Tampalini v Robinson - [2005] WASC 182

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TAMPALINI -v- ROBINSON & ORS [2005] WASC 182

CORAM: JENKINS J

HEARD: 29 JUNE 2005

DELIVERED : 19 AUGUST 2005

FILE NO/S: CIV 2593 of 2003

BETWEEN: SERGIO PAUL TAMPALINI
Plaintiff
AND
HAYDN ALAN ROBINSON
First Defendant
ANTHEA LEIGH ROBINSON
Second Defendant
LARRIKIN HOLDINGS PTY LTD (ACN 009 428 273)
Third Defendant

Catchwords:

Mandatory interlocutory injunction - Application to enforce payment of a dividend - Whether damages are a sufficient remedy - Balance of convenience

Legislation:

Corporations Act 2001 (Cth), s 254T, s 588G

Statute of Frauds 1677 (Imp), s 4

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr A Metaxas
First Defendant             :     Mr I A Morison
Second Defendant         :     Mr I A Morison
Third Defendant           :     Mr I A Morison

Solicitors:

Plaintiff:     Arthur Metaxas & Co
First Defendant             :     Williams & Co
Second Defendant         :     Williams & Co
Third Defendant           :     Williams & Co

Case(s) referred to in judgment(s):

American Cyanamid Co v Ethicon Ltd [1975] AC 396
Castlemaine Tooheys Ltd v South Australia [1986] 161 CLR 148
Shepherd Homes Ltd v Sandham [1971] Ch 340
Tampalini v Larrikin Holdings Pty Ltd & Ors [2003] WASC 185
Tsimidopoulos v Mulson Holdings Pty Ltd (1989) 1 WAR 359

Case(s) also cited:

Aaronisle Pty Ltd v Thorpe [2005] WASC 87
Bairstow v Berry [2003] WASC 155
Bonds Real Estate Sales Pty Ltd v Ray White (Vic) [2005] VSC 221
Burland v Earle [1902] AC 83
Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471
Cayne v Global Natural Resources plc [1984] 1 All ER 225
Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd, unreported; SCt of WA (Ipp J); Library No 920231; 7 April 1992
Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992
Fingleton v The Queen (2005) 216 ALR 474
Industrial Equity v Blackburn (1977) 137 CLR 567
Marigold Pty Ltd v Belswan (Mandurah) Pty Ltd [2001] WASC 209
Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616
Miles v Sydney Meat-Preserving Co Ltd (1912) 16 CLR 50
Rototek Pty Ltd v AD Engineering Pty Ltd [2004] WASC 108
SDS Corporation Ltd v Pasdonnay Pty Ltd [2002] WASC 276
Standard Chartered Bank of Australia Ltd v Antico (No 1) (1995) 38 NSWLR 290
State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243
State Transport Authority v Apex Quarries Ltd [1988] VR 187

JENKINS J: The plaintiff applies for a mandatory interlocutory injunction that the third defendant pay to the plaintiff as and by way of a dividend the sum of $2,150 per month from 1 November 2004. The plaintiff also seeks a related order to compel the first and second defendants to vote in their capacity as directors of the third defendant in support of a resolution for the payment of the dividend.
The application has been made in the course of a dispute between the plaintiff on the one hand, and the first and second defendants on the other, as directors and shareholders of the third defendant. The third defendant operates a business as a video hire shop. After the dispute arose the plaintiff stopped being paid a regular monthly sum known by the parties as a dividend. The plaintiff says that the payments were stopped without reasonable cause and contrary to an agreement that he entered into with the first defendant. The defendants deny that there was any such agreement and that, in any event, the third defendant cannot afford to pay the dividend.

