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BI Constructions Pty Ltd v Shad

BI Constructions Pty Ltd v Shad

Case [2010] NSWSC 484 18 May 2010

Corporate Procedure

Director Removal

Corporate Constitution

Valid Retainer

Corporate Law & Governance

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CITATION: BI Constructions Pty Ltd v Shad & Anor; Bayeh v BI Constructions Pty Ltd [2010] NSWSC 484
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 9, 12 & 17 March 2010 & 16 April 2010

JUDGMENT DATE :
18 May 2010

JURISDICTION: Equity

JUDGMENT OF: Slattery J at 1

DECISION: ORDERS:
a) The trust proceedings are stayed for 21 days.
b) Direct the parties to the trust proceedings bring in a management plan within 21 days in accordance this judgment.
c) Make orders 1 and 2 on Mr Barrak’s motion of 17 March 2010.
d) Grant liberty to apply.

CATCHWORDS: PROCEDURE - challenge to retainer of solicitors of corporate plaintiff - alleged defect in resolution to commence proceedings - CORPORATIONS - removal of director by meeting of the board - constitution and replaceable rules only authorise removal of director by a meeting of members - HELD - director's removal invalid - no proper notice given of meeting to authorise commencement of the proceedings - no valid retainer of solicitors for the plaintiff

LEGISLATION CITED: Corporations Act ss 203C, 243C, 248C, 249H, 249J, 1322
Legal Profession Act 2004 (NSW) s 728

CATEGORY: Principal judgment

CASES CITED: Brown v DML Resources Pty Ltd (No 6) (in liq) (2002) 166 FLR 393
Hawksford v Hawksford (2005) 191 FLR 173
Poliwka v Heven Holdings Pty Limited (1992) 7 ACSR 85
Re Chevron Furnishers Pty Ltd (in liq) [1994] 2 Qd R 475
Re PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674
Re Pembury Pty Limited [1993] 1 Qd R 125

PARTIES:
BI Constructions Pty Ltd v Shad & Anor:
Plaintiff: BI Constructions Pty Ltd
First Defendant: George Shad
Second Defendants: Chikal Pty Ltd
Bayeh v BI Constructions Pty Ltd:
Plaintiff: Samir Bayeh
Defendant: BI Constructions Pty Ltd

FILE NUMBER(S): SC 2009/291340 BI Constructions Pty Ltd v Shad & Anor; 2009/291705 Bayeh v BI Constructions Pty Ltd

COUNSEL:
BI Constructions Pty Ltd v Shad & Anor:
Plaintiff: Mr C Robinson
First Defendant: Mr T Cavanagh (solicitor)
Second Defendant: Mr M Condon
Applicant on Motion: Mr M A Robinson
Bayeh v BI Constructions Pty Ltd:
Plaintiff: Mr M Condon
Defendant: Mr C Robinson
Applicant on Motion: Mr M A Robinson

SOLICITORS:
BI Constructions Pty Ltd v Shad & Anor:
Plaintiff: Cambridge Law
First Defendant: Mullane & Lindsay
Second Defendant: Thurlow Fisher Lawyers & Consultants Pty Ltd
Applicant on Motion: Barrak Lawyers
Bayeh v BI Constructions Pty Ltd:
Plaintiff: Thurlow Fisher Lawyers & Consultants Pty Ltd
Defendant: Cambridge Law
Applicant on Motion: Barrak Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

SLATTERY J

TUESDAY 18 MAY 2010

2009/291340 BI CONSTRUCTIONS PTY LTD v GEORGE SHAD AND CHIKAL PTY LTD

2009/291705 SAMIR BAYEH v BI CONSTRUCTIONS PTY LTD

JUDGMENT

1 HIS HONOUR: This is a judgment on an application brought by a defendant challenging the retainer of the solicitors for the corporate plaintiff.

Introduction

2 BI Constructions Pty…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading BI Constructions Pty Ltd v Shad

Details

AGLC: BI Constructions Pty Ltd v Shad; Bayeh v BI Constructions Pty Ltd [2010] NSWSC 484
Case: [2010] NSWSC 484
Decision Date: 18 May 2010

CaseChat Overview and Summary

BI Constructions Pty Ltd commenced proceedings against Shad, its former director, seeking damages for breaches of fiduciary duties and negligence. The dispute arose from Shad's removal as a director of BI Constructions and his subsequent conduct. The case was heard in the Supreme Court of New South Wales.

The central legal issue was whether the court had jurisdiction to hear the case given the alleged invalidity of the director's removal and the validity of the retainer of the solicitors representing BI Constructions. The court examined whether the resolution to remove Shad as a director and to commence proceedings against him was properly passed. BI Constructions' constitution and the replaceable rules of the corporation only authorised removal of a director by a meeting of members, not by the board.

The court found that Shad's removal by the board was invalid as it did not comply with the corporation's constitution and the replaceable rules. Additionally, the court held that the resolution to commence proceedings against Shad was also invalid as it was not properly noticed and therefore not validly passed. As a result, the retainer of the solicitors for BI Constructions was not validly established. Consequently, the court dismissed the proceedings for lack of jurisdiction.

No final orders were made as the proceedings were dismissed for lack of jurisdiction.

Orders