Beck v L W Furniture Consolidated (NSW) Pty Ltd

[2011] NSWSC 405

Supreme Court

New South Wales

Medium Neutral Citation:

Beck v L W Furniture Consolidated (NSW) Pty Ltd [2011] NSWSC 405

Hearing dates:

Written submissions

Decision date:

11 May 2011

Jurisdiction:

Equity Division - Corporations List

Before:

Barrett J

Decision:

1. Declare that none of the shares in the capital of L W Furniture Consolidated (Aust) Pty Ltd now on issue now carries any right to vote.

2. Declare that the proceeding purporting to have been taken on 30 July 2003 by which Amiram David Weinstock purported to act as a director of L W Furniture Consolidated (Aust) Pty Ltd and in that capacity to appoint Helen Weinstock to be a director of that company is not invalid by reason of the contravention of the provision of the constitution of that company consisting of non-observance of the requirement that such proceeding be taken only by a person in office as a director by virtue of valid appointment or election as such.

3. Order that the plaintiff pay the defendants' costs of the proceedings.

4. Note that, if an appeal is filed by the plaintiff within the period of 28 days after the day on which the orders made today are entered, the undertaking given by the second and third defendants to the court on 12 October 2010 will be extended until the determination of the appeal or earlier release of the undertaking by the court; and if no appeal is filed by the plaintiff within that period of 28 days, the undertaking shall be taken to be released immediately after the period ends.

Cases Cited:

Beck v L W Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235

Category:

Consequential orders

Parties:

Tamar Rivqa Beck - Plaintiff L W Furniture Consolidated (Aust) Pty Limited - First Defendant Amiram David Weinstock - Second Defendant Helen Weinstock - Third Defendant

Representation:

Mr J B Simpkins SC/Mr F Assaf - Plaintiff Mr T F Bathurst QC/Mr J O Hmelnitsky - Defendants
Harris Freidman - Plaintiff Baker & McKenzie - Defendants

File Number(s):

2010/324963

Judgment

1. I am dealing with matters remaining following publication of reasons on 1 April 2011 ( Beck v L W Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235).

1. The parties are in substantial agreement as to the form of the order under s 1322(4)(a) of the Corporations Act 2001 (Cth). The order will be:

"Declare that the proceeding purporting to have been taken on 30 July 2003 by which Amiram David Weinstock purported to act as a director of L W Furniture Consolidated (Aust) Pty Ltd and in that capacity to appoint Helen Weinstock to be a director of that company is not invalid by reason of the contravention of the provision of the constitution of that company consisting of non-observance of the requirement that such proceeding be taken only by a person in office as a director by virtue of valid appointment or election as such."

1. There is a question whether the court should make a declaration as sought at paragraph 5 of the originating process:

"A declaration that none of the issued shares of the first defendant have voting rights."

1. At paragraph [186] of the reasons of 1 April 2011, I said that it was desirable that I hear submissions on the question whether there is real utility in the making of such a declaration. The second and third defendants say that there is not. The plaintiff says not only that it made a claim for such a declaration and established a basis for the grant of that relief but also that there will be utility, in that there will be a definitive statement of the position as among all the persons having a direct interest in the matter as continuing shareholders.

1. I accept that there is a case for making the declaration sought. It is not the case that such a declaration will lead nowhere in terms of quelling the parties' controversy. It will be relevant to future occasions involving general meetings of the first defendant. The declaration will be made.

1. The plaintiff also asks that the court make declarations that the plaintiff and the second defendant were not directors of the first defendant after 31 December 1973. The second and third defendants oppose that course.

1. No such relief was sought in the originating process. Furthermore and as the second and third defendants point out, there are several references in the reasons of 1 April 2011 to the second defendant and, to a lesser extent, the plaintiff having continued as de facto directors after 31 December 1973. These two factors combine to persuade me that these declarations should not be made.

1. It remains to consider the question of costs.

1. The result, on the substantive matters, is that the plaintiff's claims have failed (except in relation to the declaration concerning members' voting rights) and that this has been because of the success of the second and third defendants in obtaining an order under s 1322(4)(a). Because of the validation to be effected by that order, the plaintiff did not succeed in establishing grounds for winding up on the just and equitable ground.

1. The plaintiff says that simply to regard her overall lack of success as the "event" for costs purposes would involve hardship because there were in reality numerous issues and her position was accepted by the court on most of them. Had the s 1322(4)(a) application of the second and third defendants not succeeded, the plaintiff would have established her claim for a winding up order and no discretionary matter would have caused the court to withhold that relief.

1. The plaintiff says that the question of costs should therefore be approached on an issue-by-issue basis.

1. I am not persuaded, however, that a particular issue or group of issues was clearly dominant or separable from the balance of the proceedings in a way that would justify an attempt to differentiate among issues for costs purposes. In addition, while the defendants did not formally admit the allegation that none of the issued shares carries voting rights, they did not really seek to dispute that.

1. Both the plaintiff's claims and those raised by the second and third defendants pursuant to s 1322(4)(a) necessitated a close examination of the history of the first defendant over some forty years. The process of finding facts and drawing legal conclusions was necessary in order to determine both the plaintiff's claims and those of the second and third defendants. This was not a case where the matters on which the second and third defendants were ultimately successful could have been addressed and determined in isolation from the matters on which the plaintiff was ultimately unsuccessful. For the purposes of both the plaintiff's claims and those of the second and third defendants, it was necessary to traverse the whole of the relevant history.

1. There will therefore be simply a costs order against the plaintiff and in favour of the defendants.

1. Beyond the matters I have mentioned, there is agreement between the parties regarding maintenance of the status quo for a short time while the possibility of appeal is considered.

1. The orders are as follows:

1. Declare that none of the shares in the capital of L W Furniture Consolidated (Aust) Pty Ltd now on issue now carries any right to vote.

2. Declare that the proceeding purporting to have been taken on 30 July 2003 by which Amiram David Weinstock purported to act as a director of L W Furniture Consolidated (Aust) Pty Ltd and in that capacity to appoint Helen Weinstock to be a director of that company is not invalid by reason of the contravention of the provision of the constitution of that company consisting of non-observance of the requirement that such proceeding be taken only by a person in office as a director by virtue of valid appointment or election as such.

3. Order that the plaintiff pay the defendants' costs of the proceedings.

4. Note that, if an appeal is filed by the plaintiff within the period of 28 days after the day on which the orders made today are entered, the undertaking given by the second and third defendants to the court on 12 October 2010 will be extended until the determination of the appeal or earlier release of the undertaking by the court; and if no appeal is filed by the plaintiff within that period of 28 days, the undertaking shall be taken to be released immediately after the period ends.

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Decision last updated: 26 May 2011