as personal representatives of the ESTATE of HARRY LEWIS

TAXI COMBINED SERVICES (LAUNCESTON) PTY LTD (ACN 066 318 376)

Corporations - Corporate finance - Shares - Transfer - Directors' power to refuse to register - Powers of court in event of refusal - Whether refusal without just cause - Onus - Whether on transferee - Whether company limited by statement of reasons for refusal in minutes of board meeting - Whether unreasonable delay in dealing with transfer - Failure to send notice of refusal to transferee within two months after transfer lodged - Effect of failure to pay stamp duty on transfer.

Corporations Act 2001 (Cth), s1093 and s1094.

Roberts v Coussens (1991) 25 NSWLR 171; re Swaledale Cleaners, Ltd [1968] 1 All ER 1132 and [1968] 3 All ER 619; Manning River Co-operative Dairy Co Ltd v Shoesmith [1915] HCA 32; (1915) 19 CLR 714, considered.

Second Respondent: Director of Public Prosecutions

Judgment ID Number: [2002] TASSC 2

LAURENCE CHARLES LEAVER and MICHAEL HERBERT NEWTON as

personal representatives of the ESTATE OF HARRY LEWIS and MICHAEL HERBERT NEWTON v TAXI COMBINED SERVICES (LAUNCESTON) PTY LTD (ACN 066 318 376), THE REGISTRAR OF MOTOR VEHICLES, JACK HINDS, PHILLIP DANIEL SMITH, JAMES FRANCIS DEANE, MERVYN SYDNEY TURNER and JOHN PATRICK GREGG

REASONS FOR JUDGMENT CRAWFORD J 30 January 2002

1 At a meeting of the board of directors of the first respondent, Taxi Combined Services (Launceston) Pty Ltd ("TCS") on 26 August 1997, a motion was carried that a transfer of 20 shares from the estate of the late Harry Lewis to the second applicant, Mr Newton, not be approved. The motion, as recorded in the minutes of the meeting, noted the reason as being "Unlikely to abide by Company rules". A further motion was carried that a transfer of 10 shares from the estate to Lewis Property Trust not be approved, the noted reason being "Licence not held by Trust".

2 On 11 May 1998 a form transferring those 30 shares from the applicants, as trustees of the estate, to Jack Hinds, for a consideration of $30, was signed. The transfer was purportedly entered into on behalf of the applicants, in their role as trustees, "by their lawfully appointed attorney Mr Phillip Smith pursuant to the provisions of a deed of agreement entered into in 1995 and registered as 71/286 pursuant to the provisions of the Powers of Attorney Act 1934". That transfer of the shares was subsequently completed.

3 On 25 June 1998, the applicants, as personal representatives of the estate of the late Mr Lewis, and the second applicant on his own behalf, filed the originating application which, as amended, seeks the following orders:

"1 That the transfer of 20A Class shares in Taxi Combined Services (Launceston) Pty Ltd (ACN 066 318 376) from the Estate of Harry Lewis to Michael Herbert Newton be registered by the company.

2 That the transfer of 10A Class shares in Taxi Combined Services (Launceston) Pty Ltd (ACN 066 318 376) from the Estate of Harry Lewis to Michael Herbert Newton as trustee of "The Harry Lewis Property Trust" be registered by the company.

2A In the alternative, an Order that the register of members of the First named Respondent be corrected by inserting the name of the Applicant, Michael Herbert Newton as the holder of 30A Class shares in the company, and further in the alternative,

2B An Order that the register of members of the First named Respondent be corrected by deleting the name of Jack Hinds as the shareholder of 30A Class shares transferred to him on the 11th May, 1998.

3 That it be and is hereby declared that the Estate of Harry Lewis is the owner of Perpetual Taxi Licence numbers LN006 and LN007."

4 The Registrar of Motor Vehicles was named as a respondent because of par3 of the orders sought. However, such an order is no longer sought. At the outset of the hearing, counsel for the Registrar formally appeared and withdrew, after announcing that the Registrar intended to take no further part in the proceedings, except that he wished to be heard as to costs. Most of the other individuals who were named as respondents to the application were at one time or another directors of TCS and I suspect it is likely that they have all been shareholders. However, it is not apparent to me why they were each named as respondents. For ease of reference, I will hereafter refer to "the respondents" upon the basis that the expression does not include the Registrar.

The provisions of the Corporations Law (and Corporations Act 2001)

5 The applicants sought to invoke the Court's jurisdiction under the Corporations Law, s1094 (see now Corporations Act 2001, s1094), which was contained in Pt 7.13 Div 2 of the Law (and the Act). The only other section in that division upon which reliance was placed was s1093. The two sections provide:

"1093 If a company refuses to register a transfer of any shares in, debentures of, or interests made available by, the company, it shall, within 2 months after the date on which the transfer was lodged with it, send to the transferee notice of the refusal.

1094(1) Where a relevant authority in relation to a company refuses or fails to register, or refuses or fails to give its consent or approval to the registration of, a transfer or transmission of shares in, debentures of, or an interest made available by, the company, the transferee or transmittee may apply to the Court for an order under this section.

(2) Where, on an application made under subsection (1), the Court is satisfied that the refusal or failure was without just cause, the Court may:

(a) order that the transfer or transmission be registered; or

(b) make such other order as it thinks just and reasonable, including, in the case of a transfer or transmission of shares, an order providing for the purchase of the shares by a specified member of the company or by the company and, in the case of a purchase by the company, providing for the reduction accordingly of the capital of the company.

"relevant authority", in relation to a company, means:

(a) a person who has, 2 or more persons who together have, or a body that has, authority to register a transfer or transmission of shares in, debentures of, or interests made available by, the company; or

(b) a person, 2 or more persons, or a body, whose consent or approval is required before a transfer or transmission of shares in, debentures of, or interests made available by, the company is registered."

6 The directors of TCS were collectively a "relevant authority", in relation to the company, at all material times.

7 The Court may only make an order under s1094(2) if it is satisfied that the refusal or failure to register the transfers, or to approve the registration, was without just cause. Clearly the onus of proving that rests with the applicants. If the Court is not so satisfied, no order under s1094 can be made, for it is not authorised by the terms of the section. In Roberts v Coussens (1991) 25 NSWLR 171 at 188 Rolfe J thought that the onus probably rested upon the applicant for registration to show an absence of just cause, but I do not see there to be any doubt about the point. See also Australian Metropolitan Life Assurance Co Ltd v Ure [1923] HCA 29; (1923) 33 CLR 199 at 219. I also observe that notwithstanding that absence of just cause may be proved, the Court has a discretion to exercise as to whether or not an order under s1094(2) should be made. In its terms, the Court "may" make an order, but it is not obliged to do so.

