In the matter of Ledir Enterprises Pty Limited [2013] NSWSC 1332

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Ledir Enterprises Pty Limited [2013] NSWSC 1332 Hearing dates: 11-14 June, 18-21 June, 23, 26 July 2013 Decision date: 17 September 2013 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Judgment that breaches of specified statutory directors' duties established and oppression established. Questions of relief to be determined after delivery of judgment. Catchwords: CORPORATIONS - share capital - shares - whether voting rights attached to relevant shares - whether valid votes were cast for removal of plaintiff as director - whether conversion of specified convertible preference shares occurred - whether representational or conventional estoppel prevents denial that shares were converted. CORPORATIONS - management and administration - duties and liabilities of officers of corporation - directors' duties - claim for breach of fiduciary duties and breach of directors' duties at general law - whether defendants as directors of second plaintiff owe a duty to the holding company of the second plaintiff. CORPORATIONS - management and administration - duties and liabilities of officers of corporation - claim for breach of ss 180(1) and 181(1) Corporations Act 2001 (Cth) - duty to act in good faith in the company's best interests - claim that payments were unauthorised - whether payments should be characterised as distributions or as loans - where in the context of a family group and family trust - whether resolution of directors occurred authorising payments - whether meeting of minds of directors occurred as to matters necessary to give rise to informal authorisation of payments - where alternate claim for unjust enrichment established - whether a demand for repayment had been made. CORPORATIONS - management and administration - duties and liabilities of officers of corporation - oppression - whether the affairs of the company were being conducted in a way contrary to the interests of the members as a whole - whether the first plaintiff was excluded from the management of the group - whether there was an expectation of participation in management - whether the first plaintiff was deprived of information - whether the court should exercise its discretion to deny relief to the first plaintiff on the basis that her conduct brought about the behaviour relied upon as oppression. CORPORATIONS - winding up - application for winding up on just and equitable ground - whether the companies can effectively function where personal relationships have broken down. EQUITY - general principles - equitable fraud - claim that defendants acted together to obtain control of companies and for other ends in equitable fraud against the first plaintiff - whether abuse and fraud on power of attorney - whether alleged scheme was an imposition or deceit and voidable on grounds of public policy. Legislation Cited: - Companies (NSW) Code s 320 - Corporations Act 2001 (Cth) ss 53, 53(a), 53(c), 53(f), 53(g), 180, 180(1), 181, 181(1), 187, 201M, 232, 232(d), 232(e), 233, 233(1)(a), 233(1)(d), 237, 247A, 249D, 260, 461(1)(k), 1274, 1322 - Corporations Law s 260 - Corporate Law Economic Reform Program Act 1999 (Cth) - Evidence Act 1995 (Cth) - Family Provision Act 1982 (NSW) - Income Tax Assessment Act 1997 (Cth) Div 7A - Powers of Attorney Act 2003 (NSW) s 11(1), Pt 4 Div 2 - Uniform Civil Procedure Rules 2005 (NSW) r 14.26 Cases Cited: - Angas Law Services Pty Ltd (in liq) v Carabelas [2005] HCA 23; (2005) 226 CLR 507; (2005) 53 ACSR 208 - Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 75 ACSR 1 - Australian Securities and Investments Commission v Vines [2007] NSWCA 75; (2007) 73 NSWLR 451; (2007) 62 ACSR 1 - Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 - Barnes v Addy (1874) LR 9 Ch App 244 - Beck v LW Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235 - Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) [2008] WASC 239; (2008) 39 WAR 1; (2008) 70 ACSR 1 - Birch v Cropper (1889) 14 App Cas 525 - Briginshaw v Bringinshaw (1938) 60 CLR 336 - Byrne v AJ Byrne Pty Ltd [2012] NSWSC 667 - Cambridge Electronics v McMaster [2005] NSWSC 198 - Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; (2008) 66 ACSR 359 - Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 - Chew v R (1991) 4 WAR 21; (1991) 5 ACSR 473 - Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 - Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 - Commonwealth Bank of Australia v Hamilton [2012] NSWSC 242 - CSG Ltd v Fuji Xerox Australia Pty Ltd [2011] NSWCA 335 - Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 - David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 - Dynasty Pty Ltd v Coombs (1995) 59 FCR 122; (1995) 138 ALR 64 - Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125; (1751) 28 ER 82 - Ebrahimi v Westbourne Galleries Ltd [1973] AC 360; [1973] 2 All ER 492 - Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 - Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672 - Galea v Bagtrans Pty Ltd [2010] NSWCA 350 - Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640; (2002) 42 ACSR 534 - Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 - Gray v Gray [2004] NSWCA 408 - Harding Investments Pty Ltd v PMP Shareholdings Pty Ltd (No 2) [2011] FCA 567; (2011) 282 ALR 229 - Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd [1930] HCA 26; (1930) 45 CLR 111 - IceTV Pty Ltd v Ross & Ors [2008] NSWSC 1321 - Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653 - John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'Asia) Pty Ltd (1991) 6 ACSR 63 - Joint v Stephens [2008] VSCA 210; (2008) 26 ACLC 1467 - Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 - Krecichwost v R [2012] NSWCCA 101; (2012) 88 ACSR 339 - Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 - Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144; (2006) 59 ACSR 444 - Liosatos v Kefalinian Brotherhood "O Kefalos" of NSW [2000] NSWSC 1138 - Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 - Macleod v R [2003] HCA 24; (2003) 214 CLR 230 - McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 - McGrath & Anor (in their capacity as liquidators of HIH Insurance Ltd) [2010] NSWSC 404; (2010) 78 ACSR 405 - McWilliam v LJR McWilliam Estates Pty Ltd (1990) 20 NSWLR 703; (1990) 2 ACSR 757 - Mancini v Mancini [1999] NSWSC 799 - Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd [2001] NSWSC 448; (2001) 38 ACSR 404 - Mills v Mills (1938) 60 CLR 150 - Mopeke Pty Ltd v Airport Fine Foods [2007] NSWSC 153; (2007) 61 ACSR 395 - Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 - Nasser v Innovative Precast Group Pty Ltd [2009] NSWSC 342; (2009) 71 ACSR 343 - New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86 - NM Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26; (1992) 7 ACSR 105 - Ogilvie v Adams [1981] VR 1041 - O'Neill v Phillips [1999] 2 All ER 961 - Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 - Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; (1994) 14 ACSR 109 - Poliwka v Heven Holdings Pty Ltd (1992) 7 ACSR 85 - Re A Company (No 00709 of 1992) [1997] 2 BCLC 739 - Re Back 2 Bay 6 Pty Ltd (1994) 12 ACSR 614 - Re Colorbus Pty Ltd [2004] VSC 486; (2004) 51 ACSR 677 - Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588; (1990) 2 ACSR 553 - Re DG Brims & Sons Pty Ltd [1995] QSC 53; (1995) 16 ACSR 559 - Re Driffield Gas Light Company [1898] 1 Ch 451 - Re HIH Insurance Ltd and HIH Casualty and General Insurance Ltd; Australian Securities and Investments Commission v Adler [2002] NSWSC 171; (2002) 41 ACSR 72 - Re Hollen Australia Pty Ltd [2009] VSC 95 - Re London School of Electronics Ltd [1985] 3 WLR 474 - Re Lowes Park Pty Ltd; Headlam v Lowes Park Pty Ltd (1994) 62 FCR 535 - Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279 - Re Sullivans Cove IXL Nominees Pty Ltd [2011] TASSC 9; (2011) 82 ACSR 224 - Roden v International Gas Applications (1995) 125 FLR 396; (1995) 18 ACSR 454 - Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 - Royal Bank of Canada v The King [1913] AC 283 - Schmierer v Taouk [2004] NSWSC 345; (2004) 207 ALR 301 - Sheahan v Londish [2010] NSWCA 270, (2010) 80 ACSR 377 - Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548 - Shum Yip Properties Development Ltd v Chatswood Investment and Development Co Pty Ltd [2002] NSWSC 13; (2002) 166 FLR 451; (2002) 40 ACSR 619 - Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2010] NSWSC 776 - Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756 - Temples Wholesale Flower Supplies Pty Ltd v Commissioner of Taxation (1991) 29 FCR 93 - Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610 - Toll (FGCT) v Alphapharm [2004] HCA 52; (2004) 219 CLR 165 - Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 - Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104, (2011) 84 ACSR 121 - Turnbull & Ors v NRMA [2004] NSWSC 577; (2004) 50 ACSR 44 - Vigliaroni v CPS Investment Holdings Pty Ltd [2009] VSC 428; (2009) 74 ACSR 282 - Walker v Wimborne (1976) 1 CLR 1 - Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 - Waterman v Gerling Australia Insurance Company Pty Ltd & Anor [2005] NSWSC 1066; (2005) 65 NSWLR 300 - Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459 - Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604 - Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 89 ACSR 1 - Wilson HTM Investment Group Ltd v Pagliaro [2012] NSWSC 1068 - Winlyn Developments Pty Limited [2011] NSWSC 1218; (2011) 86 ACSR 197 Texts Cited: - Austin Ford & Ramsay, Company Directors: Principles of Law and Corporate Governance, 2005 - Mason, Carter and Tolhurst, Mason & Carter's Restitution Law in Australia, 2nd ed Category: Principal judgment Parties: Rosemary Ellen Aboud (First Plaintiff) Ledir Investments Pty Limited (Second Plaintiff) Ledir Enterprises Pty Limited (First Defendant) David Louis Aboud (Second Defendant) Ian Samuel Aboud (Third Defendant) Ethel Aboud (Fourth Defendant) Mandala Pty Ltd (Fifth Defendant) Representation: Counsel: R. Brender, G.A. Elliott (First and Second Plaintiff) A.R. Zahra (First and Second Defendant) A. Fernon (Third and Fifth Defendants) Solicitors: Michael Michell & Associates (First and Second Plaintiffs) DLA Piper Australia (First and Second Defendant) Slater & Gordon (Third and Fifth Defendants) File Number(s): 10/123392