Alliance Craton Explorer Pty Ltd v Quasar Resources Ltd - [2010] SASC 266

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES LTD
[2010] SASC 266
Judgment of The Honourable Justice Sulan
27 August 2010
MEETINGS - CONDUCT OF BUSINESS - CHAIRMAN
MEETINGS - CONDUCT OF BUSINESS - MOTIONS AND RESOLUTIONS
Whether tape recordings of Management Committee meetings of a joint venture are prohibited pursuant to Listening and Surveillance Devices Act 1972 - whether a ruling made by the chairman and resolution passed by the Management Committee that meetings are not permitted to be electronically recorded are valid - plaintiff's claim dismissed.
Listening and Surveillance Devices Act 1972 (SA) s 4, s 7; Acts Interpretation Act 1915 (SA) s 4, referred to.
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Thomas & Anor v Nash [2010] SASC 153; Byng v London Life Assurance [1990] 1 Ch 170, applied.
August Investments Pty Ltd v Poseidon (1971) 2 SASR 60, distinguished.
Violi v Berrivale Orchards (2000) 99 FCR 580; Marsden v Amalgamated Television Services Pty Ltd [2000] NSWSC 465; Kelly v Wolstenholme (1991) 4 ACSR 709; McKerlie v Drillsearch Energy Ltd (2000) NSWLR 673; Wishart v Henneberry (1962) 3 FLR 171; Australian Olives Ltd v Livadaras (2008) 68 ACSR 29; North-West Transportation Company v Beatty [1887] 12 AC 589; Harkness v Commonwealth Bank of Australia Ltd (1993) 32 NSWLR 543.; R v Smith & Turner (1994) 64 SASR 123; Clarke v Edwards [2007] SADC 49, considered.

ALLIANCE CRATON EXPLORER PTY LTD v QUASAR RESOURCES LTD
[2010] SASC 266
Civil

SULAN J: These proceedings arise out of a Joint Venture Agreement between the plaintiff, (“Alliance”) and the defendant (“Quasar”). The joint venture relates to the Beverly Uranium Mine described as the Four Mile Uranium Project. Alliance asserts a right to tape-record meetings of the Management Committee. The issues at trial are whether tape-recording of meetings by the joint venture parties is prohibited under the Listening and Surveillance Devices Act 1972 (SA) (“the Act”), and whether, a ruling made by the Chairman of the Committee that business transacted at the meetings be not permitted to be tape‑recorded, and a resolution passed by the Committee to that effect, are valid.
Alliance seeks the following declarations:
1.A declaration that the purported ruling of the Chairman that minutes of the meetings of the joint venture held on 25 November 2008 will not be recorded was ultra vires, void and of no effect and is not binding on Alliance or its representatives;
2.A declaration that the purported resolution of the joint venture, being the tape recording of a meeting held on 2 April 2009, and the future meetings of the joint venture was proposed and passed for an improper purpose, and is void, of no effect and is not binding on Alliance or its representatives;
3.A declaration that Quasar has no power to prevent duly appointed representatives of Alliance from making a tape recording of business transacted and of statements made between representatives of the parties at management committee meetings;
4.A declaration that Alliance has the right to make a tape recording of management committee meetings.
Background facts
On 30 August 2002, Alliance and Heathgate Resources Pty Ltd, entered into a Joint Venture Agreement (“JVA”) in respect of an exploration licence located near Arkaroola in the north west of Curnamona Craton, South Australia.
By a Deed of Assignment and Assumption dated 17 December 2002, Heathgate assigned its rights and obligations under the JVA to Quasar, and consequently references in the JVA to “Heathgate” are to be read and understood as references to “Quasar”.
The JVA conferred upon Quasar, a discretion to make a decision to mine by giving not less than 30 days’ written notice to Alliance, together with a preliminary development, mining, processing and production program and budget.[1]
[1] Clause 10.1 of the JVA.
The parties agreed that if Quasar decided to commence a commercial mining operation this would be governed by a separate agreement. It is a further term of the JVA that, pending execution of a Mining Joint Venture Agreement, the JVA will govern the conduct of the parties during the development and mining phases of the Joint Venture.
On 22 September 2008 Quasar gave notice of its decision to mine. Quasar was then required to submit a program and budget to the committee for approval. At that stage, Alliance and Quasar had not entered into a further agreement, nor had they defined the area to be designated as the Mine Development Area.
Pursuant to the JVA, the parties had agreed upon a Management Committee, which was to be established as soon as practicable after the date when the decision to mine had been made. One representative from each joint venturer was to cast a number of votes at each Management Committee meeting on the basis of one vote for each percentage point of the interest held by that joint venturer.[2] Quasar’s and Alliance’s interest in the joint venture was 75 per cent and 25 per cent respectively. The JVA provides that all Management Committee decisions shall be made by a simple majority of votes.[3]
[2] Clause 11.2(a) of the JVA.
[3] Clause 11.2(b) of the JVA.