8 Affidavits sworn by 21 deponents were read at the hearing of the application. The evidence of 15 of those persons was relatively formal and they were not cross-examined. They were shareholders of TCS, or directors of companies which held shares in TCS. They simply attested to having been served with the amended originating application and the more substantial affidavits of witnesses to whom I will refer shortly and, depending on whether they were a shareholder or a director of a shareholder, to holding the following views:

"My view as a share holder [or director of a share holder] of the company is that I support the decisions made by the board of the company to refuse to register any transfer of shares to Mr Michael Newton. I also do not agree with any order which might have the effect of requiring the company to issue a further 30 A class shares to Mr Newton so that he can become a registered share holder of the company. I do not wish Mr Newton to be a share holder of the company and I do not consent to the issue of further shares in the company which may have the effect of devaluing the value of the shares in the company which are owned by me [or which have been issued]."

9 Witnesses who were cross-examined and who gave far more substantial evidence were:

* The first applicant, Mr Leaver, an executor and trustee of the estate of the late Mr Lewis and, jointly with Barbara Joy Leaver, a shareholder in TCS.

* The second applicant, Mr Newton, the other executor and trustee of the estate, a director of TCS from 1995 until 17 June 1997 and a person who attended meetings of shareholders pursuant to proxies held by him.

* The fourth respondent, Mr Smith who, jointly with Josephine Kathleen Smith, was a shareholder in TCS , and a director and the secretary since 17 December 1996.

* The fifth respondent, Mr Deane, a director and secretary of a company that is a shareholder in TCS and a director of TCS since 15 May 1995.

* Phillip John Caddy, a shareholder of TCS from 1995 until at least 1998.

* Steven John Quinn, previously a shareholder in TCS and a director from 1995 until the end of 1997 and chairman for at least some of that time including in 1997, who still attends meetings of shareholders pursuant to a proxy.

10 The applicants were their only witnesses. Mr Leaver's evidence was limited in its scope and of little assistance to me when resolving the principal issues. There were substantial conflicts between the evidence of Mr Newton on the one hand and the evidence of Messrs Smith, Deane, Caddy and Quinn, who gave evidence for the respondents, on the other hand. I found Mr Newton the least impressive of the witnesses and I preferred the evidence of the respondents' witnesses where there was a conflict. He was glib and obviously defensive, in much of his evidence. There were several occasions when I positively concluded that he was being untruthful. In particular I concluded that he was not being candid when he was being cross-examined about the circumstances which gave rise to an action for defamation brought against him (and not defended) by a magistrate, Mr Wilson, when he was being cross-examined about the accuracy of the incidents related by Mr Caddy and when he was being cross-examined about whether he wished to take over the company or play any part in running it in the future. The respondents' witnesses corroborated each other to a varying extent. Mr Smith impressed me as an honest and honourable man. He responded directly to questions. I had no reason to doubt the substance of what he said. Mr Caddy gave evidence of two incidents on consecutive days in September 1997. He attested to the facts in his affidavit sworn on 11 September 1998. However, by the time he came to give evidence in the witness box he confessed to having forgotten much of the detail of those incidents. As a result of cross-examination, during which his recollection was attacked, counsel for the respondents tendered a hand-written record Mr Caddy had made of the second of the incidents, a record which I accept as being accurate. He impressed me as a candid witness. When in the course of cross-examination he was challenged concerning evidence he had given that Mr Newton had abused him on a particular occasion, his response had a ring of truth about it. It was:

"Well, it was - Michael is a bit of a fiery sort of a character; he can be pretty obnoxious, I suppose, but that was in the heat of the moment, his car was singled out and perhaps to some extent, it's understandable why he got pretty annoyed about it."

11 I thought that went a long way to support and explain the evidence given by the respondents' witnesses of difficulties experienced with Mr Newton when he was associated with TCS.

12 I found Mr Quinn to be a quiet, thoughtful and honest witness, whose evidence I had no reason to doubt. Similarly Mr Deane impressed me as an utterly honest witness, although he clearly demonstrated that he had no liking for Mr Newton.

13 The will and codicil of the late Harry Lewis, who died on 5 November 1994, were admitted to probate in about August 1996. The applicants are his executors and the trustees of his estate. By the will, dated 29 March 1994, the deceased gave to the second applicant, Mr Newton, (inter alia) "one taxi plate and car". After providing for other specific bequests and legacies, and for a devise of land, he devised and bequeathed the remainder of his real and personal estate to the applicants upon trust to sell, call in and convert the same into money, with power to postpone doing so, and to hold the residue upon trusts providing for its distribution. By the codicil, dated 3 November 1994, the deceased made additional provisions which included a gift to Mr Newton of "all taxis and taxi licences owned by me at the date of my death".

14 In about 1994 it was agreed that a taxi business owned by Taxi Combined Services would be purchased by TCS, which had been incorporated for the purpose of making the purchase. There were about 30 original shareholders in TCS, one of whom, according to Mr Newton's first affidavit, was the deceased. However, the deceased died before the purchase by TCS of the taxi business was completed in about March 1995. According to Mr Newton's affidavit, at the time of his death the deceased owned 10 per cent of the shares of TCS and he also owned three public vehicle (taxi) licences. Mr Newton attested that the deceased bequeathed to him the three taxi licences and his shares in TCS. However, while the copies of the will and codicil in evidence confirm that the three taxi licences were bequeathed to him, the shares were not. In fact, as was conceded by him in cross-examination, the shares were not then in existence, for they were not issued until after Mr Lewis' death. They were not specifically mentioned in the will or codicil and merely formed part of the remainder of the estate which was to be sold, called in and converted into cash, and eventually distributed among named charities. It has troubled me that if I determine the application in his favour, I will be condoning a breach of trust by him. Until it was put to him in cross-examination, Mr Leaver had not realised that the will and codicil had not bequeathed the shares to Mr Newton. Mr Leaver's evidence was that Mr Newton had paid nothing for the shares.

15 On a date not revealed by the evidence, but after 13 July 1995 (being a date endorsed by the typist on the document), a deed ("the shareholder deed") was entered into between TCS, and its original shareholders, by which the original shareholders acquired shares in TCS. Included among the class "A" shareholders was the estate of Mr Lewis, who had died the previous year. The deed was executed on behalf of the estate by Mr Newton.

16 By the deed it was agreed (inter alia) that class "A" shares could only be held by and transferred to the holder of a public vehicle licence with respect to a motor vehicle, the owner of which employed the services of a base station owned and operated by TCS at 32 Cameron Street, Launceston (cl 1(a)). The shareholders were allotted 10 class "A" shares for each such public vehicle licence they held. The estate of Mr Lewis was allotted 30 such shares, the estate being the holder of three such licences. Each of the shareholders agreed that for so long as they were the holder of class "A" shares, they would employ the base station to service any vehicle with respect to which they were the holder of a public vehicle licence, "with the intention that such vehicle and it's [sic] driver will be subject to the directions of the company and it's employees and shall be operated as a member of the companies [sic] base station" (cl 3(a)). They also agreed that they would "ensure that the said vehicle and it's driver shall at all times comply with and abide by the rules of operation as determined by the company and it;s [sic] board from time to time" (cl 3(b)). They agreed that they would "pay the weekly rank rent set by the company and it's board from time to time for all taxis and vehicles so employing the company and that they will accept any directions and disciplinary measures implemented by the board of the company with respect to such share holder and licence holder or their driver" (cl 3(c)).

