Medium Neutral Citation: Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76
Hearing dates: 2 February 2012
Decision date: 05 April 2012
Before: Campbell JA at [1]
Young JA at [215]
Sackville AJA at [228]
Decision:
(1) Appeal allowed.
(2) Orders 2 and 3 in the court below be set aside.
(3) Remit the matter to the primary judge, or such other judge as the Chief Judge in Equity might decide, to determine whether the Company should be wound up.
(4) Cross-Appeal dismissed.
(5) Respondents to pay the costs of the Appellant of the appeal and cross-appeal.
(6) Costs of the first trial to follow the event of the second trial.
(7) Respondents to have a certificate under the Suitors Fund Act 1951 concerning those costs of the Appellant of the appeal that they have been ordered to pay, which are assessed as being 80 percent of the combined costs of the Appellant of the appeal and the cross-appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - family company incorporated in 1971 - directors consisting of founder, his wife and their two children - no voting shares ever issued - in 2003 the founder passed away, and his wife had become incapable - both children ceased to be directors - result was no validly appointed directors - the son, who was a de facto director, purported to exercise reserve power under articles to return directors to quorum by electing his wife as an additional director - application by appellant for winding up

COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - whether director validly appointed - director appointed to fill casual vacancy until next annual general meeting - articles of association required directors to retire and seek re-election at each annual general meeting, failing which directors who retired at annual general meeting were deemed to be re-elected - directors did not retire at each annual general meeting but purported to re-elect themselves as "retiring" directors - consequently director appointed to fill casual vacancy was not, since his first annual general meeting, ever validly elected or deemed elected despite acting as de facto director for decades - default re-election provision not effective where the director had not retired at the annual general meeting - remaining de facto director not director

COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - whether additional director validly appointed by de facto director - articles of associated contained a defect clause that cured any defects in acts done by directors - whether this clause operated to cure fact that the remaining de facto director was never re-elected - held that initial appointment was not defective, as it had simply run its natural course - no defect for the articles of association to cure - de facto director not able to validly appoint additional director

COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - power of court to rectify corporate act which is taken in contravention of corporate constitution - Corporations Act 2001 s 1322 considered - where primary judge granted relief in relation to purported appointment of additional director by de facto director - whether purported act contravening constitution by person never validly appointed to office is a "contravention" that can be cured by s 1322(4)(ii) - remedial provisions to be construed broadly - held (per Young JA and Sackville AJA) "contravention" does not mean every invalid act done in relation to the corporate constitution, despite wide meaning - additional director's appointment not capable of being validated under s 1322

ESTOPPEL - issue estoppel - Anshun estoppel - appellants did not challenge, in previous proceedings, the validity of the appointment of the remaining director - where validity of appointment of director was not obvious or complete argument in previous proceedings - where argument would have required substantial additional resources to make - where previous litigation not necessarily sufficiently related to present proceeding to give rise to Anshun estoppel - not unreasonable to not rely on argument against validity of appointment

APPEAL AND NEW TRIAL - denial of natural justice - defendants in court below did not extend their submissions on Corporations Act 2001 s 1322 issue to appointment of additional director - appellant lost opportunity not merely to make submissions, but to lead evidence on the topic and make submissions on that evidence - s 1322 finding essential to underlying relief claimed by appellant - held (per Campbell JA dissenting) matter to be remitted to consider whether s 1322 order should be made
COMPANIES - management and administration - directors and other officers - powers under articles - directors empowered to allot unissued voting shares - voting shares comprised of par value shares - consideration of Company Law Review Act 1988 s 1427 repealing par value share provisions - Company Law Review Act to be interpreted as a whole - "repeal" of provision may only require that certain parts of the provision are inoperative - held (per Campbell JA dissenting) validly appointed director would have power to issue voting shares
Legislation Cited: Acts Interpretation Act 1901 (Cth)
Companies (New South Wales) Code
Companies Act 1961
Companies Ordinance 1962 (ACT)
Company Law Review Act 1998 (Cth)
Company Law Review Bill 1997
Corporations Act 2001 (Cth)
Corporations Law
Suitors Fund Act 1951
Cases Cited: Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60
Australasian Memory v Brien [2000] HCA 30; (2000) 200 CLR 270
Australia Hydrocarbons NL v Green (1985) 10 ACLR 72
Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235
Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Dicker v Angerstein (1876) 3 Ch D 600
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Eyre v Milton Proprietary Limited [1936] 1 Ch 244
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336
Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1
Henderson v Henderson (1843) 3 Hare 100; 67 ER 313
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Jordan v Avram (1997) 141 FLR 275
Knight v F P Special Assets Ltd (1992) 174 CLR 178
Law Society of New South Wales v Bruce (1996) 40 NSWLR 77
Logue v Shoalhaven SC [1979] 1 NSWLR 537
Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411
Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486
Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15
Morris v Kanssen [1946] AC 459
Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38
Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386
North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327
NRMA Ltd v Gould (1995) 18 ACSR 290
NSW Rugby League Ltd v Australian Rugby Football League Ltd [1999] NSWCA 9; (1999) 30 ACSR 354
Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767
Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218
Ooregum Gold Mining Co of India Ltd v Roper [1892] AC 125
Oshlack v Richmond River Council (1998) 193 CLR 72
Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404
Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14
Phonogram Ltd v Lane [1982] QB 938
PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Re Ausram Resources Ltd [2004] FCA 823
Re Australian Continental Resources Ltd (1975) 1 ACLR 405
Re Centennial Coal Co Ltd [2006] NSWSC 62; (2006) 56 ACSR 698; (2006) 226 ALR 341
Re Continental Pacific Insurance Co [2002] NSWSC 789
Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187
Re Yanollee Pty Ltd (in liq) [2006] NSWSC 705; (2006) 24 ACLC 1087
Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64
Tomlinson v The Broken Hill Proprietary Co Ltd (Victorian Supreme Court, Southwell J, 20 September 1984, unreported)
Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462
Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427; (2001) 166 CLR 144; 40 ACSR 221
Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581
Category: Principal judgment
Parties: Tamar Rivqa Beck (Appellant/Cross-Respondent)
L W Furniture Consolidated (Aust) Pty Limited (First Respondent/First Cross-Appellant)
Amiram David Weinstock (Second Respondent/Second Cross-Appellant)
Helen Weinstock (Third Respondent/Third Cross-Appellant)
Representation: Counsel
R G McHugh SC; D J Barnett (Appellant/Cross-Respondent)
D F Jackson QC; J O Hmelnitsky (Respondents/Cross-Appellants)
Solicitors
McCabe Terrill Lawyers Pty Ltd (Appellant/Cross-Respondent)
Baker & McKenzie (Respondents/Cross-Appellants)

File Number(s): 2010/324963
Decision under appeal

Jurisdiction:

9111

Citation:

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

Date of Decision:

2011-04-01 00:00:00

Before:

Barrett J

File Number(s):

2010/324963

Judgment

Nature of the Case

CAMPBELL JA: Mr Leo Weinstock and his wife Mrs Hedy Weinstock brought about the incorporation on 30 April 1971 of LW Furniture Consolidated (Aust) Pty Ltd ("the Company"). They were its first directors. On 29 June 1973 their two children, Tamar Beck and Amiram David Weinstock were purportedly appointed directors of the Company.

Without intending any disrespect in doing so, I shall refer to these members of the Weinstock family as "Leo", "Hedy", "Tami", and "Ami".

All the issued shares in the Company were preference shares that conferred no right to vote.

By 30 July 2003 Tami had resigned as a director, Leo had died, and Hedy had become incapable. On 30 July 2003 Ami, purporting to act as the sole remaining director, purported to appoint his wife Helen Weinstock ("Helen") as an additional director ("the Purported Appointment"). Hedy died in July 2004.

Tami brought proceedings in the Equity Division of the Supreme Court of New South Wales in which she contended that Ami was not a director of the Company on 30 July 2003 or thereafter, and that the Purported Appointment was invalid. Tami sought the winding up of the Company on the just and equitable ground (s 461(a)(k) Corporations Act 2001 (Cth)). She submitted that the absence of directors, and the absence of shareholders who could ever elect directors, had the effect that the Company was entirely without governance, that there was no way in which a system of governance could be restored to it. She contended that winding up was the appropriate way of dealing with the constitutional and administrative vacuum that resulted from that state of affairs: cf Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 at [60]-[61]; Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 at [39]-[40]. For a time, she also sought relief under the provisions of s 233 Corporations Act, but that claim was abandoned at the trial.

Ami, Helen, and also (it was claimed) the Company, brought an interlocutory process in the nature of a cross-claim in those proceedings. They sought a declaration that Ami and Helen were validly appointed directors, or alternatively certain orders under s 1322 Corporations Act to regularise the governance of the Company.

Barrett J (as his Honour then was) made an order that validated the appointment of Helen as a director. His Honour decided that Ami did not hold office as a director on 30 July 2003, and in consequence the purported appointment of Helen as a director on 30 July 2003 would not (absent its validation under s 1322) have been valid. He decided that, in a way I shall explain in more detail below, validation of the purported appointment of Helen opened the way for proper governance to be restored to the Company. In consequence he declined to order the winding up of the Company: Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235.

Tami appeals against the order validating the appointment of Helen, and seeks that this Court make an order winding up the Company.

Ami, Helen, (and also, purportedly, the Company) bring a cross-appeal that challenges the judge's decisions that Ami did not hold office as director on 30 July, 2003 and that Helen had not been validly appointed. They also contend that the primary judge should have dismissed Tami's proceedings on the basis of the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. By a Notice of Contention, they submit that the Court in its discretion should have refused to make a winding up order for the Company.

The Company does not trade, but holds a complex set of interests in various companies and other commercial ventures associated with the Weinstock family. It is undisputed that the assets of the Company are worth numerous millions of dollars.

At the hearing of the appeal Mr RG McHugh SC and Mr DJ Barnett appeared for Tami. Mr DF Jackson QC and Mr JO Hmelnitsky appeared for Ami, Helen, and the Company

The following issues that arise on the appeal and cross-appeal are dealt with in this judgment:

1. Whether Ami held office as a director of the Company on 30 July 2003 and thus had power to appoint Helen as an additional director. I have concluded that the primary judge was right in holding that Ami was not a director on 30 July 2003.

2. Whether, even if Ami did not hold office as director on 30 July 2003, his purported appointment of Helen is validated by a provision of the Articles that validates certain purported corporate acts that would otherwise be invalid. I have concluded that that article is not effective to validate Helen's appointment.

3. Whether Tami's failure to contest, in certain earlier proceedings that she brought relating to the Company, the validity of Ami holding office as a director, results in her being precluded by an Anshun estoppel from now contending that Ami did not hold office as a director on 30 July 2003. I have concluded that the judge was right in holding that there was no such estoppel.

4. Whether the validation of the Purported Appointment fell outside the powers of the court under s 1322(4)(a) because it was not an "act ... purporting to have been done... in relation to a corporation" or because there had been no "contravention of ... a provision of the constitution" of the Company. I have concluded that the making of an order of the type the court made is within the powers conferred by s 1322(4)(a).

5. Whether the primary judge was mistaken in holding that, if the Purported Appointment were to be validated, the way would be opened for the Company to issue voting shares. I have concluded that the primary judge was right in holding that in that circumstance the Company would have the power to issue voting shares.

6. Whether, in light of the issues raised and argued in the case below, the court failed to accord natural justice when it made the order validating the Purported Appointment. I have concluded that this submission should succeed, and that in consequence the appeal should succeed and the matter should be remitted for further hearing.

Because the matter is to be remitted this judgment does not deal with other matters, such as whether an order under s 1322(4) should be made, and whether it is appropriate to order that the Company be wound up, which would need to be decided before the disputes between the parties can be finally decided.

The Shares in the Company

It will be necessary to refer to numerous provisions of the Articles of Association of the Company. Like the primary judge, I will set out most of the relevant provisions in an appendix to these reasons.

Clause 3(1) of the Articles of Association with which the Company was originally incorporated made provision for the capital of the Company to be $20,000 divided into 20,000 shares of one dollar each. These comprised five 'A' 5% convertible preference shares, five 'B' redeemable preference shares, ten 'C' redeemable preference shares, ten 'D' redeemable preference shares, and a total of 19,970 ordinary shares of one dollar each, made up of 1,997 shares each of classes called 'E'-'N' inclusive. Like the primary judge, I will refer to shares of these various classes as 'A' shares, 'B' shares, etc, without according them their full titles.

All five of the 'A' shares were allotted on 30 April 1971. Four of them were allotted to Leo, and the remaining share was allotted to a Mr Nagel, who held the share on trust for Leo. A meeting of directors on 1 April 1972 resolved to allot three 'C' shares. One of them was to be allotted to Hedy, one to Tami, and the remaining 'C' share to Ami. There was a resolution that certificates 3, 4 and 5 be issued, and sealed with the common seal of the Company.

The Register of Members records that Hedy held eight 'C' shares, said to have been allotted on a date in 1992 and comprised in certificate No 3. However, the minute book of the Company contains no resolution in 1992 relating to any allotment of shares to Hedy. The primary judge did not decide, and nor is it necessary that this Court decides, precisely how many 'C' shares were allotted in total to Hedy.

Two 'D' shares were ostensibly issued on 20 April 1975 to LW Furniture (Consolidated) Pty Ltd. Ami controls that company. The Judge expressed some doubt about whether those shares had been validly allotted, but did not decide whether they had been validly allotted. It is not necessary for us to enter into that question.

No shares have ever been issued by the Company apart from those that I have mentioned.

The rights attaching to the five 'A' shares were set out in Article 3(2). The holders of those shares had no right to vote at any general meeting, but were entitled to notice of, and to attend, a general meeting. They had the right to a fixed cumulative preferential dividend of 5% per annum on the capital paid up. Leo had the right, during his lifetime, to elect to convert the 'A' shares into shares that conferred the right to vote. However, he never exercised that right.

