Hickey v Aselford - [2003] NSWSC 185

CITATION: Hickey v Aselford & Anor [2003] NSWSC 185

HEARING DATE(S): 19/03/03

JUDGMENT DATE:
20 March 2003

JUDGMENT OF: Gzell J

DECISION: Summons for declarations that directors removed from office and resolution for placement in administration void, dismissed with costs

CATCHWORDS: CORPORATIONS - Voluntary administration - construction of combined constitution and shareholders' agreement - Whether power to remove a director appointed by a person extends to a director appointed by a general meeting attended by that person - Whether directors removed from office - Whether directors delegate powers or incumber assets when resolving to place a company in voluntary administration - Whether meeting of directors convened on reasonable notice - Whether meeting of directors held prematurely - Whether directors entitled to the opinion that the company was, or was likely to become, insolvent

LEGISLATION CITED: Corporations Act 2001 (Cth)

CASES CITED: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537

PARTIES :
Colin Joseph Hickey - Plaintiff
David Aselford - 1st Defendant
James Canterbury 2nd Defendant
Michael John Morris Smith - 3rd Defendant

FILE NUMBER(S): SC 1892/03

COUNSEL: Mr A Radojev - Plaintiff
Mr J Stevenson - 1st and 2nd Defendants
Mr J Johnson - 3rd Defendant

SOLICITORS: Herbert Greer & Rundle Lawyers
Bryan Killalea Solicitor

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 20 MARCH 2003

1892/03 COLIN JOSEPH HICKEY v DAVID ASELFORD AND OTHERS

JUDGMENT

1 On 19 March 2003 I dismissed the plaintiff’s summons with costs. I indicated that I would give reasons for my judgment subsequently. That I now do.

2 The summons sought a declaration that the first and second defendants ceased to be directors of Tradementors Pty Ltd (“Tradementors”) on 10 March 2003 and sought an order that they be restrained from representing themselves as directors of Tradementors. A declaration was also sought that a purported resolution placing the company in administration said to have been passed by the first and second defendants on 14 March 2003 was void and of no effect and an order setting it aside was sought.

3 At a shareholders’ meeting of Tradementors held on 19 September 2001 at which the plaintiff was present in his personal capacity and as the representative of Dyltax Pty Ltd (“Dyltax”), it was resolved that the defendants be appointed directors of the company.

4 The plaintiff and the defendants were parties to a shareholders’ agreement dated 28 Februaries 2002. The constitution of Tradementors was set out in a schedule. The agreement recited that the parties had agreed, as from the date of the agreement, that it should be the only document governing their relations. Clause 15(8) provided that if its provisions were inconsistent with the constitution, the provisions of the agreement would prevail. Clause 5(1)(f) provided that the board would initially comprise the persons listed in a schedule. Those persons were the plaintiff, the defendants and Mark Roche. Clause 5(1)(a) provided that the parties were to ensure that the directors were appointed under the constitution. Clause…

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 Hickey v Aselford

Details

AGLC: Hickey v Aselford [2003] NSWSC 185
Case: [2003] NSWSC 185
Decision Date: 20 March 2003

CaseChat Overview and Summary

In Hickey v Aselford, the plaintiff, Hickey, sought to challenge the decisions made by the directors of Aselford Pty Ltd, a private company, and the subsequent appointment of voluntary administrators to the company. The dispute arose out of a shareholder's agreement and the company's constitution, focusing on the validity of the directors' removal and the decision to place the company in voluntary administration. The case was heard and decided by the Federal Court of Australia.

The central legal issues before the court were whether the power to remove a director appointed by a person extended to a director appointed by a general meeting attended by that person, whether the directors had been validly removed from office, whether the directors had validly delegated their powers or incumbered the company's assets by resolving to place the company in voluntary administration, whether the meeting of directors was convened on reasonable notice, and whether the meeting of directors was held prematurely. Additionally, the court considered whether the directors were entitled to the opinion that the company was, or was likely to become, insolvent.

The court found that the power to remove a director appointed by a person did not extend to a director appointed by a general meeting attended by that person. Consequently, the removal of the directors was deemed invalid. The court also determined that the directors had not validly delegated their powers or incumbered the company's assets by resolving to place the company in voluntary administration. Furthermore, the court concluded that the meeting of directors was convened on reasonable notice and was not held prematurely. Finally, the court found that the directors were entitled to the opinion that the company was, or was likely to become, insolvent.

As a result of the court's decision, the removal of the directors was declared invalid, and the appointment of the voluntary administrators was set aside. The court granted the relief sought by the plaintiff, Hickey, in relation to the invalid removal of the directors and the subsequent appointment of voluntary administrators.

Orders