In the matter of Alexandria Landfill Pty Limited [2016] NSWSC 1503

In the matter of Alexandria Landfill Pty Limited [2016] NSWSC 1503

The impugned resolution was not an effective declaration of a dividend under Corporations Act 2001, s 254V(2), did not fix the amount and time for payment under s 254V(1), and was not a mere policy statement; it was a purported partial and incomplete exercise of clause 7.1(b) of ALF's constitution, because it declared but did not authorise payment of an interim dividend. It was therefore a nullity. In any event, it was inconsistent with and oppressive to the preference shareholders because they were entitled to participate pari passu in any dividend and to repayment of accrued loan amounts before any dividend could be paid.

Jurisdiction
Australia
Judgment Date
25 October 2016
Procedural Posture
Equity Corporations List Principal Judgment Concerning Validity of Dividend Resolution and Rights Attached to Preference Shares / Final Judgment After Hearing
Outcome
Plaintiff entitled to a declaration that the impugned dividend resolution is void; plaintiff directed to bring in short minutes to give effect to the judgment.
Legal Topics
["members' Rights and Remedies" 'preference Shares' 'dividends' 'pari Passu Dividend Rights' 'shareholders Agreement' 'corporate Constitution' "directors' Dividend Powers" 'shareholder Oppression' 'accrued Loan Entitlements']
['corporations Law' 'equity'] ["members' Rights and Remedies" 'preference Shares' 'dividends' 'pari Passu Dividend Rights' 'shareholders Agreement' 'corporate Constitution' "directors' Dividend Powers" 'shareholder Oppression' 'accrued Loan Entitlements']

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Procedural Posture

Equity Corporations List Principal Judgment Concerning Validity of Dividend Resolution and Rights Attached to Preference Shares / Final Judgment After Hearing

Legal Issues

  1. 1 ['Whether preference shareholders were entitled to participate pari passu in any dividend declared by Alexandria Landfill Pty Limited.' "How the preference shareholders' pari passu dividend rights related to their right to minimum cash distributions of 11% per annum and amounts accrued as loans." 'Whether the 28 November 2014 resolution to declare but not pay an interim dividend to the ordinary shareholder created an immediate enforceable liability, a deferred liability, a mere statement of intention, or a nullity.' 'Whether the impugned dividend resolution was inconsistent with the rights of, or oppressive to, the preference shareholders or contrary to the interests of the company as a whole.' 'If the impugned dividend resolution was valid, whether accrued loans in respect of unpaid minimum cash distributions had become due and payable to the preference shareholders.']

Ratio Decidendi

The impugned resolution was not an effective declaration of a dividend under Corporations Act 2001, s 254V(2), did not fix the amount and time for payment under s 254V(1), and was not a mere policy statement; it was a purported partial and incomplete exercise of clause 7.1(b) of ALF's constitution, because it declared but did not authorise payment of an interim dividend. It was therefore a nullity. In any event, it was inconsistent with and oppressive to the preference shareholders because they were entitled to participate pari passu in any dividend and to repayment of accrued loan amounts before any dividend could be paid.

Court Disposition

Plaintiff entitled to a declaration that the impugned dividend resolution is void; plaintiff directed to bring in short minutes to give effect to the judgment.

Orders

  • ['The plaintiff bring in short minutes on a date to be fixed to give effect to this judgment.']