Beck v Tuckey Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1938/04 TAMAR RIVQA BECK V TUCKEY PTY LTD (ACN 069 981 942) & ORS JUDGMENT 1 HIS HONOUR: By her amended originating process, the plaintiff seeks an order under s 249G of the Corporations Act 2001 (Cth) to call a meeting of the members of the first defendant ("Tuckey"), to consider motions for the removal of the second and fourth defendants as directors and secretaries of the company, and for the appointment of her daughter as a director. She seeks orders under s 1319 that the motions put to the meeting be decided by a poll of the members, and that for the purpose of the meeting the quorum shall be deemed to be the plaintiff alone, if the plaintiff is the only member attending the meeting. Evidentiary matters 2 The final hearing of proceeding took place within the Corporations List, after a referral from the Registrar and inevitably without advance notice to me. With the consent of counsel for the represented parties and to save time, I admitted the affidavit evidence of the second and fourth defendants subject to considering, and subsequently ruling on, objections based upon relevance, form, opinions and conclusions. Having now had the opportunity to review the affidavits and consider those objections, I have decided to allow the evidence of the defendants to be read in full. Although much of the evidence is irrelevant to the question, raised by s 249G, whether it is "impracticable" to call a meeting of members in any other way, the section gives the court a wide discretion to grant or refuse relief once "impracticability" is established. The evidence, including evidence of the opinions and conclusions expressed in the defendants' affidavits, is in my opinion relevant to the exercise of the court's discretion under the section. 3 The plaintiff gave evidence of a conversation between herself and her brother at a meeting on 2 October 2003, attended by their respective solicitors. It appears that the conversation took place on the occasion of a meeting of the plaintiff and the second defendant as directors of Tuckey, either during the directors' meeting or just before it. The conversation related to whether the plaintiff would sign a deed poll to satisfy some bank requirements in respect of the Weinstock trusts, and would agree to repay other entities within the Weinstock Group an amount that had been lent to Tuckey. The second defendant required that these matters be attended to before he would vote as a director in favour of a mortgage to the Commonwealth Bank over Tuckey's property. When the plaintiff refused to comply, the second defendant voted against the Commonwealth Bank mortgage. I shall return to this evidence, which is obviously relevant to the proceeding. 4 The second defendant gave evidence that the conversation on 2 October 2003 was a "without prejudice" conversation, but this was denied by the plaintiff. The second defendant's solicitor, who was present the meeting, did not give evidence, but the plaintiff's solicitor did so, deposing that a set of proposed minutes of the meeting of directors which summarised the conversation was a true copy of the minutes. It is implied in the evidence of the plaintiff's solicitor that she did not regard the conversation as a without prejudice conversation, evidence of which would be inadmissible. In my opinion, the weight of the evidence favours the conclusion that the conversation, though related to settlement of differences between the brother and sister, was not conducted as a without prejudice negotiation. At the hearing, wishing to avoid embarking on a voir dire due to the pressure of time, and with the consent of counsel, I admitted evidence of the conversation on condition that the court would find, after reviewing the evidence, that the conversation was not a without prejudice conversation. My finding means that the evidence of the conversation is now admitted unconditionally. The parties and the Weinstock Group 5 The plaintiff and the second defendant are sister and brother. Their mother is the fourth defendant. She is suffering from dementia and has granted an enduring power of attorney in favour of the second defendant. Her husband and their father ("the deceased") died last year, leaving a large and complicated estate. By his last will, he appointed the second defendant as executor, and (after various specific requests to family members and subject to a life estate to his wife) he gave two-thirds of the residue to the second defendant, and one-third to the plaintiff. The second defendant has not yet applied for probate but says he will do so soon. Somewhat irregularly, the third defendant is described as the estate of the deceased. Relief is not sought against the estate and so I have allowed the hearing to take place notwithstanding that irregularity. Only the plaintiff and the second and fourth defendants were represented at the hearing. 6 Tuckey is one of 18 companies and trusts forming the Weinstock Group. The directors of the companies in that group are (with the single exception of the second defendant's wife) members of the Weinstock family. The shareholders of the companies are either other companies in the group, or members of the Weinstock family, with the sole exception that the second defendant's wife has some shares. The interlocking nature of the companies and trusts has been recognised in negotiations with the Commonwealth Bank for loan funds, as the bank has required all entities within the group to provide equitable charges to support borrowings. 