17 Regulations 19 - 23 of TCS's regulations for management controlled the transfer of shares in the company. To effect a transfer, reg20 required a form of transfer, signed by the transferor, to be left for registration at the registered office of the company, together with the certificate for the shares in question and, subject to the directors' powers, the company was obliged to register the transferee as a shareholder. However, reg21 gave to the directors power to decline to register a transfer of shares to a person of whom they did not approve, and in such event, if the transferor asked for it, the fair value of the shares was to be fixed by a prescribed method and the directors were empowered to sell the shares for that fair value to any person as the directors saw fit, and for that purpose the directors were empowered to execute any necessary transfer as the agent of the transferor. Notwithstanding that provision in the regulations, the shareholder deed provided in cl 1(c) that "the directors shall not unreasonably withhold approval and consent to the transfer of [sic] a purchaser of a class "A" share or shares where the member provides to the satisfaction of the directors proof that the proposed transferee is a respectable, responsible and solvent person or corporation who or which will be the holder of a public vehicle licence issued pursuant to the Traffic Act 1925 as amended with respect to a motor vehicle the owner of which at the date of such transfer has entered into an agreement to employ the services of the base station owned and operated by the company at 32 Cameron Street, Launceston or elsewhere as aforesaid".

18 The shareholder deed further provided by cl 1(e) that in the event of any class "A" shareholder ceasing to be the owner and holder of a public vehicle licence attached to a vehicle which employed the base station, the shares of that shareholder would be transferred by the holder to the directors or their nominees as trustees for the remaining class "A" shareholders, in which case the consideration for the transfer would only be the amount paid for the shares on issue or allotment. For that purpose each shareholder appointed the secretary of TCS to be his or her attorney to sign the appropriate share transfer.

Mr Newton became a public vehicle licence holder in place of the estate

19 A board of directors was elected at a general meeting of shareholders in early 1995 and Mr Newton was one of the elected directors. There was no requirement that a director be a shareholder in TCS and he was not a shareholder. His involvement with the company arose in two ways. He was a trustee of Mr Lewis' estate which owned 30 class "A" shares in the company. He had inherited from the deceased three public vehicle (taxi) licences and the associated taxis used the company's base station. Mr Newton also managed taxis and their licences for persons called Hutton, Deane and Bourke. I assume that they were shareholders and that those taxis also used the company's base station.

20 Sometime during 1996 the desirability of him being a director, while not being the holder of a taxi licence and not being a shareholder, was questioned. In response, Mr Newton informed a meeting of shareholders in October or November 1996, that he would take immediate steps to have one of the taxi licences then owned by the estate of Harry Lewis transferred into his own name.

21 It was Mr Newton's evidence that on or about 13 November 1996 he filled out and lodged with the Transport Commission an application to transfer taxi licence number 355 from the name of the estate into his own name. However, it appears that he made a similar application with respect to the other two taxi licences in the estate's name. As a result, in about January 1997, the three licences were transferred into his name only.

22 When on 26 August 1997, the board of directors passed the motions that the transfer of 20 shares from the estate to Mr Newton and the transfer of 10 shares from the estate to Lewis Property Trust not be approved, it had before it three standard forms of share transfer. There were a number of deficiencies in the forms. I will deal with each:

1 One purported to be a transfer from the estate of the late Harry Lewis to Mr Newton. It was signed by Mr Newton and Mr Leaver as sellers, on 1 May 1997. It was signed by both men again as buyers on the same date. Mr Leaver should not have signed as a buyer. It did not state the name of the company in which the shares were held and it did not state the number or class of shares being transferred. It did not state the consideration paid for the transfer. Stamp duty was not noted as having been paid, as required by the Stamp Duties Act 1931.

2 A second form purported to be a transfer from the estate of the late Harry Lewis to "The Harry Lewis Property Trust". As submitted by counsel for the respondents, shares may be transferred to trustees under a trust, but not to the trust itself. Mr Newton's evidence was that he was the trustee of the Harry Lewis Property Trust. The form of transfer was signed by Mr Newton and Mr Leaver, both as sellers and buyers, on 1 May 1997. Once again, Mr Leaver should not have signed as a buyer. As with the first form, the second did not state the name of the company in which the shares were held, it did not state the number or class of shares being transferred, it did not state the consideration paid for the transfer and stamp duty was not noted as having been paid, as required by the Stamp Duties Act 1931.

3 The third form was in a better state. It purported to be a transfer from the estate of the late Harry Lewis to Mr Newton. It was signed by Mr Newton and Mr Leaver, both as sellers and buyers, on 2 June 1997. Once again, Mr Leaver should not have signed as a buyer. Unlike the other forms of transfer, it identified TCS as the company, 10 ordinary "A" class shares as the securities being transferred and $10 as the consideration. However, like the other two transfer forms, stamp duty was not noted as having been paid, as required by the Stamp Duties Act 1931.

The effect of the shares being transferred to Mr Jack Hinds

23 According to the minutes, upon the making of the board's decision on 26 August 1997 not to approve the transfers, the board instructed the company secretary, Mr Phillip Smith, to act on the company's behalf "in recovering the 30 'A' class shares from the Lewis Estate". On 29 September 1997 Mr Smith wrote to Mr Leaver, apparently in response to enquiries made by Mr Leaver, advising that the transfers had not been approved by the board and that "the matter has been referred to the company [sic] solicitors to make the appropriate arrangements to recover the shares, and pay the Estate their value, on the companies [sic] behalf and in accordance with the Articles of Association".

24 The reference to recovery of the shares was based on cl 1(e) of the shareholder deed. The shareholder of the shares in question was recorded as the estate of the late Harry Lewis. The estate was no longer the holder of public vehicles licences attached to a vehicle which employed the base station of TCS, because Mr Newton had arranged for the licences owned by the estate to be transferred into his own name in about January 1997. When Mr Phillip Smith signed a transfer, bearing 11 May 1998 as its date, of the estate's 30 "A" class shares to Mr Jack Hinds, he did so as secretary of the company and pursuant to the power of attorney given to him by cl 1(e) of the shareholder deed, to which the estate was a party. On 6 May 1998 Mr Smith sent to the applicants, in their capacity as trustees of the estate, a letter informing them that he had exercised the power to transfer the shares to Mr Hinds. He added that the estate was entitled to be paid, as consideration for the transfer, the amount subscribed and paid for the shares in the first place, which totalled $1,500, and he forwarded a cheque in that sum. The applicants have not accepted or banked that cheque. On 18 May 1998 Mr Smith sent a further letter to Mr Newton informing him that with effect from 18 June 1998 he would no longer be allowed to use the company's base station for the benefit of the three taxis with respect to which he held the public vehicle licences, or to enjoy in any other way the benefits enjoyed generally by shareholders of the company. One week later the originating application was filed.

