In the matter of Lesso Building Material Trading (Sydney) Pty Limited (administrators appointed) [2018] NSWSC 1486

In the matter of Lesso Building Material Trading (Sydney) Pty Limited (administrators appointed) [2018] NSWSC 1486

Since the company's constitution required only two directors for a quorum and was not amended in accordance with the statutory procedure, the meeting that appointed voluntary administrators was valid. A breach of the shareholder agreement's quorum clause does not void board actions conducted per the constitution. Even if there were a procedural irregularity, s 1322 of the Corporations Act would operate to prevent invalidity absent substantial injustice, which was not present here. The challenge to the administrators' appointment fails.

Jurisdiction
Australia
Judgment Date
01 June 2018
Procedural Posture
Corporations List – Equity / Interlocutory Judgment (ex Tempore) on Three Interlocutory Processes
Outcome
Plaintiffs' application dismissed with costs; validity of administration confirmed.
Legal Topics
['director Meetings Quorum' 'shareholder Agreement V Constitution' 'appointment of Voluntary Administrators' 'procedural Irregularities Under S 1322' 'validity of Board Resolutions']
['corporations Law'] ['director Meetings Quorum' 'shareholder Agreement V Constitution' 'appointment of Voluntary Administrators' 'procedural Irregularities Under S 1322' 'validity of Board Resolutions']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Corporations List – Equity / Interlocutory Judgment (ex Tempore) on Three Interlocutory Processes

Legal Issues

  1. 1 ["Whether the resolution appointing voluntary administrators was invalid due to quorum requirements of a shareholder agreement not being met at the relevant directors' meeting" 'Whether a breach of the shareholder agreement renders the board meeting and subsequent actions void' 'Whether s 1322 of the Corporations Act cures any procedural irregularity in the board meeting' 'Validation of the appointment of administrators under s 447A or 447C of the Corporations Act']

Ratio Decidendi

Since the company's constitution required only two directors for a quorum and was not amended in accordance with the statutory procedure, the meeting that appointed voluntary administrators was valid. A breach of the shareholder agreement's quorum clause does not void board actions conducted per the constitution. Even if there were a procedural irregularity, s 1322 of the Corporations Act would operate to prevent invalidity absent substantial injustice, which was not present here. The challenge to the administrators' appointment fails.

Court Disposition

Plaintiffs' application dismissed with costs; validity of administration confirmed.

Orders

  • ["The Plaintiffs' Interlocutory Process filed on 25 May 2018 is dismissed." 'The Plaintiffs pay the costs of the Second, Third and Fourth Defendants and of Messrs Cummins and Krejci in their capacity as voluntary administrators of Lesso Building Material Trading (Sydney) Pty Ltd, as agreed or assessed.' 'List the...