7 According to ASIC's records, the directors of Tuckey are the plaintiff, the second and fourth defendants, and deceased. There are 100 issued ordinary shares of the company. The plaintiff holds 70, and 10 each are registered in the names of the second defendant, the fourth defendant and the deceased. The ordinary shares are the only issued voting shares in the company. Additionally the plaintiff owns a "B" share, the second defendant holds a "C" share, a "D" share is registered in the name of the deceased, the fourth defendant owns an "E" share, and a company called Maralex holds an "H" share. The directors of Maralex are the second defendant and his wife, and the shares in the company are held by the deceased (4 shares), the fourth defendant (3 shares) and the second defendant (1 share). The "B, "C", "D", "E" and "H" shares do not confer on the holders the right to vote at a general meeting or to receive notice of or attend a general meeting. They confer on the holders the right to participate in such dividends as the directors may recommend and the company may declare, and the shares rank in priority to ordinary shares in a reduction of capital or winding up, to a value not exceeding their normal value. Facts 8 The deceased and his wife and their two children arrived in Australia in 1954, and soon afterwards the deceased commenced his own business, which eventually included furniture manufacturing, building and property investing. From about 1974 he was assisted by his son and eventually his son took over the management of the businesses of the Weinstock Group. There is a conflict in the evidence of the plaintiff and the second defendant as to whether their father became "semi-retired", but they agree that business decisions for the Weinstock Group were taken by father and son. The second defendant says that the plaintiff was not involved in the day-to-day management of the Weinstock Group, and she has not denied this statement. 9 In time the major focus of the Weinstock Group became property investing, and the deceased and his son decided that property should be owned through trusts. They formed two family discretionary trusts. The trusts borrowed both externally and from other entities in the Weinstock Group. 10 The second defendant says that Tuckey and another company called Mengarno were incorporated for the purpose of receiving trust distributions which were taxed at the lower corporate rate of tax. He says that once tax was paid by these companies, the balance was returned to the trusts to assist the trusts to purchase further properties or repay external debt. He says that the vast majority of the income of Tuckey was as a result of trust distributions. He lists the distributions made from one of the trusts to Tuckey in the years from 1995 to 2003. The figures range from $280,000 in 1997 to $970,000 in 2002. 11 The accountant for the Weinstock Group has given evidence that he participated in the establishment of Tuckey, on instructions from the deceased and the second defendant, to enable trust distributions to be paid from trusts in the Weinstock Group to Tuckey to gain advantage of the corporate tax rate. He has confirmed the second defendant's evidence as to the amount of the distributions made to Tuckey in the period from 1995 to 2003. 12 The plaintiff denies that Tuckey forms part of the Weinstock Group, saying that from the date of its incorporation in 1995 until her father's death, her brother had no involvement in the management of the company, and has only attempted to be involved since their father's death. She says that Tuckey was incorporated by her father primarily for her personal use and benefit, and that another company called Mangano was formed for use by the second defendant. She says that, in addition to the taxation purpose for their formation, another "primary purpose" for the incorporation of Tuckey and Mengarno was so that each of her brother and her could have their own corporate vehicles for the conduct of the independent businesses, Mengarno being for the personal use and benefit of the second defendant and Tuckey being for her personal use and benefit. 13 The plaintiff endeavoured to give evidence about her exclusion from the management of Mengarno. I regard that evidence as irrelevant. 14 The plaintiff has given evidence that in the period from 1995 to 2003, she told her father on numerous occasions that she did not trust her brother to look after her, and that he reassured her by saying that Tuckey belonged to her, and offered to give her his 10% shareholding. In the present proceeding she does not seek relief against her father's estate, and the evidence does not assist me because it implies recognition by the plaintiff and her father that there was an outstanding minority shareholding in Tuckey. 