Alibrandi v Jefa Australia Pty Ltd

[2004] NSWSC 1065

NEW SOUTH WALES SUPREME COURT

CITATION:      Alibrandi v JEFA Australia Pty Ltd [2004]  NSWSC 1065

CURRENT JURISDICTION:            Equity Division

FILE NUMBER(S):    4639/04

HEARING DATE{S):            8/ll/04

JUDGMENT DATE: 08/11/2004

PARTIES:
Arturo Alibrandi (P)
JEFA Australia Pty Limited (1st Defendant)
Edward Sebastian Failla (2nd Defendant)
Francesco Anthony Colacicco (3rd Defendant)

JUDGMENT OF:      Young CJ in Eq     

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S):       Not Applicable

LOWER COURT JUDICIAL OFFICER:     Not Applicable

COUNSEL:
F Santisi (P)
M Green (D)

SOLICITORS:
Hunter Lawyers (P)
Norman Waterhouse (D)

CATCHWORDS:
CORPORATIONS [135]- Meetings- Application to restrain- Policy- Whether appropriate to preserve status quo in a three person company in deep conflict.

ACTS CITED:

DECISION:
Continuation of interim injunction refused.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Monday 8 November 2004

4639/04 – ALIBRANDI v JEFA AUSTRALIA PTY LTD

JUDGMENT

1. HIS HONOUR:  This is an application for interim relief in respect of the first defendant company JEFA Australia Pty Ltd, a company which is controlled by three gentlemen, namely the plaintiff and the second and third defendants.  Earlier this year a dispute arose in which the second and third defendants accused the plaintiff of misapplying various moneys of the company for his own purposes, an allegation which the plaintiff denies.

2. The second and third defendants have made it quite clear that they don't want to associate with the plaintiff and they want to remove him as a director of the corporation.  I have looked at the documents which purport to convene a meeting to be held tomorrow for that purpose.  It would seem to me, with respect, that the documents do not validly convene the meeting because of Article 40 of the Company's Articles of Association and it may be that tomorrow's attempt will not ultimately succeed in law.  That may or may not be so; I am not deciding the point.

3. However, it is also quite clear that under the Articles any director can convene a general meeting of the company and that if that happens the plaintiff can be out-voted and his directorship can go.  He, however, relies on an agreement made between the shareholders which he says envisages that at all times all three gentlemen are to be actively involved in the business and that each of them may appoint one director and that there will always be one director representing each of the three interests.

4. The problem about that is that there is an obvious lack of confidence in the plaintiff by the other directors and perhaps vice versa as well.

5. The Court does not compel people to associate together who have lost confidence in each other.  The Court does not allow enterprises to continue to limp along.  The appropriate remedy is for someone to wind the company up because of minority oppression or on the just and equitable ground so that the liquidator can be appointed or alternatively one party can buy out the other.

6. Accordingly, I am not at all impressed with the submission of counsel for the plaintiff that the status quo should be preserved.  In this sort of situation the last thing one does is to preserve the status quo.  If there is a serious allegation that the majority are running the business for their own purposes or running it into the ground, then the appropriate form of relief is a provisional liquidator, but no-one has sought liquidation at this stage.

7. There is then an application to restrain the holding of the meeting.  The general policy of the law is that people should be encouraged to meet and to talk out their differences.  It is only in a very rare situation that courts restrain the holding of meetings.  If the meeting is invalid either because it has not been held on proper notice or because the persons participating in it have some unconscionable purpose which they perpetrate, then in due course orders can be made that the meeting is of no effect.  Accordingly, in my view, there are no grounds for ordering that the meeting proposed to be held not be held and the interim injunction or undertaking which expires today can expire today.

8. The plaintiff must pay the costs of today.  There are directions to be made as to the defendants giving the plaintiffs further records by 5 November for a timetable which I understand is not opposed and then the plaintiff has forecast that he will be filing a notice of motion to seek to have what he calls his salary continued to be paid.  That can be made returnable before the Registrar in the ordinary way.  I make orders in accordance with the short minutes.

9. That matter thus goes to the Registrar's list at 11 am on 28 February 2005.

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LAST UPDATED:            11/11/2004