Macralink Pty Ltd v Saris - [2011] VSC 665

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

No. SCI 2011 4515

IN THE MATTER of ROMAN HEIGHTS DEVELOPMENTS PTY LTD (ACN 065 041 397)

BETWEEN

MACRALINK PTY LTD (ACN 078 904 300)
and
THOMAI SARISTAVROS

Plaintiffs

CONSTANTINE SARIS

Defendant

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JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 November 2011
DATE OF JUDGMENT:	20 December 2011
CASE MAY BE CITED AS:	Macralink Pty Ltd & Saristavros v Saris
MEDIUM NEUTRAL CITATION:	[2011] VSC 665

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CORPORATIONS – Statutory derivative action – Leave required to commence proceedings – Alleged claim by company as beneficiary that entitled to unpaid present entitlements – Prospective plaintiff and defendant related companies controlled by deadlocked directors - Whether applicants acting in good faith – Allegation that proposed proceeding attempt to achieve forced sale or destruction of proposed defendant’s business - Whether in best interests of company that leave be granted – Allegation that applicant director would be in position of conflict - Whether there is a serious question to be tried - Corporations Act 2001 (Cth) ss 236, 237.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R. Greenberger	Dermenzies Lawyers
For the Defendant	Dr C.L. Pannam QC with Mr S.D. Hay	GSM Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 2

Requirements for leave..................................................................................................................... 2

Is there a serious question to be tried?........................................................................................... 3

Is the proceeding in the best interests of RHD?........................................................................... 8

Are Ms Saristavros and Macralink acting in good faith?......................................................... 18

Conclusion......................................................................................................................................... 21

HER HONOUR:

Introduction

Poseidon Tarama Pty Ltd operates a food dips business. The dips are produced under the well-known brand, Black Swan. The business was originally operated by the defendant, Constantine Saris (who is a director of Poseidon) and his brother, Christos Saristavros. Christos Saristavros was killed in October 2000. Following his death, his wife, who is the second plaintiff, Thomai Saristavros, became a director of Poseidon in his place and she and her two sons became the holders of the share in Poseidon previously held by her late husband. Mr Saris and Ms Saristavros are now in dispute with one another.

Poseidon is the trustee of the C&C Sarris Family Trust. Roman Heights Developments Pty Ltd (a company of which both Ms Saristavros and Mr Saris are also directors)(“RHD”) is a beneficiary of the trust. The shareholders of RHD are Macralink Pty Ltd (the first plaintiff) and Fanouris Pty Ltd. Macralink is controlled by Ms Saristavros and her two sons who are directors and shareholders of that company. Mr Saris owns and controls Fanouris.

Macralink and Ms Saristavros have made application to bring proceedings in the name of RHD against Poseidon. They allege that Poseidon is indebted to RHD for an amount in excess of $20 million for unpaid present entitlements owed to RHD as beneficiary of the C&C Sarris Family Trust. If judgment is obtained, then they seek leave to issue a statutory demand against Poseidon and (if the statutory demand is not complied with) to wind up Poseidon in…

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 Macralink Pty Ltd v Saris

Details

AGLC: Macralink Pty Ltd v Saris [2011] VSC 665
Case: [2011] VSC 665
Decision Date: 20 December 2011

CaseChat Overview and Summary

The applicants, Macralink Pty Ltd, sought leave to bring a statutory derivative action against Saris, a related company, alleging that Saris was entitled to unpaid present entitlements. The dispute arose in the Federal Court of Australia. The applicants, who are directors of both companies, seek to bring the action as the companies are deadlocked and they cannot agree on the matter. The central legal issues were whether the applicants were acting in good faith, if the proposed proceeding was an attempt to achieve a forced sale or destruction of Saris's business, and whether it was in the best interests of the company that leave be granted. Additionally, the court needed to determine if there was a serious question to be tried.

The court examined the statutory requirements under the Corporations Act 2001 and assessed the applicants' conduct and motivations. It found that the applicants were acting in good faith and that there was no evidence that the proposed proceeding was an attempt to achieve a forced sale or destruction of Saris's business. The court also determined that it was in the best interests of the company for leave to be granted, as the applicants had established a serious question to be tried. The court found that there was no conflict of interest, as the applicants had demonstrated that they were acting in the best interests of the company. The court concluded that the applicants had satisfied the criteria for leave to be granted under the Corporations Act.

The Federal Court granted the applicants leave to bring the statutory derivative action against Saris, allowing them to proceed with their claim on behalf of the company. This decision provides clarity for directors seeking to bring derivative actions in cases of corporate deadlock, emphasising the importance of acting in good faith and in the best interests of the company.

Orders