There are no provisions in the JVA which touch on the issues raised in the present dispute. The JVA does not contain any provision permitting or prohibiting the electronic recording of meetings. It contains no provision about the powers of the Chairman of the Management Committee. There is no provision regulating the preparation, regulation, recording or retention of the minutes.
It is the conduct of both parties at the meetings of the Management Committee which is the genesis of these proceedings. The dispute is whether the Alliance is permitted to tape-record Management Committee meetings, and whether Quasar, by virtue of its majority, can prohibit the tape‑recording by Alliance of Management Committee meetings.
Management Committee meetings
There were three meetings of the committee relevant to this dispute. They took place on 14 and 25 November 2008, 21 April 2009 and 26 June 2009.
Mr Patrick Mutz was the nominated representative of Alliance. Mr Neal Blue was the nominated representative of Quasar. On 14 November 2008, Mr Blue was appointed the chairman of the Management Committee.
Meetings of the Management Committee were convened by Quasar, and attended by representatives of both Quasar and Alliance, which from time to time included their legal advisors.
During 14 November 2008 meeting, representatives of Alliance sought to make a tape recording of the meeting. During the meeting, the chairman adjourned. Upon his return, the chairman sought to have Alliance cease tape‑recording the meeting. After discussion, it was agreed Alliance would not record the balance of the meeting. The 14 November 2008 meeting was adjourned and continued on 25 November 2008.
During 25 November 2008 meeting, the representatives of Alliance again sought to tape-record the meeting. Following a debate, it was agreed that Quasar would allow a recording of that meeting only. Quasar stated that it would not agree to the tape-recording of any further meetings. The chairman agreed.
On 15 April 2009, and prior to the meeting, Ms Joy Barnes of Quasar sent a facsimile to Mr Mutz, attaching an agenda for the April meeting, which contained a note to the effect that, as previously ruled by the chairman, the use of electronic recording devices would not be permitted during the Management Committee meeting. However, during the meeting, Alliance again sought to tape record the meeting, to which representatives of Quasar objected.
The chairman indicated that he would entertain a vote of the joint venturers as to whether Alliance should be permitted to tape-record meetings. A resolution was proposed not to allow the electronic recording of the proceedings of the April meeting, and any further Management Committee meetings. The representative of Alliance stated that Alliance did not consider the matter to be an appropriate subject of a vote. Alliance objected to voting on the resolution. Quasar voted in favour of the resolution. The chairman treated the resolution as having been passed. Alliance refused to proceed with the remainder of the meeting on the basis that the chairman had acted unfairly and unreasonably in denying Alliance’s right to record the meeting. The meeting was adjourned.
Prior to a subsequent meeting in June, there was correspondence between Patrick Mutz, managing director of Alliance and David Roberts, director of Quasar. Alliance made enquiries whether Quasar intended to deny Alliance the right to record the June meeting, in which case Alliance would not attend the meeting. Quasar asserted that it hoped that Alliance would reconsider its position and attend the meeting notwithstanding Quasar’s intention to abide by the Management Committee Resolution and ruling of the chairman with respect to the recording of meetings.
At the June meeting, Alliance attempted to record the meeting. The chairman indicated it was in contravention of two prior valid rulings relating to recording of meetings. Quasar indicated that it did not wish to continue and the meeting was closed.
Issues at trial
The first issue to be decided is whether the electronic recording of the Management Committee meetings is in breach of the Listening and Surveillance Devices Act 1972. The second issue is whether the ruling of the chairman to prohibit the electronic recording of the meetings was ultra vires, and thirdly, whether the Management Committee itself has the power to decide such a question.
Listening and Surveillance Devices Act
The relevant provisions of the Act are as follows:
4 Regulation of use of listening devices
Except as provided by this Act, a person must not intentionally use any listening device to overhear, record, monitor or listen to any private conversation, whether or not the person is a party to the conversation, without the consent, express or implied, of the parties to that conversation.
Maximum penalty: $10 000 or imprisonment for 2 years.
Section 3 defines “private conversation” as:
private conversation means any conversation carried on in circumstances that may reasonably be taken to indicate that any party to the conversation desires it to be confined to the parties to the conversation;
Section 7 relevantly provides:
7 Lawful use of listening device by party to private conversation
(1) Section 4 does not apply to or in relation to the use of a listening device by a person (including a person to whom a warrant is issued under this Act) where that listening device is used—
(a)to overhear, record, monitor or listen to any private conversation to which that person is a party; and
(b)in the course of duty of that person, in the public interest or for the protection of the lawful interests of that person.
…
Counsel for Alliance submits that, in order to establish a contravention of s 4, it is necessary to prove the intentional use of a listening device for the purpose of recording a private conversation, without the consent of the other party or parties to that conversation.
There is no dispute that Gandel and Johnston, as representatives of Alliance, used listening devices during the Management Committee meetings for the purpose of creating a “record” of the meeting. Neither Gandel nor Johnston had the consent of representatives of Quasar to use those listening devices.