25 Counsel for the respondents submitted that the Court should not now order the registration of the transfers of the shares to Mr Newton, into his own name and as trustee of the Harry Lewis Property Trust respectively, because it is no longer possible for that to occur, having regard to the fact that prior to the filing of the originating application the shares had been transferred to Mr Hinds and registered accordingly. In counsel's words, "the fundamental problem which my learned friend comes up with (is) the shares are gone. They went to Mr Jack Hinds." There is no merit in the submission. The Court has power under s1094(2) to make any orders it thinks are just and reasonable, which might include an order rectifying what took place. Mr Hinds was not a bona fide purchaser of the shares for value. He was merely a nominee and he holds the shares as trustee for the remaining class "A" shareholders, as provided by the shareholder deed, cl 1(e). There is no aspect of the transfer of the shares to him which should inhibit the Court making orders of the kind sought by the applicants.

26 I detailed earlier a number of deficiencies concerning the forms of share transfer which the board of directors refused to approve.

27 The Stamp Duties Act 1931 required ad valorem duty to be paid on each transfer. (The Act was repealed by the Duties Act 2001.) Counsel for the respondents relied on Maynard v Consolidated Kent Colliers Corporation Ltd [1903] 2 KB 121, in which the Court of Appeal held, upon a consideration of a stamp duty provision similar to that of the Stamp Duties Act 1931, s28, that the refusal of a board of directors to register a transfer, upon which insufficient stamp duty was paid, was justified. "It was the duty of the plaintiff to tender a transfer which was right in all respects in point of law, and that he never did; and unless he did that the company was under no obligation to put him on the register." Per Collins MR at 130.

28 Subject to the view I later take of the transfer to the Harry Lewis Property Trust, and to the matter of unpaid stamp duty, I agree with counsel for the applicants that the other deficiencies in the forms of transfer were matters of form and not substance. They did not trouble the board of directors. It was common to the transferors, the transferee and the board, what each form was intended to transfer. Particularly having regard to the wide powers of the Court under s1094(2), the Court may mould its orders to allow the applicants to amend the forms or submit fresh ones should that be necessary. Although the failure to pay stamp duty was not a mere matter of form, the same response is warranted when considering that failure. The board, if it had wished, could have refused to act on the forms because of all of the deficiencies. It could properly have claimed just cause for refusing approval. In such a circumstance, the applicants could have corrected the deficiencies and resubmitted amended or fresh forms of transfer which were not deficient. In the circumstances, I am not persuaded that the applications should be dismissed because the board would have had just cause for refusing to approve the transfers if it had adverted to the deficiencies. For reasons I will explain later, I do not hold that the board may not now rely on causes which were not expressly relied upon at the time. However, in a situation where causes now relied upon were apparent at the time but not then relied upon as causes and where they are of a technical nature and capable of being remedied by the applicants, I am unpersuaded that they may properly be regarded as constituting just cause for the board's original decision.

29 In imperative terms ("it must"), s1093 required the company, if it refused to register the transfers, to send to the transferee notice of the refusal within two months after the date on which the transfers were lodged with it. Counsel for the applicants relied upon the application of a similar statutory provision in re Swaledale Cleaners, Ltd [1968] 1 All ER 1132 and on appeal [1968] 3 All ER 619. In that case, transfers were lodged with a company on or before 3 August 1967. There were insufficient directors to formally deal with them. On 18 December 1967 an additional director was appointed to regularise the position and on a later date the board refused to register the transfers. The Companies Act 1948 (UK), s78(1), contained a provision almost identical to that of s1093. However, there was no equivalent of s1094. Pennycuick J, at first instance and on appeal from him, the Court of Appeal, considered a motion for an order pursuant to a statutory provision permitting rectification of the register of members of a company. Cf Corporations Law, s175(1) and Corporations Act 2001, s175(1). The Court of Appeal, and the learned judge at first instance, referred to the prima facie right of a shareholder to transfer his shares, (see re Bede Steam Shipping Company Ltd [1917] 1 Ch 123 and Wood v W & G Dean Pty Ltd [1929] HCA 44; (1929) 43 CLR 77) but noted cl 8 of the company's articles of association which empowered the directors "at any time in their absolute and uncontrolled discretion" to refuse to register a transfer of shares. Danckwerts LJ, at 623 referred to the clause as being harsh and expressed the view that "it seems to me that such an arbitrary and harsh right must be exercised within a reasonable time" and "the corollary that follows is that, if it is not exercised within a reasonable time, that right is gone". The learned judge at first instance at 1136, had expressed the view that the period of two months mentioned in s78(1) could "safely be taken as the outside limit after which there is unnecessary delay". Although that view was expressed in somewhat absolute terms, it was a decision made on the facts and in the circumstances of the case. A consideration of the judgments of the members of the Court of Appeal makes it clear that the Lords Justices regarded the limitation period of two months as indicating what was a reasonable time in the factual circumstances of the case they were considering. For example, Harman LJ at 622, said that the statutory provision of two months "quite clearly indicates that a reasonable time, other things being equal" [my emphasis] was that period of two months.

30 In this case, counsel for the applicants submitted that it was established by the evidence that the forms of transfer were received by TCS before 6 June 1997 and that the decision by which the board refused to approve the transfers was not made until 26 August 1997, at least 20 days after s1093 required the company to send to the transferees notice of the refusals. Relying upon re Swaledale Cleaners, Ltd he submitted that there was therefore an unreasonable delay by the board in considering the transfers and that the right to refuse to approve them was lost. I find myself unable to accept such a simple proposition. The Court's jurisdiction under s1094 has been invoked and the question which falls to be determined under subs(2) is whether the board's refusal or failure to register the transfer was without just cause. Although a finding of unreasonable delay may be relevant and may, depending on the factual circumstances, be determinative and lead to answering the question in the affirmative, it is not the test which the legislation requires must ultimately be applied. Delay, reasonable and unreasonable, in dealing with share transfers, along with all other relevant facts may need to be considered on the hearing of an application under s1094.

31 The form of transfer to the Harry Lewis Property Trust and one to Mr Newton appear to have been signed on 1 May 1997. The other transfer to Mr Newton appears to have been signed on 2 June 1997. There was conflicting evidence concerning when they were received by the company. Mr Newton's evidence was of two earlier transfers being signed in December 1996 and January 1997 which the company had not processed by April or May 1997, or perhaps even later, when he and Mr Leaver met with the company secretary, Mr Smith. He said that at that meeting a third transfer form was completed which purported to transfer one block of shares from the estate of Mr Lewis to Mr Newton and a second block of shares to the Harry Lewis Property Trust, of which Mr Newton was the trustee. The forms of transfer in evidence established that there was not a third transfer form which purported to do such a thing, and I would have expected separate forms to have been used for transfers to different transferees. Mr Leaver's evidence was of a share transfer being signed by him and Mr Newton as transferors and by Mr Newton as transferee, in about late December 1996, and also of further share transfer documentation being signed by him on behalf of the estate in favour of Mr Newton in May 1997. While I have no reason to doubt Mr Leaver's credit, his evidence was vague about those matters.

