Andrews v Qld Racing Ltd - [2009] QSC 338

SUPREME COURT OF QUEENSLAND

CITATION:

Andrews v Qld Racing Ltd [2009] QSC 338

PARTIES:

WILLIAM BERNARD ANDREWS
(plaintiff)
v
QUEENSLAND RACING LIMITED ACN 116 735 374
(defendant)

FILE NO/S:

9471/09

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court of Brisbane

DELIVERED ON:

23 October 2009

DELIVERED AT:

Brisbane

HEARING DATE:

20 and 21 October 2009

JUDGE:

Wilson J

ORDER:

Order:

A declaration that the Shortlist has not been prepared in compliance with clause 17 of the QRL Constitution;1.

An injunction restraining QRL, by its Chairman, from announcing at the Annual General Meeting scheduled to take place on 17 November 2009 the election of the two Directors purportedly selected in reliance upon or by reference to the Shortlist;2.

An injunction requiring that QRL undertake the selection of the Directors to fill the vacancies created by the retirements of Mr Andrews and Mr Lambert in compliance with clause 17 of theQRL Constitution based upon the twenty-six (26) applications for appointment to the Board of QRL received by Northern Recruitment as at 29 May 2009; 3.

That the counterclaim be dismissed; 4.

That there be liberty to apply;5.

That the defendant pay the plaintiff’s costs of and incidental to the proceedings (including the counterclaim) to be assessed on the standard basis.6.

CATCHWORDS:

CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – GENERALLY – where defendant is a company limited by guarantee and a “control body” under the Racing Act 2002 (Qld) – where plaintiff is one of five Directors of the defendant – where plaintiff and another Director will retire at the next Annual General Meeting – where director selection process is contained in the company’s Constitution – whether the director selection process was undertaken in accordance with the Constitution – whether to make order pursuant to s 1322(4)(a) of the Corporations Act (2001) (C’th)

Corporations Act 2001 (C’th), s 140, s 1322(4) and s 1322(6)

Racing Act 2002 (Qld), s 8(b)(ii), s 9, s 42(2)(c), s 44

Bundaberg Sugar Limited v Isis Central Sugar Mill Co Ltd [2007] 2 Qd R 214, cited
Holmes v Lord Keyes [1959] Ch 199, cited
Link Agricultural Pty Ltd v Shanahan [1999] 1 VR 466, cited
Lyon Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] 156 FCR 1, cited
Mentha v Colorbus Pty Ltd (2005) 23 ACLC 183, cited
Miller v Miller (1995) 16 ACSR 73, cited
Papaioannoy v Greek Orthodox Community of Melbourne (1978) 3 ACLR 801, cited
Re Pembury Pty Ltd (1991) 9 ACLC 937, considered
Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660, cited

Whitehouse v Capital Radio Network Pty Ltd (2003) 21 ACLC 17, cited

COUNSEL:

D J S Jackson QC and S Cooper for the plaintiff

R M Derrington SC and D Colthier for the defendant

SOLICITORS:

McCullough Robertson for the plaintiff

Cooper Grace Ward for the second defendant

Wilson J: The plaintiff William Bernard Andrews is one of five Directors of the defendant, Queensland Racing Limited.…

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.

Continue reading Andrews v Qld Racing Ltd

Details

AGLC: Andrews v Qld Racing Ltd [2009] QSC 338
Case: [2009] QSC 338
Decision Date: 23 October 2009

CaseChat Overview and Summary

In Andrews v Qld Racing Ltd, the plaintiff, Mr Andrews, one of the five directors of the defendant, Qld Racing Ltd (QRL), sought a declaration that the process used to select new directors was not in accordance with the company’s constitution. The dispute arose from the impending retirement of two directors, including Mr Andrews, and the subsequent selection process for their replacements, which was governed by the company’s constitution. The court was tasked with determining whether the director selection process was conducted in line with the constitutional provisions and whether an order should be made under section 1322(4) of the Corporations Act 2001 (Cth) to validate the process despite any irregularities.

The court considered whether the irregularities in the director selection process were merely procedural or went to the heart of the company's governance. It examined if the process was essentially procedural in nature, if the parties involved acted honestly, or if it was just and equitable to validate the process despite the irregularities. The court found that the irregularities were not merely procedural but fundamental to the governance structure of the company. Given the nature of the irregularities, the court held that it would not be just and equitable to validate the process under section 1322(4) of the Corporations Act.

The court issued several orders, including a declaration that the shortlist for new directors was not prepared in compliance with the QRL constitution. It also issued injunctions to prevent the announcement of the new directors at the Annual General Meeting and to require QRL to undertake the selection of the new directors in accordance with the constitutional provisions. Additionally, the court dismissed the counterclaim and awarded costs to the plaintiff.

Orders

Orders of the court

Order:

A declaration that the Shortlist has not been prepared in compliance with clause 17 of the QRL Constitution;1.

An injunction restraining QRL, by its Chairman, from announcing at the Annual General Meeting scheduled to take place on 17 November 2009 the election of the two Directors purportedly selected in reliance upon or by reference to the Shortlist;2.

