J J Williams (Currumbin) Pty Ltd v Williams, J. S. P

[1992] FCA 449

LIMITED DISTRIBUTION

JUDGMENT NO. ...n.,.d,,,,~,O 4-w .,o,,o,U,,,

C A T C H W O R D S I

Corporations Law - share issue - whether oppressive, unfairly prejudicial or discriminatory - leave sought for late amendment of defence - evidence of resolution of board of directors - formula to allot shares in lieu of wages - whether pleading would be inherently improbable and inconsistent - Federal Court Rules - matters which must be specifically pleaded - costs occasioned by the amendment.

Federal Court Rules Order 11 Rule 10.

J.J. Williams (Currumbin) Ptv. Ltd.. Svdnev John Arthur Williams. Barrv Joseph Williams and Grahame Charles Williams

v. John Samuel Patrick Williams and John Michael Williams and

Ors.

G3013 of 1991.

Cooper J.. Brisbane. 15 June. 1992

TN THE FEDERAL CO-UBT-OF AUSTRALIA	l
9UEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	No. G3013 of 1991
IN THE MATTER OF:

J.J. WILLIAMS (CURRUMBIN) PTY.

LIMITED

AUSTRALIAN COMPANY NO:	009 681 127
SIDNEY JOHN ARTHUR WILLIAMS. BARRY JOSEPH WILLIAMS and GRAHAME CHARLES WILLIAMS

Applicants

JOHN SAMUEL PATRICK WILLIAMS and JOHN

MICHAEL WILLIAMS

First Respondents

J. J. WILLIAMS (CURRUMBIN) PTY.

LIMITED

Second Res~ondent

J.J.W. (TWEED) PTY. LIMITED

Third Res~ondent

MINUTES OF ORDER

JUDGE W I N G ORDER:	Cooper J.
WHERE MADE:	Brisbane
DATE OF ORDER:	15 June, 1992
THE COURT ORDERS THAT :

1. GRANT LEAVE to the respondents to amend the defence in each application in the terms proposed.

2. I ORDER in each application that the respondents pay the applicants' costs thrown away in consequence of the respondents being granted leave to amend the defence.

3.          I DIRECT :-

(a)	That the reply in both applications be filed and served by 19 June, 1992:
( b )	That all parties make and file a supplementary list

of documents on or before 26 June, 1992:

That inspection of documents be completed by 3 July,
1992.

I ADJOURN each application for hearing on Monday, 12
October 1992, before me

I DIRECT that the applicants' costs of the adjournment be part of the applicants' costs occasioned by the amendment and subject to my earlier order.

I G M T LEAVE to substitute copies of exhibits 1 and

2 for the originals and direct that the original

minutes be returned to the applicant.

Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAT, COURT OF AUSTRALIA	!
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	No. G3013 of 1991
IN THE MATTER OF:

. . WILLIAMS ICURRUMBIN) PTY.

LIMITED

AUSTRALIAN COMPANY NQ:	009 681 127
SIDNEY JOHN ARTHUR WILLIAMS, BARRY JOSEPH WILLIAMS and GRAHAME CHARLES WILLIAMS

Applicants

JOHN SAMUEL PATRICK WILLIAMS and jOHN

MICIIAEL WILLIAMS

First Respondents

J. J. WILLIAMS ICURRUMBINI PTY.

LIMITED

Second Res~ondent

J.J.W. [TWEED) PTY. LIMITED

Third Respondent

corn:	Cooper J.
PLACE :	Brisbane
DATE :	15 June, 1992

EX TEMPORE REASONS FOR JUDGMENT

In each application the applicants have alleged that the first respondents' conduct as directors in respect of a'	share issue in J.J. Williams (Currumbin) Pty. Ltd. (Currumbin)
made on 2 April, 1991 to issue 2000 shares in Currumbin to J.S.P. Williams was oppressive, unfairly prejudicial to or unfairly discriminatory against the other shareholders in Currumbin.
The relevant minutes of directors meetings of Currumbin record that the shares were offered at a nominal

value of $2.00 per share "as a token of appreciation for his past efforts and contribution to this company over the past 30

years. "

By an amendment to each defence, notice of which was given on 12 June 1992, the respondents seek to plead a resolution of the Board of Directors of Currumbin, dated 29 December 1972, whereby it was resolved to allot shares to J.S.P. Williams in accordance with a formula contained in the resolution in lieu of wages. The pleading further alleges that the value of the shares allotted in April, 1991 was less than the entitlement of J.S.P. Williams under the 1972 resolution, and that the entitlement of J.S.P. Williams under the 1972 resolution would, in 1991, have been in excess of the value of Currumbin and its shares.