Both the 'C' shares and the 'D' shares had no right to vote at a general meeting, but the holder of any such shares was entitled to notice of, and to attend, general meetings. Both the 'C' shares and the 'D' shares were liable to be redeemed at par on or before 30 June 2016, at the option of the Company. As well, each of them was to be redeemed upon the death of the holder.

There was a power to declare dividends on the 'C' and 'D' shares.

By reason of these provisions, for the whole of the almost 40 years that had elapsed between the incorporation of the Company and the date of the decision appealed from, the Company had no shareholders with the right to vote at a general meeting.

It is appropriate to mention here that, after the death of Leo the Company took steps to redeem the eight 'C' shares that it accepted Hedy had held. Tami took proceedings to challenge the validity of the redemption. She did so, no doubt, because the redemption might have the effect of lessening her interest in the Company. Under Leo's will Tami received a one third interest in his shares in the Company, equivalent to one and two-thirds 'A' shares. Under Hedy's will Tami received half of Hedy's shares in the Company, ie four 'C' shares. The primary judge held that on a winding up of the Company at a time when no voting shares had been issued the assets of the Company would be returned to shareholders in the proportions in which they held shares. If that is correct, and if the 'D' shares had been validly issued, then on a winding up at a time when Hedy's shares were unredeemed, Tami would receive six and two-thirds seventeenths of the net value of the Company, ie approximately 39.2%. If a winding up were to occur after Hedy's shares had been successfully redeemed, Tami would receive two and two-thirds ninths of the net value of the company, ie approximately 29.6%.

At first instance, Hamilton AJ held that the shares were not validly issued as redeemable preference shares, and hence their redemption was not valid: Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235. That decision was reversed on appeal to this Court: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462. This Court declared that the redeemable shares had been validly redeemed. On 10 February 2012 the High Court of Australia granted Special Leave to Appeal against that decision, but the appeal to the High Court has not yet been argued.

In the course of his reasons in Weinstock v Beck, Handley AJA (with whom Giles JA agreed) gave a clue which might explain the unusual corporate structure of the Company. Handley AJA said, at [106]-[107]:

"The case concerns a Robertson scheme to reduce death and estate duties payable on the death of the founder of a company. Under the scheme the founder owned shares which give him (or her) control of the company for life. The founder could pay salaries and dividends to himself and others during his lifetime at his discretion but the rights attached to those shares lapsed on death and their value accrued to other shareholders: Robertson v FCT [1952] HCA 71, 86 CLR 463.

This appeal concerns an incomplete Robertson scheme which has gone badly wrong."

The Directors of the Company

The primary judge recorded at [16] that the matter was argued on an agreed footing that Leo and Hedy continued in office beyond the first annual general meeting ("AGM") of the Company (which was held on 30 October 1972) and were therefore in office as directors on 29 June 1973.

Article 65 provided that until otherwise determined by a general meeting, the number of directors shall be not less than two, nor more than five. It provided that the first directors would be Leo and Hedy. No general meeting has ever purported to alter the provision concerning the number of directors. While the issued shares of the Company remain as they are, it will not be possible for a general meeting to pass any resolution altering the permissible number of directors.

Article 66 provides:

"At every annual general meeting each director shall retire from office and be eligible for re-election. Retiring directors shall act as directors throughout the meeting at which they retire."

The effect of that Article was that Leo and Hedy were required to retire from office at the first AGM after their election.

Article 67 provides:

"The Company at the meeting at which a director so retires may fill the vacated office by electing a person thereto, and in default the retiring director shall if offering himself for re-election and not being disqualified under the Act from holding office as a director be deemed to have been re-elected, unless at that meeting it is expressly resolved not to fill the vacated office or unless a resolution for the re-election of that director is put to the meeting and lost."

Because of the absence of voting shares it was not possible for the Company at the meeting at which a director retired to fill the vacated office by electing a person to that office. However, the "in default" provision in Article 67 provided an alternative means by which a retiring director could be deemed to have been re-elected, even if there was no corporate resolution to re-appoint him or her.

The minute book of the Company contains a page whose heading proclaims it is minutes of an extraordinary general meeting of shareholders held on 29 June 1973. Those attending are recorded as being Leo and Hedy. The minutes record "the consent of all members to the holding of an Extraordinary General Meeting at short notice" for the purpose of considering, and if thought fit passing, a certain special resolution. It goes on to record a decision:

"that the following Resolution be passed as a Special Resolution -

That Tamar Beck and Amiram David Weinstock be appointed Directors and they shall hold office until the holding of the next Annual General Meeting of the Company."

The minutes record that an AGM of members was held on 31 December 1973. All five of the then shareholders of the Company are recorded as being present. They record a resolution:

"that any director retiring in accordance with the provisions of the Company's Articles of Association be re-appointed."

There are minutes of an AGM of members held in December of each of 1974, 1975 and 1976, each of which records a resolution in the same terms as that recorded concerning the 1973 AGM.

The minutes for AGMs in each of the years 1977 to 1982 record that all five members were present and that a resolution was passed:

"Resolved that Directors retiring by rotation be and are hereby reappointed for the ensuing year."

It is hard to grasp what that resolution means. Article 68 provides:

"The Company may from time to time by ordinary resolution passed at a general meeting increase or reduce the number of directors and may also determine in what rotation the increased or reduced number is to go out of office."

However, the minute book does not contain anything that purports to be a resolution of a general meeting that related in any way to rotation of directors. In any event, because of the absence of voting shares, no resolution relating to the rotation of directors could have been passed at any general meeting. Thus, Article 66 continued to require each director to retire at every AGM.

Minutes for AGMs in 1983 and some (but not all) subsequent years were in evidence. The primary judge held that those meetings were not relevant to the questions before him. That aspect of his decision is not disputed.

The minute book shows that from April 1975 the usual participants in a meeting of directors were Leo and Ami, but that sometimes Hedy and Tami were also present. Tami resigned as a director on 8 January 1982, and is not shown as being present at directors' meetings after that date.

The Purported Appointment on 30 July 2003

Leo died on 29 July 2003.

It was common ground on the pleadings that Hedy was diagnosed with Alzheimer's disease, that by at least 29 July 2003 she had experienced a total loss of capacity, and that in consequence her office as director of the Company had become vacant by no later than 29 July 2003. As I have noted, she died in July 2004.

The minute book contains a document that the heading declares to be a "meeting of director" of the Company held on 30 July 2003. Ami is recorded as being the chairman, and as being the director who was present. The minute records:

BUSINESS:

The company was notified of the death of Leo Arie Weinstock (Director) on 29th July 2003

Hedy Jadwiga Weinstock (Director/Secretary) who has advanced Alzheimer's disease was declared incapable of performing the duties of Director/Secretary of the company according to clause 73(d) of the Articles of Association of the company where a director

"becomes of unsound mind or a person whose person or estate is liable to be dealt with in anyway under the law relating to mental health"

APPOINTMENT OF DIRECTOR:

It was RESOLVED in accordance with clause 87 of the Articles of Association of the company which states;

"...if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the company, but for no other purpose."

that Amiram David Weinstock being the sole remaining director of the company appoint Helen Weinstock as an additional director.

Helen Weinstock has consented to be a director."

Issue 1 - Was Ami a Director on 30 July 2003?

The issues raised by the cross-appeal are logically prior to the other issues, and hence I shall deal with them first.

The Primary Judge's Reasoning

The primary judge held that the meeting on 29 June 1973 ([33] above) was an effective appointment of Tami and Ami as directors, in the terms of the resolution that the minutes record as having been passed. He held that, notwithstanding that the non-existence of voting shares had the consequence that there could not be a resolution of a general meeting, and that the resolution purported to be a resolution of a general meeting, it took effect as an appointment under Article 69. He held that the appointment was effective because the two people present on 29 June 1973 were in fact the only directors of the Company; they were purporting to transact company business; they evinced an intention to resolve then and there to appoint Tami and Ami as additional directors until the next AGM; and they actually had power under Article 69 to make such an appointment. These steps in the primary judge's reasoning are not in dispute on the appeal.

The next step in the argument was a detailed consideration of what counted as an "annual general meeting" within the meaning of the articles, as they were applicable to the Company from time to time. That topic was of importance because of the role that "annual general meeting" played in Article 66 and 69, and because the concept of an AGM was imported, by the words "the meeting at which a director so retires" into Article 67. This step in his Honour's reasoning is also not in dispute. However, as it provides a foundation for some later steps in the argument that are the subject of dispute, I shall set it out:

"73 The articles contain no explicit definition of 'annual general meeting', in the sense that there is no provision beginning, 'In these articles, "annual general meeting" means...'. There are, however, two provisions of significance. First, article 45 requires that an annual general meeting 'be held in accordance with the provisions of the Act'. Second, article 1 says:

'In these Articles ... words or expressions contained in these Articles shall be interpreted in accordance with the provisions of the Interpretation Act of 1897 and of the Act as in force at the date at which there Articles become binding on the Company.'

74 In both these provisions, 'the Act' takes its meaning from the following part of article 1:

'In these Articles ... 'the Act' means the Companies Act, 1961.'

75 Section 136 of the Companies Act 1961 required that a company hold an 'annual general meeting' at least once in every calendar year and not more than fifteen months after the holding of the last such meeting. Section 5(1) contained the following definition:

"'Annual general meeting' in relation to a company means a meeting of the company required to be held by section 136.'

76 This definition formed part of the Companies Act 1961 at the time of [the Company's] incorporation on 30 April 1971 and therefore at the date at which the articles became binding on the company. It follows that article 1, by means of the words quoted at paragraph [73] above, picked up the statutory definition of 'annual general meeting' in s 5(1) and carried it into the articles as a whole. This imported statutory definition, reinforced by article 45, makes it clear that a particular general meeting will properly be regarded as an 'annual general meeting' if the holding of it is 'required' by s 136 of the Companies Act 1961.

77 Section 18 of the Companies (Application of Laws) Act 1981 (NSW) had the effect that, on 1 July 1982, the Companies (New South Wales) Code (being the provisions of the Companies Act 1981 (Cth) applied as laws of New South Wales by s 6 of the Companies (Application of Laws) Act) came to 'operate to the exclusion of the provisions of the Companies Act 1961 ... in relation to acts, matters and things in relation to which' the Companies (New South Wales) Code provisions applied. Section 240(1) of that Code required every company to hold a general meeting called the 'annual general meeting' at least once in every calendar year and within other timing constraints imposed by the section. That provision of the Code therefore operated 'to the exclusion of' s 136 of the Companies Act 1961. It follows that, from and after 1 July 1982, no company was 'required' by the Companies Act 1961 to hold an annual general meeting and that any annual general meeting in fact held could not properly be described as 'held in accordance with the provisions of' the Companies Act 1961 (to quote the words of article 45) or as 'required to be held by' s 136 of the Companies Act 1961 (to quote the words of the statutory definition imported into the articles).

78 After 1 July 1982, the pre-existing articles of [the Company] continued to be its articles. This was the effect of s 21 of the Companies (Application of Laws) Act. On that day, however, the requirement under article 45 that an annual general meeting be held 'in accordance with the provisions of the Act' (that is, the Companies Act 1961) and the articles' imported definition of 'annual general meeting' became devoid of content and meaning, unless, upon a proper construction of the articles, as continued in operation, each reference to 'the Act' in the articles included a reference to replacing or superseding legislation so that the articles' express and imported references to the annual general meeting provisions of the Companies Act 1961 came to include a reference to the substituted provisions on that subject in s 240(1) of the Companies (New South Wales) Code .

79 The possibility that the reference to 'the Act' in article 45 might be read in that way makes it necessary to refer again to the part of article 1 set out at paragraph [73] above.

80 The Companies Act 1961, as in force on 30 April 1971, obviously did not contain any provision that might cause references to it in a company's articles to include references to legislation replacing or superseding it. The Interpretation Act 1897 (NSW) then in force dealt, in s 25(1), with the case where an Act was 'repealed and re-enacted' (with 're-enacted' including 're-made'). Section 25(1) provided that a reference to that Act in 'an Act or an instrument made under an Act' included a reference to the Act 'as amended or re-enacted'.

81 This provision of the Interpretation Act 1897 in force on 30 April 1971 did not, via the words of article 1 quoted at paragraph [73] above, cause the reference to the Companies Act 1961 in the article 1 definition of 'the Act' (and in the imported definition of 'annual general meeting') to become a reference instead to the provisions applying in this State from 1 July 1982 as the Companies (New South Wales) Code. There are two reasons for this. First, the process by which the Code provisions came to be operative did not entail the repeal and re-enactment of the Companies Act 1961. As stated at paragraph [77] above, the Code provisions were made by the legislature of New South Wales to operate from 1 July 1982 'to the exclusion of' those of the Companies Act 1961, which Act remained unrepealed for a further quarter of a century: see Statute Law (Miscellaneous Provisions) Act 2008 (NSW), s 4 and the first item in part 1 of schedule 4. Second, the articles of LWC are not 'an instrument made under an Act'. As is made clear by s 16 of the Companies Act 1961, persons desiring the incorporation of a company having articles of association from inception were required to lodge those articles as a prerequisite to obtaining incorporation, while s 29(1) made it clear that the articles so lodged were 'registered with the memorandum'. There is thus no concept of a company's articles somehow proceeding from or being produced pursuant to the Companies Act so as to be 'an instrument made under an Act'.

82 On this analysis, therefore, the position is as follows:

(1) The Companies Act 1961 ceased, on 1 July 1982, to be the source of any requirement that [the Company] hold annual general meetings.

(2) The provisions of the Companies (New South Wales) Code with respect to annual general meetings applied of their own force to [the Company] from and after 1 July 1982.

(3) Neither the reference in article 45 to the holding of an annual general meeting 'in accordance with the provisions of the Act' nor the definition of 'annual general meeting' imported into the articles from the Companies Act 1961 was altered, as of 1 July 1982, so as to refer instead to an annual general meeting held in conformity with the Companies (New South Wales) Code.