15 The plaintiff says that she uses Tuckey as the proprietor of a business that she conducts under the name of Dia Design, an interior design and furniture business. Her brother has no involvement in the management of Dia Design. She says that the business was conducted from premises in Crown Street Surry Hills but the company has purchased a property in Elizabeth Street Redfern, in a dilapidated state, which was to be renovated as a showcase showroom for the business. In the meantime the company has ceased trading and its furniture and stock in trade are in storage at a cost of about $900 per month. She says that until the property is renovated the business of Dia Design cannot recommence. She says that Tuckey needs to borrow funds from the Commonwealth Bank to pay for the renovation. 16 The weight of evidence supports the conclusion that Tuckey is part of the Weinstock Group, and is not a corporate vehicle for the plaintiff's personal use. Indeed, it would be oppressive of the minority interests for the plaintiff to treat the company in this way. The evidence of the second defendant and the accountant as to the purpose of formation of the group is supported by the evidence that large trust distributions have been made to the company and also by the shareholding structure, in which a significant minority interest is held by members of the Weinstock family other than the plaintiff. 17 The evidence includes a statement of the financial position of Tuckey as at 30 June 2003. The financial statement shows the substantial trust distributions, and records, as current liabilities, a loan of over $865,000 from the plaintiff (proceeds of sales some properties by her, and from a gift from her father) and loans of over $700,000 from several Weinstock Group companies. It records plant and equipment, presumably of the business Dia Design, at a little over $7,000, and stock in hand at about $11,400. This implies that the Dia Design business is small compared with the investment and trust distribution activities of the company. Nevertheless, it is probably true that there was an understanding amongst members of the family that the plaintiff would be able to use Tuckey as a vehicle for her business. 18 The second defendant claims that there was a common understanding at the time when trust distributions were made to Tuckey, that he and his father would remain directors. There is no other evidence for this "common understanding", and the plaintiff says she is unaware of it. The evidence is insufficient for me to find that any such common understanding existed. 19 The deceased died on 29 July 2003. On 25 September 2003 the plaintiff wrote to the second defendant convening a meeting of directors of Tuckey, for the purpose of approving a loan of $750,000 from the Commonwealth Bank to the company. The letter said that the loan would be applied to reimburse the plaintiff's loan account in the sum of $415,893, and to meet the cost of renovations to the Redfern property in the sum of $334,107. The letter invited the second defendant to resign from his position as a director. 20 The meeting was held on 2 October 2003. The plaintiff and the second defendant, and their respective solicitors, were in attendance. There is a dispute between the parties as to whether the plaintiff's solicitor was appointed to chair the meeting, but it is unnecessary to resolve the issue. Before turning to the formal business of the directors' meeting, the parties had a discussion about some issues relating to their father's estate and the Weinstock Group. The second defendant invited the plaintiff to sign a deed poll to amend the trust instrument for one of the family trusts, and some documents relating to the provision of bank cheques by Tuckey for settlement of the purchase of the Redfern property. He said that unless the plaintiff signed the deed poll and caused $342,000 to be repaid by Tuckey to Weinstock Group companies, he would not vote in favour of the proposed $750,000 loan. The plaintiff refused to execute the deed poll because, she said, her solicitor had not been given the opportunity to inspect trust deed, notwithstanding requests. She said that the intercorporate loans were not required to be repaid. When the motions for approval of the $750,000 loan and its documentation were formally put to the directors, the second defendant voted against them and they were not carried. 21 On the following day the plaintiff wrote to the second defendant expressing concerns about his attitude. She said that Tuckey needed the money to be borrowed from the Commonwealth Bank in order to carry on its business, and claimed that without that injection of funds, the company would face extremely tight financial conditions which would directly and adversely impact on the business. These assertions seem to be at odds with her letter of 25 September 2003, in which she said that more than half the money would be used to reduce her loan account. 22 The second defendant's solicitor wrote to the plaintiff's solicitors on 10 October 2003, claiming that the intercompany loans to Weinstock Group companies were repayable on demand, and expressing concern that the plaintiff proposed to use part of the borrowing by Tuckey to repay her shareholder loan, when the money could be used to pay other outstanding liabilities to the Weinstock Group. 23 The plaintiff went on an overseas trip. On 27 November 2003, after she returned, she purported to convene a meeting of members of the company, to be held on 19 December 2003, to consider motions to remove her brother and mother as directors and secretaries of the company, and to appoint her daughter as a director. In her covering letter of that date to her brother, she reiterated the concerns she had expressed in her letter of 3 October. 