Alston v Cormack Foundation Pty Ltd [2018] FCA 895

Alston v Cormack Foundation Pty Ltd [2018] FCA 895

Mr Calvert-Jones and Mr Morgan held their shares in Cormack Foundation Pty Ltd on trust for the Liberal Party. The cancellation of these shares pursuant to clause 31 of the constitution was invalid, as the clause imposed restrictions on the right to transfer and no agreement in writing was given as required by s 140(2) of the Corporations Act. The shares must be reinstated and transferred to the Liberal Party's nominees. No broader rectification or invalidation of other share issues, director appointments, or amendments is justified under equity or corporate law.

Parties
First Plaintiff: Richard Kenneth Robert Alston; Second Plaintiff: Alan Robert Stockdale; Third Plaintiff: Russell David Hannan; First Defendant: Cormack Foundation Pty Ltd (ACN 006 935 119); Second Defendant: Charles Barrington Goode; Third Defendant: Peter Algernon Franc Hay; Fourth Defendant: Frederick Sheppard Grimwade; Fifth Defendant: Richard Tyree Balderstone; Sixth Defendant: David Alistair Williamson; Seventh Defendant: Stephen Charles Spargo; Eighth Defendant: John Calvert-Jones; Ninth Defendant: Hugh Matheson Morgan
Jurisdiction
Australia
Judgment Date
14 June 2018
Procedural Posture
Civil / Final Judgment
Outcome
Plaintiffs partly succeed; shares to be reinstated and transferred as directed. Costs reserved.
Legal Topics
Trusts and Trustees, Express Trust, Company Shareholding, Rectification of Register, Breach of Trust, Corporate Governance, Rule Against Perpetuities
Equity Corporations Trusts and Trustees Express Trust Company Shareholding Rectification of Register Breach of Trust Corporate Governance +1 more

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Parties

Richard Kenneth Robert Alston

First Plaintiff

Alan Robert Stockdale

Second Plaintiff

Russell David Hannan

Third Plaintiff

Cormack Foundation Pty Ltd (ACN 006 935 119)

First Defendant

Charles Barrington Goode

Second Defendant

Peter Algernon Franc Hay

Third Defendant

Frederick Sheppard Grimwade

Fourth Defendant

Richard Tyree Balderstone

Fifth Defendant

David Alistair Williamson

Sixth Defendant

Stephen Charles Spargo

Seventh Defendant

John Calvert-Jones

Eighth Defendant

Hugh Matheson Morgan

Ninth Defendant

Procedural Posture

Civil / Final Judgment

Legal Issues

  1. 1 Whether trusts existed over shares in Cormack Foundation Pty Ltd for the benefit of the Liberal Party
  2. 2 Whether cancellation of shares was valid under Cormack Foundation's constitution and Corporations Act
  3. 3 Whether any breaches of trust occurred and what remedies are appropriate

Ratio Decidendi

Mr Calvert-Jones and Mr Morgan held their shares in Cormack Foundation Pty Ltd on trust for the Liberal Party. The cancellation of these shares pursuant to clause 31 of the constitution was invalid, as the clause imposed restrictions on the right to transfer and no agreement in writing was given as required by s 140(2) of the Corporations Act. The shares must be reinstated and transferred to the Liberal Party's nominees. No broader rectification or invalidation of other share issues, director appointments, or amendments is justified under equity or corporate law.

Court Disposition

Plaintiffs partly succeed; shares to be reinstated and transferred as directed. Costs reserved.

Orders

  • Within 7 days, plaintiffs to file and serve proposed orders and short submissions (on relief and costs).
  • Within 7 days of receipt, defendants to file and serve proposed orders and submissions.