32 In an affidavit, Mr Smith said that the three transfer forms in evidence were received by TCS "in early May and early June 1997 respectively". I presume that statement was based on the dates recorded on the forms. However, far greater detail was obtained from Mr Smith in the course of his cross-examination by counsel for the applicants. He said that very early in January 1997 he picked up a share transfer form from accountants, Davern Dixon. The form bore the signature of Mr Newton but not of Mr Leaver and it purported to transfer 10 "A" class shares into Mr Newton's name only. He said that he saw Mr Newton tear the form up in about the first week of January 1997. The apparent reason for Mr Newton doing so was not investigated by counsel.

33 Concerning the three transfer forms in evidence, Mr Smith's evidence in cross-examination was that they were not all received by him at the same time. He was unable to recall how or when the two forms dated 1 May 1997 were received by him. The form dated 2 June 1997, which purported to transfer 10 "A" class shares to Mr Newton, was received by him that day at a meeting he had with Mr Newton and Mr Leaver at TCS's office at 32 Cameron Street, Launceston. Mr Smith's evidence was that he told them he would take that form to a meeting of the board of directors. However, that evidence conflicted with other evidence given by him a little later concerning a letter dated 6 June 1997, which he sent to Mr Newton. The letter was tendered in evidence in the course of Mr Newton's evidence. It was in these terms:

"I Refer [sic] to our meeting of 2 Jun [sic] 97 (Mr Leaver Attended). You indicated that three Public Vehicle Licences of the Lewis Estate have been transfered [sic] to you and that you were going to reverse that position to allow transfers of your choice.

The present situation does not allow the Board to consider the transfers to the Trust that you indicated is your wish. The shares cannot be tranfered, [sic] at this time, in accordance with the Company Deed of Agreement.

I acknowledge reciept [sic] of the following documents.

a Australian Standard Transfer Form - Estate to yourself,

b Australian Standard Transfer Form - Estate to Property Trust,

34 It might be inferred that the letter acknowledged receipt of only two of the three forms of share transfer in evidence. It is not clear from the letter whether at that time it was intended to present the transfers to the board for formal consideration. That Mr Newton had indicated, and I find that he did, that he would have the three public licences transferred out of his name and back into the estate's name, suggests the possibility that it was intended that the transfers of the shares should not be processed, or not until the licences had been so transferred. The second paragraph of the letter was an expression of Mr Smith's opinion that there could not be a valid transfer unless the relevant block of shares could be associated with a public vehicle licence which was also in the trust's name. See the shareholder deed, cl 1(a).

35 The minutes of a meeting of the board of directors held on 23 June 1997 recorded that share transfers in the name of M Hinds, S Glenn and A Hvala were presented and approved by the board, but as to one (or possibly more) in the name of M Newton, the minutes recorded that the board had resolved that he would "be written to after discussion with P Smith". I accept Mr Smith's evidence that the resolution was incorrectly recorded, and that after discussing the position with him, the board resolved that a letter to Mr Newton be written. I find that within a few days such a letter was sent by Mr Smith to Mr Newton. A copy was admitted into evidence. It was in the following terms:

"With reference to the share issues to the Lewis Estate. On Fri 20 Jun [sic] 97 you indicated that you were going to arrange with Transport to have the Public Vehicle Licences tranferred [sic] back to the Estate so that licenses [sic] match the share issue in accordance with the requirements of our Articles of Association.

Would you please let me know when the process is complete."

36 It was Mr Newton's evidence that two of the three public vehicle licences had only come to be transferred into his name in January 1997 through error. He had only intended to transfer one to himself. He had always wanted to keep one in the estate's name and after the erroneous transfers he considered transferring another into the name of the Harry Lewis Property Trust. His evidence therefore supported Mr Smith's evidence that (on 20 June 1997 according to the letter) Mr Newton had told him not to worry about the transfers because of his intention to transfer the public vehicle licences back to the estate.

37 Notwithstanding his expressed intention, Mr Newton at no time arranged for the public vehicle licences to be transferred back into the name of the estate. Two remain in his name. The third was transferred to a Bronwyn Sellars upon acquisition by her in about May 2001.

38 It was Mr Smith's evidence that he believed, in June 1997, that Mr Newton understood that he would not be successful in having the share transfers approved and that he had decided to have all three public vehicle licences transferred back into the estate's name so that they were in the same name as the shares. However, after 20 June 1997 nothing more was heard from Mr Newton. By August 1997 Mr Smith thought that enough time had been allowed for Mr Newton to attend to matters. It was then seven months since the public vehicle licences had been transferred from the estate's name into Mr Newton's name (while the shares remained in the estate's name) and he thought that a reasonable time had passed. Accordingly, the three transfer share forms were put before a director's meeting on 26 August 1997 and the motions referred to in the opening paragraph of these reasons were passed.

39 It is unfortunate that almost all of the evidence to which I have referred was only obtained by cross-examination of Mr Smith by counsel for the applicants, in the course of the respondent's case. The issue of delay had not been raised earlier in the hearing. As a consequence Mr Smith's version of the events was substantially the only one I heard, relevant to delay. Neither of the applicants gave detailed evidence about the events of 2 June 1997 and thereafter. I have no sound reason not to accept Mr Smith's explanation for the delay from 2 June 1997 until the board dealt with the transfers on 26 August 1997. In his closing address, counsel for the applicants submitted a number of possible reasons why Mr Smith's evidence about the issue should not be accepted, but in every case a justifiable response could be made that the possible reason was not fairly raised with Mr Smith. It seemed to me that if it had, he may well have been able to satisfactorily explain that the possible reason was in fact not one at all.

40 Accordingly, I am not persuaded that the board unreasonably delayed in dealing with the share transfers and for that reason alone, it is not open to conclude that the board's right to refuse to approve the transfers was lost.

