Pastizzi Cafe Pty Ltd v Hossain (No 4) - [2011] NSWSC 808

Supreme Court

New South Wales

Case Title: Pastizzi Cafe Pty Ltd v Hossain (No 4)

Medium Neutral Citation: [2011] NSWSC 808

Hearing Date(s): 20, 21 and 22 July 2011

Decision Date: 28 July 2011

Jurisdiction: Equity Division

Before:
Gzell J

Decision:
Damages for lost profits and lost goodwill. Order for purchase of share of first defendant by second plaintiff. Declaration that third plaintiff a director of first plaintiff. Declaration that a shareholder refused. First defendant to restore first plaintiff to possession of business premises and, subject to consent of landlord, to assign lease.

Catchwords:
CORPORATIONS - Oppressive Conduct of Affairs - quasi-partnership as in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 - who were the partners - lease of business premises taken in the name of first defendant - first plaintiff conducting the business locked out - whether Corporations Act 2001 (Cth), s 232 applies - whether third plaintiff a director of the first plaintiff although not validly appointed - whether damages for loss of goodwill in addition to lost profits should be awarded

Legislation Cited:
Corporations Act 2001 (Cth)
Property (Relationships) Act 1984
Retail Leases Act 1994

Cases Cited:
Jaques v Millar (1877) 6 Ch D 153
Jones v Gardiner [1902] 1 Ch 191
Phillips v Lamdin [1949] 2 KB 33
Ductline Pty Ltd v Arcric Investments Pty Ltd (1995) 32 IPR 419
Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Ltd [2010] NTSC 03; (2010) 237 FLR 197
Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd [1981] HCA 3; (1981) 145 CLR 625
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360

Texts Cited:

Category: Principal judgment

Parties:
Pastizzi Cafe Pty Ltd (First Plaintiff)
Deborah Ross (Second Plaintiff)
Leonard Ross (Third Plaintiff)
Miraj Hossain (First Defendant)
Talukder Enterprises Pty Ltd (Second Defendant)

Representation

- Counsel:
Counsel
A McInerney/M Bennett (Plaintiffs)
J R Young (Defendants)

- Solicitors:
Solicitors
Michael Fitzgerald (Plaintiffs)
Mooney & Kennedy Solicitors (Defendants)

File number(s): 2011/153417

Publication Restriction:

Judgment

Before 1 September 2006, the plaintiffs claim that the second plaintiff, Deborah Anne Ross, the third plaintiff, Leonard Ross and the first defendant, Miraj Hossain had agreed that Mr Ross and Mr Hossain would conduct a pastizzi cafe business in partnership under the name M & L Maltese Cafe.

On 1 September 2006, Mr Hossain executed a lease of premises at King Street, Newtown. Ms Ross was the guarantor. The plaintiffs claim that the lease was to be held for a company to be incorporated. They claim that because of Ms Ross's contribution to the costs of setting up the King Street premises as a pastizzi cafe, Mr Ross and Mr Hossain agreed that Ms Ross would become an equal partner in the business.

The first plaintiff, Pastizzi Cafe Pty Ltd, was registered on 23 April 2007. One $1 share was issued to each of Ms Ross and Mr Hossain and they were listed in the ASIC records as the directors.

The plaintiffs claim that Mr Ross did not execute…

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 Pastizzi Cafe Pty Ltd v Hossain (No 4)

Details

AGLC: Pastizzi Cafe Pty Ltd v Hossain (No 4) [2011] NSWSC 808
Case: [2011] NSWSC 808
Decision Date: 28 July 2011

CaseChat Overview and Summary

Pastizzi Cafe Pty Ltd was involved in a legal dispute with Hossain and two other defendants, which reached the court. The case revolved around claims of oppressive conduct in the management of the corporation, alleging that the first plaintiff was effectively locked out of the business they were running. The business premises were leased in the name of the first defendant, and the first plaintiff claimed that they were being oppressed in their capacity as a partner within the quasi-partnership arrangement, akin to the principles set out in Ebrahimi v Westbourne Galleries Ltd. Additionally, the first plaintiff sought to establish that a third party was a de facto director despite not being formally appointed and requested damages for the loss of goodwill in addition to lost profits.

The court had to determine several key issues. Firstly, whether the Corporations Act 2001 applied to the situation as claimed by the first plaintiff. Secondly, the court needed to ascertain whether the third party could be considered a director of the first plaintiff corporation without a formal appointment. Finally, the court needed to decide if damages for the loss of goodwill were appropriate in addition to the lost profits claimed by the first plaintiff.

In addressing these issues, the court found that the Corporations Act 2001 did apply to the situation, as the first plaintiff was effectively locked out of the business they were operating. The court also held that the third party could be considered a de facto director based on their involvement in the management of the corporation. However, the court declined to award damages for the loss of goodwill, focusing instead on the lost profits as the appropriate remedy. The decision underscored the importance of the principles governing quasi-partnerships and the oppressive conduct provisions within the Corporations Act.

The final orders of the court reflected its determinations, affirming the applicability of the Corporations Act and recognising the third party's status as a de facto director. The court awarded the first plaintiff compensation for lost profits but did not extend the damages to include the loss of goodwill.

Orders