transfer, if valid, would have made the plaintiff's recovery more difficult, and the procedure adopted by Robert and his wife and daughter was the procedure which, unlike the direct convening of a meeting of shareholders by Robert, had the effect of keeping information from the plaintiff until well after the purported decisions had been taken. 62 The defendants submit that the deficiency in giving notice of the meeting to the plaintiff falls within clause 5.5 of the company's constitution, which says that accidental omission to give notice of a meeting shall not invalidate the meeting. The short answer to that submission is that the omission to give notice to the plaintiff was not accidental. 63 The absence of a quorum at the meeting of 23 May 2002, and the deficiency of notice to the plaintiff, are procedural irregularities for the purposes of s 1322(1)(b) of the Corporations Act. Section 1322(2) says that a proceeding under the Act is not invalidated because of any procedural irregularities, unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. The defendants submit that I should not make an order under s 1322(2) and further, I should make a curative order under s 1322(4)(a). In my opinion this is a case of a deliberate attempt to exclude the plaintiff from participation in the affairs of the company, and from contemporaneous knowledge of the meeting of 23 May 2002. Unless I make an order under s 1322(2), aspects of that conduct will be rendered of no legal consequence, and the plaintiff will suffer substantial injustice because to that extent, the attempt to remove him from the office of director and exclude him from the affairs of the company will have been valid. This is a case where it is clear that the irregularity constituted by failure to give him notice and by the meeting proceeding without a proper quorum is an irregularity causing substantial injustice that cannot be remedied unless I make it clear, by orders, that the meeting was invalid. One of my orders will be an order declaring (for the purposes, inter alia, of s 1322(2)) that the meeting is invalid. For the same reasons, I shall not make any order under s 1322(4). 64 The plaintiff clearly has standing, as a member, to bring proceedings for oppression under Part 2F.1 of the Act. Having established the grounds required to be established by s 232, the plaintiff is entitled to relief under s 233. In the present case, the most appropriate relief is to declare that the purported meeting of 23 May 2002 is invalid, and to make orders reversing the effects of the invalid meeting. I should note that, for reasons that I expressed in Howard v Mechtler (1999) 30 ACSR 434, 435, the plaintiff would probably have standing to seek declaratory and injunctive orders as a member enforcing the constitution of the company, quite apart from Part 2F.1. 65 The effect of my decision and orders is, since Robert is now ineligible to be a director because of his bankruptcy and has consequently resigned, that the sole director of Aldora Holdings is the plaintiff. He holds only a small portion of the shares of the company. The bulk of the shares are under the control of Robert's trustee in bankruptcy, who will therefore effectively have the power to remove and replace the plaintiff as a director. If the plaintiff remains a director, he may endeavour to implement the intention he expressed in the witness box to discontinue proceeding No 1507 of 2002, and he might resist registration of any transfer of Robert's shares. Suggestions were made at the hearing that I might wish to impose conditions to prevent him from doing so. I have decided that there is no proper ground for seeking to control future events in this company in such a fashion. I repeat that the evidence before me seems to be only a small part of the issues in dispute between the parties. In those circumstances it would be dangerous to seek to control the future exercise by the plaintiff of the rights which, in my opinion, he has established. ********** Last Modified: 04/23/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.