Costar v Rubie

The case of *Costar v Rubie* concerned an application to the High Court of Australia regarding the jurisdiction of a Full Court. The dispute arose from orders made by the Full Court which reversed a decision of a primary judge concerning a family company. The applicant, a shareholder in the company, contended that the Full Court's orders improperly interfered with the rights of third parties, specifically the company itself and its members.

The central legal issue before the High Court was whether the Full Court had exceeded its jurisdiction by making orders that intruded upon the proprietary and contractual rights of persons not parties to the marriage, particularly the applicant as a shareholder. The applicant argued that the Full Court's orders compelled the husband, a director, to exercise his fiduciary powers in a manner not necessarily in the best interests of the company, thereby infringing upon the applicant's rights as a member to have the company managed appropriately.

The applicant's argument was founded on the principle that a member of a company has a right to expect that directors will manage the company in the unfettered exercise of their fiduciary powers. The Full Court's orders required the husband, as a director, to procure the sale of the company's assets and to surrender his directorial powers regarding this sale to an agent or attorney appointed by the court if he and the wife could not agree. Furthermore, the orders mandated that the husband and wife, as the voting members, pass a special resolution to wind up the company, irrespective of whether they believed it to be in the company's best interests. The applicant contended that these directives constituted an unwarranted intrusion on the company's management and the applicant's rights as a shareholder.