Tucci v Allen
[2001] VSC 431
•8 November 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
No. 7748 of 2001
| ANGELA TUCCI and FRANCESSO CHIARELLA | Plaintiffs |
| V | |
| DEBORAH GAI ALLEN | Defendant |
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JUDGE: | Habersberger J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 October 2001 | |
DATE OF RULING: | 8 November 2001 | |
CASE MAY BE CITED AS: | Tucci v Allen | |
MEDIUM NEUTRAL CITATION: | [2019] VSC 431 | |
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Practice and Procedure – Discovery – Relevance of documents – Offer to make documents available informally – Order for delivery of affidavit of documents.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P.P. Bravender-Coyle | Chiodo and Madafferi |
| For the Defendant | Mr T.P. Davies (Solicitor) | Oakley Thompson and Co. |
HIS HONOUR:
By originating process dated 27 September 2001 the plaintiffs, applied under ss. 232, 233, 1322 and 1324 of the Corporations Act 2001 for the following relief:
"1.A declaration that the purported extraordinary general meeting of Walmonn Pty Ltd (ACN 067 592 027) allegedly held on 31 August 2001 was invalid and of no effect on the grounds that no notice of the meeting was given to the members of Walmonn Pty Ltd (ACN 067 592 027).
2.A declaration that all of the resolutions purportedly passed at the purported extraordinary general meeting of Walmonn Pty Ltd (ACN 067 592 027) allegedly held on 31 August 2001 were void and of no effect on the grounds that:
(a)no notice of the meeting was given to the members of Walmonn Pty Ltd (ACN 067 592 027); and
(b)a quorum was not present.
3.A declaration that the resolution made at the purported extraordinary general meeting of Walmonn Pty Ltd (ACN 067 592 027) allegedly held on 31 August 2001 removing the plaintiffs as directors of Walmonn Pty Ltd (ACN 067 592 027) was void and of no effect on the grounds that:
(a)no notice of the meeting was given to the members of Walmonn Pty Ltd (ACN 067 592 027); and
(b) a quorum was not present.
4.A declaration that, pending any further order of the Family Court of Australia, the defendant holds her shares in Walmonn Pty Ltd (ACN 067 592 027) as trustee for the secondnamed plaintiff.
5.A declaration that the plaintiffs are and remain directors of Walmonn Pty Ltd (ACN 067 592 027).
6.A declaration that the plaintiffs are entitled to participate in the management and direction of the business of Walmonn Pty Ltd (ACN 067 592 027).
7.An order restraining the defendant from preventing the plaintiffs from participating in the management and direction of the business of Walmonn Pty Ltd (ACN 067 592 027).
8.An order requiring the defendant to permit the plaintiffs to participate in the management and direction of the business of Walmonn Pty Ltd (ACN 067 592 027).
9.A declaration that the resolution of the board of directors of Walmonn Pty Ltd (ACN 067 592 027) purportedly made on 31 August 2001 changing the registered office and principal place of business of Walmonn Pty Ltd (ACN 067 592 027) was void and of no effect on the grounds that:
(a)no notice of the meeting was given to the directors of Walmonn Pty Ltd (ACN 067 592 027); and
(b)a quorum was not present"
The nature of the proceeding was said to be:
"oppressive conduct of the company's affairs".
The application was supported by three affidavits, one by each plaintiff and one by their solicitor Mark Madafferi. This material established that the plaintiffs' complaint was that they had been invalidly removed as directors of the company Walmonn Pty Ltd (ACN 067 592 027) ("Walmonn") at a purported extraordinary general meeting of the members of that company held on 31 August 2001. They alleged that they had been given no notice of the meeting. The plaintiffs, Angela Tucci and Francesso Chiarella, are sister and brother. The defendant, Deborah Allen, is Mr Chiarella's wife or former wife. Ms Tucci holds one share in Walmonn, the defendant holds the remaining 99 shares. Mr Chiarella said that he set up Walmonn and that it was engaged in property investment. He said that, as he was facing bankruptcy proceedings at the time, he put the 99 shares in the defendant's name.