The applicants submitted that the proposed pleading
is inherently improbable and inconsistent with the 1991

minutes. They further submitted that the proposed amendment

an absence of any contingent liability for remuneration being	is one which takes the applicants by surprise. They point to	shown in the accounts of Currumbin over a number of years.
The minute book came into the hands of the first respondents in April 1992, it having been in the hands of accountants for some time unbeknown to the respondents. The applicants were given access to the minutes at the end of April, 1992. Mr. Muir QC, who appears for the respondents, advised me that J.S.P. Williams was aware of 'the 1972 minute but unaware as to its whereabouts. He concedes that the minute was a relevant document which ought to have been discovered even though it was thought to be lost. It was not discovered.
Mr. Muir submits that the proposed amendment is not one of a material fact, but merely evidentiary material going to answer an allegation of prohibited conduct on the part of the first respondents. He submits that the material is relevant and admissible on the hearing of the applications, irrespective of whether the amendments are allowed. He concedes that the applicants may have been taken by surprise, and may have been prejudiced in the preparation of their case by the late notification that the 1972 minute had a particular relevance to the litigation.
By their pleading, the respondents do not allege that the 1991 share issue was made under or in pursuance of the 1972 resolution. Rather, the allegations are pleaded to
establish:
(a)  the existence of an obligation to issue shares in lieu of remuneration for services rendered over and above those services rendered in discharge of the office of director of the company.

that the value of the entitlement under the 1972 resolution was substantial by 1991, there having been no shares issued under the 1972 resolution as at April 1991.

that the subject matter of the 1991 agreement and resolution was the same as the 1972 resolution, namely, to remunerate or to compensate for services rendered over time.

that the value of the 1991 benefit was substantially less than the accrued entitlement under the 1972 resolutions.

These four matters, if established, would be relied upon to support a contention that the conduct of the first respondents in 1991 was neither oppressive, unfairly prejudicial or unfairly discriminatory because it fell within the ambit of an existing obligation. The 1972 resolution, on its face, appears to have been made at that time with the intention that it should be given effect to from 1 January,

services to the company beyond being a mere director.	1972 and thereafter for so long as J.S.P. Williams provided
I am not persuaded that the proposed pleading is inherently improbable and inconsistent with the 1991 minutes. The applicants, in these circumstances, do not establish a basis for striking out the proposed paragraphs if leave to
amend were granted, and thus do not make ou t a ground t o
resist the amendment.

I

The Federal Court Rules provide the circumstances in which matters must be specifically pleaded. Order 11 rule 10 provides as followsr

" In a	p l ead ing ,	subsequen t	t o a	s t a t e m e n t	o f	c l a i m ,
a	p a r t y	s h a l l	p lead	s p e c i f i c a l l y a n y m a t t e r	o f	f a c t

o r p o i n t o f l a w . . . t h a t -

( a he a l l e g e s makes a c l a i m or d e f e n c e o f t h e

o p p o s i t e p a r t y n o t m a i n t a i n a b l e ;

(b) i f n o t s p e c i f i c a l l y p leaded m igh t t a k e the

other p a r t y by s u r p r i s e , o r

( C ) r a i s e s i s s u e s o f f a c t n o t a r i s i n g o u t o f

the preced ing p l e a d i n g s " .

In the instant case, the proposed pleading raises matters of fact relied upon to show that the allegation of oppression, unfair prejudice or unfair discrimination is not maintainable. Additionally, they are such as to take the other side by surprise, particularly where there is no suggestion that the 1972 agreement was ever given effect to by the issue of shares, and was not relied upon as the operative resolution grounding an entitlement which was given effect to in April, 1991 when shares were then issued.

In my view, the matters raised in the proposed amendment, if intended to be relied upon, are required to be pleaded by Order 11, Rule 10. It is not sufficient to say that they are merely matters of evidence to be relied upon to support a general denial of oppression, unfair prejudice or unfair discrimination.

The respondents pressed for the amendments. The

applicants concede there is no prejudice to them which cannot be met by the granting of time, further directions as to interlocutory steps relevant to the allegations, and, an order for costs thrown away by the amendments including the costs of the adjournment of this hearing if necessary.

I am not persuaded that there is anything in the conduct of the applicants which would deprive them of, or reduce their entitlement to, the costs occasioned by the amendment. The respondents have had the minutes since about 6 April, 1992, and have failed for a period of at least two months to give notice of the proposed amendment. The matter was set down for trial on or about 9 April 1992. On the pleadings as they then stood, there was no reason for the applicants to believe that the 1972 resolution was either material or in issue.

I GRANT LEAVE to the respondents to amend the defence in each application in the terms proposed.

I ORDER in each application that the respondents pay

the applicants' costs thrown away in consequence of the
respondents being granted leave to amend the defence.

In addition to the orders I have already made

I DIMCT :-

(11	That the reply in both applications be filed and
served by 19 June, 1992;

I

(2)	That all parties make and file a supplementary list of documents on or before 26 June, 1992;
( 3 )	That inspection of documents be completed by 3 July, 1992.

I adjourn each application for hearing on Monday, 12 October 1992, before me, and I DIRECT that the applicants' costs of the adjournment be part of the applicants' costs occasioned by the amendment and subject to my earlier order.

I GRANT LEAVE to substitute copies of exhibits 1 and

2 for the originals and direct that the original minutes be

returned to the applicant.

I certify that this and the six (6)

preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Cooper.

Date:  15 June, 1992.

. S ( ~ ( d b t ~	/ f i t	hJ(lLeee*~d
Associate

Counsel for Applicant:	R. Gotterson Q.C. and D. North
Solicitors for Applicant8	Halliday and Stainlay
Counsel for Respondents:	J.D. Muir Q.C. and H. Weld
Solicitors for Respondents:	J.J. Taylor