24 Clause 43 of the articles of association of Tuckey authorises any director to convene a general meeting. By clause 65, the company in general meeting may by ordinary resolution remove any director, and may appoint another person to replace the director. The plaintiff was therefore entitled to convene a general meeting to remove and replace directors. As the company is not a public company, the statutory right of removal contained in s 203D is inapplicable, and therefore the special period of notice provided for by the section is irrelevant. However, by s 249H, the plaintiff was required to give at least 21 days notice of the meeting. The parties agree that the notice of the meeting convened 19 December was insufficient, falling short by one day. 25 On 12 December 2003 solicitors acting for the second and fourth defendants wrote to the plaintiff's solicitor, drawing attention to clause 45 of the articles of association of the company. Under that provision, no business is to be transacted at a general meeting without a quorum of members, and the required quorum is two members entitled to vote. The letter said that in the event that the second and fourth defendants were unable to attend the meeting, a forum would not be present and no business could be conducted. The letter also drew attention to the insufficiency of notice. 26 The plaintiff's solicitor replied to that letter on the same day, inquiring whether there was any day on which the second defendant would be available to attend a general meeting of Tuckey, and asserting that the second defendant had had adequate notice of the meeting. That letter was followed up with another letter, dated 18 December, repeating the inquiry whether there was any date on which the second defendant would be available to attend a general meeting. The second defendant's solicitor replied on 19 December 2003, noting that the plaintiff was proceeding to convene the meeting notwithstanding failure to provide 21 days notice. 27 The plaintiff wrote to the second defendant on 19 December 2003, recording that he was not present at the general meeting that morning, and informing him that as there were insufficient members to constitute a quorum, the meeting had been adjourned to 29 December 2003. The second defendant did not attend the adjourned meeting. The meeting, being inquorate, was dissolved. 28 On 6 January 2004 the plaintiff's solicitor wrote to the defendants solicitor, reiterating the position and saying that the plaintiff had no option to approach the court for an order for a general meeting of Tuckey. The second defendant's solicitor replied on 22 January 2004, offering to meet to discuss resolution of the issues between the parties, and noting problems that had been raised by the bank with respect to a proposal to change the trustee company on various security properties, which would involve signing copious new security documents. The plaintiff's solicitor replied on 28 January 2004 saying that her client wished to have discussions to resolve all of the issues but she needed to have information of various kinds in order to do so. The letter enclosed a schedule summarising the information required and the limited responses to those requests. 29 On 6 February 2004 the plaintiff convened another general meeting for the same purposes, to be held on 3 March 2004. In her covering letter to the second defendant, she reiterated her claim that Tuckey continued to face extremely tight financial conditions which directly and adversely impacted its business. 30 The second defendant did not attend the meeting on 3 March. He says he was overseas. On the same day the plaintiff wrote to him saying that as there were insufficient members to constitute a quorum, the general meeting had been adjourned to 10 March 2004. The second defendant did not attend on 10 March, and once again, the meeting was dissolved. 31 On 19 April 2004 the second defendant wrote to the plaintiff about various matters concerning the Weinstock Group. He said that he would be prepared to consider sale of the 30% minority interest in Tuckey, and to resign as a director, as part of an overall settlement that would involve cleaning up the corporate ownership of the other companies and paying out associated loans between entities. 32 The plaintiff replied on 20 April 2004, saying she also wished to have an overall settlement but that she needed further information about her correct entitlement. She wrote a second letter on the same day, asking various questions about Weinstock Group matters. There is some evidence that the plaintiff's solicitors had pressed the Commonwealth Bank for information at various times about the assets of the estate, and that the second defendant authorised provision of that information only this month. This correspondence also indicates some progress in negotiations for the plaintiff to sign certain documents. 33 The second defendant has expressed the belief, in his affidavit, that Tuckey has been able to operate and transact day-to-day business during the period from October 2003 to April 2004, except only for the issue of removal of directors. In reply, the plaintiff draws attention to the second defendant's vote against the $750,000 loan, and says that in the absence of that loan the company has been unable to renovate the Redfern property and recommence its business, Dia Design, from the new location. 