McLaughlin v Dungowan Manly Pty Limited [2010] NSWSC 187

New South Wales Supreme Court

CITATION : McLaughlin v Dungowan Manly Pty Limited [2010] NSWSC 187

HEARING DATE(S) : 21, 22, 23, 24, 25 September, 9 October 2009 and 18 February 2010

JUDGMENT DATE : 16 March 2010

JURISDICTION : Equity Division

JUDGMENT OF : Ward J

1. Declare that the September 2006 resolution approving the payment of a $250,000 fee to Mr Garratt is ineffective and of no effect. DECISION : 2. Order the defendant to pay to the plaintiffs the sum of $200,000 by way of damages for breach of the contract constituted by the Articles of Association (such breach constituted by the pursuit of the redevelopment insofar as it abrogated, varied or restricted rights of the plaintiffs in relation to the their occupation of their home unit). 3. Order the defendant to pay to the plaintiffs the sum of $59,885.93 by way of interest on 50% of the January 2000 special levy from the date on which demand was first made for its return (21 March 2007) to 30 September 2009. 4. Give leave for the plaintiffs to commence a derivative suit in the name of the company against the directors for breach of statutory duties in relation to the redevelopment.

CATCHWORDS : CORPORATIONS – company title – oppression – construction and breach of articles of association – meetings procedure – validity of resolutions – assessment of damages for breach of articles of association and oppression – whether leave should be granted to commence derivative suit – defendant company undertook extensive re-development of block of units – re-development opposed by plaintiffs who were company members – whether conduct of re-development, including the striking of levies and entering into loans to fund re-development, the selective buy-back of shares and a remuneration payment to director were capable of valid resolution and undertaken according to articles of association or amounted to oppression – HELD – re-development project constituted breach of articles of association – resolution to remunerate director invalid due to inadequate notice – decision to undertake re-development in particular manner not oppressive – unequal treatment of plaintiffs in respect of a special levy constituted oppression – leave granted to commence derivative suit for breach of statutory duties