Legal Principles

In an application for an interlocutory injunction the onus is on the applicant to prove that:
1.There is a serious issue to be tried between the parties; and
2.the applicant will suffer irreparable injury for which damages are an inadequate remedy; and
3.the balance of convenience favours the grant of the injunction:
Castlemaine Tooheys Ltd v South Australia [1986] 161 CLR 148 at 153.
Issue 2 can be seen as part of issue 3. In American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 408, Lord Diplock expressed it thus:
"As to [whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that he sought] the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.
It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case."
Before granting a mandatory interlocutory injunction a court must "feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted and that this is a higher standard than is required for a prohibitory injunction": Shepherd Homes Ltd v Sandham [1971] Ch 340 at 351 per Megarry J. In Western Australia, Malcolm CJ has interpreted this to mean that the grant of a mandatory interlocutory injunction is a remedy which will only be granted in exceptional cases: Tsimidopoulos v Mulson Holdings Pty Ltd (1989) 1 WAR 359 at 369. The authors of Meagher Gummow & Lehane "Equity, Doctrines and Remedies" 3rd ed at p 600 [2178] suggest that this is not because the test for the grant of a mandatory interlocutory injunction is different to that for the grant of an interlocutory injunction but rather because in the application of the same test, often, but not always, the fact that the relief sought is mandatory will tilt the balance of convenience in the defendant's favour.
One of the purposes of a mandatory interlocutory injunction is to maintain the status quo until trial. This has been a reason given for why a court should be more reluctant to grant a mandatory interlocutory injunction which on the face of it will alter the status quo. However, each matter must be considered on its facts. In some cases, where the status quo was altered by a defendant shortly before the application for the mandatory interlocutory injunction it "may be more just" to revert to the status quo existing before the defendant's acts took place: Tsimidopoulos v Mulson Holdings Pty Ltd (supra) at 368.
It is not appropriate that at this stage of the proceedings I resolve conflicts of evidence on affidavit or complex legal issues. These are matters that should be resolved at trial.

