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Malos v Malos

Malos v Malos

Case [2003] NSWSC 118 4 March 2003

Fiduciary Duty

Unconscionable Conduct

Winding Up & Liquidation

Corporate Law & Governance

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Reported Decision:
(2003) 44 ACSR 511

New South Wales

Supreme Court

CITATION: Malos v Malos [2003] NSWSC 118

HEARING DATE(S): 24/02/03, 27/02/03

JUDGMENT DATE:
4 March 2003

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Winding up order

CATCHWORDS: CORPORATIONS - family company with two members - competing applications for relief - one relies on other's allegedly oppressive conduct to seek orders assisting him to exert control - other seeks winding up on basis of mutual loss of trust and confidence

LEGISLATION CITED: Corporations Act 2001 (Cth), ss.232, 461(1)(k)

CASES CITED: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Ruut v Head (1996) 20 ACSR 160
Re Yenidje Tobacco Co Ltd [1912] 2 Ch 426

PARTIES :
Jason Malos - Plaintiff
Jacovos Bill Malos - First Defendant
Georgia (Georgia Limnios) Malos - Second Defendant

FILE NUMBER(S): SC 5262/02

COUNSEL: Mr V A Bizannes, Solicitor - Plaintiff
Mr P T Newton - Defendants

SOLICITORS: Victor A Bizannes - Plaintiff
Heidtman & Co - Defendants

- 9 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

TUESDAY, 4 MARCH 2003

5262/02 – JASON MALOS v JACOVOS BILL MALOS & 2 ORS

JUDGMENT

1 This is an unusual case. Before the court are two competing applications for relief by shareholders of a family company. The respective applicants are the only shareholders. They are an uncle and his nephew.

2 The nephew alleges conduct in the affairs of the company that is contrary to the interests of the members as a whole, oppressive to him, unfairly prejudicial to him or unfairly discriminatory against him as a member (Corporations Act 2001 (Cth), s.232). On that basis, the nephew seeks certain orders directed towards the convening of a meeting of members of the company and compulsion upon the uncle to attend in person or by proxy with a view to changing the composition of the board of directors. The uncle opposes the nephew’s application.

3 The uncle, for his part, has filed an interlocutory process in the nephew’s proceedings by which the uncle seeks an order for the winding up of the company on the just and equitable ground (Corporations Act, s.461(1)(k)). The nephew opposes the making of a winding-up order.

4 The nephew holds 5,002 shares in the capital of the company and the uncle holds 3,002 shares. The directors, if there are any validly in office (a matter to which I shall come), are the uncle and his wife who is the second defendant.

5 The nephew is aged 29. He was orphaned at 15 and lived with his grandmother until she died two years later, after which he continued to live in her house without supervision. The uncle was his guardian before he attained his majority and, as I shall mention presently, attended to the nephew’s financial and other needs.

6 The nephew says that he has never known much about the affairs of the company. He believes he inherited his 5,002 shares from…

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 Malos v Malos

Details

AGLC: Malos v Malos [2003] NSWSC 118
Case: [2003] NSWSC 118
Decision Date: 4 March 2003

CaseChat Overview and Summary

The case of Malos v Malos was heard in the Supreme Court of Victoria. The parties involved were two siblings, the respondents, who were the only members of a family company. They were seeking relief from the court due to a breakdown in their relationship, which had caused the company to cease trading. The respondents had filed competing applications; one sought relief based on the other's allegedly oppressive conduct, while the other sought winding up on the basis of a mutual loss of trust and confidence.

The legal issues before the court included whether the family company had ceased to carry on business, whether the court should exercise its discretion to grant relief to one party, and whether winding up was appropriate. The court needed to consider the nature of the family company, the conduct of the parties, and the impact of their relationship on the company. The court also had to balance the interests of the parties, considering the family context of the dispute.

The court found that the family company had indeed ceased to carry on business, and that the discretion to grant relief should be exercised in favour of the party seeking relief based on oppressive conduct. The court found that the other party's conduct had been oppressive, and that it was appropriate to grant relief to the applicant. The court also found that winding up was not appropriate in the circumstances, as it would not be in the best interests of the company or its members. The court made orders to assist the applicant in exerting control over the company and to ensure that the company was able to continue trading.

Orders