Sheahan v Londish

Case [2010] NSWCA 270
Reported Decision: 80 ACSR 337

New South Wales


Court of Appeal


CITATION: Sheahan v Londish [2010] NSWCA 270
HEARING DATE(S): 17 August 2010
 
JUDGMENT DATE: 
21 October 2010
JUDGMENT OF: Hodgson JA at [1]; Young JA at [39]; Lindgren AJA at [179]
DECISION: 1. Extend the time for making an application for leave to appeal until 13 April 2010.
2. Grant leave to appeal.
3. Direct the applicants to file a notice of appeal in the form behind Tab 7 of the White Appeal Book within 7 days.
4. Allow the appeal.
5. Set aside the orders made by Brereton J and entered on 6 October 2009.
6. Declare that the purported appointment of the appellants as administrators of Valofo Pty Ltd (Valofo) on 16 July 2009 is not invalid by reason of either or both of the following:
Peter Londish not having been removed as a director of Valofo on 26 February 2009 and Sidney Londish not having been appointed as a director of Valofo in his place on that date in conformity with s 249B of the Corporations Act 2001 (Cth);
Peter Londish not having been removed as a director of Londish Nominees Queensland Pty Ltd (LNQ) on 25 February 2009 and Sidney Londish not having been appointed as a director of LNQ in his place on that date in conformity with s 249B of the Corporations Act 2001 (Cth).
7. Reserve questions of costs.
8. Direct that the appellants make any submissions on costs within 14 days of the date of these reasons, the other parties within 14 days after receiving the appellants' draft with the appellants to have a further seven days after receiving those submissions to reply. Unless a party seeks to speak to the submissions the matter of costs will be decided on the papers.
CATCHWORDS: Corporations- validity of appointment of directors of company who purported to appoint administrators- single shareholder company- whether document headed notice of removal and signed by sole shareholder constituted a valid resolution within Corporations Act 2001 (Cth), s 249B- relevance of intention of shareholder- distinction between legal personality of shareholder and company- importance of formalities. Corporations- whether Corporations Act s 201M or company Article to same effect validates appointment of the administrators by invalidly appointed directors- distinction between purported appointment and non-appointment of directors. Corporations- s 1322(4)- whether "contravention of the Act" extends to failing to take advantage of a provision of the Act- "contravention" has extended meaning- s 1322(6)- whether proceeding of a "procedural nature"- question irrelevant where just and equitable to make validating order.
LEGISLATION CITED: Companies Act 1959 (Vic) s 117(4)
Company Law Review Act 1998 (Cth)
Company Law Review Bill 1997 (Cth)
Corporations Act 2001 (Cth), ss 114, 201G, 203, 201M, 205B, 248A, 248B, 248D, 249A, 249B, 251A, 436A, 1322
Corporations Law, ss 114, 249(1)(a), 255A
First Corporate Law Simplification Act 1995 (Cth)
Joint Stock Companies Registration Act 1844 (UK)
CATEGORY: Principal judgment
CASES CITED: Albert Gardens (Manly) Pty Ltd v Mercantile Credits Ltd [1973]…

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AGLC
Sheahan v Londish [2010] NSWCA 270
Case
[2010] NSWCA 270
Decision Date

CaseChat Overview and Summary

The appeal concerned the validity of the appointment of administrators to Valofo Pty Ltd and Londish Nominees Queensland Pty Ltd (LNQ). The appellants, who were appointed as administrators, sought to appeal orders made by Brereton J that had set aside their appointments. The dispute arose from the purported removal of a director, Peter Londish, and the appointment of Sidney Londish as a replacement director, which the primary judge found to be invalidly effected under section 249B of the Corporations Act 2001 (Cth).

The central legal issues before the Court of Appeal were whether the document signed by the sole shareholder, headed "notice of removal," constituted a valid resolution for the removal and appointment of directors under section 249B of the Corporations Act, and whether the subsequent appointment of administrators by directors whose appointments were thus invalid could be validated under section 1322(4) of the Act. The court also considered the distinction between the legal personality of a shareholder and the company itself, and the importance of adhering to formal requirements for director appointments.

The Court of Appeal reasoned that while the document might not have strictly complied with the formalities of section 249B, the intention of the sole shareholder was clear. The court found that the purported appointment of the administrators was not invalid, distinguishing between a non-appointment and a purported appointment. Furthermore, the court held that section 1322(4) of the Corporations Act, which allows for the validation of acts where there has been a contravention of the Act, could extend to situations where a party failed to take advantage of a provision of the Act. The court concluded that it was just and equitable to make a validating order.

Consequently, the Court of Appeal allowed the appeal, set aside the orders of Brereton J, and declared that the purported appointment of the appellants as administrators was not invalid by reason of the alleged non-compliance with section 249B regarding the removal and appointment of directors. The court also extended the time for the application for leave to appeal and granted leave. Questions of costs were reserved.

Orders

Orders of the court

1. Extend the time for making an application for leave to appeal until 13 April 2010.

2. Grant leave to appeal.

3. Direct the applicants to file a notice of appeal in the form behind Tab 7 of the White Appeal Book within 7 days.

4. Allow the appeal.

5. Set aside the orders made by Brereton J and entered on 6 October 2009.

6. Declare that the purported appointment of the appellants as administrators of Valofo Pty Ltd (Valofo) on 16 July 2009 is not invalid by reason of either or both of the following:

Peter Londish not having been removed as a director of Valofo on 26 February 2009 and Sidney Londish not having been appointed as a director of Valofo in his place on that date in conformity with s 249B of the Corporations Act 2001 (Cth);

Peter Londish not having been removed as a director of Londish Nominees Queensland Pty Ltd (LNQ) on 25 February 2009 and Sidney Londish not having been appointed as a director of LNQ in his place on that date in conformity with s 249B of the Corporations Act 2001 (Cth).

7. Reserve questions of costs.

8. Direct that the appellants make any submissions on costs within 14 days of the date of these reasons, the other parties within 14 days after receiving the appellants' draft with the appellants to have a further seven days after receiving those submissions to reply. Unless a party seeks to speak to the submissions the matter of costs will be decided on the papers.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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