Background Facts

The parties do not agree upon the relevant background facts. However, it is not in dispute that the plaintiff, the first defendant and the second defendant are directors of the third defendant. The third defendant is the trustee of the Larrikin Unit Trust ("the Trust") and in that capacity it carries on the business of the retail sale and hire of video tapes and similar goods. There are six issued shares in the third defendant. The first and second defendants have two each. The plaintiff has one share and the first defendant holds another as trustee for the plaintiff. Each of the plaintiff, the first defendant and the second defendant holds 10 units in the Trust.
The plaintiff is a lecturer at a university. The first defendant is the manager of the business. The first and second defendants are married.
The plaintiff's case is that in 1995 the first defendant suggested to him that he take a one‑third interest in the third defendant which would cost him $200,000. The plaintiff met with his banker and then advised the first defendant that the bank's assessment was that he did not have the income to service a loan of that size. The plaintiff says that the first defendant told him words to the effect that he need not worry as he would always be paid "a dividend" that would cover the repayments. Further at a meeting with the plaintiff's banker the plaintiff says that the first defendant told the banker words to the effect that the plaintiff could rely upon being paid "a dividend" at the rate of $2,150 per month.
The plaintiff says that in reliance on those assurances he proceeded with the borrowing from the bank. He has deposed that between acquiring shares in the third defendant and units in the Trust in April 1995 and October 2004 he was paid a dividend on a monthly basis of at least $2,150 which was used to service the loan.
In or about 2001, the plaintiff and the first and second defendants fell out. In January 2003 the plaintiff commenced a proceeding in this Court seeking orders to wind up the third defendant. For reasons for decision given on 26 September 2003 that proceeding was dismissed: Tampalini v Larrikin Holdings Pty Ltd & Ors [2003] WASC 185. The plaintiff has appealed against that decision.
It is not in dispute that the plaintiff stopped receiving dividend payments in October 2004. On 19 October 2004 the plaintiff received an e‑mail from an employee of the third defendant. It read:
"Serge
due to your dithering and subsequent refusal to supply information: re refinancing, we are in no position to pay dividends.
Haydn
PS – Are you enjoying your weekly movies?"
It is these payments which he seeks to have restored by way of a mandatory interlocutory injunction.
The plaintiff has deposed to his personal circumstances. He says that the loan he arranged to purchase his interest in the third defendant has been transferred to a different bank. It has always been an interest only facility. As at 11 March 2004 the monthly payments varied depending on interest rates but were approximately $1,300. He says that he has always utilised the dividends from the third defendant to make those repayments. The plaintiff has deposed that he receives an income of $64,000 gross per annum. He says that his only interest in real estate is an undivided half interest in the property occupied by his former wife. However, he has not put a value on this half interest. He deposes that his costs include rent of $495 per fortnight, occasional maintenance towards the living expenses of his adult son and his legal costs. He says that he has funded his legal costs from a benefit of $80,000 under his mother's Will, all of which has been expended. He says that further facilities to a total of $67,000, the origin of which he does not identify, have also been expended. He says that he is funding present costs and funding the bank loan from an increase in a $40,000 loan facility but that he has cash reserves of only about $2,000. He says that he is not saving money and cannot afford to continue drawing down his other loan to make the repayments on the $200,000 loan.
The plaintiff relies on certain financial documents relevant to the third defendant to establish that it can afford to continue paying the dividend. After the hearing the plaintiff forwarded to me the final draft accounts for the year ending June 2004. The final accounts for year ending June 2005 have not been completed. The plaintiff relies upon a profit and loss statement to January 2005, a profit and loss statement to June 2004 and numerous documents and financial information provided to the defendants' bank. These documents were provided to the bank for the purpose of obtaining finance to enable the third defendant to refurbish premises which it owns, adjacent to the premises occupied by its business. The idea being that once the adjoining premises were refurbished they could be let, to the benefit of the third defendant. According to the draft final accounts for the year ending June 2004 the third defendant made a profit of $180,000 before income tax. Prima facie the accounts show that the third defendant is in a sound financial position and arguably can afford to pay the monthly dividend.
The submissions made to a bank for the purposes of the loan application are also quite optimistic about the third defendant's future financial position. However, I believe that those sorts of documents must be regarded with some caution.
The first defendant disputes the plaintiff's allegations regarding the agreement to pay the dividend. He says that he has no recollection of agreeing that the third defendant would always pay a dividend sufficient to meet the plaintiff's loan replacement or one of $2,150 per month.
The first defendant has deposed that after the plaintiff's investment in the third defendant the plaintiff received a dividend. Specifically he says that the plaintiff received $1,500 per month between October 1995 and October 1996 and $2,200 per month between October 1996 and May 1997. It is not disputed that these payments continued up to October 2004 when the first defendant said he discussed the payment with the second defendant and "resolved" to stop the dividend payments to each of the directors effective from the end of October 2004.