41 It was also submitted by counsel for the applicants that in any event, there was a failure on the company's part to comply with s1093 and send to each of the named transferees, Mr Newton and the Harry Lewis Property Trust respectively, notice of the refusal to approve the transfers within two months after they were lodged, and as a result the company lost the power to refuse. A letter was sent to Mr Leaver by Mr Smith on 28 September 1997 advising him of the refusal. It appears that a letter was not sent to the Harry Lewis Property Trust nor to Mr Newton until the letter of 6 May 1998. There was no evidence that Mr Newton was not aware of the refusal shortly after it occurred, but in any event it is beyond doubt that the board's refusal to approve the transfers occurred over two months after the transfers were received by the company and by then any notification of the refusal to the transferees could only have taken place contrary to the requirements of s1093. In re Swaledale Cleaners, Ltd [1968] 3 All ER 619 at 624 Sachs LJ confessed to having "considerable trouble" when considering a statutory equivalent of s1093, for it appeared to create an offence in the event of non-compliance without there being an escape provision such as "unless some reasonable cause be shown". It seems to me that there is a clear deficiency in s1093 and unless and until it is remedied by amending legislation, companies may feel obliged to process transfers well within the two month limitation period notwithstanding exceptional circumstances, such as a request from the parties to the transfer to delay the process.

42 Swaledale is not an authority for the proposition that a mere breach of s1093 vitiates a refusal to approve a transfer and counsel cited no authority supporting that proposition. I reject it, noting once again that s1094 has been invoked, under which the applicants, to succeed with their application, must satisfy the Court that the refusal to approve the transfers was without just cause. A mere failure, as opposed to a refusal, to approve a transfer would not prevent a company from resisting an application under s1094, and it is unlikely that the legislature intended that companies would be barred from resisting such an application only in cases where the company refused to approve and failed to notify the transferee within two months after the date on which the relevant transfer was lodged with it.

Whether the company may only rely on the minuted reasons for refusing approval

43 The minutes of the board's meeting on 26 August 1997 recorded the refusal of approval of the share transfers in the following terms:

a From Lewis Estate (20 shares) to M Newton. Moved M Petering seconded P Smith that the transfer not be approved. (Unlikely to abide by Company rules)

b From Lewis Estate (10 shares) to Lewis Property Trust. Moved P Smith seconded J Dean that the transfer not be approved. (Licence not held by Trust)

44 Mr Smith was the minute secretary and he confirmed that the motions were passed in those terms. Counsel for the applicants submitted that the Court may only have regard to the minuted reasons for refusal when considering whether the refusal to approve the transfers was without just cause. He referred to no rule or principle of evidence or law upon which that submission was based, relying merely on what was said by Isaacs J in Manning River Co-operative Dairy Co Ltd v Shoesmith [1915] HCA 32; (1915) 19 CLR 714 at 723:

"I should again observe that the one ground on which the directors refused registration was that the transfer amounted to 'vote splitting.' Having stated their single ground of objection, it must be assumed no other objection operated to influence their discretion. See per Lord Herschell in Balkis Consolidated Co v Tomkinson (1893) AC 396 at 407, and per Chitty J in Bell Brothers' Case 65 LT 245 at 246."

45 I should, of course, have careful regard to a statement made by a member of the High Court, but I point out that the other members of the court did not make it and with respect I confess to being unable to understand why his Honour did so. It is true that it was part of the facts in that case that in the resolution of a board of directors refusing to register transfers the only ground expressed for refusal was "vote splitting". But there is nothing in the report of the case to suggest that at the hearing the company relied on any ground other than that of vote splitting or one closely related to it. On the other hand, Isaacs J supported the company's refusal upon a ground which was differently expressed, that "there was no real transfer of the shares at all", the transaction being "unreal", referring in his conclusion to vote splitting as the transferor's motive which had become "material as the dominating circumstance".

46 The authorities cited by Isaacs J do not support the proposition that a company cannot rely on a ground for refusal which does not fall within the grounds, if any, that were expressed by the directors in the motion or resolution by which the decision to refuse was made. In Balkis Consolidated Co v Tomkinson nothing was said by Lord Herschell to support it, nor by Chitty J in re Bell Bros Ltd; ex parte Hodgson. Chitty J acknowledged the right of the directors not to state any reason at all, but added at 246 that "they are however, at liberty, if they think fit, to disclose them, and if they do the court must consider the reasons assigned with a view to ascertain whether they are legitimate or not". Neither Lord Herschell nor Chitty J were referring to grounds expressed by the directors in their decision refusing to approve or register a transfer.

47 In my opinion the test of s1094 whether the refusal or failure was without just cause should not, as a matter of law or evidence, be limited to an examination of the words used in the minutes as grounds for the decision and a determination whether they amounted to just cause. The test is a wide one and ought to remain so. I agree with counsel for the respondents that it is neither just nor fair to take a technical line and hold the company to what may have been ill-chosen words recorded in a minute or formal resolution. Of course if a company, in defence of an application under s1094, seeks to rely on grounds not included among grounds expressed in the motion or resolution, the Court might be justified in viewing the additional grounds with suspicion. In that regard each case will depend on its own facts and circumstances.

48 By the time of the board meeting on 26 August 1997, officers and members of the company had considerable experience of dealings with Mr Newton because he had been a director; he had managed taxis which had used the company's base station, for Messrs Hutton, Deane and Bourke; he was an executor and trustee of the estate of Mr Lewis which had three taxis that also used the base station; and he had attended shareholders meetings pursuant to proxies held by him. At the time of the meeting, Mr Smith was both company secretary and a director. It was his evidence that a number of matters were taken into consideration by the directors in reaching the decision to refuse the transfers of shares from the estate to Mr Newton and the Harry Lewis Property Trust (of which, according to Mr Newton's evidence, he was the trustee, there being no other evidence of the trust, its terms and beneficiaries). I will deal with most of the matters raised by Mr Smith in evidence.

49 One matter raised by him was that Mr Newton had gained a financial advantage, to the detriment of TCS, through the conduct of a business known as Plaza Taxis. That was a business name that Mr Smith and his fellow TCS directors had believed was purchased by TCS at the same time and in the same transaction as the purchase of Taxi Combined Services. Both Plaza Taxis and Taxi Combined Services had been operated by Mr John Gregg. As a result of TCS purchasing Taxi Combined Services from Mr Gregg, the directors believed that TCS had also acquired Plaza Taxis. It appears that was a misunderstanding by the directors. Shortly after the death of Mr Lewis on 5 November 1994, Mr Newton realised that no-one was the registered proprietor of the business name of Plaza Taxis and he secured the name for himself. Thereafter he carried on business as Plaza Taxis in competition with TCS. In my view, at the time of the TCS director's meeting on 26 August 1997, directors were justifiably concerned that Mr Newton was operating a business which competed with TCS. As a TCS director, Mr Deane said, "I thought that it wasn't correct that a director of the company" (Mr Newton) "should start up another company without the knowledge of the directors and go into direct competition with them". I should mention Mr Quinn's evidence that he was not concerned about a shareholder competing with TCS, unless he sought to undermine the company. On the other hand, Mr Quinn did not consider it proper that a director of TCS should compete in that way, which is something Mr Newton had done when a director of TCS.

