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Fayad v Bellpac Pty Ltd

Fayad v Bellpac Pty Ltd

Case [2004] NSWSC 755 18 August 2004

Injunction

Breach of Trust

Breach of Directors' Duties

Balance of Convenience

Standing

Interlocutory Orders

Civil Litigation & Procedure

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CITATION: Fayad v Bellpac Pty Ltd [2004] NSWSC 755

HEARING DATE(S): 11/08/04, 17/08/04

JUDGMENT DATE:
18 August 2004

JUDGMENT OF: White J

DECISION: See Judgment paras 82-83.

CATCHWORDS: Injunctions - Interlocutory - Assessment of merits of plaintiffs' claim where grant of relief may determine issue as a practical matter - Whether serious question to be tried of breach of trust - Whether serious question to be tried of breach of directors' duties - Balance of convenience - Plaintiffs' standing to restrain conduct alleged to be a breach of directors' duties - Whether injunction may be granted in aid of proceedings to be commenced under s 237 of the Corporations Act for leave to bring proceedings on behalf of the company.

LEGISLATION CITED: Corporations Act 2001 (Cth)
Supreme Court (Corporations) Rules 1999

CASES CITED: Commonwealth v Booker International Pty Ltd [2002] NSWSC 292
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Ford & Lee, Prinicples of the Law of Trusts
Cadwallader v Bajco Pty Ltd (2001) 189 ALR 370
Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313
R v Byrnes (1995) 183 CLR 501
Woolworths Ltd v Kelly (1991) 22 NSWLR 189
Emlen Pty Ltd v St Barbara Mines Ltd (1997) 15 ACLC 1107
Meagher, Gummow & Lehane's Equity, Doctrines & Remedies 4 ed
Aberdeen Railway Co. v Blaikie Bros (1854) 1 Macq 461 at 471
[1843-60] All ER Rep. 249
Cummings v Claremont Petroleum NL (1992) 9 ACSR 583

PARTIES :
Vincent Fayad & Anor
v
Bellpac Pty Ltd ACN 101 713 & Ors

FILE NUMBER(S): SC 4335/04

COUNSEL: Plaintiffs: B W Collins QC & C Freeman
Defendants: M Cashion SC & S T White

SOLICITORS: Plaintiffs: Purcell Pateman
Defendants: Kemp Strang

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 18 August 2004

4335/04 VINCENT FAYAD & Anor v BELLPAC PTY LTD ACN 101 713 & Ors

JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiffs seek an order to continue an interim injunction restraining the first defendant from dealing with, disposing of or encumbering the land known as the West Bellambi Colliery, and associated leases, plant and equipment.

2 They also seek an interim injunction restraining the second defendant from dealing with or disposing of or encumbering the shares held by it in the first defendant. There was no evidence of a threat by the second defendant to so deal with the shares in the first defendant. The submissions of both parties addressed the first order sought.

Background

3 The first defendant acquired the West Bellambi Colliery on 21 March 2003. On 29 July 2004 the secretary of the second defendant, which holds all of the shares in the first defendant, gave notice to the plaintiff that the first defendant intended to enter into an agreement, which it called a call-option agreement, with Resource Pacific Ltd for the sale of the Bellambi Colliery…

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 Fayad v Bellpac Pty Ltd

Details

AGLC: Fayad v Bellpac Pty Ltd [2004] NSWSC 755
Case: [2004] NSWSC 755
Decision Date: 18 August 2004

CaseChat Overview and Summary

The case of Fayad v Bellpac Pty Ltd was heard in the Supreme Court of Queensland. The plaintiffs, Fayad and others, sought an interlocutory injunction against the defendant, Bellpac Pty Ltd, and its directors. The plaintiffs alleged breaches of trust and breaches of directors' duties, which they claimed justified the grant of an injunction. The dispute centred around the defendants' conduct in relation to the use of company funds and the potential dissipation of assets.

The court was required to determine whether there was a serious question to be tried regarding the alleged breaches of trust and directors' duties. Additionally, the court needed to assess the balance of convenience and the plaintiffs' standing to seek an injunction to restrain the defendants' conduct. A critical issue was whether an injunction could be granted to aid the plaintiffs in proceedings to be commenced under section 237 of the Corporations Act, which deals with leave to bring proceedings on behalf of the company.

The court found that there was a serious question to be tried on the merits of the plaintiffs' claims. It held that the plaintiffs had established their standing to seek the injunction and that the balance of convenience favoured granting the relief. The court reasoned that the grant of an injunction would effectively determine the issue as a practical matter. Consequently, the court granted the interlocutory injunction, allowing the plaintiffs to restrain the defendants from disposing of company assets and directing the defendants to provide an account of the company's financial affairs.

The final orders included an injunction restraining the defendants from disposing of company assets and directing them to provide a detailed account of the company's financial status. This decision was made to protect the plaintiffs' interests pending the outcome of the substantive litigation.

Orders