Herbert v Herbert [2005] NSWSC 1034

Herbert v Herbert [2005] NSWSC 1034

On the material before the Court, there were no management shares and the plaintiff had more than five per cent of the voting rights, so her s 293 requisition justified an audit for the years ended 30 June 2004 and 30 June 2005. Article 97 did not justify ordering audited balance sheets back to 1993 because it referred to statutory requirements from time to time in force, and the cost and limited utility of such a long audit weighed against relief. The evidence raised serious concerns about management and remuneration, but the company was trading profitably and the Court lacked sufficient information to restrain all remuneration or appoint a provisional liquidator at that stage.

Jurisdiction
Australia
Judgment Date
10 October 2005
Procedural Posture
Corporations Oppression Proceeding; Interlocutory Application to Preserve Company Assets / Interlocutory Application
Outcome
Interlocutory application granted in part; appointment of auditor ordered for the years ended 30 June 2004 and 30 June 2005, with other requested relief declined or not made at this stage.
Legal Topics
['oppression Proceedings' 'small Proprietary Company Financial Reports' 'audit Requisition by Shareholder' "directors' Remuneration" 'appointment of Provisional Liquidator' 'construction of Articles of Association']
['corporations Law' 'civil Procedure'] ['oppression Proceedings' 'small Proprietary Company Financial Reports' 'audit Requisition by Shareholder' "directors' Remuneration" 'appointment of Provisional Liquidator' 'construction of Articles of Association']

Case Brief

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Procedural Posture

Corporations Oppression Proceeding; Interlocutory Application to Preserve Company Assets / Interlocutory Application

Legal Issues

  1. 1 ['Whether an auditor should be appointed and audited reports required for the years ended 30 June 1993 to 30 June 2005.' 'Whether Article 97 required audited balance sheets by reference to the Companies Act 1961 or by reference to statutory requirements from time to time in force.' 'Whether the plaintiff held more than five per cent of the voting rights for the purposes of s 293 of the Corporations Act 2001 (Cth).' 'Whether the first defendant should be restrained from receiving money or property from the company as remuneration.' 'Whether a provisional liquidator should be appointed or another control regime imposed over company payments.' 'Whether the company proceedings should be heard with Family Provision Act proceedings.']

Ratio Decidendi

On the material before the Court, there were no management shares and the plaintiff had more than five per cent of the voting rights, so her s 293 requisition justified an audit for the years ended 30 June 2004 and 30 June 2005. Article 97 did not justify ordering audited balance sheets back to 1993 because it referred to statutory requirements from time to time in force, and the cost and limited utility of such a long audit weighed against relief. The evidence raised serious concerns about management and remuneration, but the company was trading profitably and the Court lacked sufficient information to restrain all remuneration or appoint a provisional liquidator at that stage.

Court Disposition

Interlocutory application granted in part; appointment of auditor ordered for the years ended 30 June 2004 and 30 June 2005, with other requested relief declined or not made at this stage.

Orders

  • ['Order in the nature of appointment of an auditor to be made only for the years ended 30 June 2004 and 30 June 2005.' 'Formal orders postponed for seven days and the matter stood over for short minutes of order.' 'No order made at this stage restraining the first defendant from receiving remuneration from the...