83 It follows that annual general meetings of [the Company] held after 1 July 1982 in obedience to the requirements of the Companies (New South Wales) Code - and later the Corporations Law of New South Wales - were not 'annual general meetings' within the articles' definition imported from the Companies Act 1961 and were accordingly not meetings referred to in articles 66, 67 and 69 and elsewhere in the articles as 'annual general meetings'.

84 It is also relevant to note that a proprietary company such as [the Company] has not been subject to any statutory obligation to hold an annual general meeting since the First Corporate Law Simplification Act 1995 (Cth) came into operation on 9 December 1995. That Act abolished the requirement for an annual general meeting in relation to relevant companies. Thus, even if

(a) it is wrong to think that, after 1 July 1982, the definition of 'annual general meeting' in the constitution was devoid of meaning and there was no requirement under article 45 that such a meeting be held); and

(b) the article 1 definition of 'annual general meeting' and the article 45 requirement, both referring to 'the Act', are properly regarded as referring to any provision for the time being in force that requires a company such as [the Company] to hold an annual general meeting,

the position was that, after 9 December 1995, there was no statutory requirement for the holding of such a meeting and therefore no content to either the article 1 definition or the article 45 requirement."

The judge held that the inability of any member of the Company to vote at an AGM did not mean that in the period up to 1 July 1982 it was impossible for an AGM to be held. Every shareholder in the Company had, in accordance with the articles defining the terms on which their shares were issued, an entitlement to notice of, and to attend, any general meeting of the Company. At such a meeting each shareholder could "consider accounts and reports laid before the meeting by the directors and ... engage in the discussion that is part of that process": [87].

The judge was satisfied that the various meetings that were held prior to 1 July 1982 and purported to be AGMs in the minute book, were "annual general meetings" of the Company, within the meaning of the articles. That step in the argument is also not in dispute.

The primary judge did not decide at what precise times Leo and Hedy ceased to be directors. He took that course because what was of critical importance was whether there was a validly appointed director on 30 July 2003, and Leo and Hedy had both ceased to be directors by no later than 29 July 2003.

The judge took the view that there was a close connection between Article 66 and Article 67. When Article 67 referred to "the meeting at which the director so retires" it was referring to the AGM "at" which each director was required to retire by Article 66. Further, the expression "so retires" refers to retirement in the manner required by Article 66. He accepted that if a director retired from office pursuant to Article 66 the inability of the AGM to pass a resolution to "fill the vacated office by electing a person thereto" did not prevent there being any directors in office after the AGM. Rather, the failure of the meeting to pass a resolution that filled the vacated office caused the remaining portion of Article 67, beginning "and in default" to come into operation. It was, seemingly, the contention of Ami in the court below that the "and in default" portion of Article 67 had the effect that he was deemed to have been re-elected as a director at the AGM on 31 December 1973.

The judge did not accept that argument. The appointment of Ami on 29 June 1973 as director under Article 69 was only "until the next following annual general meeting". The judge held that that meant that Ami's office had ceased at the moment the AGM began. The "and in default" provision in Article 67 applied only to a director who retired at an AGM, and thus did not apply to Ami in December 1973. It followed that Ami was not a director after the start of the 31 December 1973 AGM, and thus was not a director who retired at any subsequent AGM. It further followed that Ami was ineligible to be deemed reappointed by the "and in default" portion of Article 67 at any subsequent AGM. By the same process of reasoning, Tami had not been a validly appointed director after the commencement of the December 1973 AGM.

The primary judge based that construction of the articles on Eyre v Milton Proprietary Limited [1936] 1 Ch 244; Australia Hydrocarbons NL v Green (1985) 10 ACLR 72; NSW Rugby League Ltd v Australian Rugby Football League Ltd [1999] NSWCA 9; (1999) 30 ACSR 354 and Tomlinson v The Broken Hill Proprietary Co Ltd (Victorian Supreme Court, Southwell J, 20 September 1984, unreported).

Eyre v Milton Proprietary Limited concerned a company article 85 of which provided:

"At the ordinary meeting in the year 1925 and in every subsequent year, one-third, or the nearest number next below one-third, of the whole number of directors, shall retire from office, and the meeting shall elect qualified members in their place. A retiring director shall be eligible for re-election at the meeting at which he retires and shall act as a director throughout that meeting."

The article went on to stipulate the manner in which the directors who were to retire would be identified. Article 90 provided:

"The Board may from time to time appoint additional directors, but so that the total number of directors shall not exceed the prescribed maximum, but any director so appointed shall hold office only until the next following ordinary general meeting of the company, and shall then be eligible for re-election."

At the time in question the company had a total of eight directors. One was the managing director, who under a particular clause of the articles was not liable to retire by rotation or be taken into account in determining the rotation of retirement of directors. Two were "additional directors" appointed under article 90. The question at issue was whether one director, or two directors would be required to retire at the next ordinary general meeting. The English Court of Appeal unanimously held that only one director was required to retire. The reasoning of Lord Wright MR at 254-5 was:

"But at the ordinary general meeting it is clear under art. 90 that the two additional directors will not be in office. They are to hold office 'only until the next following ordinary general meeting of the company,' so that at the moment when the next following ordinary general meeting of the company begins they are no longer in office, whereas the other five directors, whether retiring or not, are to act as directors throughout the meeting. There is no express provision as in art. 90 that their office is to continue only until - that is to cease just before - the ordinary general meeting. It follows that, in my opinion, at the critical time, which is the commencement of the ordinary general meeting, the number of directors to be considered is the number of directors exclusive not only of the managing director but also of the two additional directors. That being so, the number to be considered is only five and 'one-third, or the nearest number next below one-third' of five is obviously one ..." (emphasis added)

The "critical time" to which his Lordship referred is, fairly clearly, the time as at which a decision must be made about how many directors are obliged to retire.

Romer LJ at 257 agreed with that reasoning. Greene LJ at 257-8 said:

"... it appears to me that arts. 85 and 90 show a clear distinction in the status of additional directors appointed under art. 90, and directors who retire by rotation under art. 85 at the relevant moment. The status of those appointed under art. 90 when the ordinary general meeting opens is that they are not directors. On the other hand, at the moment when the meeting opens a director retiring by rotation is entitled to be present in his capacity as director, notwithstanding that he is to retire, and may retire, at the next moment." (emphasis added)

Australian Hydrocarbons NL v Green concerned a company that had four directors immediately prior to a particular annual general meeting. One of them had been elected at a previous annual general meeting, while the other three were appointed by the board. Article 98 required a person "not being a retiring director" to give a certain period of notice to be eligible for election as a director (77-78). Another article enabled a director to be appointed fill a casual vacancy or as an addition to the board, and required that "any director so appointed shall hold office only until the next following annual general meeting of the company and then shall be eligible for re-election". The three directors who had been appointed by the board did not give the requisite period of notice. At 78 Hodgson J (as his Honour then was) followed Eyre v Milton Pty Ltd and accepted that the three directors in question were not "retiring directors" within the meaning of article 98, and thus their failure to give the requisite notice resulted in them being ineligible for election.

In New South Wales Rugby League Ltd v Australian Rugby Football League Ltd Powell JA (Meagher JA agreeing) said at [76], 373 that a provision in articles of association that certain directors should "hold office until the Annual General Meeting ..." resulted in a director losing office "either just before, or immediately upon, the commencement of the annual general meeting".

Tomlinson v The Broken Hill Proprietary Co Ltd concerned a set of articles; article 105 of which required a person "not being a retiring Director" to give certain advance notice if that person was to be eligible for election as a director. Two directors in question, who had not given any such notice, had been appointed during the previous year by the directors under article 88. It provided that any director so appointed "shall hold office only until the next following Annual General Meeting". Southwell J, at 5, referred to Eyre v Milton Pty Ltd as constituting "strong authority that the second and third defendants ceased to be directors at the commencement of the Annual General Meeting". However he distinguished Eyre on the basis that article 101 exempted from a requirement for retirement in rotation three categories of directors, one of which was a director "appointed and vacating office under the provisions of article 88". Article 102 went on to say:

"The Company at any annual general meeting at which any directors retire in manner aforesaid may fill up all or any of the vacated offices by electing a like number of qualified persons to be Directors."

Southwell J held, at 6:

"It is clear that article 101 acknowledges the difference between a director appointed under article 88 who vacates office, a director ceasing to hold office under article 99 and a director retiring under article 103, but when one looks at the next following article, and where the reference is made to the words, 'At which any directors retire in manner aforesaid', it seems to me that the words, 'in manner aforesaid' must refer to the three methods by which a director may cease to be a director either by vacating office or by ceasing to hold office or retiring. Accordingly, it seems to me to follow that the word, 'retire' in article 102 encompasses those three means by which a person may cease to be a director."

Southwell J held that that construction of "retire" in article 102 was also applicable in article 105.

After referring to the passage I have just quoted from Tomlinson, the primary judge continued, at [101]-[103]:

"There is no room for any similar approach in this case. The words 'so retires' in article 67 can only refer to retirement under the immediately preceding article 66, which is retirement 'at' the meeting itself, that is, after it has begun. The reference to a person holding office 'only until' the meeting does not appear until the second part of article 69; and the words 'so retires' in article 67 - placing emphasis on 'so', in the sense of 'thus' or 'in this way' - obviously cannot refer forward to article 69 as well as back to article 66.

The clear conclusion, as a matter of construction, is that, since the second part of article 67 (beginning 'and in default') refers only to the case where an office vacated by retirement 'at' the meeting is not filled by the meeting itself, the default mechanism cannot and does not apply to a position on the board that was held 'only until' the meeting by a person appointed under article 69.

It follows that, since the positions occupied by Mrs Beck and A D Weinstock from 29 April 1973 were of that kind, the default mechanism in the 'default' part of article 67 could not operate in relation to either of them at the 31 December 1973 annual general meeting, with the result that neither of them was a director beyond the point at which that meeting commenced."

The Argument Against the Primary Judge's Reasoning

Mr Jackson QC submits that "retirement" can apply to ceasing to hold office through an action or event that is not voluntary (as happens when there is a compulsory retiring age for the office). He submits that as a matter of language there is no reason why a director appointed to fill a casual vacancy, and who ceases to hold office pursuant to Article 69, should not be regarded as a "retiring director" for the purposes of Article 66, and thus, as being eligible for a deemed re-election under Article 67. He submits that the articles in the present case should be construed on the basis that it was contemplated that no voting shares would be issued prior to the death of Leo. He refers to the remarks of Handley AJA in Weinstock v Beck at [106] ([26] above). He submits that, when it was contemplated no voting shares would be issued, it was necessary to have a mechanism to maintain continuity of the board without a requirement that the company in general meeting perform some positive act, and that Article 66 provided that mechanism. He submits it should be construed so that all directors, whenever and however appointed, were to retire from office at the annual general meeting, and then all be deemed re-elected pursuant to Article 67. He submits that that construction would enable the board to be composed in a manner determined by the directors.

I do not accept that argument. First, the articles in the present case are not relevantly distinguishable from those in Eyre v Milton Pty Ltd as a matter of language. Though Mr Jackson submitted at one stage that in Eyre v Milton Pty Ltd "there does not appear to have been an article like Article 66 in the present case", article 85 in Eyre v Milton Pty Ltd included a provision that said "a retiring director shall be eligible for re-election at the meeting at which he retires and shall act as a director throughout that meeting."

Second, a difficulty with the construction that Mr Jackson propounds is that if his construction of Article 66 were correct it would be unnecessary, and perhaps contradictory, for Article 69 to state "any director so appointed shall hold office only until the next following Annual General Meeting and shall then be eligible for re-election". Rather, the general provision in Article 66 should be read as being subject to the more specific provision in Article 69. So construed, Article 66 requires the retirement of each person who at the time of an AGM is a director. Because directors elected to fulfil a casual vacancy had ceased to hold office immediately before the AGM, Article 66 does not apply to them.

Third, there is a textual problem with reaching the conclusion that it was contemplated that no voting shares would be issued before the death of Leo. It is that Article 3(2)(e) expressly gives Leo the right to convert the 'A' preference shares into voting shares.

Fourth, even if it were correct that it was intended that no voting shares be issued prior to the death of Leo, that would not compel the correctness of the construction that Mr Jackson advocates. Leo and Hedy would be deemed re-elected under Article 67 at each annual general meeting for as long as they were not disqualified under the Act from holding office and offered themselves for re-election. By them making a casual appointment under Article 69 after each annual general meeting, the composition of the board could be in accordance with their wishes. Further, if that succession of casual appointments were made, there would be at least one director in office at the death of Leo. Even if there were only one director in office at Leo's death, that director could act, under Article 69 and Article 87, to increase the number of directors the board that continued in office after Leo's death could take whatever steps were appropriate to continue the corporate governance of the Company.

In my view, the primary judge was right in concluding that Ami ceased to be a director on 31 December 1973.

Issue 2 - Was Helen Validly Appointed?

Mr Jackson submits that even if Ami was not a validly appointed director on 30 July 2003, there is an independent reason why Helen was validly appointed. This argument was not put to the primary judge, but Mr McHugh raises no objection to it being put for the first time on appeal.

The argument is based on Article 92, which provides:

"All acts done by any meeting of the directors or of a committee of directors or by any person acting as a director shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any such director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director."

The primary judge has referred to the resolution of 30 July 2003 as "the purported appointment of Helen Weinstock by a de facto director having no formal power to appoint" [163]. The primary judge found, at [122], that each of Ami and Helen "in fact acted as a director from the date of appointment or purported appointment (29 June 1973 in one case and 30 July 2003 in the other) and has continued to do so up to the present". He held that Ami and Helen "continue to be de facto directors today". Mr Jackson submits that on 30 July 2003 Leo was "acting as a director" within the meaning of Article 92. He submits that if the primary judge was right in concluding that Ami was not validly appointed on 30 July 2003 (as I have held is the case) it has been "afterwards discovered that there was some defect in the appointment of" him, within the meaning of that article. Thus, he argues that the purported appointment of Helen is deemed to be "as valid as if ... [Ami] had been duly appointed and was qualified to be a director". Mr Jackson submits that this is consistent with the conclusion reached by Blackburn J in Re Australian Continental Resources Ltd (1975) 1 ACLR 405 at 412-414.