There have been proceedings in the Family Court between Mr Chiarella and Ms Allen. On 4 December 1998 Registrar Raby made an order by consent, which included the following:
"9.That contemporaneously with compliance by the husband with the terms and conditions referred to in paragraph 5 hereof the Wife shall do all such acts and things and sign all such documents as may be required to transfer to the Husband all her shares in Walmonn Pty. Ltd. and resign as a Director of the said company.
……………….
13.That the Wife shall forthwith do all acts and things and sign all necessary documents to appoint the Husband or his nominee as a Director of Walmonn Pty. Ltd."
On 11 March 1999, Registrar Raby made a further order by consent, which included the following:
"17.That the Wife shall forthwith resign as a Director of Walmonn Pty. Ltd. and the Husband shall forthwith obtain a release of any personal guarantees the Wife has given in her capacity as Director of Walmonn Pty. Ltd.
18.That the Wife shall forthwith sign a share transfer document providing for the Wife to transfer her shares in Walmonn Pty. Ltd. to the Husband, such share transfer shall be held on trust by the Wife's Solicitors pending payment to the Wife of the balance of monies owed to her pursuant to the Orders of 4 December, 1998."
Ms Allen resigned as a director and secretary of Walmonn and Mr Chiarella was appointed to both positions in her place.
When the originating process first came before me on 12 October 2001, Mr Davies, the solicitor for Ms Allen, sought an order for discovery of a number of specified documents. Mr Bravender-Coyle of counsel for the plaintiffs submitted that the documents in question were not relevant to the matters in dispute. He submitted that the only issue in the case was whether notice of the extraordinary general meeting had been validly given and emphasised that Mr Davies had conceded in the hearing that no notice had been given. Mr Davies submitted that the issues were broader than suggested by Mr Bravender-Coyle, referring in particular to the statement in the application that the nature of the proceeding was "oppressive conduct of the company's affairs".
The argument was cut short when Mr Bravender-Coyle indicated that he saw no reason why some of the documents could not be made available for inspection by the defendant and her advisers. On the basis of that statement, in the order I made on 12 October 2001 setting out a time table, I noted in Other Matters the following statement:
"Access to financial records of the company, statutory records of the company and documents relating to loans to the company be made available to the Defendant and her advisers. The solicitors for the Defendant will write to the solicitors for the Plaintiff with a list identifying the documents to which access is sought."
The defendant was to file and serve any affidavit on which she intended to rely by 2 November and the further hearing of the proceeding was adjourned to 9 November 2001.
Pursuant to the reservation of liberty to apply, the defendant brought the matter back before me on 26 October 2001. The interlocutory process filed on behalf of the defendant sought that the plaintiffs provide discovery of the following documents:
"1.All accounting and financial reports for Walmonn Pty Ltd from the date of incorporation to present including:
(a) Profit and Loss reports.
(b) Balance sheets.
(c) Taxation returns.
(d) Management accounts.
(e)Banking records including cheque books and cheque statements and the like.
2.The Statutory Records of Walmonn Pty Ltd comprising all Minutes of Directors and Members, Annual Returns, Directors Consents, Register of Members, Seal Register, Register of Charges and the like.
3.All documents concerning loans (whether current or discharged) obtained by Walmonn Pty Ltd from the date of incorporation to present including:
(a) Loan applications and agreements.
(b) Mortgage documents.
(c) Mortgage statements.
(d) Security documentation."
Two affidavits in support were sworn by Mr Davies. He deposed to the fact that he wrote to the plaintiffs' solicitors, Chiodo Madafferi, on 12 October 2001 requiring production of the documents listed in the previous paragraph. He did not receive a response to his letter. He sent a follow up letter on 17 October 2001, but received no reply. On 23 October 2001, he telephoned the plaintiffs' solicitors and left a message for Mr Madafferi to call him as he had had no reply to his two letters. He did not receive a telephone call in response to his message.
On 24 October 2001, Mr Davies sent a further letter to the plaintiffs' solicitors advising that the matter was coming back to court on 26 October 2001. On the same day he at long last did receive a reply from Mr Madafferi. This letter included the following:
"We advise we are presently seeking to obtain the Walmonn files and we asked our client to contact his accountant to provide any financial information which is available from his accountant.