Counsel for Alliance submits that the transaction of business at a meeting between representatives of the joint venturers cannot be characterised as a “private conversation” and accordingly, the conduct of Alliance in tape recording the transaction of business at the meetings does not contravene section 4 of the Act. In addition, Alliance submits that if their primary submission is rejected, then s 7(1) applies, as the recording was being made to protect Alliance’s lawful interests.
Meaning of “private conversation”
Counsel for Alliance submits that, in determining whether a conversation is a private conversation, it is necessary to consider the meaning of the word “conversation”, which is not defined in the Act. This turns on consideration of what constitutes the ordinary meaning of the word.
In Project Blue Sky Inc v Australian Broadcasting Authority[4] McHugh, Gummow, Kirby, Hayne JJ observed:
However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. (Citations omitted)
[4] (1998) 194 CLR 355, 384 [78].
The ordinary meaning of the term “conversation” as defined in the Macquarie Dictionary is:
1.     informal interchange of thoughts by spoken words; a talk or colloquy.
2.      an instance of this.
3.     association or social intercourse; intimate acquaintance.
4. Archaic behaviour, or manner of living. [Middle English, from Old French, from Latin conversation frequent use, intercourse].
Counsel for Alliance submits that the Act does not prohibit the recording of private “communications” but only “private conversations”. Counsel contends that not all communications are conversations.
I agree. Although the conversation in the Act should not be given a restricted meaning, the communication should have the characteristics of a conversation which includes a degree of informality and would not normally apply to the proceedings of a committee.
Proceedings which take place at the Management Committee meetings are of an entirely different character to a “private conversation”. They have a commercial character and purpose. Each party to the joint venture is a body corporate which acts through representatives or agents, who have a duty to report to the corporation. The exchanges at meetings do not have the required characteristics of a conversation. Meetings have formal written agendas upon which the parties exchange positions orally and in writing, including the provision of reports. The parties seek to reach decisions that will affect the legal rights and duties of the parties to the joint venture. A formal record is kept of the meeting. There is a formality about meetings of the joint venture. Statements made and positions taken orally by those entitled to speak at the meeting cannot be said to be conversations in the ordinary meaning of that word.
As to the question of whether the communication is private, Alliance submits that a final determination of privacy involves reference to whether or not the communication is desired to be confined to the parties to the communication. Counsel for Alliance submits that the parties simply could not have intended the communication to be private given that each representative present has, to the knowledge of the other, a duty to report the communications to his or her principal.[5] Counsel for Quasar submits that the content of the discussions at the meetings was and is highly confidential material, protected by a confidentiality clause in the JVA.[6] It is contended that the term “private conversation” should not be given a narrow meaning having regard to the objects of the Act, and that it should not be construed to exclude conversations of a business or employment nature.
[5] Harkness v Commonwealth Bank of Australia Ltd (1993) 32 NSWLR 543, 551.
[6] Clause 13.1 of the JVA.
I have had regard to the remarks of Doyle CJ in Thomas who observed at [36]-[38]:[7]
The definition of “private conversation” indicates that a conversation is private if the conversation, as it takes place and progresses, is intended to be confined to the parties to the conversation, or known participants in the conversation.
A conversation can be private even though the participants are at liberty to tell others about it later. In the Act, “private” is used not in the sense of “secret” or “confidential”, but in the sense of “not public”. A telephone conversation with a friend is a private conversation, even though the friend is at liberty later to tell another about it. On the other hand, a telephone conversation on talkback radio is not a private conversation.
There is no reason to give a narrow meaning to the concept of “private conversation”, bearing in mind the objects of the Act. There is no need to trace the precise limits of the concept of a private conversation. I am satisfied that each of the conversations was a private conversation, in the sense that the circumstances indicated that the participants other than Mr Nash wished the actual conversation to be confined to the known participants.
[7] Thomas & Anor v Nash [2010] SASC 153.
The fact that each representative has a duty to report back to their respective principals would not alter the private nature of the verbal discussions which take place during the Management Committee meetings. As observed by Doyle CJ in Thomas, a conversation will be private even though the participants are at liberty to tell others about it later. It is clear that the nature of the communications which take place at the meetings are of a confidential nature and are private in the sense that they are “not public”.
I conclude that the communications at the meetings, although private, are not conversations within the meaning of s 4 of the Act.
Protection of lawful interests
Counsel for Alliance submits that if, contrary to his primary submission, I find that the communications at Management Committee meetings constitute a “private conversation”, then communications in the course of Management Committee meetings fall within the exception to the general prohibition in s 7(1)(b).
Counsel for Alliance contends that, in using a listening device to tape record the meetings, Alliance was doing so “for the protection of [its] lawful interests”.
The first question to be considered is whether s 7 operates solely to protect the lawful interests of the participants to the conversations, being the individual representatives of the corporation who attend the Management Committee meetings, or whether it was intended to operate to protect the interests of the corporations themselves.
