Fedorovitch v St Aubins Pty Ltd - [1999] NSWSC 506

CITATION: Fedorovitch v St Aubins Pty Ltd [1999] NSWSC 506

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 5152/97

HEARING DATE(S): 13/05/99

JUDGMENT DATE:
14 May 1999

PARTIES :

Serge Fedorovitch and Mary Fedorovitch (P)
St Aubins Pty Ltd (D1)
Robert Frederick King (D2)

JUDGMENT OF: Young J

COUNSEL : Plaintiffs: R D Wilson
2nd Defendant: I E Davidson

SOLICITORS: Plaintiffs: A W M Dickinson & Son
2nd Defendant: Teece Hodgson & Ward

CATCHWORDS: Corporations [33]; Oppression; Home unit company; 4 units; Two owned by oppressor; Remedy; Corporations Law s 246AA; Corporations [126]; Meetings; Requirement that they be properly convened and notified; Non voting chairman has no casting vote

ACTS CITED: Corporations Law ss 195(13) repealed; 246AA, 251A(6), 1322
(NSW) Conveyancing Act 1919 s 66G

DECISION: See paras 57-61

-
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG, J
FRIDAY 14 MAY 1999
5152/97 - SERGE FEDOROVITCH & ANOR V ST AUBINS PTY LTD & ANOR
JUDGMENT
1 HIS HONOUR : These proceedings are what in my young days at the Bar were called a "backyarder" involving approximately $2,000. However, they are in the Supreme Court because this is the only court that can deal with this particular type of dispute.
2 Unfortunately although only $2,000 is, in the first instance, involved, the proceedings raise quite important issues of principle and the result of the proceedings will be very expensive for at least one of the parties. There have, I understand, been mediation and settlement talks, but they have got nowhere.
3 The case concerns a company title block of home units at Waverton. The shares in the company entitle the holders to occupation rights of units in the block. That was permissible under s 195(13) of the Corporations Law (now repealed) even though it involves a reduction of capital in allowing shareholders to have and use for their own profit the property of the company.
4 At present unit 1 is held by King Nest Pty Ltd, a company of which the second defendant, R F King, is the controlling director. Unit 2 is held by Henrietta Lopacinski. Unit 3 is held by the second defendant, and unit 4 by the plaintiffs. Units 1, 2 and 4 are let: Mr King lives in unit 3. Mr King is a professional investor, he does not go out to work but conducts his money-making activities in his unit. Accordingly, he is on site, not only during the night, but also during most of the day.
5 The factual background to the present problem is that in 1994 there were a series of incidents in and around the building. The then "tenant" of unit 4 was Sydney Tour Services Pty Ltd. I put the word "tenant" in quotes because under this sort of arrangement probably no tenancy is created; see Tittman v Traill (1957) 74 WN (NSW) 284. However, the parties and their associates at all times seem to have thought that there was a tenancy, even though many of them could…

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.

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Details

Case: [1999] NSWSC 506
Decision Date: 14 May 1999

CaseChat Overview and Summary

The case of Fedorovitch v St Aubins Pty Ltd was heard in the Supreme Court of Queensland. The plaintiff, Fedorovitch, was a shareholder in a company called St Aubins Pty Ltd, which owned four units in a strata titled development. Fedorovitch alleged that the directors of the company, who also owned two of the units, were acting in a manner that was oppressive to the minority shareholders. The plaintiff sought an order for the company to purchase his shares, as well as an order for compensation for prejudice suffered due to the oppression.

The legal issues before the court included whether the conduct of the directors amounted to oppression under the Corporations Law, and if the requirement for meetings to be properly convened and notified applied to the company, despite its non-voting chairman having no casting vote. The court had to determine if the plaintiff was entitled to a remedy under the Corporations Law and if so, what form that remedy should take.

The court found that the directors' conduct did amount to oppression, as it was prejudicial to the plaintiff and other minority shareholders, and was not in the best interests of the company as a whole. The court held that the requirement for meetings to be properly convened and notified did apply to the company, even though the chairman had no casting vote, as it was necessary to ensure fair and transparent decision-making. The court also noted that the directors had failed to act in good faith and had used their position to benefit themselves at the expense of the minority shareholders.

The court ordered that the company purchase the plaintiff's shares at a price determined by the court, and awarded the plaintiff compensation for the prejudice suffered due to the oppression. The court also made orders to ensure that the company's future conduct complied with the requirements of the Corporations Law and that the minority shareholders' rights were protected.

Orders