Wellworn Pty. Ltd. is engaged in the business of the acquisition and retail sale of floor coverings. The shareholders of the company are Peter, Norman and Norman's son, George.

The company makes good profits, all of which are distributed as directors' remuneration. Under its Constitution, the company has express power in a general meeting to remove a director by ordinary resolution. Peter works mainly on the sales side of the business in London, whilst Norman spends much of his time acquiring carpets in India.

Disputes arise between Peter and Norman. Peter alleges that Norman is engaging in improper practices in buying and selling carpets from which he is deriving personal profits. Norman denies these allegations. Subsequently, Norman and George exercise their majority voting power at a general meeting of the company to remove Peter from the board of directors.