34 However, there is nothing in the evidence to indicate that a proposal to finance specific renovation plans for the Redfern property would be opposed by the second defendant. His attitude, evidenced by his solicitor's letter of 10 October 2003, is that he opposed the $750,000 loan because more than half of it was to be used to reduce the plaintiff's loan account at a time when there was money outstanding to other Weinstock Group companies, and in circumstances where the plaintiff was refusing to sign documentation to facilitate a variation of the Weinstock trusts. In these circumstances I accept the second defendant's evidence that Tuckey has been able to operate and transact day-to-day business. The law 35 Section 249G(1) of the Corporations Act says: "The Court may order a meeting of the company's members to be called if it is impracticable to call the meeting in any other way." 36 An application for such an order may be made by any director, or any member entitled to vote. The plaintiff fits within both categories. 37 A note to s 249G refers to s 1319. That section is as follows: "Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as thinks fit." 38 It will be seen that there are two components to s 249G(1). First, it must be impracticable to call the meeting in any other way. Secondly, once impracticability is established, the Court has a discretion to make or refuse the order. 39 To understand the meaning of the first component, it is necessary to refer to the legislative history of the provisions. Provisions similar to ss 249G and 1319 have been part of statutory company law for many years: Companies Act, 1961 (NSW), s 142; Companies (NSW) Code, s 246; Corporations Law, ss 251 and 1319; and see Companies Act 1948 (UK), s 135. The present two provisions, read together, are substantially similar to their predecessors, except in one noticeable respect. The UK Act of 1948 was expressed to apply "if for any reason it is impracticable to call a meeting of the company in any manner in which meetings of that company may be called, or to conduct the meeting of the company in manner prescribed by the articles or this Act". The statement of two alternative conditions was adopted in almost identical words in the Uniform Companies Act of 1961. Subsequently, in the Companies Code the word "call" was replaced by the word "convene", apparently without changing the meeting of the provision, and the Companies Code wording was preserved in the Corporations Law until the 1998 amendments. Then the provisions of the Corporations Law concerning meetings were overhauled in the 1998 amendments, which removed the second alternative condition and changed "convene" to "call". 40 The meaning of "impracticable" has been considered in several cases on the predecessor provisions. Re El Sombrero Ltd [1958] 3 WLR 349 was a case under the UK Act of 1948. The applicant had 90% of the issued shares but was not a director. The two respondents, each holding 5% of the shares, were the directors. No general meeting of the company had ever been held. The constitution of the company prescribed a quorum of two members. Wynn-Parry J made an order under the section that a meeting be held to consider motions including motions for the removal of the directors, and that one member would be deemed to constitute a quorum. He said (at 351) that the word "impracticable" required the court to "examine the circumstances of the particular case and answer the question whether, as a practical matter, the desired meeting of the company can be conducted, there being no doubt, of course, that it can be convened and held". It was impracticable to conduct the meeting in the manner prescribed by the company's constitution, which require a quorum of two members, because it was unlikely that two of the three members would attend. 41 Those observations were applied to the provision of the New South Wales Act of 1961, in Re Totex-Adon Pty Ltd and the Companies Act [1980] ACLC 34,133. In that case the impracticability related to the convening of the meeting, rather than its conduct, because it appeared, on the court's construction of other statutory provisions, that there was no power in the Act or in the company's constitution for a meeting to be called in any other way (at 34,137). Needham J made orders for a meeting to be called, and for one person to constitute a quorum. 42 In Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACLC 768 an application was made for a meeting to be ordered under the Corporations Law provision, as it stood prior to the 1998 amendments. Young J observed (at 772) that "impractability will cover a wide range of circumstances, from the case where all the corporators have been killed in an aircraft accident, down to situations where it is extremely inconvenient for a meeting to be called". He declined to make an order because there was an alternative means of convening a meeting and insufficient evidence to demonstrate that it would be impracticable to use it. 43 In Favretto v Eagland (1995) 13 ACLC 1515, also a case under the Corporations Law before its amendments, some shareholders of a listed public company proposed to requisition a meeting, and the court was asked to decide whether it had power to "facilitate" the conduct of the meeting so requisitioned, under the statutory power then