The first defendant has deposed to the financial circumstances of the third defendant and says that in those circumstances it is clearly not financially prudent to declare or pay monthly dividends. He says that the second defendant agrees with this view.
In order to understand the basis of the first defendant's opinion it is necessary to state some of the background facts upon which he relies. However, for reasons which I will give when I discuss the balance of convenience I do not propose to go into great detail about these disputed matters. The first defendant says that in early 2004 he came to the view that the third defendant needed to refinance its borrowings and borrow additional moneys to enable it to develop and fit out the adjoining premises and enable the third defendant to take the benefit of an interest only loan facility. On 7 April 2004 a meeting of the members and directors of the third defendant was held. The plaintiff did not attend this meeting as he alleged that he had been given insufficient notice of it. However he was provided with the minutes of the meeting which advised in relation to the proposed refinancing that it would require each director, including the plaintiff, to provide directors/personal guarantees for approximately $500,000 each. The minutes further record that there was a discussion about a proposed retainer of a consultant to implement a business plan and that the cost of the consultant when added to the existing and anticipated future refinancing costs would mean that the third defendant would be unable to continue to pay the monthly dividend to each director. It was resolved to defer any changes to dividend payments to the directors to the next meeting.
The plaintiff's solicitors' letter to the defendants' solicitor dated 24 May 2004 refers to this aspect of the minutes and seeks advice that the defendants would agree to maintain the status quo in respect to dividend payments. No such undertaking was given.
The first defendant says that he recalls previous discussions with the plaintiff during which he raised with him the need to refinance the third defendant's loan and borrow enough money to develop and let out the adjoining premises.
A further meeting of the directors and members of the third defendant was held on 15 July 2004. The plaintiff and first defendant attended the meeting. The first defendant held a proxy on behalf of the second defendant. The minutes note that the draft financial statement for the year ending 30 June 2004 showed a profit of $240,158 before any expenses relating to the adjoining premises were taken into account.
As to the refurbishment of the adjoining premises it was noted that total construction costs were estimated at $320,000 and that refurbishment was expected to be finished in about six weeks. Part of the premises had been leased. It was noted that a total loan of $1.5 million was required in order to finance the expansion of the business and to increase cash reserves. It was noted that the plaintiff agreed to be guarantor for one‑third of the loan after sighting the loan offers from various banks. As to dividends it was noted that in future there may be a need to reduce the dividends due to expansion.
By e‑mail dated 7 September 2004 the plaintiff advised that it would be "foolish" for him to enter into any new loan agreement whilst his appeal against the decision to refuse his application to wind up the company was pending.
In October 2004 the first and second defendants resolved to make the finance application on behalf of the third defendant without the plaintiff. The first defendant says that by 19 October 2004 it was apparent to him that the costs of acquiring, developing and fitting out the adjacent building (including refinancing and anticipated construction costs) were likely to be greater than any short term profit the third defendant might make. He formed the view that the third defendant would have no or insufficient profit from which to pay dividends. He has deposed that in October 2004, the third defendant's cash flow had decreased to the extent that some payments to the business' creditors were being made at the expiration of those creditors' payments terms. In these circumstances he did not believe that a dividend should be paid. The first and second defendants decided to stop the dividend payments; there being no formal resolution to pay the dividends. He says that he asked one of the staff to send the e‑mail to the plaintiff advising him of this decision. He says that he did not see the e‑mail before it was sent and regrets the poor choice of words used in it. The first defendant says in his capacity as managing director of the third defendant that it does not make monthly dividend payments to the unit holders of the Trust because the current financial circumstances of the company show that up to 31 January 2005 the Trust has suffered a loss in the 2004/05 financial year of $226,495. In the circumstances it was and is not financially prudent to declare or pay monthly dividends.
In an affidavit sworn 17 June 2005 the first defendant says that by virtue of the plaintiff's delay and ultimate refusal to guarantee a new loan, by early November 2004 the then bank facility had been overdrawn by approximately $86,000. A different bank approved a refinancing proposal on the basis that the third defendant provide security in the form of a mortgage over its commercial property and a registered mortgage debenture over the third defendant itself. Further, the second and third defendants were required to provide a mortgage over their home and provide personal guarantees. The plaintiff did not provide any security for the refinanced debt. The second defendant deposes that due to the refusal of the plaintiff to provide security, the new bank was not prepared to advance the same amount of money. As a consequence of this and related matters the first defendant says that the business did not have access to the $200,000 in capital as expected. Thus, any surplus cash from the business was applied in payment of the business' operating costs which by then included the costs of the refurbishment work and the bank fees and charges. The first defendant says that by early 2005 the business required more capital to cover its operating expenses and he arranged to borrow $100,000 from his family. He says that this amount has been applied to the payment of the business' operating expenses.

