Beck v LW Furniture Consolidated (Aust) Pty Ltd - Valid appointment of directors in a family company

On 5 April 2012, the New South Wales Court of Appeal handed down their judgment in the case of Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76. The appeal was allowed, and it was determined that the case should be remitted, with the Respondents to pay 80% of the combined costs of the Appellant of the appeal and cross-appeal.

The facts of the case involve a family company incorporated in 1971. The founder and his wife passed away, and their two children came into dispute over the directorship of the company. The daughter sought an application for the winding up of the company on the grounds that it was without proper governance.

The issued addressed by the court included:

·         Whether the son was a director at the relevant time.

·         Whether his wife was validly appointed.

·         Anshun Estoppel.

·         Whether the Validation Order was of the type described in   Section 1322(4)(a).

·         The power to issue Voting Shares.

·         Whether there had been a failure to accord natural justice.

In their reasoning, Young JA and Sackville AJA considered s 1322 of the Corporations Act 2001; specifically, whether a purported act contravening constitution by a person never validly appointed to office is a ‘contravention’ that can be cured by s1322(4)(ii). They held, with Capbell JA dissenting, that ‘contravention’ does not mean every invalid act done in relation to the corporate constitution, and thus the additional director’s appointment was not capable of being validated under s 1322.

TimeBase Case Law includes a comprehensive collection of over 25,000 full text Australian judgments. It is a fast and convenient service giving you access to current and past case law with the ease of powerful, expansive searching. Contact us for a free trial today.