In the matter of Alexandria Landfill Pty Limited (No 2) [2016] NSWSC 1671

In the matter of Alexandria Landfill Pty Limited (No 2) [2016] NSWSC 1671

The impugned interim dividend resolution was void. Properly construing ALF's constitution, the Deed Poll and the Shareholders Agreement, ALF could not declare a final dividend under clause 7.1(a), or pay an interim dividend under clause 7.1(b), unless it first discharged existing loan liabilities to A Class preference shareholders accrued under clause 8.2(b); A Class preference shares were also entitled to participate pari passu in dividends. Although the plaintiff substantially succeeded, costs were apportioned because it abandoned severable financial adequacy and s 254T issues, so Mr Malouf was ordered to pay 60% of the plaintiff's costs.

Jurisdiction
Australia
Judgment Date
28 November 2016
Procedural Posture
Equity Corporations List; Costs and Final Orders Following Principal Judgment / Short Minutes After Principal Judgment
Outcome
Declarations and injunction granted; second defendant ordered to pay 60% of the plaintiff's costs.
Legal Topics
["members' Rights and Remedies" 'dividends' 'preference Shares' 'construction of Company Constitution and Shareholders Agreement' 'oppression' 'costs Apportionment']
['corporations' 'costs'] ["members' Rights and Remedies" 'dividends' 'preference Shares' 'construction of Company Constitution and Shareholders Agreement' 'oppression' 'costs Apportionment']

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Procedural Posture

Equity Corporations List; Costs and Final Orders Following Principal Judgment / Short Minutes After Principal Judgment

Legal Issues

  1. 1 ['Whether ALF may declare and pay a dividend only after first discharging loan liabilities accrued to holders of A Class preference shares under clause 8.2(b) of the Shareholders Agreement, or whether the relief should refer only to payment of a dividend.' "Whether the second defendant should pay the plaintiff's costs and whether costs should be apportioned because the plaintiff abandoned severable issues concerning ALF's financial position and Corporations Act, s 254T."]

Ratio Decidendi

The impugned interim dividend resolution was void. Properly construing ALF's constitution, the Deed Poll and the Shareholders Agreement, ALF could not declare a final dividend under clause 7.1(a), or pay an interim dividend under clause 7.1(b), unless it first discharged existing loan liabilities to A Class preference shareholders accrued under clause 8.2(b); A Class preference shares were also entitled to participate pari passu in dividends. Although the plaintiff substantially succeeded, costs were apportioned because it abandoned severable financial adequacy and s 254T issues, so Mr Malouf was ordered to pay 60% of the plaintiff's costs.

Court Disposition

Declarations and injunction granted; second defendant ordered to pay 60% of the plaintiff's costs.

Orders

  • ["The resolution passed by the Second Defendant (Mr Malouf) as sole director of the First Defendant (ALF) on 28 November 2014 that ALF declare (but not pay) an interim dividend of $24,434,678 to Mr Malouf as ALF's sole ordinary shareholder is void and of no effect." "Upon the true construction of the constitution of...