We believe it is premature for you to seek orders from the court regarding this matter when counsel made it abundantly clear to you when [sic] our client was more than willing to provide the details.
Nonetheless we believe that your client, who was a director of the company for a substantial period of time is well aware of all the financial details of this matter and have been provided on numerous occasions to her previous solicitors.
Unfortunately counsel was not aware of this until after the hearing.
Accordingly we will provide all files and as much financial detail as we possibly can once the same are located. We hereby advise you that our offices were recently burgled and our archive room was severely disrupted, whereby files were thrown all over the floors.
You are welcome to inspect the archive files yourself, if you so choose, to locate all the Walmonn files."
By letter dated 25 October 2001 Mr Davies responded to the suggestion that it was premature to seek orders. This letter also brought forth a response from the plaintiffs' solicitors on the same day. Their letter contained some argumentative material about who had been responsible for the financial records in the past and who had had access to these records in the past. It concluded:
"In the circumstances we suggest that if you want to inspect the financial records you contact Mr Raso our clients [sic] Accountant on 9347 3000 and if you need to inspect the Walmonn Pty. Ltd. files same can be inspected on Monday 29 October, 2001 to allow our office to obtain same over the weekend."
When the interlocutory application came on for hearing on 26 October 2001, Mr Bravender-Coyle submitted that the documents in respect of which the defendant was seeking discovery were not relevant to the proceeding. He repeated the submissions made on the earlier hearing. Mr Bravender-Coyle also submitted that it was unnecessary to make any order for an affidavit of documents to be filed and served by the plaintiffs because the required documents had now been made available to the defendant by the offer contained in the letter from the plaintiffs' solicitor dated 25 October 2001.
I do not accept the plaintiffs' submissions. In my opinion, the documents being sought by discovery are relevant to possible issues in this application. On the previous occasion Mr Davies had submitted that his client needed these documents in order to develop an argument that there should be no invalidation of a possible procedural irregularity because there had been no substantial injustice that could not be remedied by an order of the Court (s.1322 (2) of the Corporations Act 2001). In addition, the issue is not as narrowly defined as claimed by Mr Bravender-Coyle. For example, paragraph four of the claimed relief seems to me to make these documents relevant to possible issues in the application.
That being so, I am not inclined to leave the question of discovery to a second informal attempt by the parties to reach a satisfactory outcome. Having tried that on the last occasion, and it having failed dismally, I am not prepared to have the defendant and her representatives seeking to arrange part of the inspection with the plaintiffs' accountant. The usual formal steps will have to be followed. This is particularly the case where, as here, Mr Bravender-Coyle conceded that "some of the old files …seem to be in a bit of a mess …that old stuff might be in a mess on the 29th …". An order requiring the plaintiffs to file and serve an affidavit of documents making discovery of specified classes of documents will give the plaintiffs' solicitors the opportunity to tidy up the old corporate files and put everything on a proper footing. Inspection should then be a simple and straight forward step. The plaintiffs' counsel agreed that two to three weeks would be adequate for the preparation of the affidavit of documents.
For all of these reasons I am disposed to grant the defendant's application and order that on or before 4.00 p.m. on 16 November 2001 the plaintiffs file and serve an affidavit of documents making discovery of the classes of documents listed in the interlocutory process dated 24 October 2001 (see paragraph 7 above).
On behalf of the plaintiffs, Mr Bravender-Coyle agreed that he could not resist an order for costs in favour of the defendant, the defendant having been successful in her application to the court on 26 October 2001. Mr Madafferi's failure to respond to Mr Davies' two letters and his telephone message meant that Mr Davies really had no alternative but to seek to have the matter relisted. It was only when Mr Madafferi was informed that the matter was coming back to Court that he communicated with Mr Davies. There was no explanation of why this was the case. The commercial list cannot operate sensibly and efficiently if solicitors for the parties do not reply to the other side's oral or written communications. Accordingly, I order that the plaintiffs pay the defendant's costs of and incidental to this application.
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