found in s 251. Young J said (at 1517) that the section applied in circumstances where it was possible to convene a meeting, but impossible to have the meeting properly conducted, giving as an example a case where it would be impracticable to achieve a quorum. However, he held that the section did not give the court any power to intervene and give directions as to the conduct of a meeting convened by somebody else. 44 Were not for the change of wording introduced by the 1998 amendments, it would be clear that the section would be available to be used in the circumstances of the present case. Although the plaintiff continues to have the power under the constitution of Tuckey to convene meetings of members, it is unlikely that the second defendant will attend, in view of his non-attendance on four previous occasions, and therefore impracticable to conduct any meeting convened by the plaintiff. The problem is that specific reference to the impracticability of conducting the meeting, as opposed to "calling" it, has been removed from the section. 45 The 1998 amendments, introduced by the Company Law Reform Bill, were part of the process of simplifying statutory company law. The avowed object of the amendments was to "significantly improve the substance and the drafting of the current rules, eliminating unnecessary or redundant regulation and making the Law more readily understandable": Explanatory Memorandum to Company Law Review Bill, [1.2]. Although important changes were made to the power of members to convene meetings, it appears that there was no intention to change the substance of the court's power to order that a meeting be called, but only to "simplify" the drafting: see Explanatory Memorandum, [10.22]. It seems to me probable, therefore, that the words of the current provision, "it is impracticable to call the meeting in any other way", are intended to have the same meaning and effect as the two alternative conditions of the previous law. 46 Of course, it can happen that the drafters of legislative amendments intended only to simplify the law might fail to give effect to that intention. In the context of corporate law simplification, Hanel v O'Neill (2003) 48 ACSR 378 provides a dramatic recent example of a case where a court has held that to be so. Here, however, it is possible to read the word "call", in the new simplified language, as a word of more expansive meaning than the word "convene" in the immediate predecessor legislation, or even the word "call" in the older legislation. In its modern plain language usage, "call" could be taken to cover the whole process of convening the meeting and bringing together the members. While it would not strictly be impracticable, here, to convene a meeting in the sense of giving a valid notice of meeting, it would be impracticable to bring the members together in a meeting because of the likelihood that the second defendant will not attend. If, therefore, it were necessary for me to decide, I would hold that the cases decided on the former provisions continue to be applicable notwithstanding the change of wording, and therefore the impracticability requirement is satisfied in the circumstances of this case. My conclusion is supported by dicta in the Full Court of the Supreme Court of Western Australia in Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198, at [139]. Discretionary considerations 47 It is clear from the wording of s 249G, and from all the cases that I have cited, that the Court has a discretion to make or refuse to make an order, in cases where the prerequisite of impracticability is present. 48 In Re El Sombrero, Wynn-Parry J recognised the existence of the discretion (at 353), and decided to exercise it in favour of the applicant on several grounds. He took into account that, under the UK legislation, the majority shareholders have a statutory right to convene a meeting for the removal of a director by ordinary resolution, and held that a quorum provision in the articles of the company does not give the minority an entitlement to defeat that right. He also took into account that the company had failed to comply with the statutory requirements for holding general meetings and filing annual returns. I should say at once that the former part of his Lordship's reasoning is qualified, in its application in Australia, by the fact that here, the statutory right to convene a meeting to remove directors (Corporations Act, s 203D) is inapplicable to a proprietary company, where the right to remove a director is governed by the corporate constitution, and so the removal right is on the same level as the quorum requirement. 49 In Re Opera Photographic Ltd [1989] 1 WLR 634, a case under the UK Act of 1985 which is not materially different from the 1948 Act, the court made an order that a meeting be called, at which a quorum of one would suffice, where there were two directors, one holding 51% of the shares and the other holding 49%, and the evidence indicated that the minority director did not attend a meeting convened by the majority director for the purpose of removing him from his position. Although the evidence is not fully set out in Morritt J's reported reasons the judgment, he was clearly influenced, in the exercise of his discretion, by evidence showing that there was a deadlock between the two individuals, such that if no order was made the deadlock would continue and the company could not be managed effectively (at 636-7). 