Andrews v Qld Racing Limited (No 2) - [2009] QSC 364

SUPREME COURT OF QUEENSLAND

CITATION:

Andrews v Qld Racing Limited (No 2) [2009] QSC 364

PARTIES:

RE QUEENSLAND RACING LIMITED

WILLIAM BERNARD ANDREWS
(plaintiff)

v

QUEENSLAND RACING LIMITED ACN 116 735 374
(defendant)

FILE NO/S:

BS 9471 of 2009
BS 12551 of 2009

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 November 2009

DELIVERED AT:

Brisbane

HEARING DATE:

12 November 2009

JUDGE:

McMurdo J

ORDER:

In 9471 of 2009:

1. The respondent Queensland Racing Ltd is restrained from acting upon any shortlist provided by Northern Recruitment Pty Ltd in the process of the selection and appointment of directors to take place in 2009.

2. There be liberty to apply.

CATCHWORDS:

CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – GENERALLY – where the Constitution provides that the Independent Recruitment Consultant is to prepare a shortlist of no less than four director candidates – where the Consultant had been erroneously instructed to limit the shortlist to four candidates and provided a shortlist accordingly – where the Consultant was issued with revised instructions that the shortlist was to contain a minimum of four candidates but nonetheless reverted with the same four candidates – where the Consultant had apparently collaborated with the company in previous proceedings but about which there was no positive finding as to independence – whether the Consultant lacked independence – whether the Consultant was affected by bias

Corporations Act 2001 (Cth), s 201H, s 249G, s 1319, s 1322

Belchier v Reynolds (1754) 3 Keny 87; 96 ER 1318, cited

Andrews v Qld Racing Limited [2009] QSC 338, cited

Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] 2 Lloyd’s Rep 352, cited

Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593, applied

Legal & General Life of Australia Ltd v A Hudson Pty Ltd [1985] 1 NSWLR 314, applied

Macro v Thompson (No 3) [1997] 2 BCLC 36, applied

Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507, applied

COUNSEL:

A Crowe SC, with P D Lane for Queensland Racing Limited and Hanmer
D Kelly SC, with K O’Gorman, for Andrews

SOLICITORS:

Cooper Grace Ward for Queensland Racing Limited and Hanmer
McCullough Robertson for Andrews

These are further applications in the dispute between Mr W B Andrews and Queensland Racing Limited (“QRL”). He is one of five founding directors of QRL. According to its Constitution, two of them must retire at the first annual general meeting of the company, which is scheduled for 17 November 2009. He wishes to be reappointed. He sued QRL seeking declarations and injunctions complaining that QRL had not followed its Constitution in the process of selecting directors to fill the two vacancies. After a two day trial, Margaret Wilson J upheld some of his complaints and he was granted some of the relief which he had claimed (“the judgment).[1]
[1]Andrews v Qld Racing Limited [2009] QSC 338.

Her Honour found that the process had…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] QSC 364
Decision Date: 13 November 2009

CaseChat Overview and Summary

In Andrews v Qld Racing Limited, the appellant sought to challenge the process by which directors of the respondent were to be appointed. The dispute centred on the alleged lack of independence and potential bias of the Independent Recruitment Consultant who was to prepare a shortlist of director candidates. The matter was heard in the Supreme Court of Queensland. The appellant contended that the Consultant's failure to adhere to instructions and apparent collaboration with the respondent cast doubt on the Consultant's independence and potentially introduced bias into the selection process.

The primary legal issue before the Court was whether the Consultant's actions indicated a lack of independence and whether such a lack of independence rendered the Consultant's shortlist invalid. The Court had to examine whether the Consultant's adherence to the initial, erroneous instruction, and subsequent failure to revise the shortlist despite receiving new instructions, could be construed as evidence of bias or a lack of independence. Additionally, the Court needed to consider whether the Consultant's previous collaboration with the respondent, without a formal finding of compromised independence, impacted the Consultant's ability to fairly prepare the shortlist.

In delivering the judgment, the Court held that the actions of the Consultant did not establish a lack of independence or bias. The Court found that the Consultant's preparation of the shortlist, despite the initial error, did not indicate any bias or lack of impartiality. The Court also noted that there was no evidence of improper collaboration that would undermine the Consultant's independence. Consequently, the Court decided that the respondent was not to act upon any shortlist provided by the Consultant in the 2009 director selection process.

The Court's orders included a restraint on the respondent from acting upon any shortlist provided by the Consultant and granted liberty to apply for further orders if necessary. This decision underscores the importance of adherence to corporate governance procedures and the need for transparent and impartial processes in the appointment of directors.

Orders

Orders of the court

In 9471 of 2009:

1. The respondent Queensland Racing Ltd is restrained from acting upon any shortlist provided by Northern Recruitment Pty Ltd in the process of the selection and appointment of directors to take place in 2009.

2. There be liberty to apply.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Andrews v Qld Racing Limited (No 2) [2009] QSC 364
PARTIES:	RE QUEENSLAND RACING LIMITED WILLIAM BERNARD ANDREWS (plaintiff) v QUEENSLAND RACING LIMITED ACN 116 735 374 (defendant)
FILE NO/S:	BS 9471 of 2009 BS 12551 of 2009
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	13 November 2009
DELIVERED AT:	Brisbane
HEARING DATE:	12 November 2009
JUDGE:	McMurdo J
ORDER:	In 9471 of 2009: 1. The respondent Queensland Racing Ltd is restrained from acting upon any shortlist provided by Northern Recruitment Pty Ltd in the process of the selection and appointment of directors to take place in 2009. 2. There be liberty to apply.
CATCHWORDS:	CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – GENERALLY – where the Constitution provides that the Independent Recruitment Consultant is to prepare a shortlist of no less than four director candidates – where the Consultant had been erroneously instructed to limit the shortlist to four candidates and provided a shortlist accordingly – where the Consultant was issued with revised instructions that the shortlist was to contain a minimum of four candidates but nonetheless reverted with the same four candidates – where the Consultant had apparently collaborated with the company in previous proceedings but about which there was no positive finding as to independence – whether the Consultant lacked independence – whether the Consultant was affected by bias Corporations Act 2001 (Cth), s 201H, s 249G, s 1319, s 1322 Belchier v Reynolds (1754) 3 Keny 87; 96 ER 1318, cited Andrews v Qld Racing Limited [2009] QSC 338, cited Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] 2 Lloyd’s Rep 352, cited Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593, applied Legal & General Life of Australia Ltd v A Hudson Pty Ltd [1985] 1 NSWLR 314, applied Macro v Thompson (No 3) [1997] 2 BCLC 36, applied Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507, applied
COUNSEL:	A Crowe SC, with P D Lane for Queensland Racing Limited and Hanmer D Kelly SC, with K O’Gorman, for Andrews
SOLICITORS:	Cooper Grace Ward for Queensland Racing Limited and Hanmer McCullough Robertson for Andrews