50 Counsel for Mr Newton relied on evidence establishing that owners and drivers of taxis operating as part of the TCS network competed between each other for business. Nevertheless, I am firmly of the view that the directors of TCS were justifiably concerned at the prospect of a potential shareholder (who would necessarily own a licensed taxi that used TCS's base station) operating a rival taxi business. Plaza Taxis was not the only competing business operated by Mr Newton. He also operated Regency Hire Cars. I accept Mr Smith's evidence that the TCS board had information that business had been diverted from TCS to Mr Newton's competing operation.

51 I accept the submission of counsel for the respondents that although it is technically a company, TCS has the nature of a cooperative, the members of which own taxis and share and enjoy the company's base station and associated services and benefits. A qualification for being a shareholder is ownership of a taxi which uses the base station. Particularly because of those circumstances, the directors were justified in not wanting the operator of a rival business as a shareholder. Although Mr Newton's actions in competing with TCS were not in breach of any of the rules of the company, they operated against the company's interests and were fairly regarded as improper by a number of members of the board.

52 A second matter raised by Mr Smith concerned the payment of rank rent. A failure to pay it could appropriately be regarded as a failure to abide by company rules. Rank rent was payable with respect to each taxi. The directors had information which caused them to believe that for the period from 1 January 1995 to 22 October 1995, with respect to taxis for which Mr Newton was responsible, $8,028.44 of rank rent remained unpaid. At that time Mr Newton managed three taxis for the estate of Harry Lewis and one or more taxis for each of Mr Hutton, Mr Deane and Mr Bourke. On 7 April 1997 the company's solicitor demanded that sum from Mr Newton, who refused to pay it. At least partly because of poor accounting practices, the company was unable to recover, for it was unable to allocate what amount was due with respect to each of the taxi owners concerned. Mr Quinn calculated that about $10,500 was owing to the company with respect to taxis managed by Mr Newton over a period of about 2½ years. On 17 June 1997 the directors passed a motion that rank rent would only be accepted by the company if it was accompanied by written notification of the taxi licence plate numbers with respect to which the rank rent was being paid. That motion was passed principally because Mr Newton had consistently refused to identify the vehicles in respect of which he paid rank rent. Notwithstanding the passing of the motion, he continued to frustrate the procedure and failed to conform with it until about September 1997, and only then after letters had been sent by Mr Quinn to each of the persons on whose behalf Mr Newton was managing taxis, demanding compliance.

53 That Mr Newton was being deliberately uncooperative about the payment of rank rent was corroborated by Mr Deane. His evidence was that he had leased two of his taxis to Mr Newton and became aware that rank rent payments had not been made to TCS with respect to them by Mr Newton. He asked Mr Newton to make the payments and Mr Newton's response was "I will just say that I paid yours and they will not be able to tell whose I have paid".

54 Arising out of the rank rent dispute, on 7 July 1997, only seven weeks before the board meeting of 26 August 1997, when the decision was made to refuse to approve the transfer of shares to Mr Newton, his solicitors wrote to Mr Quinn, the chairman of the board of directors of TCS, threatening to sue Mr Quinn for damages for defamation unless he could prove a statement he had allegedly made to a recent board meeting that Mr Newton owed TCS $10,500 for rank rent. No such action was commenced. The threat was an example of a confrontational and antagonistic attitude displayed by Mr Newton to officers and members of TCS on many occasions. Since that date, two court actions have been commenced by Mr Newton but not pursued. In October 1999 he sued TCS and its chairman for damages for defamation, but did not pursue the action beyond delivery of a statement of claim. I concluded that if he was not lying he was confabulating when he gave evidence that he did not continue with the action following receipt of a letter of apology, it being admitted by him later in cross-examination that the letter of apology was received over a month before the commencement of the action. Two months later, in December 1999, he commenced another action against TCS, claiming an injunction and damages. Initially he claimed unconvincingly in cross-examination that he could not remember what the action was about. When he did explain it, the explanation was vague. Once again, he did not pursue the action.

55 A further incident raised by Mr Smith as relevant to the board's refusal, was one which occurred on 14 July 1997, only six weeks before the board's meeting. Although not evidencing an inability to abide by company rules, it amounted to a failure on Mr Newton's part to act with propriety and decorum towards a senior officer of the company. The chairman, Mr Quinn, was at the office of TCS at 32 Cameron Street, Launceston, along with the base operator. Mr Newton entered the office and demanded that Mr Quinn remove a particular driver from the TCS radio network. Mr Quinn told him that he would deal with the issue the following morning. I understand that Mr Newton's grievance was that the driver owed him money. Upon Mr Quinn refusing to do Mr Newton's bidding immediately, the latter became aggressive. When Mr Quinn turned to continue a conversation he was having with the base operator, Mr Newton grabbed hold of him and turned him around, saying "don't you turn your back on me". He abused Mr Quinn, calling him a weed and using obscene language towards him. He refused to allow Mr Quinn to walk past him to leave the office and repeatedly requested Mr Quinn to punch him. The incident continued for about 15 minutes until Mr Newton left the office.

56 That was not the only occasion upon which Mr Newton had been abusive towards Mr Quinn. About a month earlier, also at the office of TCS, he abused Mr Quinn, using offensive language, among other things telling him that "you're days are numbered, one way or another your days are numbered". Another of the directors of the company at the meeting of 26 August 1997 was Mr Deane. It was his evidence that he was concerned about Mr Newton's attitude to the company in general but in particular to its chairman, Mr Quinn. He found Mr Newton's attitude to Mr Quinn to be quite unacceptable both at board meetings and in the general business of the company. He observed Mr Newton to be particularly aggressive towards Mr Quinn, and often abusive either to him or to other people about him after board meetings were held, when Mr Newton was a director of the company (until he resigned in the face of a motion to remove him at a meeting on 17 June 1997). Mr Deane regarded Mr Newton's language towards Mr Quinn as aggressive and offensive and certainly not what he expected of a responsible director of the company. Mr Newton displayed a similar attitude to other shareholders. Mr Deane recalled one particular occasion when he and Mr Newton discussed, following a board meeting, a concern Mr Newton had with a Mr Manshanden, who was a manager of Fleet Cars on behalf of different owners, all of whom were members of the company. Mr Newton's concern was that Mr Manshanden had lured one of Mr Newton's taxi drivers away to work for him. Mr Newton told Mr Deane, in a very threatening and aggressive tone, that he would teach Mr Manshanden a lesson by having his fingers chopped off. Mr Deane regarded what Mr Newton had said as being quite unacceptable.

57 It was also Mr Deane's evidence that on many occasions Mr Newton threatened to "take over" TCS. He recalled in particular a conversation he had with Mr Newton some time before August 1997, when Mr Newton was complaining about TCS owing him money for cab-charge vouchers, which the company disputed. Mr Deane told Mr Newton that he knew as well as Mr Deane did that the dispute was between Mr Newton and Mr John Gregg, the person from whom TCS had acquired the taxi business. Mr Newton then went into a tirade and told Mr Deane that he would take over the company and "cut anyone's fucking throat" who tried to stop him. During the conversation Mr Newton was very abusive towards the company.

