Maine & Anor v Chelia & Ors [No 1] [2005] NSWSC 424

New South Wales Supreme Court

CITATION : Maine & Anor v Chelia & Ors [No 1] [2005] NSWSC 424

HEARING DATE(S) : 12 April 2005

JUDGMENT DATE : 12 April 2005

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Application for interlocutory relief refused.

CATCHWORDS : CORPORATIONS - DIRECTORS - REMOVAL - INTERLOCUTORY RE-INSTATEMENT - Whether balance of convenience favoured reinstatement of director removed from office because of personality clash in joint venture business.

Anthony Leonard Maine - First Plaintiff Newsnet.com Pty Ltd - Second Plaintiff Coomar Chelia - First Defendant PARTIES : Indrajit Solomon Arulampalam - Second Defendant Jardine Thompson Pty Ltd (formerly Opipo Pty Ltd) - Third Defendant Digital Messaging Solutions Pty Ltd - Fourth Defendant

FILE NUMBER(S) : SC 2352/05

F.G. Lever SC - Plaintiffs COUNSEL : B. Goldsmith (Sol) - Defendants

Landerer & Co - Plaintiffs SOLICITORS : Goldsmiths - Defendants

LOWER COURT JURISDICTION :

Ex tempore

1 The First Plaintiff seeks an interlocutory order reinstating him as a director of the Fourth Defendant. The Fourth Defendant is a joint venture company. The First Plaintiff prior to September last year controlled a certain business and the First and Second Defendants controlled another business. The two businesses were complementary. The parties agreed that they would combine their ventures into one organisation. It is not necessary to set out the details of the agreement between the parties. 2 The First Plaintiff says that he has wrongfully been voted out of office as a director. He says that his removal as a director is in breach of an underlying Heads of Agreement which governs the operation of the Fourth Defendant as a joint venture company. The Defendants say that that is not the case and that the relevant agreement which governs the overall operation of the joint venture is a Joint Venture Deed which has superseded the prior Heads of Agreement relied upon by the Plaintiffs. 3 Further, the Defendants say that the First Plaintiff has been removed from his office as a director in accordance with the constitution of the Fourth Defendant. In response, the First Plaintiff says that the constitution has not been validly adopted by the company and that the provisions relied upon are not part of the rules governing the operation of the company. 4 It is inappropriate, and in any event impossible in such a heavy Duty Judge List, to examine in detail the competing submissions of the parties to substantiate their positions. I can say, however, that I have been sufficiently taken to the evidence and sufficiently heard the submissions of the parties to be able to form the view that there is a serious question to be tried as to whether or not the First Plaintiff has been validly removed as a director. The question is, therefore, where does the balance of convenience lie as to whether or not the First Plaintiff should be reinstated as a director pending final determination of these proceedings. 5 The determination of these proceedings on a final basis will decide the very question which is now in debate at the interlocutory stage, that is, whether or not the First Plaintiff has been validly removed. No other relief is sought in the Summons. If I grant the order now sought on an interlocutory basis I will, in effect, be granting what is sought as final relief, although whether that order will stand indefinitely will be the subject of the trial, if it ever happens. 6 The dispute between the parties seems to arise out of personality differences, although the Defendants say that they have concerns about the First Plaintiff's management generally of the affairs of the Fourth Defendant. There is no allegation by the Defendants that the First Plaintiff has been guilty of any dishonesty in the operation of the company's affairs. There is no specific instance given of the First Plaintiff's unsatisfactory conduct in management. The gravamen of the Defendants' complaints against the First Plaintiff seems to focus, as I have said, on the First Plaintiff's personal attitude and behaviour towards the Defendants. From the little I have seen in the Defendants' affidavits it seems that there is a considerable degree of personal animosity between the First Plaintiff and the personal Defendants, resulting in an alleged incident of physical aggression. 7 In short, this seems to be a case in which parties who have come together in a joint venture company have fallen out by reason of basic personality differences and, perhaps, differences in attitude to the management of the business. 8 The situation is that the Defendants control the majority of shares in the Fourth Defendant. As I have said, there is a serious question to be tried as to whether the Defendants can exercise that voting control to remove the First Plaintiff from management of what is, in effect, the joint venture business carried on by the Fourth Defendant. 9 As to the balance of convenience, I am informed that the First Plaintiff does not depend upon any continued income from his position as a director of the company. The First Plaintiff says that the balance of convenience favours his restoration as a director because half of the joint venture company's business is basically his own business and his interests will suffer if he is excluded from management. The Defendants say that the balance of convenience is in favour of his continued exclusion because his conduct in the business is disruptive of the company's ability to carry on the whole of its business successfully. 10 It seems to me that this is a typical case of partners in a joint venture coming to the point where they can no longer work together. Mr Lever SC, who appears for the Plaintiffs, says that his client may seek a winding up order against the Fourth Defendant on the just and equitable ground. As matters presently stand, if no agreement can be reached by the parties, a winding up may be inevitable. 11 However, in the meantime, I cannot see that the balance of convenience favours the reinstatement of the Plaintiff. As far as I can see, the reinstatement of the Plaintiff, even on a temporary basis, will simply aggravate a situation of personal animosity between the parties which cannot be for anyone's benefit, least of all for the employees of the Fourth Defendant. 12 The balance of convenience favours leaving matters as they are with the management of the company and bringing the final hearing of this matter on as soon as conveniently possible. The matter, therefore, should be placed in the Expedition List and the Plaintiffs will have to give consideration to whether they wish to seek any additional relief to that set out presently in their Summons. 13 For those reasons, I decline to make any interlocutory order in the terms sought by the Plaintiffs in their Summons. I will stand the matter into the Expedition List if so requested.