Pastizzi Café Pty.LTD V HOSSAIN (NO 4)
NSWSC 808 (28 July 2011)
The legal major issues:
· If there is any breach of fiduciary duties by the
first defendant Mr. Hossain or by the second plaintiff Mr. Ross and third
plaintiff Ms. Ross.
· Whether The Corporations Act section 232 which
addresses the conduct of company affairs can be implied in this case
· Whether the damages for loss can be granted.
The relevant facts:
· On mutual agreement between Mr. Ross and Mr. Hossain,
a business under the name Pastizzi Café was started in 2007 in which both of
them including Ms. Ross had their own contribution in the business and had an
agreement of equal ownership of the company.
· Mr. Ross and Ms. Ross claims that they were banned
from the business premises by Mr. Hossain and also claims that Mr. Hossain
misused the money from company account for own personal purpose.
· Mr. Hossain accused second and third plaintiff for
restricting him to access the financial information of the company.
The actual decision of the case:
· On the basis of the definition of “director” in
section 9 of the Corporation Act which stated if a person fulfills the role of
director despite of informality declaration can be appointed as a director, the
court declared third plaintiff Ms. Ross as a director of the company.
· Mr. Hossain was proved for breaching two fiduciary duties
under Corporation Act s 182 which involves locking the other partners from the
business premises and using the money from company’s account for personal
benefit. Thus the court ordered him to restore the possession of the leased
premises to the first plaintiff upon approval of the landlord.
· It was also decided and ordered by the court that Mr.
Ross can buy Mr. Hossain’s shares of the company.
· The court found that the plaintiffs had not breached
section 290 in which the right of director of company to access financial
records is stated. This clarifies that Mr. Ross and Ms. Ross didn’t restrict
first defendant to the financial information of the company.
· The café was entitled to a compensation of $400,000
for the recovering of damages of
profits and goodwill.
The relevant law relied on by the judge in
making his decisions are as:
Section 9: “A person who is not validly appointed as a director
but has played significant role of
director is in fact entitled as a director”. This law was implied for the
declaration of Ms. Ross as a director of the company.
290: “All directors have right to access to the financial records at all
Fiduciary duties of a director – not to benefit self at the cost or expense of
other partners and
The final verdict was,” Mr. Hossain, the
first defendant of the case was found guilty for breaching fiduciary duties and
was charged with the compensation for the loss of profits and goodwill of the
Pastizza Café”. After careful examination of case study in accordance with
legislation law as referred, I morally bound with the court’s decision.