Hawcroft v Jamieson [2017] NSWSC 1478

Hawcroft v Jamieson [2017] NSWSC 1478

The chairperson resolution was invalid because it provided for additional director remuneration without approval of the company in general meeting, contravening the company’s constitution and Table A Art 70. The protocol signed on 31 August 2011 was not intended to be immediately binding as evidenced by the directors’ qualified assent and subsequent conduct. Consequently, it created no enforceable limitation on director action, nor did it operate to amend the constitution under the Duomatic principle. Arguments based on estoppel did not prevent the plaintiff’s relief regarding the chairperson resolution.

Parties
Plaintiff: Jennifer Hawcroft; First Defendant: Michelle Jamieson; Second Defendant: John Hawcroft
Jurisdiction
Australia
Judgment Date
31 October 2017
Procedural Posture
Principal Judgment / Final Judgment After Trial
Outcome
Resolution of directors on 28 June 2016 appointing first defendant as chairperson declared invalid; all other claims dismissed except costs issues reserved.
Legal Topics
Validity of Directors' Resolutions, Directors' Powers, Company Constitutions, Remuneration of Directors, Intention to Create Legal Relations, Shareholder Agreements, Estoppel, Duomatic Principle
Corporations Law Validity of Directors' Resolutions Directors' Powers Company Constitutions Remuneration of Directors Intention to Create Legal Relations Shareholder Agreements Estoppel +1 more

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Parties

Jennifer Hawcroft

Plaintiff

Michelle Jamieson

First Defendant

John Hawcroft

Second Defendant

Procedural Posture

Principal Judgment / Final Judgment After Trial

Legal Issues

  1. 1 Whether the resolution appointing Michelle Jamieson as chairperson and awarding additional remuneration was beyond the power of the directors under the company constitution
  2. 2 Whether a protocol signed by directors/shareholders in August 2011 was a legally binding and enforceable agreement governing company management
  3. 3 Whether the protocol altered the company’s constitution via the doctrine of informal unanimous assent (Duomatic principle)

Ratio Decidendi

The chairperson resolution was invalid because it provided for additional director remuneration without approval of the company in general meeting, contravening the company’s constitution and Table A Art 70. The protocol signed on 31 August 2011 was not intended to be immediately binding as evidenced by the directors’ qualified assent and subsequent conduct. Consequently, it created no enforceable limitation on director action, nor did it operate to amend the constitution under the Duomatic principle. Arguments based on estoppel did not prevent the plaintiff’s relief regarding the chairperson resolution.

Court Disposition

Resolution of directors on 28 June 2016 appointing first defendant as chairperson declared invalid; all other claims dismissed except costs issues reserved.

Orders

  • Declaration that the resolution of directors on 28 June 2016 appointing the first defendant as chairperson is invalid and of no effect.
  • Amended statement of claim otherwise dismissed, except relation to costs.