In Australian Continental Resources there was what purported to be a meeting of the board of the relevant company on 3 April 1975. Of the two persons acting as directors on that day, one, Mr Cowper, had never been validly appointed. The other, Mr Macarthur-Stanham, had been validly appointed, but had ceased to be a director by virtue of later disposing of his qualification shares (412). The meeting purported to appoint Messrs Elliott and Ware as additional directors. Blackburn J at 412-414 held that if the only problem with the appointments of Messrs Elliott and Ware was the lack of qualification shares on the part of Mr Macarthur-Stanham at the time the appointments were made, their appointments would be validated by s 119 of the Companies Ordinance 1962 (ACT). Section 119 provided:

"The acts of a director, manager or secretary are valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification."

Blackburn J held that Mr Macarthur-Stanham had power by himself, under an article not materially different to Article 87 in the present case, to increase the number of directors, and that s 119 was not limited to acts of directors affecting persons outside the company. Blackburn J continued, at 413-4:

"Counsel also relied on the principle of Morris v Kanssen [1946] AC 451; [1946] 1 All ER 586 and the dicta of Kitto J in Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1, at 52 and 53; the distinction between the defective exercise of a power and the non-exercise or non-existence of the power. But the principle derived by Kitto J from Morris v Kanssen cannot apply to Mr Macarthur-Stanham and what he did at the meeting on 3 April. He had been appointed in the first place - it must be presumed, validly; and the defect arose from his later disqualification under art 71(d). In my opinion, therefore, the purported appointment of Messrs Elliott and Ware by Mr Macarthur-Stanham on 3 April 1975 acting as a director at what purported to be a directors' meeting, was an act validated by s 119; strictly speaking, it was an act which, when s 119 is applied to it, is not invalidated by Mr Macarthur-Stanham's lack of qualification shares."

Their appointment was, however, invalid for another reason, in that they themselves did not hold the necessary qualification shares. Blackburn J made an order under s 366(3) Companies Ordinance 1962 (ACT) to cure the invalidity arising from that source. I consider his reasons for so doing at [124]-[129] below.

The written submissions signed by Mr Jackson's instructing solicitor stated that Blackburn J:

"...concluded that the effect of s 119 of the Companies Ordinance was to validate the appointment of Messrs Elliott and Ware by Mr Macarthur-Stanham in circumstances where Mr Macarthur-Stanham had not been qualified for appointment as a director."

That statement has the potential to mislead. Mr Macarthur-Stanham had been validly appointed as a director, but had ceased to be a director by virtue of the article that required him to continue to hold qualification shares. That difference is important for understanding the reasoning of Blackburn J in the passage I have quoted at [73] above. As well, understanding that passage requires a discussion of the cases on which Blackburn J relied.

Morris v Kanssen [1946] AC 459 concerned a company that had an article in identical terms to the Article 92 upon which Mr Jackson relies. There was also at the time a statutory provision identical to s 119 Companies Ordinance 1962. Lord Simonds (with whom Viscount Simon, Lord Thankerton, Lord Porter and Lord Uthwatt agreed), said at 471:

"There is, as it appears to me, a vital distinction between (a) an appointment in which there is a defect or, in other words, a defective appointment, and (b) no appointment at all. In the first case it is implied that some act is done which purports to be an appointment but is by reason of some defect inadequate for the purpose; in the second case there is not a defect, there is no act at all. The section does not say that the acts of a person acting as director shall be valid notwithstanding that it is afterwards discovered that he was not appointed a director. Even if it did, it might well be contended that at least a purported appointment was postulated. But it does not do so, and it would, I think, be doing violence to plain language to construe the section as covering a case in which there was been no genuine attempt to appoint at all. These observations apply equally where the term of office of a director has expired, but he nevertheless continues to act as a director, and where the office has been from the outset usurped without the colour of authority."

Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 concerned a resolution that had been voted for by three people purporting to be directors of the company. Two of them had not been validly appointed, because there had been no extraordinary resolution increasing the number of directors and thereby creating vacancies to which they could be appointed (34). Williams J, at 34, referred to an article and statutory provision like those in Morris v Kanssen and to the principle I have quoted from Lord Simonds' speech. He said that the article requiring there to be a resolution to increase the number of directors

"... was a substantive provision which had to be fulfilled before they could be appointed, and one that could not be overridden by a section of an Act or an article dealing with slips or irregularities in appointments."

Kitto J agreed, but at 52-3 said that the passage that Williams J had quoted from Lord Simonds' speech:

"... justifies a broader proposition. The passage points out that the section and article relate only to the case where a slip has been made in appointing a director, and it draws a distinction between such a case and a case in which substantive provisions relating to an appointment have been ignored or overridden. The reason for the distinction is, I think, that a defect in an appointment can be said to exist only where some requirement has been neglected in exercising a power to make an appointment. The section and the article presuppose an appointment in fact made by a person or body having power to appoint, and they refer to a slip in the making of the particular appointment in question. It is therefore necessary to distinguish between the defective exercise of a power to appoint and the non-exercise or non-existence of such a power. The proposition which I think is justified by Morris v Kanssen is that where a person acts as a director, either without being appointed or in pursuance of a purported appointment made by a person or body not authorized to make an appointment, neither the section nor the article operates to validate his actions."

In Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60 Barwick CJ (with whom McTiernan and Gibbs JJ agreed) said at 65 that "the settled view" of an article of the type of Article 92 is that it is:

"effective to validate acts done as director on behalf of a company by a person appointed a director by a person or body with power under the articles to appoint directors."

The particular act that was validated in Albert Gardens was execution of corporate securities by a director who at the time of appointment had lacked qualification shares.

Mr McHugh submits that the Article 92 does not operate to validate Helen's appointment. He submits that the articles refers to "some defect in the appointment of any director or person acting [as a director]". He submits that the article does not refer to, or "cure", the lack of any appointment; it only operates in respect of an appointment that is defective in some relevant way. He submits that there was an appointment of Ami, "until the next following Annual General Meeting", but that that appointment came to its natural end and there was no subsequent re-appointment. Thus, he submits that there was not any "defect" in the appointment that could be cured by Article 92.

In my view, this submission is correct, and is justified by Morris v Kanssen, Grant v John Grant & Sons and Albert Gardens. At the time he purported to appoint Helen as a director, Ami was, in the words of Lord Simonds, someone whose "term of office of a director ... has expired, but he nevertheless continues to act as a director". He was not, in the words I have quoted from Albert Gardens "a person ... with power under the articles to appoint directors". Properly understood, the passage in Australian Continental Resources on which Mr Jackson relies does not lead to the conclusion that he seeks to draw from it. Article 92 does not validate Ami's purported appointment of Helen as a director.

Issue 3 - Anshun Estoppel

In 2007, Tami and a company with which she was connected brought proceedings in the Equity Division of the Supreme Court of New South Wales. The defendants in those proceedings included Ami, Helen and the Company. The Amended Statement of Claim in those proceedings raised a multitude of allegations of disparate types. The claims for relief included a claim for a declaration that the eight 'C' shares in the Company that Hedy held were not preference shares, and hence were not able to be redeemed. It also sought a declaration that the purported redemption of such shares was void and of no effect. In the Amended Statement of Claim the Company was referred to as "LWC".

The pleading that founded claims for relief concerning the 'C' shares was:

"57D. Further and in the alternative:

(a) At the date of her death Hedy still held 8 C Redeemable Preference Shares in LWC;

(b) The rights privileges and conditions of such shares to the extent that they were express were set out in clause 30.4 of the Constitution of LWC;

(c) Those rights privileges and conditions conferred no preference of any kind over other shares in LWC;

(d) In the premises such shares were not preference shares within the meaning of section 9 of the Corporations Act and were, accordingly, unable to be redeemed;

(e) The share register of LWC is liable to be rectified so as to reverse the purported redemption of Hedy's LWC shares;

(f) Ami wrongfully caused the purported redemption to occur and has refused or neglected to take any steps to rectify the register of LWC or to cause the true value of the LWC shares to be paid to the Hedy estate."

Ami's defence to that pleading admitted paragraph 57D(a), and denied the rest of the allegations in 57D.

All the claims made in the 2007 proceeding were settled, except for the claim relating to whether the 'C' shares were redeemable, and had been redeemed. It is that claim that was decided by Hamilton AJ, by this Court, and is awaiting its ultimate determination in the High Court: [24] above.

As Hamilton AJ recorded in his judgment at [6] the argument raised three questions:

"(1) Whether the 8 'C' Class Shares held by Hedy in LWC were redeemable preference shares within the meaning of the Corporations Act 2001 (Cth) ('the CA').

(2) Whether there was sufficient evidence of a resolution to redeem those shares.

(3) Whether the redemption should have been at fair market value and whether their fair market value was no greater than the $8 that was paid on their redemption."

As Hamilton AJ decided question (1) by holding that the shares were not redeemable preference shares, there was no need for him to decide the second and third questions. However, he expressed his view on the second question at [33]:

"As to the question of the sufficiency of a resolution to support the redemption, I am of the view that there was evidence of a sufficient resolution. It is correct, as submitted for the plaintiffs, that there was not in evidence the resolution or a minute of the meeting at which it was passed. However, there was a clear statement in a letter written at the time by a director of the company to the effect that such a resolution had been passed by the directors. In the absence of any contrary evidence I regard that as sufficient evidence of the requisite resolution. It may be that the plaintiffs could rely as well, if they needed to, on s 1274B of the CA."

Only the first of the questions identified by Hamilton AJ was considered in the Court of Appeal, and the outcome in the Court of Appeal turned on the answer to that question.

In [36] of her Points of Claim in the present proceeding Tami identified the basis upon which she claimed that it was just and equitable for the Company to be wound up:

"(a) since about early 1996, or alternatively, 29 July 2003, the Company has had no directors;

(b) since 29 July 2003, Ami and Helen have purported to act as directors, transact business and conduct the day to day affairs of the Company despite not being directors;

(c) no mechanism presently exists for directors to be appointed to the Company;

(d) the current members of the Company have no entitlement to vote at general meeting; and

(e) the power of removal of directors at an AGM cannot be exercised."

In their Points of Defence in the present proceeding, Ami, Helen and (purportedly) the Company, pleaded:

"... the plaintiff is precluded from contending that the Company should be wound up on any of the bases set out in paragraph 36(a) and (b) of the Points of Claim by reason of the principle stated in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589.

Particulars of Anshun estoppel

(a) By an amended statement of claim filed 2 October 2008 in the 2007 proceedings, the plaintiff sought orders in relation to, among other things, the value of shares issued by the Company: paragraphs 4 and 9 of the relief sought.

(b) The Company was the fifth defendant to the 2007 proceedings. The second and third defendants were, respectively, the first and second defendants to the 2007 proceedings.

(c) In paragraphs 3A, 3C, 3D, 4 and 9 of the relief sought in the 2007 proceedings, the plaintiff sought orders which related to the value of shares in the Company.

(d) In paragraphs 21A-21E and 57A-57C of the amended statement of claim in the earlier proceedings, the plaintiff pleaded facts relating to the value of the shares issued by the Company, including that all shares issued by the Company were entitled to 'participate in any surplus on a notional winding up of' the Company: paragraph 21E.

(e) At the time the plaintiff commenced the 2007 proceedings, she was aware of all of the matters now relied upon in relation to the contentions in paragraphs 36(a) to (d) of the Points of Claim in these proceedings.

(f) Those contentions, together with all of the facts relied upon by the plaintiff in support of those contentions, would have been relevant to the determination of the relief sought in the 2007 proceedings.

(g) In the circumstances, it was unreasonable of the plaintiff not to raise the issues identified in paragraphs 36(a) to (d) of the Points of Claim in the 2007 proceedings and the plaintiff is estopped from asserting them in these proceedings."

The primary judge did not uphold the defence based on an Anshun estoppel. His reasons, at [212]-[215] were:

"... the 2007 proceedings seem to have raised only ... issues concerning the purported redemption of shares held by Mrs Weinstock and the question whether they were truly redeemable preference shares. The only claims for relief concerning LWC were claims for a declaration that the shares in question were not preference shares and were accordingly not able to be redeemed by the company, a declaration that the purported redemption of the shares was void and of no effect, an order rectifying the register of members of LWC by reinstating the supposedly redeemed shares and an order for 'compensation'. All these claims were based on the characteristics of the shares themselves.

The principle associated with Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 is, in essence, that there cannot be raised in later litigation matters that should have been put in issue in earlier proceedings between the same parties. The test is whether the matter sought to be litigated subsequently is 'so relevant' to the matters litigated previously that it was 'unreasonable' not to raise it in the earlier proceeding: Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 at [4] per Allsop P, at [52] per Giles JA.

I am not satisfied that the question whether LWC should be wound up was so relevant to the matters in issue with respect to that company in the 2007 proceeding that it was unreasonable for Mrs Beck not to have raised it there. Her objective regarding LWC in the 2007 case was to establish that the relevant shares had not been validly redeemed and that the register should be rectified so as to reflect their continuing existence. She succeeded in that part of her case and thus produced certainty as to the state of the company's share capital and the way in which it is held (or, at least, such certainty as exists in the context of a pending appeal from Hamilton AJ's decision). The attainment of that certainty may, in my view, be regarded as a legitimate preliminary to any decision whether or not to institute winding up proceedings in relation to the company.

I am not persuaded that Mrs Beck should, in the relevant sense, have put the question of winding up of LWC in issue in the 2007 proceedings. I therefore do not accept the defendants' submission that Anshun principles would have precluded the making of a winding up order in these proceedings. "

Mr Jackson submits that in this course of reasoning in the primary judge posed the wrong question for himself. Mr Jackson submits that the issue was not whether Tami "should, in the relevant sense, have put the question of winding up of LWC in issue in the 2007 proceedings". Rather, he submits, the question of the validity of the directors' appointment should, in the relevant sense, have been put in issue in the proceedings. Mr Jackson submits that whether Ami had been validly appointed as a director was directly relevant to the allegations in the 2007 proceeding that Ami had "wrongfully caused the purported redemption" of the 'C' shares and that he had "neglected to rectify the register".

