In the matter of Cummings Engineering Holdings Pty Ltd ACN 001 794 743 [2014] NSWSC 250

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Cummings Engineering Holdings Pty Ltd ACN 001 794 743 [2014] NSWSC 250 Hearing dates: 11, 12 March 2014 Decision date: 26 March 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: THE COURT DIRECTS that the plaintiffs bring in short minutes at a time to be fixed to give effect to this judgment to the effect: 1. on the plaintiffs' claim, judgment that the defendants pay the third plaintiff $250,000; 2. on the cross-claim, judgment that the third plaintiff pay the first defendant $122,522; 3. an order that Engineering be joined as third defendant, and a declaration that Holdings is liable to pay Engineering the sum of $34,518 by way of clause 4.3 bonus for the year 2011/12. Catchwords: CORPORATIONS - management and administration - duties and liabilities of officers of corporation - restrictions on termination payments - "golden handshake" to director upon termination - whether payment in contravention of Corporations Act s 200B - whether member approval required - whether "in consideration of past services" - application of Corporations Act Part 2D.2 to contracts made before 24 November 2009 - transitional provisions - whether payment in contravention of directors' duties - where company's business at an end and no ongoing interest in reputation for generosity - held, payment could not be justified in interests of company CORPORATIONS - management and administration - duties and liabilities of officers of corporation - relief from liability - whether directors acted honestly - whether directors ought to be relieved DEEDS - what amounts to a deed - whether document expressed as agreement but sealed operates as a deed EMPLOYMENT LAW - the contract of service and rights, duties and liabilities as between employer and employee - termination - notice - pay in lieu of notice - whether managing director entitled to pay in lieu of notice where he had practical control of sale and closure of business and could have given requisite notice - held, not entitled EMPLOYMENT LAW - the contract of service and rights, duties and liabilities as between employer and employee - termination entitlements - annual leave and long service leave LIMITATION OF ACTIONS - contracts, torts and personal actions - the period of limitation - employee's cross-claim for underpaid remuneration - when time stops running - held, upon institution of principal action Legislation Cited: (CTH) Corporations Act 2001, s 180, s 181, s 182, s 200B, s 200E, s 200G, s 200J, s 236, s 237, s 1317H, s 1318 (CTH) Corporations Amendment (Improving Accountability on Termination Payments) Act 2009, Sch 1 Part 3. (CTH) Corporations Regulations 2001, reg 2D.2.03(1)(C) (NSW) Annual Holidays Act 1944 (NSW) Conveyancing Act 1919, s 38(3) (NSW) Limitation Act 1969, s 14(1)(a), s 16, s 74 Cases Cited: ASIC v Edwards (No 3) (2006) 57 ACSR 209 ASIC v Macdonald (No 12) [2009] NSWSC 714; (2009) 259 ALR 116; 73 ACSR 638 ASIC v Vines [2005] NSWSC 1349; (2005) 224 ALR 499; 56 ACSR 528 Electricity Meter Manufacturing Co Ltd v Manufacturers' Products Pty Ltd (1930) 30 SR(NSW) 422; 54 ALJ 46 Fletcher's Fotographics Pty Ltd v Patman [1982] 2 NSWLR 876 Maelor Jones Investments (Noarlunga) Pty Ltd v Heywood-Smith (1989) 54 SASR 285 McKinlay v Dodds (1984) NSW ConvR ¶55-188 Nelson v Wyong Shire Council (1989) 68 LGRA 164 Patman v Fletcher's Fotographics Pty Ltd (1984) 6 IR 471 (NSWCA) Proud Projects Pty Ltd v Plotkin [1977] AR(NSW) 315 Randall v Aristocratic Leisure Ltd [2004] NSWSC 411 Re A Forsyth & Co Pty Ltd (In Liq) and the Companies Act (NSWSC, Wootten J, 11 December 1975, unreported) Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 Rodenstock v Leahy [2002] NSWSC 957 Rose v Commissioner of Stamps (1979) 22 SASR 84 Woolworths Ltd v Kelly (1991) 22 NSWLR 189 Xenios v Wickham (1866) LR 2 HL 296 Texts Cited: Austin & Black's Annotations to the Corporations Act Category: Principal judgment Parties: Wendy Anne Hansen (first plaintiff) Sandra Crayn (second plaintiff) Diane Styles (third plaintiff) Chaljenamu Pty Ltd (fourth plaintiff) Jackev Pty Ltd (fifth plaintiff) Cupieson Pty Ltd (sixth plaintiff) Cummings Engineering Holdings Pty Ltd (seventh plaintiff) Michael Cummings (first defendant) Robyn Cummins (second defendant) Representation: Counsel: M. W. Sneddon w K P Tang (plaintiffs) S. Galitsky (defendants) Solicitors: Carrolls Lawyers (plaintiffs) Websters Solicitors (defendants) File Number(s): 2013/ 52846