50 In the Totex-Adon case, Needham J exercised his discretion in favour of making an order, notwithstanding evidence that the blame for failure to appoint directors and convene meetings in a proper manner should be laid at the applicant's door, and evidence that the applicant wished to remove the respondent as a director so that he could cause the company to sue the respondent. 51 In the present case there are several discretionary considerations that have led me to conclude that I should decline to make orders. This is not a case of general deadlock preventing the day-to-day management of the company. Moreover, the parties have indicated that they are prepared to negotiate to resolve their differences. I believe the court should be reluctant to intervene in the dispute in a partial fashion when there is a prospect that such negotiations will take place and might succeed. 52 There is evidence that the company is suffering some detriment because of the failure of the parties to agree on the proposed $750,000 loan, but the detriment seems to be fairly minor in the context of the company's overall financial circumstances. It amounts to the inability of the plaintiff to cause the company to resume the Dia Design business, and the payment of storage fees of about $900 per month. As I said, there has not been any specific funding proposal confined to identified renovations, and it therefore cannot be said that the defendant has refused a funding proposal for renovations. 53 I would be concerned that if the second defendant were removed as a director, a principal function of Tuckey might be stultified. That is the function of Tuckey receiving trust distributions as part of the overall tax management of the Weinstock Group. Although there is no direct evidence on the point, it seems to me unlikely that the second defendant would be prepared to cause trust distributions to be made to Tuckey if he were no longer a director, given the plaintiff's evidence that she regards the company as existing for her personal use. Conclusions 54 I have decided that, although it is at least arguable that it would be impracticable to call a meeting of members of Tuckey, for the purposes of s 249G, and therefore that there is jurisdiction for me to make an order under that section, there are good discretionary reasons for declining to make the orders sought by the plaintiff. Therefore I shall, in due course, dismiss the originating process. 55 I am conscious that my decision does nothing to resolve the real issues in dispute between the parties. Indeed, there is a risk that similar applications might have to be made in future, for example at the time when an annual general meeting is to be called, if the relationship between the plaintiff and the second defendant deteriorates and eventually comes to affect the day-to-day management of the company. 56 One thing that emerges strongly from my review of the correspondence is that both parties have expressed a willingness to negotiate towards settlement of all the matters in dispute concerning their father's estate and the administration of the Weinstock Group entities. Proper negotiations have not taken place partly because of the present litigation, and partly because of the plaintiff's claim that she needs additional information. In my opinion something must be done in the hope that sensible mediation can occur before further litigious steps are taken and the parties are locked into entrenched positions. 57 When I raised the possibility of mediation, before commencing the hearing of the proceeding, counsel for the second and fourth defendants told me that his clients would agree to a mediation order, but counsel for the plaintiff said that mediation would be fruitless because she had been denied access to information. It seems to me, from the correspondence, that the information problem is slowly being alleviated. If I were to order mediation, on the court's own motion, it would be open to the mediator to seek to resolve any lack of information as part of the mediation process, and indeed the confidentiality arrangements obtaining in a mediation may be of assistance. The plaintiff's complaint about lack of information does not now seem to me to be an insuperable obstacle to a mediation order. 58 I therefore intend to make an order for mediation, giving the parties a short time (say, two weeks) to agree on the identity of a mediator, and in the absence of agreement, granting liberty to apply so that the court can make an appointment. I shall require that mediation take place on a less-than-urgent basis (say, within two months). This should give the mediator and the parties time to address information issues, and permit the second plaintiff to make an application for probate so that any mediation can bind the estate. I have in mind delaying the final disposition of the present proceeding until after the timetable for mediation has expired, and bringing the parties back before the court at that stage. 59 I shall stand the matter over for a short time and direct the second defendant to bring in short minutes order to reflect these reasons for judgment. I shall hear submissions with respect costs on the next occasion. **********

Last Modified: 05/03/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.