The principles governing Anshun estoppel are not a matter of controversy in this case.

In Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319 Sir James Wigram VC said:

"... where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of [a] matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

In Port of Melbourne Authority v Anshun Pty Ltd at 598, Gibbs CJ, Mason and Aickin JJ approved that statement of principle. At 602, their Honours rejected, as going too far, the statement of Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590 that it was "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in the earlier proceedings". It was wrong because in that context "could" did not entail "should". Their Honours also, at that page, said that it was "not of great utility" to ask whether "the issue in question was so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding." The test that their Honours laid down, at 602, was that this type of estoppel would not arise unless the matter sought to be relied upon in the second action "was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it."

As Allsop P pointed out in Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 at [3], deciding whether the matter in question was so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding involves "a value judgment to be made referable to the proper conduct of modern ligation".

Mr McHugh submitted, in reliance on Champerslife at [107], that the evidence upon which a court considers whether there is an Anshun estoppel is "restricted to the pleadings in both proceedings and the reasons for judgment in the earlier". For the reason I gave in C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [63]-[68], I do not accept the accuracy of that proposition. However, as the arguments of both sides on this topic were put, the scope of the admissible evidence for determining whether there is an Anshun estoppel is not a matter of importance.

The claim that Tami made in the 2007 proceedings concerning redemption of the 'C' shares was a narrow one involving no disputed issues of fact. It was whether the 'C' shares answered the statutory description of redeemable preference shares. The allegation that she made in para 57D of the Amended Statement of Claim in the 2007 proceedings needs to be read as a whole. Read in that way, the allegation in 57D(f) is nothing more than an allegation that Ami purported to bring about a result (redemption of Hedy's 'C' shares) that it was legally impossible to achieve, in light of the rights that attached to the 'C' shares and the other issued shares in the Company.

It well may be that one of the ways in which Tami could have challenged the validity of the redemption of Hedy's 'C' shares was by alleging that the corporate acts that purported to effect that redemption were all invalid because the Company had no properly appointed officers. However, success on that ground would not have solved the problem of whether in principle the shares were capable of redemption. That question of principle is one that would need to be considered even if Ami and Helen could extricate the Company from the Sargasso Sea in which it had become becalmed. The extra evidence and argument that would be needed to allege that the particular corporate act by which the redemption purported to be effected was invalid would (as the present proceedings show) be considerable. Even now, the use to which Tami seeks to put her contention that the Company is without proper governance is to achieve the winding up of the Company, not to attack the validity of the redemption of the 'C' shares.

In all these circumstances, I would not uphold the contention that the question of whether Ami was validly appointed as a director was so relevant to the subject matter of the 2007 proceedings that it was unreasonable for Tami not to rely on it.

The Validation Order - Generally

The relevant portions of s 1322 Corporations Act are:

"(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

...

and may make such consequential or ancillary orders as the Court thinks fit.

...

(6) The Court must not make an order under this section unless it is satisfied:

(a) in the case of an order referred to in paragraph (4)(a):

(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;

(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or

(iii) that it is just and equitable that the order be made; and

...

(c) in every case--that no substantial injustice has been or is likely to be caused to any person."

It is common ground (and in any event, in light of the "or" at the end of s 1322(6)(a)(ii), clearly correct) that only one of the paragraphs in 1322(6)(a)(i), (ii) and (iii) need be satisfied as a precondition to the making of an order. It has been so decided in Re Continental Pacific Insurance Co [2002] NSWSC 789 at [14], Re Ausram Resources Ltd [2004] FCA 823 at [19]; Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 at [10] and Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 at [160]. However, in every case when an order is made the requirements of s 1322(6)(c) must be satisfied. The onus of establishing one of the conditions in s 1322(6)(a), and of establishing the absence of substantial injustice, rests upon the applicant for an order: Australian Hydrocarbons NL v Green at 83; Jordan v Avram (1997) 141 FLR 275 at 281-2.

By their interlocutory process Ami, Helen, and purportedly the Company, sought a declaration pursuant to s 1322 Corporations Act that seven particular things were "not invalid" by reason of a "contravention" of the Corporations Act, or the Constitution of the Company. The primary judge identified those seven matters at [135]. He granted relief in relation to only one of them, namely the Purported Appointment. As there is no cross-appeal concerning the primary judge's refusal to grant relief under s 1322 concerning the other six matters, I need not consider them in any detail.

(c) subdivide its shares or any of them into shares of smaller amount than is fixed by the Memorandum; so however that in the subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(d) cancel shares which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person or which have been forfeited and diminish the amount of its share capital by the amount of the shares so cancelled.

Article 45:

An annual general meeting of the Company shall be held in accordance with the provisions of the Act. All general meetings other than the annual general meetings shall be called extraordinary general meetings.

Article 48:

All business shall be special that is transacted at an extraordinary general meeting and also all that is transacted at an annual general meeting, with the exception of declaring a dividend, the consideration of the accounts, balance-sheets, and the report of the directors and auditors, the election of directors in the place of those retiring, and the appointment and fixing of the remuneration of the auditors.

Article 56:

Subject to any special rights or restrictions for the time being attaching to any special class of shares in the capital of the Company -

(a) on a show of hands every member (not being a corporation) present in person shall have one vote and every member being a corporation present by a representative authorised pursuant to the Act or by proxy or by attorney shall have one vote.

(b) on a poll every member (not being a corporation) present in person or by proxy or by attorney shall have one vote for every share held by him and every member being a corporation present by a representative authorised pursuant to the Act or by proxy or by attorney shall have one vote for every share held by it.

Article 65:

Until otherwise determined by a general meeting the number of directors shall not be less than two nor more than five. The first directors shall be LEO AIRE WEINSTOCK and HEDY JADWIGA WEINSTOCK.

Article 66:

At every annual general meeting each director shall retire from office and be eligible for re-election. Retiring directors shall act as directors throughout the meeting at which they retire.

Article 67:

The Company at the meeting at which a director so retires may fill the vacated office by electing a person thereto, and in default the retiring director shall if offering himself for re-election and not being disqualified under the Act from holding office as a director be deemed to have been re-elected, unless at that meeting it is expressly resolved not to fill the vacated office or unless a resolution for the re-election of that director is put to the meeting and lost.

Article 68:

The Company may from time to time by ordinary resolution passed at a general meeting increase or reduce the number of directors and may also determine in what rotation the increased or reduced number is to go out of office.

Article 69:

The directors shall have power at any time and from time to time to appoint any person to be a director either to fill a casual vacancy or as an addition to the existing directors but so that the total number of directors shall not at any time exceed the number fixed in accordance with these Articles. Any director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election but shall not be taken into account in determining the directors who are to retire by rotation at that meeting.

Article 70:

The Company may by ordinary resolution remove any director before the expiration of his period of office and may by an ordinary resolution appoint another person in his stead; the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director.

Article 71:

The remuneration of the directors shall from time to time be determined by the Company in general meeting. That remuneration shall be deemed to accrue from day to day. The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the Company or in connection with the business of the Company.

Article 73:

The office of director shall become vacant if the director:-

(a) ceases to be a director by virtue of the Act;

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally;

(c) becomes prohibited from being a director by reason of any order made under the Act;

(d) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental health;

(e) resigns his office by notice in writing to the Company;

(f) for more than six months is absent without permission of the directors from meetings of the directors held during that period.

Article 75:

The business of the Company shall be managed by the directors, who may pay all expenses incurred in promoting and registering the Company and may exercise all such powers of the Company as are not, by the Act or by these Articles, required to be exercised by the Company in general meeting, subject nevertheless, to any of these articles, to the provisions of the Act and to such regulations being not inconsistent with the aforesaid Articles or provisions as may be prescribed by the Company in general meeting; but no regulation made by the Company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made.

Article 82:

The directors may meet together for the despatch of business adjourn and otherwise regulate their meetings as they think fit. A director may at any time and the secretary shall on the requisition of a director summon a meeting of the directors.

Article 86:

The quorum necessary for the transaction of the business of the directors may be fixed by the directors, and unless so fixed shall be two.

Article 87:

The continuing directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as the necessary quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the Company, but for no other purpose.

Article 115:

If the Company is wound up the liquidator may, with the sanction of a special resolution of the Company, divide amongst the members in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not) and may for that purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how the division shall be carried out as between members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of any such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, thinks fit but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

YOUNG JA: I have read in draft the reasons of both Campbell JA and those of Sackville AJA. I agree with both that the conclusions reached by Campbell JA on the first three issues are correct for the reasons his Honour has given.

My brothers differ on the ambit of the operation of s 1322(4)(a) of the Corporations Act 2001 (Cth).

The question arises over the alleged appointment of Helen Weinstock (Helen) as a director of the first respondent ("the Company"). She was appointed by a de facto director of the Company.

Helen's appointment was invalid. The question is whether that appointment could be validated under s 1322(4)(a), the terms of which have already been set out in the reasons of Campbell JA at [102]

The two elements of the paragraph that need to be examined are:

(i) whether there was an act purporting to be done in relation to a corporation; and

(ii) whether, unless validated, the act was invalid because of a contravention of the constitution of the corporation.

As to (i), the authorities show that the word "purported" in this context must be given a wide operation and cover at least some cases where the actor did not have power to do the required act; see eg Dicker v Angerstein (1876) 3 Ch D 600; Logue v Shoalhaven SC [1979] 1 NSWLR 537 at 550; Phonogram Ltd v Lane [1982] QB 938. I agree with Campbell JA ([148]) that what Ami did in appointing Helen was an act purporting to be done in relation to the Company.

As to (ii), I have read what my brothers have said. There is some guidance in the authorities as to the ambit of the operation of the paragraph, but there is no authority which provides a ready made answer to the present problem.

Mr McHugh SC for the appellant submitted that in order for the paragraph to apply it is necessary to find that there is a "contravention" of the constitution, either by infringing a provision of it or failing to take advantage of a provision of it. I would accept that submission.

It is not every invalid action within a corporation that may be validated under s 1322 as sub-sections (4) and (6) make clear. As I understand it, the approach of Sackville AJA is along the lines that the impugned action must be able to be achieved under the Act or constitution. If this is the case, then, where the action is performed in a different and invalid way, it may be validated under the section. However, if it is not possible to attain the result under the Act or constitution, the section cannot assist. Whether I have read Sackville AJA correctly or not, I consider that this is the proper approach to the section.

If this or some near variation is not adopted, the section would cover almost every invalid action in the face of the express limitations built into sub-section 6.

Accordingly, I would agree with the orders proposed by Sackville AJA.

It is unnecessary to consider the detailed matters considered by the primary judge as to whether, if the case had come within the section, a validating order should have been made or whether the appellant was denied natural justice.

The case must thus go back to the Equity Division to determine whether there should be a winding up. Ordinarily, the present sort of problem can be fixed by an order for a court convened meeting made under s 249G of the Corporations Act. However, in the present case, there is no person qualified to make such an application. Unless there is a scheme of arrangement under s 411 or a compromise, the options available to the Judge in Equity may be very limited.

SACKVILLE AJA: I have had the privilege of reading Campbell JA's very thorough judgment.

I agree with his Honour that:

Mr A D Weinstock ("Ami") was not a director of LW Furniture Consolidated (Aust) Pty Ltd ("the Company") on 30 July 2003 and thus did not have power on that date to appoint his wife, Ms H Weinstock ("Helen"), as a director of the Company;
Ami's purported appointment of Helen as a director of the Company was not validated by Article 92; and
Ms T Beck ("Tami") is not precluded, by reason of her failure to raise the issue in earlier proceedings, from now contending that Ami did not hold office as a director of the Company on 30 July 2003.

The Validation Issue

However, I respectfully disagree with the conclusions that the purported appointment of Helen as a director ("the Purported Appointment") could be validated by an order made pursuant to s 1322(4)(a) of the Corporations Act. The relevant provisions of s 1322 are set out by Campbell JA (at [102]). His Honour also records (at [108(a)]) the question for determination identified by Mr McHugh SC, who appeared with Mr Barnett for the appellant (Tami).

The critical issue in my opinion is whether the purported appointment by Ami of Helen as a director was invalid "by reason of a contravention of a provision of this Act or a provision of the constitution of a corporation": s 1322(4)(a). The primary Judge found (at [150]-[151]) that there was a "contravention" of the constitution of the Company for these reasons:

"... [T]he person who purported to make the appointment allowed by the constitution did not formally and regularly occupy the position of director necessary to make the appointment a valid appointment. It cannot be said that there was no action or that the person acting was a mere interloper. [Ami] was not only a member holding one 'C' share but also a former director whose appointment, validly made, had expired and who had then functioned as a de facto director for some thirty years. Those connections with the company did not make him capable of acting under the combination of article 87 and article 69 under which he ostensibly acted.

151. The conclusion that there was, in these circumstances, a 'contravention' of the constitution is confirmed by the following passage in the judgment of Lehane J in Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38

'... [C]ases such as North Sydney Brick & Tile [North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327] and Omega Estates [Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218] proceed on the basis that if something is done which has not been properly authorised because, for example, appropriate resolutions have not been passed or because there is in office no validly elected board of directors, the doing of it without authority may be regarded as a contravention, for these purposes, of the articles of association.'

152. Acceptance here of the proposition that something not properly authorised 'because there is in office no validly elected board of directors' is a 'contravention' of the constitution is of particular significance. The absence of the formal status of sole extant director that would have enabled [Ami] to act as he purported to act on 30 July 2003 is of the same quality as non-existence of a validly elected board of directors and therefore within the relevant concept of 'contravention'."