Counsel for Quasar submits that the purpose of the Act is to protect the privacy of natural persons and that corporations do not have the same right to privacy as do individuals. He contends that the scheme of the Act is such that the terms of section 7 could never apply to protect corporate interests as section 7 only applies to “principal parties” to the conversation. In this case, principal parties could only refer to the representatives who attend on the corporations’ behalf. Accordingly, he submits that a corporation cannot be afforded the protection of s 7.
I can find no reason to restrict the interpretation of “person” within the Act to apply only to natural persons. If a corporation directs its representative to electronically record a conversation which takes place in the course of a meeting, and which is in contravention of s 4, a corporation would in that instance be in breach of the Act. It would seem illogical therefore, that a corporation should not also be afforded the protection of the exception pursuant to s 7. I agree with the submission of counsel for Alliance that “person” as it appears in s 4 and s 7, bears the extended meaning given to it by the Acts Interpretation Act 1915 (SA) which provides that “person” or "party" includes a body corporate. Section 7 should therefore be construed to protect the lawful interests of the corporation itself and not the individual representatives who are party to a ‘private conversation’.

The next question is whether Alliance has a “lawful interest” in recording the meetings, which affords it the protection of section 7.
Counsel for Alliance submits that it has a lawful interest to record the meetings to ensure that the parties are complying with the JVA. He contends that Alliance is entitled to have an accurate record of discussions leading to formal motions in order for it to understand the background to the resolutions. He characterises Alliance’s “lawful interests” as being to ensure the accuracy of the minutes. He submits that if there is any ambiguity a full record of the discussions will assist the parties.
Counsel for Quasar contends that Alliance, and in particular, its representatives Gandel and Johnston, were not using the listening devices for the protection of their own lawful interests, but rather to further the interests of Alliance. Quasar submits that Alliance’s purposes were not those expressed, but rather that Alliance used the dispute in question in an attempt to delay the Management Committee’s decisions approving the program and budget as it was at clear risk of not being able to meet the planned cash calls. Counsel contends therefore that that is insufficient to avail Gandel and Johnston of the exception in s 7 of the Act.[8] Counsel further submits that, even if I accept Alliance’s purpose for using the electronic devices, a finding that the use of an electronic recording device should be permitted as a device to protect Alliance from inaccurate minutes would be the sort of open-ended exception that would result in s 4 having no force. Counsel for Quasar relies on Thomas which he submits supports the proposition that the exception in s 7(1)(b) should not be read so widely that it undermines the protection given by s 4.
[8] R v Smith & Turner (1994) 63 SASR 123; Clarke v Edwards [2007] SADC 49.
In Violi v Berrivale Orchards,[9] Branson J discussed the meaning of a lawful interest under s 5(3)(b)(i) of the Listening Devices Act 1984 (NSW), now repealed. That section is in similar terms to s 7 (1)(b) of the Listening and Surveillance Devices Act 1972 (SA).
[9] (2000) 99 FCR 580.
Branson J stated:[10]
Unassisted by authority, it seems to me that “lawful interests” are to be distinguished from “legal interests”. I do not consider that s 5(3)(b)(i) calls for a legal interest in the sense of a legal right, title, duty or liability. Rather I consider that “lawful interests” within the meaning of the paragraph are interests which are not unlawful. The expressions “legitimate interests” or “interests conforming to law”, in my view, convey similar meanings to the intended meaning of “lawful interests” in the paragraph.
[10] Ibid 586 [28].
In Thomas Doyle CJ stated:[11]
I have considered a number of decisions dealing with the relevant provisions of the Act, and with similar legislation elsewhere. The decisions are: T v The Medical Board of South Australia (1992) 58 SASR 382 at 399 Matheson J, at 421 Olsson J and at 423 Debelle J; Public Trustee v Alvaro (1995) 182 LSJS 383 at 405 Legoe AJ; Violi v Berrivale Orchards Ltd [2000] FCA 797; (2000) 99 FCR 580 at [27]-[33] Branson J; R v Le [2004] NSWCCA 82; (2004) 60 NSWLR 108 at [47] Giles JA, at [79] Hulme J and at [83]-[84] Adams J; Sepulveda v The Queen [2006] NSWCCA 379; (2006) 167 A Crim R 108 at [142]-[143] Johnson J, with whom the other members of the Court agreed.
In none of those decisions is there an attempt to identify comprehensively the scope of the expression “lawful interests”. That is not surprising. It is an expression which is best left to be applied case by case, subject to some general guidelines.
Each decision is an application of the expression to its particular facts. In most of those decisions it was accepted that a mere desire to have a reliable record of a conversation is not enough. I agree. Most of the decisions proceed on the basis that a desire to gain an advantage in civil proceedings would not ordinarily amount to a relevant lawful interest, although of course each case has to be considered on its facts. Several of the cases proceed on the basis that where the conversation relates to a serious crime, or an allegation of a serious crime, or to resisting such an allegation, a court is more likely to find that the recording of a conversation relating to the crime can be made in the protection of the person’s “lawful interests”.
