Dabab, J. v Badawi, A

[1993] FCA 537

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	)
GENERAL DIVISION	) No. VG 3186 of 1993

IN THE MATTER of an application pursuant to sections 251(1)

and 1319 of the Cor~orations	Law
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IN THE MATTER of KLEMMS PTY LTD

A.C.N. 005 841 190

B E T W E E N :

JAMAL DABAB

Applicant

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AMIN BADAWI and

KLEMMS PTY LTD

Respondents

m:	Olney J
Place:	Melbourne
Date:	16 July 1993
effectively prevented the holding of the meeting.

This application has been brought on short notice such that there has been no opportunity to facilitate the filing of answering material. The affidavit in support of the application establishes on its face a situation where there is an obvious deadlock not only on the board of directors but amongst the shareholders insofar as the minority shareholder, by absenting himself from a general meeting of the company at which certain resolutions aimed at resolving the deadlock were to be moved, has

I do not understand it to have been said by counsel for the minority shareholder that the general thrust of the applicant's affidavit is inaccurate except to the extent that it is said that the company is not being prevented from carrying on its business. Undertakings have been sought that the minority shareholder, the first respondent, will attend the meeting which has been adjourned until 5 pm today, but no undertakings have been forthcoming.

It is not usual for the Court to be moved to exercise its jurisdiction on short notice in circumstances where the respondent has had no opportunity to effectively respond to the factual material put before the Court, but there are

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circumstances which justify the Court in so acting. That type of order is made frequently on ex parte applications where it is necessary to protect property or other rights.

In this case the company conducts a business as a real estate agency. The law requires it to be under the effective control

of a licensed agent which it is, that is, under the control of	the applicant. The company is trustee for a trust in which it
happens that both the applicant and first respondent are equal beneficiaries. I do not think that latter circumstance entitles the first respondent thereby to effectively exercise 50 per cent voting power in the company. The company structure has obviously been designed advisedly to meet the particular circumstances of the business and in those circumstances the majority shareholder ought to be able to exercise his rights in accordance with the articles and the corporations law.
It is said that there is only about $37,000 of money really immediately at stake and that may well be the case. But I do not think that fact weighs more heavily on one side than the other. The persons entitled to that $37,000 which of course includes the company itself are set out. There is no reason to believe that those entitled to the money will not be paid if the present management of the company was able to draw the funds and pay out the money.
It is said that the first respondent who is the second signatory to the cheques would co-operate by signing cheques to clients entitled to funds held in the trust account. And that is as I would expect it to be. But, nevertheless, the situation has arisen that the company is unable to function fully by reason of the fact that it is unable to have recourse to commissions earned but at present held in the trust account of which the first
respondent is a signatory.
Whatever may be the facts upon which the first respondent's application for winding up is based it seems to me that at the present time the company is in a situation where it cannot effectively operate to its full capacity. And in those circumstances I would be inclined to grant relief of the nature sought. I have not fully considered whether it is appropriate to make an order in the form sought in the minute, that is, to make an order in relation to the currently adjourned meeting. It may be appropriate that the relief should be in the nature of a direction for the holding of a meeting which seems to be what section 251 is concerned with. But I will be happy to hear argument on that given that it is my view that a meeting of the nature in question, namely, that a meeting to consider the matters of which notice was given to convene the aborted meeting of last week should be held.

I certify that this and the preceding 3 pages is a true copy of the Ex Tempore Judgment of the Honourable Mr Justice Olney

Associate: r6 t - /p~ve

Dated: g 73

D.H. Denton (instructed by David Boyall) appeared for the applicant).

V. Ruta (instructed by Chrapot Bock & CO) appeared for the

respondents.

Date of Hearinq:	16 July 1993
Place:	Melbourne
Date of Judgment:	16 July 1993