Interpretation of s 1322(4)(a)

A number of propositions are established in relation to the construction of s 1322(4)(a):

Section 1322 is a remedial provision to be accorded a liberal interpretation. Its scope and operation are not to be restricted solely because of the effect an exercise of the power might occasion to third parties: North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327, at 341, per Clarke JA (with whom Samuels and Mahoney JJA agreed); Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427; 40 ACSR 221, at 240 [74], per Giles JA (with whom Beazley JA and Davies AJA agreed); see also the authorities cited by Campbell JA (at [130]).
The word "contravention" in s 1322(4)(a) is to be read very widely and is not to be confined to its orthodox meaning of "infringement": NRMA Ltd v Gould (1995) 18 ACSR 290, at 293, per Young J; Jordan v Avram (1997) 141 FLR 275, at 276, per Gillard J; Sheahan v Londish [2010] NSWCA 270; 80 ACSR 337, at [162], per Young JA; at [234], per Lindgren AJA. Thus a failure to comply with the articles in the course of taking steps that the company is not obliged to take (for example, a reduction of capital) may constitute a contravention: Re Centennial Coal Co Ltd [2006] NSWSC 62; 226 ALR 341, at 346 [15], per Barrett J.
Section 1322(4)(a) is not confined to procedural irregularities, but extends to irregularities, errors and mistakes of a general nature. It includes a power to validate an act which is not in accordance with the articles: Jordan v Avram, at 157. The balance of authority favours the view that an irregularity can include a deliberate act of non-compliance with the articles or the Corporations Act: Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386, at 397 [54], 401 [76]-[82], per Middleton J.

The Present Case

While s 1322(4)(a) must be given a liberal interpretation, it is necessary for an applicant (in this case Ami) to bring himself within the language of the provision. In particular, an applicant must show that the act or proceeding sought to be validated was invalid by reason of a contravention of the Act or of the constitution of the company. Even on a generous interpretation of the word "contravention", I do not think that it can be said that Ami's purported appointment on 30 July 2003 of Helen as a director of the Company was an

"act ... purporting to have been done ... in relation to a corporation [that was] invalid by reason of any contravention of a provision"

of the Corporations Act or of the constitution of the Company.

Ami had ceased to be a director on 31 December 1973, 30 years before the purported appointment. He continued to act as a director of the Company after that date, but at no subsequent time was he a lawfully appointed director. This was not because Ami had been the subject of a purported but invalid appointment. It was because his term as a director had expired immediately before the Annual General Meeting of 31 December 1973 and he had never been reappointed. The resolution passed at the meeting held on that date (at [34] above) simply did not apply to him.

Ami purported to exercise a power which the Articles (Art 69) limited to a lawfully appointed director. Ami had never been a director of the Company since his term as a director expired in 1973. At no time during that period did the Company or the directors purport to appoint him as a director. In 2003, when Ami purported to exercise the power to appoint Helen as a director, there were no validly appointed directors of the Corporation and none of the members of the Corporation had any right or power to vote at a general meeting (see the primary judgment at [28], [103], [106], [113], [114]). Thus there was no mechanism available to the Company, whether in general meeting or otherwise, to appoint Ami as a director.

It does not assist the Company that "contravention" in s 1322(4)(a) has been construed to extend to a failure to take advantage of a provision in the articles of a corporation. There is no provision in the Articles of the Company of which Ami could have taken advantage in order to appoint Helen as a director. Ami's act was ineffective (a better description in my view than "invalid") because he was not, and could not be appointed as, a director of the Company. In my opinion, it is stretching language to breaking point to suggest that Ami's act was ineffective (or invalid) because he contravened or failed to take advantage of a provision in the Articles or the Act.

The primary Judge thought that the purported appointment of Helen was a "contravention" because an act by a de facto director was equivalent to the act of an invalidly appointed board of directors. In my opinion, this analysis assumes that any act committed by an invalidly appointed board of directors will always involve a "contravention" of the constitution of the corporation or of the Act. I do not think that that is necessarily the case. Whether there is a "contravention", even in the widest sense, will depend on the reasons why no validly appointed board of directors is in place and the nature of the act purportedly done by the de facto directors.

The primary Judge also appears to have assumed that any unauthorised action by a de facto director can be said to be invalid by reason of a contravention of a provision of the constitution or of the Act. Again, I do not think that this is necessarily correct. Whether acts performed by a de facto director are invalid for that reason must depend on the reasons why the de facto director was not a lawfully appointed director and the nature of the acts he or she has purported to perform on behalf of the corporation.

It is one thing to apply s 1322(4)(a) of the Corporations Act to the purported acts of an invalidly appointed director and another to apply the provision to the purported acts of someone who has never been validly appointed as a director and cannot be so appointed. If, for example, the appointment of a person as director was invalid because the meeting which resolved to make the appointment was not properly convened, a fresh appointment could be made at a duly convened meeting and the acts of the de facto director ratified. But where a person has never been appointed a director (at least after his or her original term expired) and cannot be validly appointed, the purported act of that person, even if performed when he or she was a de facto director, cannot in my view be described as invalid by reason of a contravention of the articles or of the Corporations Act. Nor can it be said that the de facto director's purported acts are invalid by reason of a failure to take advantage of a provision of the constitution of the corporation or of the Corporations Act.

I should add that I do not disagree with the proposition stated by Campbell JA (at [141]), that the language of s 1322(4)(a) should be given its full width. The problem, in my view, is that the full width is still not wide enough. There are other mechanisms under the Corporations Act for dealing with a corporation that has become paralysed, particularly where the members of the corporation are at loggerheads.

The Authorities

In none of the cases to which we were referred was an order made in circumstances similar to the present case. I accept, as Campbell JA observes (at [120]) that this does not necessarily preclude the application of s 1322(4)(a) to this case. But the fact that all previous decisions applying s 1322(4)(a) are distinguishable adds force to the conclusion I have reached.

As Campbell JA has dealt at length with the authorities construing s 1322(4)(a) of the Corporations Act or its predecessors, I do not propose to examine them in detail. However, I shall make some brief observations about some of the cases referred to in argument.

In Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218, as a consequence of non-compliance with the articles of a company, there were doubts as to the validity of the appointment of the directors. There was no suggestion that the directors could not be validly appointed or that the irregularities could not be cured. Moreover, as Campbell JA has pointed out (at [125]), the case concerned a differently worded provision (s 366 of the Companies Act 1961) which, in any event, was held not to apply in the circumstances of the case.

In Re Australian Continental Resources Ltd (1975) 1 ACLR 405, the Court was concerned with the ACT equivalent of s 366 of the Companies Act 1961. The directors of a company, in contravention of the articles, purported to appoint as directors persons who were ineligible because they did not hold the prescribed minimum number of shares. Although some directors who purported to make the appointments were themselves ineligible for appointment, at all times there was at least one director capable of validly appointing directors. Nor was there any impediment to the putative directors acquiring the minimum number of shares and thus being eligible for appointment or re-appointment.

In Jordan v Avram, Gillard J applied s 1322(4)(a) to validate the purported appointment of two directors of a corporation. The purported appointment had been made by two non-directors, whose own company held 50 per cent of the shares in the corporation. The other 50 per cent of the shares in the corporation were held by a company associated with the existing director, who had power to make the appointments if he so chose. Presumably the two non-directors could have required the existing director to make the appointments, by obtaining orders enforcing the antecedent agreement between the two families. Alternatively, the two non-directors could have called a general meeting which would have had power to appoint additional directors. While the families were deadlocked, the non-directors could have enforced the antecedent agreement through the mechanism of the general meeting if necessary obtaining orders to enforce the terms of the agreement. Gillard J made the orders sought, but his Honour did not specifically consider whether a purported appointment by someone who was not a director and had never been so appointed was a "contravention" of the constitution of the corporation. (It does not appear that the issue was raised in argument.)

In North Sydney Brick v Darvall, the Court of Appeal did not find it necessary to consider the application of s 539(4)(a) of the Companies (New South Wales) Code, (the predecessor to s 1322(4)(a)). Nonetheless, Clarke JA considered that the provision could have been applied to validate a resolution which had been passed at an extraordinary general meeting, but not in the form required for the declaration of a dividend. There was no issue that the meeting had power to pass a resolution in the appropriate form.

In Nece Pty Ltd v Ritek, Lehane J held that s 1322(4)(a) was inapplicable in the particular circumstances of that case. Lehane J's obiter comments (at [231] above), referred to by the primary Judge, were not directed to a case such as the present, but merely contemplated that an act done by an invalidly appointed board of directors could constitute a "contravention" of the constitution of the corporation for the purposes of s 1322(4)(a). His Honour did not need to consider and did not in fact consider how the provision might apply, if at all, where a person who was not a director, and could not be appointed as a director by any procedure available to the corporation, purported to appoint another director.

In Sheahan v Londish, X, the sole corporate shareholder of a corporation (Y), gave notice advising Y that X had removed a director. The notice was not expressed to be and did not purport to be an act or resolution of Y and thus was "the purported exercise of a non-existent power under a non-existent article of [the corporation]" (at [90]), per Young JA. Section 1322(4)(a) was applied to validate the notice because it was open to X to take advantage of s 249 of the Corporations Act (dealing with the form of resolutions of one member companies) to achieve the same result (see at [161], per Young JA).

None of these cases involved an act by a person who, although a de facto director, had not been appointed (or purportedly appointed) as a director and could not be appointed as a director because there was no mechanism available to the corporation to bring about that result. They therefore do not govern or provide clear guidance for this case.

ORDERS

For these reasons, I think that the appeal should be allowed. Campbell JA has also concluded that the appeal should be allowed, but for different reasons. I would make the same substantive orders proposed by Campbell JA, except that I would amend Order 3 so as to remit the matter only for the purpose of determining whether the Company should be wound up. I would also order the respondents to pay the costs of the appellant of the appeal and cross-appeal.

As I would order the respondents to pay the whole of the costs of the appellant of the appeal, it is appropriate that the respondents' certificate under the Suitors' Fund Act 1951 relate to all of their costs of the appeal. I would assess those costs as being 80 percent of the combined costs of the appellant of the appeal and the cross-appeal.

Thus, the orders I propose are:

(1) Appeal allowed.

(2) Orders 2 and 3 in the court below be set aside.

(3) Remit the matter to the primary judge, or such other judge as the Chief Judge in Equity might decide, to determine whether the Company should be wound up.

(4) Cross-Appeal dismissed.

(5) Respondents to pay the costs of the Appellant of the appeal and cross-appeal.

(6) Costs of the first trial to follow the event of the second trial.

(7) Respondents to have a certificate under the Suitors Fund Act 1951 concerning those costs of the Appellant of the appeal that they have been ordered to pay, which are assessed as being 80 percent of the combined costs of the Appellant of the appeal and the cross-appeal.

**********

Amendments

20 April 2012 - [202] - last sentence amended to read "10 December 2010".[220] - last sentence, "Ari" amended to read "Ami".[233] - identity of applicant corrected.

Amended paragraphs: [202], [220] and [233]

Details

AGLC: Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76
Case: [2012] NSWCA 76
Decision Date: 05 April 2012

CaseChat Overview and Summary

The appeal concerned a family company, LW Furniture Consolidated (Aust) Pty Ltd, which was incorporated in 1971. The dispute arose from a lack of validly appointed directors, following the death of the founder and the incapacitation of his wife, with both children ceasing to be directors. The son, acting as a de facto director, purported to appoint his wife as an additional director. The appellant sought the winding up of the company. The primary judge had validated the appointment of the son's wife as a director under section 1322 of the Corporations Act 2001, and consequently declined to order the winding up of the company.

The court was required to determine whether the son's appointment of his wife as an additional director was valid, particularly in light of the company's articles of association and the fact that the son himself was arguably not a validly appointed director. Further issues included whether the son's purported appointment of his wife could be cured by a defect clause in the articles of association, and whether section 1322 of the Corporations Act 2001 could validate such an appointment. The court also considered whether issue estoppel, specifically *Anshun* estoppel, applied to prevent the appellant from challenging the validity of the remaining de facto director's appointment in the current proceedings, and whether there had been a denial of natural justice in relation to the section 1322 issue.

The majority of the Court of Appeal (Young JA and Sackville AJA) held that the son, as a de facto director, was not able to validly appoint an additional director because his own position was not a defect that the articles of association could cure. They found that the default re-election provision in the articles was not effective if a director had not retired at the annual general meeting. Furthermore, they determined that the remedial provisions of section 1322 of the Corporations Act 2001, while to be construed broadly, did not extend to validating an appointment made by a person who was never validly appointed to office. The court also found that *Anshun* estoppel did not apply, as the validity of the director's appointment was not an obvious or complete argument in previous proceedings and would have required substantial additional resources to pursue.

The appeal was allowed, and the orders validating the appointment of the additional director and declining to wind up the company were set aside. The matter was remitted to the primary judge to determine whether the company should be wound up, with the respondents ordered to pay the costs of the appeal and cross-appeal. One judge dissented on the issue of natural justice, believing the matter should be remitted to consider whether a section 1322 order should be made.

Orders

Orders of the court

(1) Appeal allowed.

(2) Orders 2 and 3 in the court below be set aside.

(3) Remit the matter to the primary judge, or such other judge as the Chief Judge in Equity might decide, to determine whether the Company should be wound up.

(4) Cross-Appeal dismissed.

(5) Respondents to pay the costs of the Appellant of the appeal and cross-appeal.

(6) Costs of the first trial to follow the event of the second trial.

