In the matter of Lesso Building Material Trading (Sydney) Pty Limited (administrators appointed)

The case before the court involved Lesso Building Material Trading (Sydney) Pty Limited, a company that had appointed voluntary administrators. The company's shareholders had entered into an agreement which contained provisions about the quorum required for directors’ meetings. The administrators challenged the validity of a resolution passed at a directors' meeting to appoint them. The issue before the court was whether this resolution was valid despite the fact that the quorum specified in the shareholders' agreement was not met.

The central legal issue was whether the resolution to appoint the administrators was valid despite the shareholders' agreement requiring a higher quorum than what was specified in the company's constitution. The court had to determine if the shareholders' agreement could impose a higher quorum requirement than what was stipulated in the company's constitution. The court also needed to consider the implications of the company's insolvency on the validity of the resolution.

The court held that the shareholders' agreement did not have the effect of imposing a higher quorum requirement than what was specified in the company's constitution. The court found that the directors' meeting had satisfied the constitutional quorum requirement, and therefore the resolution to appoint the administrators was valid. The court also noted that the company's insolvency did not affect the validity of the resolution. Consequently, the administrators' challenge to the resolution was dismissed.

The court's decision meant that the resolution to appoint the administrators was upheld. The court did not declare the resolution invalid, and the administrators' appointment stood. The court's ruling clarified that a shareholders' agreement cannot impose a higher quorum requirement than what is specified in a company's constitution, and that the constitutional quorum is the one that applies in such circumstances.