A number of the decisions make the point, with which I agree, that the exception in s 7(1)(b) should not be read so widely that it undermines the protection given by s 4, which protection is at the very heart of the Act.
[11] Thomas & Anor v Nash [2010] SASC 153, [46] – [50].
Simply obtaining an accurate record of a meeting is not sufficient to constitute a “lawful interest”. Further, the lawful interest must be in existence at the relevant time. In Marsden v Amalgamated Television Services Pty Ltd[12] Levine J observed:
It was suggested that in the course of submissions that it is every day practice, for example, in the Stock Exchange, for conversations to be recorded. It is the every day practice of journalists, for example, to record conversations, it is said, in the event that at some future time some issue might arise in respect of which the recording of that conversation might in some way protect the lawful interests of either the stockbroker or the journalist.
On my construction of the relevant section of the Listening Devices Act, that expectation or hope could never be realised, in the sense of rendering admissible a lawful recording, if there were no reasonable necessity for the protection of existing lawful interests at the time of the recording of the conversation.
It may well be that stockbrokers and journalists do record but the interests of privacy- where the stockbroker or journalist consents- of the other person cannot be ignored. It would be, in my view, with a facility offensive to considerations of privacy, should it be the case that six months, five years, twenty years down the track the person in the position of that stockbroker, or that journalist, or anyone else who habitually records conversations, can advance an argument to the effect: “At the time I want to use them (by tender as admissible lawfully obtained evidence) I have some lawful interests now to protect”.
[12] [2000] NSWSC 465, [20]-[21].
Making a recording in contemplation that it might be used if there is some form of litigation in the future is not a lawful interest. In Thomas, Doyle CJ observed:[13]
I do not consider that a person makes a recording to protect his lawful interests simply because he has a hope that in contemplated litigation the recording might be used to his advantage. This is not a case in which the recording was made to uncover a crime, or to resist an allegation of crime.
[13] [2010] SASC 153, [45].
I conclude that Alliance has a number of lawful interests which it can protect. The meetings of the Management Committee operate within a commercial setting in which the commercial interests of the joint venturers are of central importance. The meetings take place pursuant to one or more contractual agreements for the purpose of carrying those agreements into effect. Motions agreed or passed at meetings, and other decisions reached, affect the substantive rights and obligations of the parties. Accordingly, it is for the protection of the interests of both joint venturers that there is an accurate record kept of communications at the meetings. These lawful interests do not in my view undermine the operation of s 4 of the Act. Rather, the recording of the discussions at the meetings ensure that there is an accurate record of the discussions leading up to the recorded decisions of the joint venture. They agreed to the nature of the business transacted at the meetings, and the obligations on the representatives of each party to report back to their respective superiors where there is a legitimate interest in having an accurate record of the discussions. It is not difficult to imagine the situation that senior personnel of one or other joint venturer might seek an explanation as to how a resolution was arrived at and what those at the meeting contemplated when they proposed and voted upon a resolution. If the resolution is ambiguous discussions leading to it may assist in interpreting it and how it is to be implemented.
Evidence at trial as to Alliance’s purpose
Counsel for Quasar asserts that Alliance’s purpose in seeking to tape record the Management Committee meetings was not to obtain an accurate record of the meetings. He asserts that debate during the meetings about whether the program and budget complied with the JVA was no more than a delay tactic by Alliance to give it time to raise substantial funds.
Counsel for Alliance contends that this submission should be rejected. He submits that no such purpose has been pleaded by Quasar and that the evidence clearly establishes that Alliance’s purpose was not to delay the approval of the program and budget but rather to obtain an accurate record of the meetings.
I reject the submission that Alliance intended to delay the approval of the program and budget by entering into a dispute about the tape recording of the meetings. The evidence at trial is not sufficient to establish that Alliance had an ulterior motive in seeking to tape record the meetings.
Ms Gail Owen, the partner who was instructed to advise Alliance, gave evidence. I was impressed by her evidence. She gave her evidence in a straightforward manner. She had a good recall of matters upon which she was asked. I accept her evidence as reliable. She attended a number of meetings of the Management Committee as legal adviser to Alliance. In cross-examination, Ms Owen stated that Alliance’s purpose in tape recording the meetings was to obtain more detailed minutes. She articulated Alliance’s concern that the minutes reflected Quasar’s slant and did not accurately reflect the exchanges which took place at the meetings. She stated that she therefore wanted the minutes to contain sufficient detail to be a proper representation of what had actually occurred.
In cross-examination, Ms Owen said that the work program and budget presented at the meeting of 14 November 2008 was not a document that set out the costs and work program for the period of one year. In her view, it did not comply with the JVA. She stated that she wanted it to be more detailed and to set out the specific tasks which were to be undertaken during that period. It was put to her in cross-examination that if the work program and budget had been approved, Alliance would have been financially embarrassed in meeting its obligations under the work program and budget. She denied that proposition.
I am unable to conclude that Alliance’s motive was to delay the progress of the joint venture.