(7) Respondents to have a certificate under the Suitors Fund Act 1951 concerning those costs of the Appellant of the appeal that they have been ordered to pay, which are assessed as being 80 percent of the combined costs of the Appellant of the appeal and the cross-appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Ami, Helen, and also (it was claimed) the Company, brought an interlocutory process in the nature of a cross-claim in those proceedings. They sought a declaration that Ami and Helen were validly appointed directors, or alternatively certain orders under s 1322 Corporations Act to regularise the governance of the Company. Barrett J (as his Honour then was) made an order that validated the appointment of Helen as a director. His Honour decided that Ami did not hold office as a director on 30 July 2003, and in consequence the purported appointment of Helen as a director on 30 July 2003 would not (absent its validation under s 1322) have been valid. He decided that, in a way I shall explain in more detail below, validation of the purported appointment of Helen opened the way for proper governance to be restored to the Company. In consequence he declined to order the winding up of the Company: Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235. Tami appeals against the order validating the appointment of Helen, and seeks that this Court make an order winding up the Company. Ami, Helen, (and also, purportedly, the Company) bring a cross-appeal that challenges the judge's decisions that Ami did not hold office as director on 30 July, 2003 and that Helen had not been validly appointed. They also contend that the primary judge should have dismissed Tami's proceedings on the basis of the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. By a Notice of Contention, they submit that the Court in its discretion should have refused to make a winding up order for the Company. The Company does not trade, but holds a complex set of interests in various companies and other commercial ventures associated with the Weinstock family. It is undisputed that the assets of the Company are worth numerous millions of dollars. At the hearing of the appeal Mr RG McHugh SC and Mr DJ Barnett appeared for Tami. Mr DF Jackson QC and Mr JO Hmelnitsky appeared for Ami, Helen, and the Company The following issues that arise on the appeal and cross-appeal are dealt with in this judgment: Because the matter is to be remitted this judgment does not deal with other matters, such as whether an order under s 1322(4) should be made, and whether it is appropriate to order that the Company be wound up, which would need to be decided before the disputes between the parties can be finally decided. It will be necessary to refer to numerous provisions of the Articles of Association of the Company. Like the primary judge, I will set out most of the relevant provisions in an appendix to these reasons. Clause 3(1) of the Articles of Association with which the Company was originally incorporated made provision for the capital of the Company to be $20,000 divided into 20,000 shares of one dollar each. These comprised five 'A' 5% convertible preference shares, five 'B' redeemable preference shares, ten 'C' redeemable preference shares, ten 'D' redeemable preference shares, and a total of 19,970 ordinary shares of one dollar each, made up of 1,997 shares each of classes called 'E'-'N' inclusive. Like the primary judge, I will refer to shares of these various classes as 'A' shares, 'B' shares, etc, without according them their full titles.

Actions

Citations

Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76

Most Recent Citation

Oil Basins Limited v Bass Strait Oil Company [2012] FCA 1122

Cases Citing This Decision

Ryan v Commissioner of Police, NSW Police Force (No 3) [2021] FCA 408
Citation 1 (Para 4)

…se successful party failed on matters that were either a dominant issue in contest or were separable: Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; (2012) 265 FLR 60 at [209]. A separable issue can relate to “any disputed question of fact or law” on which a party fails, notwithstanding that they…
Primary Securities Ltd v Aurora Funds Management Ltd [2020] NSWCA 230
Citation 2 (Para 142)

…Young J in Re PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674 at 675, as Sackville AJA observed in Beck v L W Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; 87 ACSR 672 at [232] “the balance of authority favours the view that an irregularity can include a deliberate act of non-compliance with the article…
Young v Racing NSW (No 2) [2020] NSWDC 785
Citation 3

…36.15, r 36.16, 42.1, 42.20 Cases Cited: Amos v Monsour P/L & Ors [2009] QCA 65 Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 Brambles Holdings Ltd v Trade Practices Commission (No 3) (1981) 58 FLR 452 Cameron v Cole (1944) 68 CLR 571 at 591 Cassegrain v Commonwealth Development Bank of Australia…
Preston v Diaspora Holdings Pty Ltd; Diaspora Holdings Pty Ltd v Owners Corporation of Strata Plan 68608 [2019] NSWSC 651
Citation 4

…(Aust) Pty Ltd [2011] NSWSC 235 Boensch (As Trustee of Boensch Trust) v Pascoe (2018) 133 ACSR 268; [2018] FCAFC 234 Boston Deep Sea Fishing and Ice Co Ltd v Farnham [1957] 1 WLR 1051 Calabretta v Redpen Developments Pty Ltd (2010) 183 FCR 47; [2010] FCA 81 Cordiant Communications (Australia) Pty Ltd v Communicat…
ACX15 v Minister for Immigration and Border Protection [2017] ACTCA 33
Citation 5 (Para 94)

…is an Anshun estoppel that precludes them from so doing, having regard to the principles analysed in Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [94] - [97] and Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245.…
Swiegers v Commonwealth Scientific and Industrial Research Organisation (No 3) [2016] NSWDC 146
Citation 6 (Para 6)

…successful party failed on matters that were either the dominant issues in contest or were separable: Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [209]. The plaintiff further submitted that costs in favour of a successful party can be ameliorated to reflect that party’s failure on particular…
State of New South Wales v Shaw [2015] NSWCA 97
Citation 7 (Para 3)

…is an Anshun estoppel that precludes them from so doing, having regard to the principles analysed in Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [94] - [97] and Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245.…
Bull v The Australian Quarter Horse Association [2014] NSWSC 1665
Citation 8

…Hydrocarbons NL v Green (1985) 10 ACLR 72 Australian Innovation Ltd v Petrovsky (1996) 14 ACLC 1357 Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; (2012) 265 FLR 60 Broadway Motors Holdings Pty Ltd (In Liq), Re (1986) 6 NSWLR 45 Cameron v Hogan [1934] HCA 24; (1934) 51 CLR 358 Catalano v Managin…
Menzies v Paccar Financial Pty Ltd (No 4) [2014] NSWCA 210
Citation 9 (Para 1)

…Services International Pty Ltd (in liq) [2002] NSWSC 937; 43 ASCR 179 at [24], [33] (Young CJ in Eq); Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [213] (Campbell JA). The doubts expressed by Rares J in National Australia Bank Ltd v State of New South Wales as to whether the doctrine of esche…
Correa v Whittingham [2013] NSWCA 263
Citation 10

…Kennedy [1999] NSWCA 908; 33 ACSR 1 BE Australia WD Pty Ltd v Sutton [2011] NSWCA 414; 82 NSWLR 336 Beck v L W Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 Breen v Williams (1996) 186 CLR 71 Bristol & West Building Society v Mothew [1998] Ch 1 Calabretta v Redpen Developments Pty Ltd (in liq) [2010] FCA…
Beck v Weinstock [2013] HCA 15
Citation 11 (Para 12)

…Weinstock v Beck [2013] HCA 14 at [36] to the consideration of the 1998 amendment by Campbell JA in Beck v LW Furniture Consolidated (Aust) Pty Ltd (2012) 265 FLR 60 at 96–100 [159]–[174].…
Weinstock v Beck [2013] HCA 14
Citation 12 (Para 3)

…ld be wound up[2]. [1] Beck v LW Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235 at [175]. [2] Beck v LW Furniture Consolidated (Aust) Pty Ltd (2012) 265 FLR 60.…
In the matter of H&P Newcastle Pty Limited (in liquidation) [2013] NSWSC 778
Citation 13 (Para 1)

…Mr Emmett has drawn my attention to the summary of the relevant principles in Beck v L W Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; (2012) 87 ACSR 672 at [232] where Sackville AJA accepted that the section should be accorded a liberal interpretation; that the word "contravention" should be read widely…
Carroll v Body Corporate for Palm Springs Residences CTS 29467 [2013] QCATA 21
Citation 14 (Para 11)

…orum.[24] It seems to me that the provisions of the BCCMA should be approached in a similar way. [23] Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [12(4)]. [24] Chalet Nominees (1999) Pty Ltd v Murray [2012] WASC 147.…
Ahmed v Chowdhury [2012] NSWSC 1452
Citation 15 (Para 1)

…Beck v Law Furniture Consolidated (Aust) Pty Limited [2012] NSWCA 76; 87 ACSR 672 at [222]-[225], [232]-[233] and [236]-[240] established (by a majority comprising Young JA and Sackville AJA) that, in the context of a corporation registered under the Corporations Act 2001 (Cth), it is not every invalid action with…
Oil Basins Ltd v Bass Strait Oil Company [2012] FCA 1122
Citation 16 (Para 12)

…nse”: NRMA Ltd v Gould (1995) 18 ACSR 290 at 293; Winpar Holdings ; Sheahan v Londish and Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [133]ff.…
Belfield v Belfield [2012] NSWSC 416
Citation 17 (Para 1)

…rations Act 2001 (Cth), s 1322(4) in this case, on its own whim. Recently, the Court of Appeal in Beck v LW Furniture Consolidated (Aust) Pty Limited [2012] NSWCA 76 re-emphasised that Corporations Act , s 1322(4), although a broad a remedial power, can still only be used in circumstances where, the Court has juri…
Kabir Ahmed v Ayubur Rahman Chowdhury (No. 4) [2012] NSWSC 348
Citation 18 (Para 1)

…ction has recently been considered by the Court of Appeal. As Young JA and Sackville AJA explained in Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [223] not every invalid action within a corporation may be validated under s 1322; but provided the impugned action can be achieved under the Act…
High Court Bulletin [2013] HCAB 4
Citation 19

…Appealed from NSW SC (CA): [2011] NSWSC 235; (2012) 87 ACSR 672, [2012] NSWCA 76; (2012) 265 FLR 60.…
High Court Bulletin [2013] HCAB 3
Citation 20

…Appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…
High Court Bulletin [2013] HCAB 2
Citation 21

…Appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…
High Court Bulletin [2013] HCAB 1
Citation 22

…Appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…
High Court Bulletin [2012] HCAB 12
Citation 23

…Appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…
High Court Bulletin [2012] HCAB 11
Citation 24

…Appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…
High Court Bulletin [2012] HCAB 9
Citation 25

…Both matters appealed from NSW SC (CA): (2011) 252 FLR 462, [2011] NSWCA 228; (2012) 87 ACSR 672, [2012] NSWCA 76.…

Cases Cited

Statutory Material Cited

Beck v Weinstock [2013] HCA 15
Citation 1 (Para 1)

…hat the shares were not validly issued as redeemable preference shares, and hence their redemption was not valid: Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235. That decision was reversed on appeal to this Court: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462. This Court declared that the redeemable s…
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Citation 2 (Para 1)

…s "restricted to the pleadings in both proceedings and the reasons for judgment in the earlier" . For the reason I gave in C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [63]-[68], I do not accept the accuracy of that proposition. However, as the arguments of both sides on this topic were put, the scope of the admi…
Nenna v Australian Securities and Investments Commission [2011] FCA 1193
Citation 3

…NSWCA 15 Morris v Kanssen [1946] AC 459 Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386 North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327 NRMA Ltd v Gould (1995) 18 ACSR 290 NSW Rugby League Ltd v Australian Rug…
Weinstock v Beck [2011] NSWCA 228
Citation 4 (Para 1)

…edemption was not valid: Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235. That decision was reversed on appeal to this Court: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462. This Court declared that the redeemable shares had been validly redeemed. On 10 February 2012 the High Court of Australia grante…
Beck v LW Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235
Citation 5 (Para 1)

…to be restored to the Company. In consequence he declined to order the winding up of the Company: Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235.…
Sheahan v Londish [2010] NSWCA 364
Citation 6 (Para 1)

…[14], Re Ausram Resources Ltd [2004] FCA 823 at [19]; Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 at [10] and Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 at [160]. However, in every case when an order is made the requirements of s 1322(6)(c) must be satisfied. The onus of establishin…
Sheahan v Londish [2010] NSWCA 270
Citation 7 (Para 1)

…2002] NSWSC 789 at [14], Re Ausram Resources Ltd [2004] FCA 823 at [19]; Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 at [10] and Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 at [160]. However, in every case when an order is made the requirements of s 1322(6)(c) must be satisfied. The…
Beck v Weinstock [2010] NSWSC 1068
Citation 8 (Para 1)

…Hamilton AJ held that the shares were not validly issued as redeemable preference shares, and hence their redemption was not valid: Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235. That decision was reversed on appeal to this Court: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462. This Court declared t…
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33
Citation 9 (Para 1)

…As Allsop P pointed out in Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 at [3], deciding whether the matter in question was so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding involves "a value judgment to be made referable to the proper…
Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15
Citation 10

…FLR 411 Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Morris v Kanssen [1946] AC 459 Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 Nenna v Australian Securities and Investments Commission [2011] F…
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Citation 11

…Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 Dicker v Angerstein (1876) 3 Ch D 600 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Eyre v Milton Proprietary Limited [1936] 1 Ch 244 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Federal Commissione…
MLC Limited, in the matter of MLC Limited [2006] FCA 1357
Citation 12 (Para 1)

…The primary judge based that construction of the articles on Eyre v Milton Proprietary Limited [1936] 1 Ch 244; Australia Hydrocarbons NL v Green (1985) 10 ACLR 72; NSW Rugby League Ltd v Australian Rugby Football League Ltd [1999] NSWCA 9; (1999) 30 ACSR 354 and Tomlinson v The Broken Hill Proprietary Co Ltd (Victo…
Official Trustee in Bankruptcy v Buffier [2006] NSWSC 870
Citation 13 (Para 1)

…ate of affairs: cf Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 at [60]-[61]; Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 at [39]-[40]. For a time, she also sought relief under the provisions of s 233 Corporations Act , but that claim was abandoned at the trial.…
Mansfield v Director of Public Prosecutions (WA) [2006] HCA 38
Citation 14

…1 NSWLR 537 Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Morris v Kanssen [1946] AC 459 Nece Pty Ltd v Ritek Incorporation (1997)…
Re Yanollee Pty Ltd [2006] NSWSC 705
Citation 15

…; (2006) 226 ALR 341 Re Continental Pacific Insurance Co [2002] NSWSC 789 Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 Re Yanollee Pty Ltd (in liq) [2006] NSWSC 705; (2006) 24 ACLC 1087 Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 Tomlinson v The Broken Hill Proprietary Co Ltd (Victor…
Re Centennial Coal Co Ltd [2006] NSWSC 62
Citation 16

…Pty Ltd (1981) 147 CLR 589 Re Ausram Resources Ltd [2004] FCA 823 Re Australian Continental Resources Ltd (1975) 1 ACLR 405 Re Centennial Coal Co Ltd [2006] NSWSC 62; (2006) 56 ACSR 698; (2006) 226 ALR 341 Re Continental Pacific Insurance Co [2002] NSWSC 789 Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 Re Yanoll…
NBIF v Minister for Immigration [2006] FMCA 182
Citation 17

