Aloridge Pty Ltd (Provisional liquidator appointed) v West Australian Gem Explorers Pty Ltd (In liq) & Ors [1996] FCA 1125

Aloridge Pty Ltd (Provisional liquidator appointed) v West Australian Gem Explorers Pty Ltd (In liq) & Ors [1996] FCA 1125

The removal of Mr Loukas as director was invalid as it was not effected by notice of the majority shareholder as required by the Articles; s 1322 could not validate since it was not procedural only and would cause substantial injustice. The share allotment on 30 March 1992 was also invalid due to breach of pre-emption rights and again could not be validated under s 1322 for similar reasons. On the cross-claim, the documentation evidencing debt and security was valid and enforceable as the Deed was properly executed, and contribution as guarantors was available.

Jurisdiction
Australia
Judgment Date
23 December 1996
Procedural Posture
Corporations Dispute With Cross Claims / Final Judgment/reasons for Judgment
Outcome
Application and cross-claim both succeed in substance, with directions for parties to bring in draft short minutes of order; costs reserved.
Legal Topics
['removal of Director' 'breach of Pre Emption Rights' 'share Allotment' 'procedural Irregularity Under S.1322' 'cross Claim for Debt Enforcement and Guarantees' 'contribution Between Guarantors']
['corporations Law'] ['removal of Director' 'breach of Pre Emption Rights' 'share Allotment' 'procedural Irregularity Under S.1322' 'cross Claim for Debt Enforcement and Guarantees' 'contribution Between Guarantors']

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Procedural Posture

Corporations Dispute With Cross Claims / Final Judgment/reasons for Judgment

Legal Issues

  1. 1 ["Whether purported removal of a director without shareholding majority's notice was valid" 'Whether allotment of shares in breach of pre-emption rights was valid or saved by s 1322 Corporations Law' 'Whether cross-claimant entitled to enforce security and guarantee for loan' 'Whether contribution is owed between guarantors']

Ratio Decidendi

The removal of Mr Loukas as director was invalid as it was not effected by notice of the majority shareholder as required by the Articles; s 1322 could not validate since it was not procedural only and would cause substantial injustice. The share allotment on 30 March 1992 was also invalid due to breach of pre-emption rights and again could not be validated under s 1322 for similar reasons. On the cross-claim, the documentation evidencing debt and security was valid and enforceable as the Deed was properly executed, and contribution as guarantors was available.

Court Disposition

Application and cross-claim both succeed in substance, with directions for parties to bring in draft short minutes of order; costs reserved.

Orders

  • ['The parties are directed to bring in draft short minutes of order for claims and cross-claims.' 'Costs reserved.']