Akierman Holdings Pty Ltd v Akerman - [2019] NSWSC 1486

Supreme Court

New South Wales

Medium Neutral Citation: Akierman Holdings Pty Ltd v Akerman [2019] NSWSC 1486
Hearing dates: 6, 7, 9, 13 November 2018; 13, 14 December 2018; 17 April 2019
Date of orders: 31 October 2019
Decision date: 31 October 2019
Jurisdiction: Equity - Corporations List
Before: Parker J
Decision:
See [359].

Catchwords:
CORPORATIONS — Directors and officers — Authority and powers – appointment of managing director by purported resolution of sole director - articles did not provide for sole director – appointment not valid – resolution approving of director’s remuneration not valid – payment of legal fees on behalf of company not valid.

CONTRACTS — Formation — Agreement – informal oral agreement for sale of Company property – parties contemplated later execution of formal documents – oral agreement not enforceable.

CONTRACTS — Formation — Agreement – informal written agreements contemplated later execution of formal document but otherwise unqualified and specific in terms – immediately binding if entered with authority.

CORPORATIONS — Directors and officers — Authority – Unanimous Assent – where one share held on trust by estate and transfer not registered until some time later – application of doctrine – informed consent.

CORPORATIONS — Directors and officers — Authority – entry into agreements for sale of land absent proper authority – party likely unaware he lacked proper authority – party a solicitor and likely aware Company’s articles must be changed to facilitate sole directorship – validation of agreement to sell Company’s share of property under s 1322 refused.
CORPORATIONS — Membership — Register — Rectification of register – rectification of share register – share held on trust – transfer from beneficiary’s estate belatedly recorded in Company’s register – transfer recorded as occurring on date omission discovered not prior date of intended transfer – evidentiary purpose of Company register – rectification granted to accord with parties’ intent to transfer all shares from beneficiary’s estate.
Legislation Cited: Companies Act 1961 (NSW), Schedule 4, Table A, rr 70, 73, 76, 79, 84, 86
Corporations Act 2001 (Cth) ss 126, 127, 169, 178A, 201A, 1317H, 1317S, 1318, 1322
First Corporate Law Simplification Act 1995, sch 4 item 25
Uniform Civil Procedure Rules 2005 (NSW) r 31.13
Cases Cited: Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507
Bamford v Bamford [1970] Ch 212
Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279
Coomber v Coomber [1911] 1 Ch 723
Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1
Hall v Busst (1960) 104 CLR 206; [1960] HCA 84
Hall v Poolman [2007] NSWSC 1330
Herrman v Simon (1990) 4 ACSR 81
Hill v Newth (2014) 17 BPR 32,787; [2014] NSWSC 298
Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72
Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] 1 Ch 258
MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636
Re Compaction Systems Pty Ltd [1976] 2…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NSWSC 1486
Decision Date: 31 October 2019

CaseChat Overview and Summary

Akierman Holdings Pty Ltd sought relief against Akerman over a range of issues related to the governance and property transactions of the company. The dispute included the validity of an appointment of a managing director, the enforceability of an oral agreement for the sale of company property, and the rectification of the company’s share register. The Federal Court of Australia was tasked with resolving these matters.

The central legal questions before the court were whether the appointment of the managing director by the sole director was valid, the enforceability of an oral agreement for the sale of company property, and the appropriateness of rectifying the company’s share register. The court had to determine if the appointment followed proper procedures, if the oral agreement was binding, and whether the rectification of the share register would reflect the parties' true intentions.

The court found that the appointment of the managing director by the sole director was invalid because the company's articles of association did not provide for such an appointment. Additionally, the oral agreement for the sale of the company's property was not enforceable as the parties intended to formalise the agreement in writing at a later stage. However, the court did grant the rectification of the company’s share register to reflect the parties' intent, despite the belated recording of the transfer. The court refused to validate the agreement to sell the company’s share of the property under s 1322, as the party lacked the proper authority to enter into the agreement.

The court ordered the rectification of the company's share register to reflect the transfer of shares from the beneficiary's estate. The court did not enforce the oral agreement for the sale of company property and found the appointment of the managing director invalid. The court also refused to validate the agreement to sell the company's share of the property under s 1322.

Orders