The first defendant says that the budgeted projection of a profit of $773,000 in 2005 referred to in a profit and loss projection included in a business plan is wrong and was not prepared by him. The first defendant believes that a consultant to the business put together the business plan.
The first defendant denies receiving a dividend or any equivalent payment since 1 October 2004. He says that the only income he and the second defendant have received from the business are their salaries. He denies borrowing any moneys from the third defendant. He acknowledges that the third defendant has paid the legal fees related to the plaintiff's actions. He justifies this on the basis that the third defendant is a party to these actions and they have been directed at the assets of the third defendant. However, the first defendant acknowledges that some of those fees may relate to him and the second defendant. The first defendant says that the costs that the plaintiff was ordered to be paid after his unsuccessful application to wind up the third defendant were paid exclusively to the third defendant and used to pay its operating expenses.
The first defendant says that if a dividend were to be paid to the plaintiff the source of the funds for it would be from moneys borrowed from the third defendant's new banker, for which the plaintiff has provided no security or guarantee, or from money which the first defendant has borrowed from his family, for which he is personally liable.

Is There a Serious Issue to be Tried?

The statement of claim filed by the plaintiff does not include an application for a permanent mandatory interlocutory injunction requiring the third defendant to pay $2,150 per month to the plaintiff or any similar amount. However, subsequent to payment of the dividend ceasing the plaintiff applied to amend his statement of claim to seek a declaration for payment of a dividend to the plaintiff of not less than $2,150 per month and related orders. The first proposed amendment alleged that the plaintiff and the first defendant verbally agreed that the first and second defendants would ensure that the third defendant paid to the plaintiff a monthly dividend not less than $2,150 so as to enable the plaintiff to pay interest on the loan of $200,000. A second proposed amendment does not refer to the second defendant and alleges that the agreement was for a monthly dividend of an amount sufficient to enable the plaintiff to pay interest on the loan of $200,000.
The defendants submit that the affidavit material filed by the plaintiff does not support this allegation. First the defendants say that the plaintiff deposed that the first defendant agreed that the third defendant would pay the dividend. Subsequently, in his affidavit sworn 22 December 2004 the plaintiff deposed that the first defendant told him that he would always be paid a dividend that would cover the payments on the loan, not a dividend not less than $2,150. Further, the chamber summons the subject of this application seeks an order that the third defendant pay to the plaintiff by way of dividend the sum of $2,150 per month, despite the fact that more recently the plaintiff has deposed that the current repayments of the loan are approximately $1,300 per month.
The defendants submit that in any event there was no such agreement. The defendants point to the absence of any evidence corroborative or supportive of the plaintiff's assertion that he had a conversation to this effect with the first defendant. However, it is not my job to resolve conflicts in evidence. The fact is that the appellant asserts that the conversation occurred. It is not appropriate for me to find on an interlocutory application that it did not.
Further, the defendants say that not only are the terms of the agreement vague but even if it is accepted that there was an agreement of some sort it amounts to a guarantee and must fail for lack of writing as a consequence of the application in Western Australia of the Statute of Frauds 1677 (Imp), s 4.
The defendants further submit that the agreement as to payment of a dividend in terms as alleged by the plaintiff would be void for illegality as a contract to commit a company to pay dividends without reference to profits and thus to break the law.
The Corporations Act 2001 (Cth), s 254T provides that a dividend may only be paid out of profits of the company. A breach of s 254T is an offence by virtue of s 1311 and s 1311(1A) read with Sch 3. However, any agreement would have been made prior to the passing of the Corporations Act 2001 (Cth). The defendants did not attempt to prove that the agreement would have been illegal in 1995. Certainly the payment of dividends without regard to profit after October 2004 may be an offence. This is a matter that seems to go to the balance of convenience.
Even if the plaintiff manages to prove a promise of some description to meet his loan repayments, it is questionable whether such an agreement would be enforceable against either the second defendant or the third defendant as, on the face of it, neither of those parties were involved in the making of the promise. Yet the injunction is sought against the third defendant. Belatedly, the appellant appeared to acknowledge difficulties in this respect and submitted that the injunction could be ordered against the first defendant only. However, that is not the application the defendant came to court to meet and I am not prepared to determine the application on that basis.
Further, as the defendants submit, there are problems with the proposed amendment to the statement of claim insofar as the amendments rest on a premise that the defendants can be compelled to ensure that the third defendant pays a dividend whether or not there are profits from which to pay the dividend or whether or not at any particular time the third defendant has the money in hand to pay the dividend. It would be an offence for the first and second defendants as directors, to cause the company to incur a debt when the company is insolvent or if it became insolvent by incurring the debt and the director suspected at the time when the company incurred the debt that the company was insolvent or would be become insolvent as a result of incurring the debt: the Corporations Act 2001 (Cth), s 588G. This matter also goes to the question of the balance of convenience.
It seems to me that the matters raised by the defendant in respect to whether there is a serious issue to be tried raise some substantive matters, one or more of which may ultimately result in the plaintiff being unable to succeed in his actions. However, I am not prepared to find, upon an application of an interlocutory nature that there is not a serious issue to be tried between the parties. It seems to me that the ultimate merits of the matters raised by the defendants can only be determined upon a full hearing of the action. This is not to say that the plaintiff will be successful in his application to amend the statement of claim in the form that he seeks to do so. That application will be heard on its merits.
Despite the apparent strength of some of the matters raised by the defendants I have reminded myself that it is not part of my function to try and resolve conflicts of evidence on affidavit nor to decide difficult questions of law calling for detailed arguments or mature consideration. Thus, I am prepared to find that there is a serious issue to be tried between the parties.
However, it does seem to me that I should take into account the difficulties that I apprehend for the plaintiff in establishing his case both in fact and law in determining where the balance of convenience lies.