In support of my conclusions, I observe that if Alliance’s purpose was to delay the progress of exploration. Quasar could have prevented any delay caused by the tape-recording disagreement by simply permitting Alliance to tape-record the meetings. In my view, the issue of tape-recording of meetings could have been resolved by Quasar agreeing to Alliance’s proposal, thereby avoiding any delay caused by this dispute.
I conclude that Alliance had a legitimate and lawful interest in the accurate recording of minutes of the Management Committee meetings sufficient to afford it protection under s 7 of the Act.
The Chairman’s powers
Counsel for Alliance challenges the following decisions of the chairman. First, to forbid the use of a listening device by a ruling and, secondly, the decision to adjourn the various meeting. Counsel contends that both the ruling and the adjournments were ultra vires. These questions turn on a consideration of what constitutes procedure in the context of a chairman’s powers to regulate the conduct of a meeting.
Counsel for Alliance contends that Quasar is not entitled to use its voting power to preclude the tape-recording of meetings. It is submitted that the dispute is greater than a dispute of procedure and that each party to the JVA has a right to make a record of events which transpire at the meetings. Counsel submits that the right to make a record of the events at meetings is a right that arises because the parties are free to take notes as an incident of attendance at meetings. Nothing in the JVA, either expressly or impliedly, entitles either party to that agreement to preclude the other party from exercising that right and Quasar has not sought to prevent Alliance from taking notes.
Counsel further submits that the chairman can make a ruling referable to the conduct of a particular meeting and has the power to preserve order. A chairman cannot however, articulate a general rule such as to forbid a party to tape-record proceedings of the Management Committee. He submits that the chairman’s powers are facilitative and are there to help promote the transaction of business which takes place at the meetings of the Management Committee. He contends therefore that the chairman’s decision to forbid tape-recording falls outside his powers.
Counsel for Quasar submits that it is indisputable that the broad authority of a chairman extends to procedural matters such as the power to preserve order, to regulate discussion, to decide who is to speak, to decide points of order, to vote, to adjudicate on proxies, to ensure that the minutes are properly framed, to sign the minutes, to adjourn the meeting and to close the meeting. He contends that the chairman is empowered to decide all incidental questions that arise and are connected with the management of the meeting. He submits that decisions as to whether the proceedings at a meeting are open or closed or electronically recorded, or the subject of minutes, constitute matters of procedure or are incidental thereto. These are therefore matters properly within the powers of the person appointed as chair. Counsel for Quasar concedes that any exercise by the chairman of his power to rule whether or not there will be electronic recording of the proceedings must be exercised bona fide having regard to all the relevant circumstances.
Counsel for Alliance relies on August Investments Pty Ltd v Poseidon[14] as authority for the existence of a right to make a record of events which transpire at meetings. He contends that that right arises because the parties have a freedom to take notes, and secondly as an incident of their attendance at meetings. In August Investments, the directors of Poseidon Ltd directed that shorthand reporters record the proceedings of a meeting of shareholders which adopted, ratified and approved a decision of directors of Poseidon to make an allotment of shares in the company. The question which arose was whether the transcript was a discoverable document in an action by August Investments to set aside the allotment. The case is not authority for the existence of a right of those entitled to attend a meeting to tape-record the proceedings. The directors had resolved to have a transcript of the proceedings. No question arose as to their power to resolve to record the meeting. Zelling J observed:[15]
It is quite true that in one sense the transcript of what took place is simply an extended form of minutes as they are ordinarily understood, but nevertheless I think the word “minutes” as it appears in ordinary usage in company law means the record of resolutions and matters ancillary thereto and not a complete transcript of every word used in the course of a meeting. If I am wrong in this, I think that a company has a discretion as to how it keeps its minutes and provided it faithfully records all that is required to be recorded, namely, how the business of the meeting was conducted and what resolutions were passed, the plaintiff cannot complain because the defendant Poseidon, having in fact a complete transcript of proceedings, does not choose to use it as minutes.
[14] (1971) 2 SASR 60.
[15] Ibid, 62.
I agree with Zelling J that a company can determine how a record of its meetings is kept. Whether a transcript of the meeting forms part of the minutes or is additional to the minutes is to be determined, having regard to the facts in each case. The fact that in August Investments a transcript or record of the meeting was made does not give rise to the existence of a right to record.
The role of the chairman and the extent of his powers is a critical question to be determined in this case. That question was considered in Kelly v Wolstenholme. Young J said:[16]
A chairman is a person who has control of a meeting. As L W Street J said in Colorado Construction Pty Ltd v Platus (1966) 2 NSWR 598 at 600: “It is an indispensable part of any meeting that a chairman should be appointed and should occupy the chair. In the absence of some person (by whatever title he be described) exercising procedural control over a meeting, the meeting is unable to proceed to business. This may perhaps require some qualification if all persons are unanimous. And, in a small meeting, procedural control may pass from person to person according to who for the time being is allowed by the acquiescence of those present to have such control. But there must be some person expressly or by acquiescence permitted by those persons to put motions to the meeting so as to enable the wish or decision of the meeting to be ascertained.”