…767 Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218 Ooregum Gold Mining Co of India Ltd v Roper [1892] AC 125 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14 Phonogram Ltd…
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Citation 18

…LR 336 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Jordan v Avram (1997) 141 FLR 275 Knight v F P Special Assets Ltd (1992) 174 CLR 178 Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 Logue…
Official Trustee in Bankruptcy v Buffier [2005] NSWSC 839
Citation 19 (Para 1)

…ulted from that state of affairs: cf Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 at [60]-[61]; Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 at [39]-[40]. For a time, she also sought relief under the provisions of s 233 Corporations Act , but that claim was abandoned at…
Re Ausam Resources Ltd [2004] FCA 823
Citation 20 (Para 1)

…econdition to the making of an order. It has been so decided in Re Continental Pacific Insurance Co [2002] NSWSC 789 at [14], Re Ausram Resources Ltd [2004] FCA 823 at [19]; Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 at [10] and Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 at [160…
Re Continental Pacific [2002] NSWSC 789
Citation 21 (Para 1)

…6)(a)(i), (ii) and (iii) need be satisfied as a precondition to the making of an order. It has been so decided in Re Continental Pacific Insurance Co [2002] NSWSC 789 at [14], Re Ausram Resources Ltd [2004] FCA 823 at [19]; Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 at [10] and Sheahan v Londish [2010] NSWCA 27…
Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427
Citation 22

…rt, Southwell J, 20 September 1984, unreported) Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462 Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427; (2001) 166 CLR 144; 40 ACSR 221 Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 Category: Principal judgment Parties: Tamar Rivqa Beck…
Australasian Memory Pty Ltd v Brien [2000] HCA 30
Citation 23

…Law Suitors Fund Act 1951 Cases Cited: Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60 Australasian Memory v Brien [2000] HCA 30; (2000) 200 CLR 270 Australia Hydrocarbons NL v Green (1985) 10 ACLR 72 Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235 Beck v W…
New South Wales Rugby League Limited & ORS. v Australian Rugby Football League Limited [1999] NSWCA 9
Citation 24 (Para 1)

…Proprietary Limited [1936] 1 Ch 244; Australia Hydrocarbons NL v Green (1985) 10 ACLR 72; NSW Rugby League Ltd v Australian Rugby Football League Ltd [1999] NSWCA 9; (1999) 30 ACSR 354 and Tomlinson v The Broken Hill Proprietary Co Ltd (Victorian Supreme Court, Southwell J, 20 September 1984, unreported).…
Oshlack v Richmond River Council [1998] HCA 11
Citation 25

…[2005] NSWSC 839; (2005) 54 ACSR 767 Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218 Ooregum Gold Mining Co of India Ltd v Roper [1892] AC 125 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14 Pho…
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43
Citation 26

…0] NSWSC 1068; (2010) 241 FLR 235 C G Maloney Pty Ltd v Noon [2011] NSWCA 397 Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 Dicker v Angerstein (1876) 3 Ch D 600 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Eyre v Milton Proprietary Limit…
PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service [1995] HCA 36
Citation 27

…ollieries Pty Ltd (1992) 178 CLR 14 Phonogram Ltd v Lane [1982] QB 938 PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re Ausram Resources Ltd [2004] FCA 823 Re Australian Continental Resources Ltd (1975)…
Owners of “Shin Kobe Maru” v Empire Shipping Co Inc [1994] HCA 54
Citation 28

…d Mining Co of India Ltd v Roper [1892] AC 125 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14 Phonogram Ltd v Lane [1982] QB 938 PMT Partners Pty Ltd (in liq) v Australian Nationa…
Knight v FP Special Assets Ltd [1992] HCA 28
Citation 29

…3) 3 Hare 100; 67 ER 313 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Jordan v Avram (1997) 141 FLR 275 Knight v F P Special Assets Ltd (1992) 174 CLR 178 Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 Logue v Shoalhaven SC [1979] 1 NSWLR 537 Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 78…
FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13
Citation 30

…y Ltd v Salmon (No 2) [2007] NSWCA 373 Eyre v Milton Proprietary Limited [1936] 1 Ch 244 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Henderson v Hend…
Fancourt v Mercantile Credits Ltd [1983] HCA 25
Citation 31 (Para 1)

…In Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60 Barwick CJ (with whom McTiernan and Gibbs JJ agreed) said at 65 that "the settled view" of an article of the type of Article 92 is that it is:…
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45
Citation 32

…The principle associated with Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 is, in essence, that there cannot be raised in later litigation matters that should have been put in issue in earlier proceedings between the same parties. The test is whether the matter sought to be liti…
Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd [1981] HCA 4
Citation 33

…h 244 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 James v Surf Road Nominees Pty Ltd (No 2) [2005]…
Albert Gardens (Manly) Pty Ltd v Mercantile Credits Ltd [1973] HCA 60
Citation 34 (Para 1)

…In Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60 Barwick CJ (with whom McTiernan and Gibbs JJ agreed) said at 65 that "the settled view" of an article of the type of Article 92 is that it is:…
Grant v John Grant & Sons Pty Ltd [1954] HCA 23
Citation 35 (Para 1)

…Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 concerned a resolution that had been voted for by three people purporting to be directors of the company. Two of them had not been validly appointed, because there had been no extraordinary resolution increasing the number of directors and thereby creating vacancie…
Henderson v Henderson [1948] HCA 15
Citation 36 (Para 1)

…In Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319 Sir James Wigram VC said:…
Patton v Buchanan Borehole Collieries Pty Limited [1992] HCATrans 271
Citation 37

…a Ltd v Roper [1892] AC 125 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14 Phonogram Ltd v Lane [1982] QB 938 PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 Port…
Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789
Citation 38 (Para 1)

…iate way of dealing with the constitutional and administrative vacuum that resulted from that state of affairs: cf Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 at [60]-[61]; Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 at [39]-[40]. For a time, she also sought relief un…
Nece Pty Ltd v Ritek Incorporation [1997] FCA 504
Citation 39

…HCA 38; (2006) 226 CLR 486 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Morris v Kanssen [1946] AC 459 Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386 North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327…
Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996] FCA 822
Citation 40

…Noon [2011] NSWCA 397 Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 Dicker v Angerstein (1876) 3 Ch D 600 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Eyre v Milton Proprietary Limited [1936] 1…

AI Chat coming soon

Medium Neutral Citation:	Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76
Hearing dates:	2 February 2012
Decision date:	05 April 2012
Before:	Campbell JA at [1] Young JA at [215] Sackville AJA at [228]
Decision:	(1) Appeal allowed. (2) Orders 2 and 3 in the court below be set aside. (3) Remit the matter to the primary judge, or such other judge as the Chief Judge in Equity might decide, to determine whether the Company should be wound up. (4) Cross-Appeal dismissed. (5) Respondents to pay the costs of the Appellant of the appeal and cross-appeal. (6) Costs of the first trial to follow the event of the second trial. (7) Respondents to have a certificate under the Suitors Fund Act 1951 concerning those costs of the Appellant of the appeal that they have been ordered to pay, which are assessed as being 80 percent of the combined costs of the Appellant of the appeal and the cross-appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - family company incorporated in 1971 - directors consisting of founder, his wife and their two children - no voting shares ever issued - in 2003 the founder passed away, and his wife had become incapable - both children ceased to be directors - result was no validly appointed directors - the son, who was a de facto director, purported to exercise reserve power under articles to return directors to quorum by electing his wife as an additional director - application by appellant for winding up COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - whether director validly appointed - director appointed to fill casual vacancy until next annual general meeting - articles of association required directors to retire and seek re-election at each annual general meeting, failing which directors who retired at annual general meeting were deemed to be re-elected - directors did not retire at each annual general meeting but purported to re-elect themselves as "retiring" directors - consequently director appointed to fill casual vacancy was not, since his first annual general meeting, ever validly elected or deemed elected despite acting as de facto director for decades - default re-election provision not effective where the director had not retired at the annual general meeting - remaining de facto director not director COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - whether additional director validly appointed by de facto director - articles of associated contained a defect clause that cured any defects in acts done by directors - whether this clause operated to cure fact that the remaining de facto director was never re-elected - held that initial appointment was not defective, as it had simply run its natural course - no defect for the articles of association to cure - de facto director not able to validly appoint additional director COMPANIES - management and administration - directors and other officers - appointment removal and retirement of directors - power of court to rectify corporate act which is taken in contravention of corporate constitution - Corporations Act 2001 s 1322 considered - where primary judge granted relief in relation to purported appointment of additional director by de facto director - whether purported act contravening constitution by person never validly appointed to office is a "contravention" that can be cured by s 1322(4)(ii) - remedial provisions to be construed broadly - held (per Young JA and Sackville AJA) "contravention" does not mean every invalid act done in relation to the corporate constitution, despite wide meaning - additional director's appointment not capable of being validated under s 1322 ESTOPPEL - issue estoppel - Anshun estoppel - appellants did not challenge, in previous proceedings, the validity of the appointment of the remaining director - where validity of appointment of director was not obvious or complete argument in previous proceedings - where argument would have required substantial additional resources to make - where previous litigation not necessarily sufficiently related to present proceeding to give rise to Anshun estoppel - not unreasonable to not rely on argument against validity of appointment APPEAL AND NEW TRIAL - denial of natural justice - defendants in court below did not extend their submissions on Corporations Act 2001 s 1322 issue to appointment of additional director - appellant lost opportunity not merely to make submissions, but to lead evidence on the topic and make submissions on that evidence - s 1322 finding essential to underlying relief claimed by appellant - held (per Campbell JA dissenting) matter to be remitted to consider whether s 1322 order should be made COMPANIES - management and administration - directors and other officers - powers under articles - directors empowered to allot unissued voting shares - voting shares comprised of par value shares - consideration of Company Law Review Act 1988 s 1427 repealing par value share provisions - Company Law Review Act to be interpreted as a whole - "repeal" of provision may only require that certain parts of the provision are inoperative - held (per Campbell JA dissenting) validly appointed director would have power to issue voting shares
Legislation Cited:	Acts Interpretation Act 1901 (Cth) Companies (New South Wales) Code Companies Act 1961 Companies Ordinance 1962 (ACT) Company Law Review Act 1998 (Cth) Company Law Review Bill 1997 Corporations Act 2001 (Cth) Corporations Law Suitors Fund Act 1951
Cases Cited:	Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60 Australasian Memory v Brien [2000] HCA 30; (2000) 200 CLR 270 Australia Hydrocarbons NL v Green (1985) 10 ACLR 72 Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235 Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235 C G Maloney Pty Ltd v Noon [2011] NSWCA 397 Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 Dicker v Angerstein (1876) 3 Ch D 600 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Eyre v Milton Proprietary Limited [1936] 1 Ch 244 FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Jordan v Avram (1997) 141 FLR 275 Knight v F P Special Assets Ltd (1992) 174 CLR 178 Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 Logue v Shoalhaven SC [1979] 1 NSWLR 537 Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Morris v Kanssen [1946] AC 459 Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38 Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386 North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327 NRMA Ltd v Gould (1995) 18 ACSR 290 NSW Rugby League Ltd v Australian Rugby Football League Ltd [1999] NSWCA 9; (1999) 30 ACSR 354 Official Trustee v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218 Ooregum Gold Mining Co of India Ltd v Roper [1892] AC 125 Oshlack v Richmond River Council (1998) 193 CLR 72 Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 Patton v Buchanan Borehole Collieries Pty Ltd (1992) 178 CLR 14 Phonogram Ltd v Lane [1982] QB 938 PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Re Ausram Resources Ltd [2004] FCA 823 Re Australian Continental Resources Ltd (1975) 1 ACLR 405 Re Centennial Coal Co Ltd [2006] NSWSC 62; (2006) 56 ACSR 698; (2006) 226 ALR 341 Re Continental Pacific Insurance Co [2002] NSWSC 789 Re MLC Ltd [2006] FCA 1357; (2006) 60 ACSR 187 Re Yanollee Pty Ltd (in liq) [2006] NSWSC 705; (2006) 24 ACLC 1087 Sheahan v Londish [2010] NSWCA 270; (2010) 80 ACSR 337; (2010) 244 FLR 64 Tomlinson v The Broken Hill Proprietary Co Ltd (Victorian Supreme Court, Southwell J, 20 September 1984, unreported) Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462 Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427; (2001) 166 CLR 144; 40 ACSR 221 Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581
Category:	Principal judgment
Parties:	Tamar Rivqa Beck (Appellant/Cross-Respondent) L W Furniture Consolidated (Aust) Pty Limited (First Respondent/First Cross-Appellant) Amiram David Weinstock (Second Respondent/Second Cross-Appellant) Helen Weinstock (Third Respondent/Third Cross-Appellant)
Representation:	Counsel R G McHugh SC; D J Barnett (Appellant/Cross-Respondent) D F Jackson QC; J O Hmelnitsky (Respondents/Cross-Appellants) Solicitors McCabe Terrill Lawyers Pty Ltd (Appellant/Cross-Respondent) Baker & McKenzie (Respondents/Cross-Appellants)
File Number(s):	2010/324963
Decision under appeal	Jurisdiction: 9111 Citation: Beck v L W Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235 Date of Decision: 2011-04-01 00:00:00 Before: Barrett J File Number(s): 2010/324963

BUSINESS:	The company was notified of the death of Leo Arie Weinstock (Director) on 29th July 2003
Hedy Jadwiga Weinstock (Director/Secretary) who has advanced Alzheimer's disease was declared incapable of performing the duties of Director/Secretary of the company according to clause 73(d) of the Articles of Association of the company where a director
"becomes of unsound mind or a person whose person or estate is liable to be dealt with in anyway under the law relating to mental health"
APPOINTMENT OF DIRECTOR:	It was RESOLVED in accordance with clause 87 of the Articles of Association of the company which states;
"...if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the company, but for no other purpose."
that Amiram David Weinstock being the sole remaining director of the company appoint Helen Weinstock as an additional director.
Helen Weinstock has consented to be a director."