Will Damages be an Adequate Compensation?

The plaintiff acknowledged that this was not a case where the plaintiff would be unable to continue the litigation if the injunction was not granted by the Court.
The defendants say that in the unlikely event that the plaintiff succeeds at trial, he will be fully recompensed by damages. Consequently, they submit that there is no injustice in confining the plaintiff to the remedy of damages.
There seems to be no doubt that if the third defendant is making a profit from which a dividend may be paid that it will be able to meet any order of the court in respect to damages.
Despite the fact that the plaintiff says that he will not be forced to discontinue his litigation if the dividend is not paid, he submits that he is being starved of funds whereas the first and second defendants have full access to the resources of the third defendant to pay their legal expenses.
However, given that the plaintiff's submission which is to the effect that he will be able to maintain the litigation even if the injunction is not ordered, that the defendants are apparently able to meet any award of damages and the plaintiff has not provided any authority which would suggest that damages were not an adequate remedy in a case of this kind, I conclude that it is just in all the circumstances that the plaintiff should be confined to the remedy of damages.

Balance of Convenience

However, if I am wrong in my assessment that damages are an adequate remedy for the plaintiff I will consider other issues related to the balance of convenience. This requires me to consider whether "on the contrary hypothesis" if the defendants were to succeed at trial in establishing their right not to be forced to pay a dividend whether the defendants would be adequately compensated under the plaintiff's undertaking as to damages for any loss the defendants would have sustained by being compelled to pay a dividend. If there is doubt as to the adequacy of the respective remedies in damages available to the plaintiff and the defendants I must then take into account other matters relevant to the balance of convenience. There are numerous matters which must be taken into account when deciding where the balance lies including the strength of the plaintiff's case, the nature of the injunction sought and the financial position of the defendant to meet the order and maintain its solvency.
In my view there is a real issue as to whether or not any loss sustained by the defendants would be met by the plaintiff's undertaking as to damages. This is not only because of the plaintiff's lack of financial resources but because the defendants' losses may not be able to be adequately compensated for by damages. In this regard I must give some credence to the first defendant's claims that he and the second defendant have reasons to believe that since October 2004 the third defendant has not been in a position to pay the dividend. If the Court should force the third defendant to do so and this results in the third defendant becoming insolvent and either not being able to pay its creditors or being forced to delay payment of its creditors then these matters may have effects which cannot be adequately compensated for by damages.
Therefore I should have regard to other matters relevant to the balance of convenience between the parties. In this respect the plaintiff says that it is clear that the third defendant can afford to pay the dividend. Those submissions are based on the profit recorded in the draft final accounts for year ending 30 June 2004, the projections for 2005 and the fact that the third defendant has been able to pay a dividend since 1995. The defendants on the other hand say that the third defendant's financial position has altered significantly since it restructured its loans in late 2004 and it is no longer prudent for the third defendant to pay the dividend. In my view it is not appropriate for me to make a determination of the financial position of the third defendant in the face of these competing claims and without the benefit of independent expert evidence. I accept that the effect of the defendants' evidence before me is that the first and second defendants, who are involved in the day to day running of the third defendant, cannot form a genuine opinion that in the financial year 2004/2005 the company will show a profit. Indeed, to the contrary they are of the opinion that the company may not make a profit for some period after that. The plaintiff attacks this evidence on the basis that the first and second defendants have been shown to be acting maliciously against him and with the intention of depriving him of his dividend. It does not seem to me that I can make a determination of that issue on the basis of the affidavit material and without the aid of expert opinion. Taking into account also my concerns about the strength of the plaintiff's case and the question as to whether he can enforce any agreement that he can prove, I am of the view that the balance of convenience favours the dismissal of this application.