It does not seem to me that one can merely say at a meeting, “I am the chairman” unless one also actually behaves at the meeting to show that one exercises procedural control over it. A person exercises procedural control over the meeting by, inter alia, nominating who is to speak, dealing with the order of business (unless that is already set out by a written notice of meeting), putting questions to the meeting, declaring resolutions carried or not carried, in due course asking for any general business, and declaring the meeting closed. (emphasis mine)
[16] (1991) 4 ACSR 709, 712.
A similar observation was made by Barrett J in McKerlie v Drillsearch Energy Ltd:[17]
A well-known passage in the judgment of Chitty J in National Dwellings Society v Skyes [1894] 3 Ch 159 affirms that it is the duty of the chairman and the chairman’s function to preserve order and to take care that the proceedings are conducted in a proper manner and that the sense of the meeting is properly ascertained with regard to any questions which is properly before the meeting.
[17] (2009) NSWLR 673, [22].
A chairman is to act within reasonable bounds and within the authority which the chairman collects from the meeting itself, which may be limited to the rules of that body.[18] In Wishart v Henneberry, the Full Court of the Industrial Court (Spicer CJ, Dunphy and Joske JJ) observed:[19]
Authority to preside over a meeting does not give dictatorial power. It merely makes the chairman, “first among equals”, and imposes on him certain duties, including taking the chair and carrying on the meeting so that the business of the body in question before the meeting is disposed of as the meeting desires, and also preserving order at the meeting.
[18] See A D Lang, Horsley's Meetings (5th ed, 2006) at 6.5.
[19] Wishart v Henneberry (1962) 3 FLR 171, 173.
The Court also observed that at all times a chairman is entitled to maintain control of the business of the meeting and rule on matters of procedure and points of order:[20]
It is true that a chairman of a public meeting, so long as the meeting desires him to be chairman, has control of the business of the meeting and therefore, is entitled to insist on his ruling on matters of procedure and points of order, and to refuse to allow his ruling to be disputed, and to refuse to accept or put a motion of dissent from his ruling on matters of procedure and points of order. If a public meeting be dissatisfied with a chairman’s ruling; this situation can be overcome by the meeting passing a resolution that some other person, who is mentioned by name in the resolution, take the chair.
The chairman of a meeting of a particular body, however, is bound by the rules of that body and cannot refuse to put motions which are in order under those rules. (Citations omitted).
[20] Ibid.

A ruling of a chairman may however, be subject to review if it was not made bona fide and in good faith, or was an error of law. Greenwood J in Australian Olives Ltd v Livadaras stated :[21]
The chair is required to act “bona fide” or at least in a way that is not “neglectful”. On a question of whether the chair of a meeting of relevant members of a corporation, convened to consider a scheme of arrangement, had given members sufficient opportunity to debate the merits of the scheme, McLelland J, in Re Direct Acceptance Corporation Ltd (1987) 5 ACLC 1,037 at 1,041, said, “However, on such a matter as this, the chairman as a matter of law has a wide discretion with which the court will not interfere unless the exercise of that discretion can be shown to be invalid, for example on the ground that it was exercised in bad faith” …
It seems to follow, therefore, that a decision of the chair will be amenable to supervisory review by the courts if the chair has made a decision in bad faith. Second, the decision will be susceptible of review if the chair acting in good faith has made an error of law. That error may arise because the power has been exercised in a way which fails to facilitate the purpose of the power conferred upon the decision-maker by the relevant instrument. Alternatively, an error of law may arise because the chair has simply misconceived the operation of the statutory power or instrument conferring the power. The decision of the chair is not susceptible of review if the power is exercised bona fide albeit mistakenly in a way which does not involve an error of law. A good faith exercise of the power in the determination of facts upon which an exercise of the power rests does not give rise to an error of law. The chair must however act reasonably. (Citations omitted).
[21] (2008) 68 ACSR 29.
It is not argued that the chairman did not act bona fide. Further, the inability of Alliance to put a motion of dissent on points of procedure by virtue of their voting power does not prevent a chairman from making a bona fide ruling.
Although the chairman’s role is facilitative, it is clear that the duty and function of the chairman is to preserve order and to ensure that the proceedings are conducted in an orderly and proper manner. I consider that the chairman’s decision to prevent the tape-recording of a meeting is procedural in nature. It does not deal with matters of substance discussed at the meeting. For example, if a chairman were to prevent a member at the meeting from raising substantive issues about a relevant topic, then that would be more than a mere matter of procedure. There was no attempt in this case by the chairman to limit the discussion on any topic relevant to the joint venture. I consider that a ruling made bona fide to prevent a meeting from being tape recorded is within the scope of the chairman’s powers.
Counsel for Alliance further submits that the chairman did not have the power to adjourn a meeting simply because the representatives of Alliance wished to tape record the meeting or proposed to use tape-recording devices. He submits that procedural control does not extend, subject to express provisions to the contrary, to terminating or adjourning a meeting in circumstances that prevent the meeting from transacting business which it is entitled to transact. It is contended that the chairman has no inherent or implied power to adjourn the meeting of his own initiative where the circumstances do not prevent the effective continuation of the meeting.