An injunction requiring that QRL undertake the selection of the Directors to fill the vacancies created by the retirements of Mr Andrews and Mr Lambert in compliance with clause 17 of theQRL Constitution based upon the twenty-six (26) applications for appointment to the Board of QRL received by Northern Recruitment as at 29 May 2009; 3.

That the counterclaim be dismissed; 4.

That there be liberty to apply;5.

That the defendant pay the plaintiff’s costs of and incidental to the proceedings (including the counterclaim) to be assessed on the standard basis.6.

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

Section 1322 subsections (4) and (6) provide –“CORPORATIONS ACT 2001 - SECT 1322 Irregularities...(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: (a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; (b) an order directing the rectification of any register kept by ASIC under this Act; (c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a); (d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; and may make such consequential or ancillary orders as the Court thinks fit. …(6) The Court must not make an order under this section unless it is satisfied: (a) in the case of an order referred to in paragraph (4)(a): (i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature; (ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or (iii) that it is just and equitable that the order be made; and (b)… (c) in every case--that no substantial injustice has been or is likely to be caused to any person. Apart from the matters in subsection (6) about which it must be satisfied, the Court has an unfettered discretion under subsection (4). In Re Pembury Pty Ltd (1991) 9 ACLC 937 Byrne J considered that the application of the provision should not be restricted to instances of inadvertence or accidental non-compliance. The three matters expressed in paragraph (a) of subsection (6) are alternatives. Before making an order under subsection (4), the court must be satisfied of one of them and of the matter in paragraph (c). Of the matters in paragraph (a) - I am inclined to the view that the irregularity was more than procedural in nature; it went to the very heart of the governance of the company. In the circumstances I could not be persuaded that it would be just and equitable to make an order under s 1322(4). To satisfy the second alternative there would need to be evidence that all of the persons involved in the contravention acted honestly (rather than an absence of evidence that they acted dishonestly). See Mentha v Colorbus Pty Ltd (2005) 23 ACLC 183 at 187.

CITATION:	Andrews v Qld Racing Ltd [2009] QSC 338
PARTIES:	WILLIAM BERNARD ANDREWS (plaintiff) v QUEENSLAND RACING LIMITED ACN 116 735 374 (defendant)
FILE NO/S:	9471/09
DIVISION:	Trial Division
PROCEEDING:	Trial
ORIGINATING COURT:	Supreme Court of Brisbane
DELIVERED ON:	23 October 2009
DELIVERED AT:	Brisbane
HEARING DATE:	20 and 21 October 2009
JUDGE:	Wilson J
ORDER:	Order: A declaration that the Shortlist has not been prepared in compliance with clause 17 of the QRL Constitution;1. An injunction restraining QRL, by its Chairman, from announcing at the Annual General Meeting scheduled to take place on 17 November 2009 the election of the two Directors purportedly selected in reliance upon or by reference to the Shortlist;2. An injunction requiring that QRL undertake the selection of the Directors to fill the vacancies created by the retirements of Mr Andrews and Mr Lambert in compliance with clause 17 of theQRL Constitution based upon the twenty-six (26) applications for appointment to the Board of QRL received by Northern Recruitment as at 29 May 2009; 3. That the counterclaim be dismissed; 4. That there be liberty to apply;5. That the defendant pay the plaintiff’s costs of and incidental to the proceedings (including the counterclaim) to be assessed on the standard basis.6.
CATCHWORDS:	CORPORATIONS – CONSTITUTION AND REPLACEABLE RULES – GENERALLY – where defendant is a company limited by guarantee and a “control body” under the Racing Act 2002 (Qld) – where plaintiff is one of five Directors of the defendant – where plaintiff and another Director will retire at the next Annual General Meeting – where director selection process is contained in the company’s Constitution – whether the director selection process was undertaken in accordance with the Constitution – whether to make order pursuant to s 1322(4)(a) of the Corporations Act (2001) (C’th) Corporations Act 2001 (C’th), s 140, s 1322(4) and s 1322(6) Racing Act 2002 (Qld), s 8(b)(ii), s 9, s 42(2)(c), s 44 Bundaberg Sugar Limited v Isis Central Sugar Mill Co Ltd [2007] 2 Qd R 214, cited Holmes v Lord Keyes [1959] Ch 199, cited Link Agricultural Pty Ltd v Shanahan [1999] 1 VR 466, cited Lyon Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] 156 FCR 1, cited Mentha v Colorbus Pty Ltd (2005) 23 ACLC 183, cited Miller v Miller (1995) 16 ACSR 73, cited Papaioannoy v Greek Orthodox Community of Melbourne (1978) 3 ACLR 801, cited Re Pembury Pty Ltd (1991) 9 ACLC 937, considered Ryan v South Sydney Junior Rugby League Club Ltd [1975] 2 NSWLR 660, cited Whitehouse v Capital Radio Network Pty Ltd (2003) 21 ACLC 17, cited
COUNSEL:	D J S Jackson QC and S Cooper for the plaintiff R M Derrington SC and D Colthier for the defendant
SOLICITORS:	McCullough Robertson for the plaintiff Cooper Grace Ward for the second defendant