58 At the board meeting held on 17 June 1997 Mr Newton unsuccessfully moved a motion of no confidence in the board. It was Mr Smith's evidence that the members of the board considered that Mr Newton's actions in doing so amounted to an undesirable attempt by Mr Newton to undermine confidence between the board and its shareholders. However, I note the evidence of the chairman, Mr Quinn, that Mr Newton's actions in that regard did not influence his decision to support the motions of refusal on 26 August 1997.

59 There was evidence, which I accept, about two incidents between Mr Newton and a Mr Phillip Caddy, which supported the view of the directors that Mr Newton was unlikely to abide by the rules of the company. Although initially it was the evidence of Mr Smith that the incidents in question had occurred on about 9 September 1996, the evidence of Mr Caddy satisfied me that they did not occur until after the meeting of 26 August 1997, on or about 9 and 10 September 1997. Nevertheless, I may take the incidents into account, if for no reason other than that the Court has a discretion whether or not to make orders in favour of the applicants, even if it is satisfied that the refusal to transfer the shares was without just cause. The first incident consisted of the following. TCS had a system of inspecting the taxis which used its services, to ensure that standards of presentation and cleanliness were adhered to by all drivers. Inspections were performed on a more or less random basis and the members of the company took it in turns to carry out the inspections at the request of company management. On the occasion in question, Mr Caddy had been instructed by the management to inspect vehicles and he wished to inspect car number 20 which was at the premises of TCS at 32 Cameron Street. Mr Newton was present and very abusive. He called Mr Caddy a "little fucking turd" and he repeatedly requested Mr Caddy to punch him. The incident occurred in the presence of about two other people. Because of Mr Newton's attitude, Mr Caddy felt intimidated and unable to carry out the inspection which the board had requested him to perform. On or about the following day at 32 Cameron Street, Mr Caddy, in the presence of Mr Quinn, attempted to inspect a vehicle managed by Mr Newton. Mr Newton told Mr Caddy that if he put his head inside the door he would "chop it off". Mr Caddy opened the door of the taxi and was about to look inside when Mr Newton kicked the door closed with considerable force. He then invited Mr Caddy to open the door and told him that if he did so and put his head inside he would chop his head off. Mr Caddy then told Mr Quinn that he could not inspect the vehicle because of Mr Newton's behaviour. During the incident Mr Newton verbally abused Mr Caddy, calling him such things as a "fucking cunt" and "fucking turd". He again invited Mr Caddy to punch him and said that if he did so he would "pulverise" him. He then attempted to incite two other persons employed by Mr Newton, Mr Henry Mace and Mr Shane Porter, who were present, to be violent towards Mr Caddy. Mr Caddy's allegations were made in an affidavit sworn by him on 11 September 1998. The applicants did not call evidence from Mr Mace or Mr Porter, disputing Mr Caddy's version of the incidents. I accept it. It was supported by the evidence of Mr Quinn.

60 Evidence of further incidents, which I accept, was given by Mr Quinn. He said that Mr Newton regularly came to the office when he was there fulfilling a management role, and interfered with the way in which the company was being run. On one occasion, Mr Newton threatened him in the presence of a Mr Pettering. Mr Newton wanted to know whether Mr Quinn would be prepared to sell his taxi licence to him, and asked Mr Quinn to name a price. Mr Quinn intentionally asked for a price which was overly high, and Mr Newton's response was "I will kill you and buy it from your wife", adding that "I'm only joking". Although Mr Quinn did not believe that Mr Newton was serious about the threat made by him, he did not take it as a joke and formed the opinion that Mr Newton intended to intimidate him.

61 In cross-examination, Mr Newton agreed that he had no confidence in the board as constituted at the time of the refusal to approve the share transfers and that there was substantial disagreement between him and the members of the board about the management of the company. He did not consider that the board was running the company properly. He did not dispute that he did not see eye to eye with Mr Quinn about the way the company was run and accepted that he did not want a continuance of the way Mr Quinn did so. On 28 April 1998, with two others, he made an unsuccessful written proposal to the shareholders that he take the company over, with a view to him, operating as Plaza Taxis, controlling a single taxi company in Launceston. He continues to operate Plaza Taxis and Regency Hire Cars in competition with TCS. He gave conflicting evidence of his intentions for the future with regard to TCS. At one point in his evidence he claimed he wanted nothing more to do with its management. At another point he indicated that he might still wish to take the company over. I can have no confidence determining what his state of mind was. Plainly his antipathy for the board and his disparagement of its management of the company continue.

62 The applicants have not established that the refusal of the directors to approve the transfers to Mr Newton was without just cause. To the contrary, I am satisfied that the decision was made in good faith and in the interests of the company. Mr Newton had proved to be exceedingly aggressive and abrasive, and disruptive to the orderly and good management of the affairs of TCS. I accept virtually all the evidence presented by the respondents. As a director, Mr Deane had good reason to conclude that Mr Newton was not a fit person to be a shareholder of the company which, as I have said, was in the nature of a cooperative, and that he had not been working in the best interests of the company and its shareholders. Mr Smith had good reason for his views that Mr Newton had, on a great number of occasions, engaged in aggressive, disruptive and undesirable behaviour towards the company and its officers and agents, and had attempted to undermine confidence between the board and its shareholders. It was Mr Smith's evidence, which I accept, that in general the board considered that there had been a breakdown in trust and confidence between TCS and Mr Newton, and that it was undesirable and contrary to the best interests of the company that he should be a shareholder.

63 The reason expressed in the motion with regard to Mr Newton, that he was unlikely to abide by company rules, was justified. Not all of the complaints against him, about which evidence was given, amounted to examples of a failure to abide by the rules, but they revealed him to be a self-opinionated and self-interested person, who was not prepared to be a team player, who was disruptive and who would only conform with the standards of conduct of others and with company rules, if it pleased him to do so.

64 Concerning the transfer to "The Harry Lewis Property Trust", the reason expressed by the board for refusing to approve the transfer was that there was not an associated public vehicle licence in the name of the Trust (nor was it proposed that there would be). The reason was therefore a valid and justifiable one. See the Shareholder Deed, cl 1(a). I add that the situation now is that Mr Newton only holds two public vehicle licences which could be associated with the two transfers to himself. The third public vehicle licence which he held is now the property of Bronwyn Sellars and could not support a transfer to the Trust. I also add that the board would have had just cause for refusing to approve the transfer to the Trust, which is not itself a legal entity. If, as it appears from Mr Newton's evidence, he was the trustee of the Trust, the alternative course of a transfer to him as that trustee could justifiably have been opposed by the board because of its understandable desire not to have him as a shareholder of the company.

65 Finally, with regard to the shareholder deed, cl 1(c), I conclude that the directors did not unreasonably withhold approval and consent to the transfers in question.

66 For the reasons I have expressed the application will be dismissed.