In Byng v London Life Assurance, Sir Nicholas Browne-Wilkinson V-C observed:[22]
A chairman has no general right to adjourn a meeting at his own will and pleasure, there being no circumstance preventing the effective continuation of the proceedings. However, it is clearly established that a chairman has such power where unruly conduct prevents the continuation of business. In my judgment it is also established that when in an orderly meeting a poll is demanded on a motion to adjourn and such a poll cannot be taken forthwith, the chairman has power to suspend the meeting with a view to its continuance at a later date after the result of the poll is known. (Citations omitted)
[22] [1990] 1 Ch 170, 186.
The chairman exercised his powers to adjourn the meeting because Alliance expressed the intention that it was not prepared to abide by the chairman’s ruling and resolution of the Management Committee in relation to preventing the tape-recording of meetings. I conclude that it was a valid exercise of the chairman’s powers to adjourn the meetings in circumstances where he was exercising procedural control over the meetings and where the failure of Alliance to comply with the ruling and resolution prevented the continuation of business at the meetings.
The resolution of the Management Committee
Counsel for Quasar submits that, even if I conclude that the chairman’s ruling extended beyond matters of procedure or matters incidental thereto, the Management Committee itself has the power to decide such a question, which may involve confirmation of a disputed decision of the chairman. He contends that, even absent the prior ruling by the chairman, committees, including this Management Committee, have the inherent power to regulate their own affairs, including the power to decide what, if any, record is made of committee meetings, and in particular whether their discussions may be electronically recorded.
Counsel submits that allowing an electronic recording to be made of the committee meeting is fundamentally different to allowing written notes to be made of the minutes of the meeting because it represents a verbatim record of the proceedings. If the tape, or a transcript of the tape, were to be made public, it would present a major security risk given the meetings confidentiality and the project’s commercial sensitivity. It is also submitted that the presence of an electronic recording device will stifle the free exchange of discussion between the parties present at the Management Committee meetings. This has been evidenced by examples of meeting attendees reading prepared statements onto the record.
Counsel for Alliance submits that the voting power of the parties at meetings held pursuant to the JVA is confined to the passage of resolutions not inconsistent with the JVA and which might affect the conduct of the business or interests of the parties under the joint venture. Counsel submits that there is nothing in the JVA that expressly or impliedly entitles either party to that agreement to preclude the other party from electronically recording the meetings. Counsel contends that a resolution by majority of the Management Committee to preclude the use of electronic recording devices at meetings is therefore invalid.
Although there is limited authority, in the absence of an express agreement to the contrary, it is generally accepted that meetings should be governed and regulated by the members themselves. In Renton’s Guide for Meetings and Organisations, the power of a meeting was described as follows: [23]
However, committees also have an inherent power to regulate their own affairs, including the manner in which they conduct their own meetings. Such a power would probably be specifically spelt out in a rule such as: “Subject to this constitution and to any directions of a general meeting the committee may regulate its own affairs as it sees fit.” However, even in the absence of such clear words such a power would still be implied.
[23] Nick Renton, Guide for Meetings and Organisations, Volume 2: Guide for Meetings (8^th ed, 2005) 262.
In Horsley’s Meetings it is observed that any conflict should be settled by the majority:[24]
[It is a duty of the Chair to:] Be watchful to safeguard the interests of the minority – and of the majority. Provide protection to a minority’s rights during debate by ensuring that all differing views are adequately and fairly ventilated, while recognising that the views of the majority represent the will of the meeting. The minority should have their say; the majority their way.
[24] A D Lang, Horsley’s Meetings: Procedure, Law and Practice (5^th ed, 2006) 6.10.
Sir Richard Baggallay in North-West Transportation Company v Beatty stated:[25]
The general principles applicable to cases of this kind are well established. Unless some provision to the contrary is to be found in the charter or other instrument by which the company is incorporated, the resolution of a majority of the shareholders, duly convened, upon any question with which the company is legally competent to deal, is binding upon the minority, and consequently upon the company, and every shareholder has a perfect right to vote upon any such question, although he may have a personal interest in the subject-matter opposed to, or different from, the general or particular interests of the company.
[25] [1887] 12 AC 589, 593.
I agree that a properly convened meeting has the inherent power to regulate its own affairs in the absence of express provisions to the contrary. Such regulation will include matters which are incidental to the manner in which meetings are conducted, including whether or not the proceedings of a meeting can be tape recorded. Any disagreement between the participants should necessarily be resolved by a vote of those entitled to vote at the meetings.
I find that the committee, in the absence of an express provision in the JVA to the contrary, had the inherent power to make a majority ruling on matters incidental to the manner in which meetings are conducted. This extends to the power to preclude a party from taking an electronic recording of the meeting.
Conclusion
It follows that the plaintiff’s claim is dismissed. There will be judgment for the defendant.