Anglo Australian Resources N.L. v Bloom Financial Advice Pty Ltd
[2019] WASC 470
•23 DECEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ANGLO AUSTRALIAN RESOURCES N.L. -v- BLOOM FINANCIAL ADVICE PTY LTD [2019] WASC 470
CORAM: HILL J
HEARD: 12 DECEMBER 2019
DELIVERED : 12 DECEMBER 2019
PUBLISHED : 23 DECEMBER 2019
FILE NO/S: COR 232 of 2019
BETWEEN: ANGLO AUSTRALIAN RESOURCES N.L.
Plaintiff
AND
BLOOM FINANCIAL ADVICE PTY LTD
First Defendant
PETER ANDREW STERN
Second Defendant
SUPERMAN INVESTMENTS PTY LTD
Third Defendant
LOIS LANE INVESTMENTS PTY LTD
Fourth Defendant
BRAHAM INVESTMENTS PTY LTD
Fifth Defendant
BRAHAM CONSOLIDATED PTY LTD
Sixth Defendant
A & R SUDWEEKS PTY LTD
Seventh Defendant
ANGELA AND JOSEPH CHRISTOPHER ORSARIS AND MARSILI
Eighth Defendant
C THWAITES PTY LTD
Ninth Defendant
D & P BUCKLEY PTY LTD
Tenth Defendant
PEGGY PATRICIA BUCKLEY
Eleventh Defendant
FE & RB PTY LTD
Twelfth Defendant
M & A ISAACS PTY LTD
Thirteenth Defendant
M & R HADDON PTY LTD
Fourteenth Defendant
MATTHEW LLOYD HADDON
Fifteenth Defendant
S LOADER PTY LTD
Sixteenth Defendant
SANDRA KAYE LOADER
Seventeenth Defendant
PA & RL WINES PTY LTD
Eighteenth Defendant
TERINGA GEORGE PTY LTD
Nineteenth Defendant
K & F FALCONER PTY LTD
Twentieth Defendant
KEITH WILLIAM FALCONER
Twenty First Defendant
MATTHEW STEPHEN WRIGHT
Twenty Second Defendant
ANDREW JAMES KIBBIS
Twenty Third Defendant
A KIBBIS SUPER PTY LTD
Twenty Fourth Defendant
BORIS AND BETTY PTY LTD
Twenty Fifth Defendant
CASEY WILLIAM MCGRATH
Twenty Sixth Defendant
DEMASIADO PTY LTD
Twenty Seventh Defendant
DOMINIQUE ALEXANDRA GAUCI
Twenty Eighth Defendant
WILLIAM LAMONT AND HAJIJAH AMORY
Twenty Ninth Defendant
CASSIE AMORY
Thirtieth Defendant
KAYE MARIA SHEPPARD
Thirty First Defendant
JOSHUA MARK TWELFTREE
Thirty Second Defendant
Catchwords:
Corporations law - Authority of plaintiff to commence proceedings - Whether directors who are the subject of resolutions to remove them as directors have a material personal interest - Whether director can be joined as second plaintiff - Appropriate orders to be made
Legislation:
Corporations Act 2001 (Cth)
Result:
Proceedings stayed until further order
Application to join director as second plaintiff dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | M L Bennett |
| First Defendant | : | A J Papamatheos |
| Second Defendant | : | S J Penrose |
| Third Defendant | : | S J Penrose |
| Fourth Defendant | : | S J Penrose |
| Fifth Defendant | : | D B Shaw |
| Sixth Defendant | : | D B Shaw |
| Seventh Defendant | : | No appearance |
| Eighth Defendant | : | No appearance |
| Ninth Defendant | : | No appearance |
| Tenth Defendant | : | No appearance |
| Eleventh Defendant | : | No appearance |
| Twelfth Defendant | : | No appearance |
| Thirteenth Defendant | : | No appearance |
| Fourteenth Defendant | : | No appearance |
| Fifteenth Defendant | : | No appearance |
| Sixteenth Defendant | : | No appearance |
| Seventeenth Defendant | : | No appearance |
| Eighteenth Defendant | : | No appearance |
| Nineteenth Defendant | : | No appearance |
| Twentieth Defendant | : | No appearance |
| Twenty First Defendant | : | No appearance |
| Twenty Second Defendant | : | No appearance |
| Twenty Third Defendant | : | No appearance |
| Twenty Fourth Defendant | : | No appearance |
| Twenty Fifth Defendant | : | No appearance |
| Twenty Sixth Defendant | : | No appearance |
| Twenty Seventh Defendant | : | No appearance |
| Twenty Eighth Defendant | : | No appearance |
| Twenty Ninth Defendant | : | No appearance |
| Thirtieth Defendant | : | No appearance |
| Thirty First Defendant | : | No appearance |
| Thirty Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Bennett & Co |
| First Defendant | : | DLA Piper Australia - Perth |
| Second Defendant | : | Tottle Partners |
| Third Defendant | : | Tottle Partners |
| Fourth Defendant | : | Tottle Partners |
| Fifth Defendant | : | Gandhi And Shaw |
| Sixth Defendant | : | Gandhi And Shaw |
| Seventh Defendant | : | In person |
| Eighth Defendant | : | In person |
| Ninth Defendant | : | In person |
| Tenth Defendant | : | In person |
| Eleventh Defendant | : | In person |
| Twelfth Defendant | : | In person |
| Thirteenth Defendant | : | In person |
| Fourteenth Defendant | : | In person |
| Fifteenth Defendant | : | In person |
| Sixteenth Defendant | : | No appearance |
| Seventeenth Defendant | : | In person |
| Eighteenth Defendant | : | In person |
| Nineteenth Defendant | : | In person |
| Twentieth Defendant | : | In person |
| Twenty First Defendant | : | In person |
| Twenty Second Defendant | : | In person |
| Twenty Third Defendant | : | In person |
| Twenty Fourth Defendant | : | In person |
| Twenty Fifth Defendant | : | In person |
| Twenty Sixth Defendant | : | In person |
| Twenty Seventh Defendant | : | In person |
| Twenty Eighth Defendant | : | In person |
| Twenty Ninth Defendant | : | In person |
| Thirtieth Defendant | : | In person |
| Thirty First Defendant | : | In person |
| Thirty Second Defendant | : | In person |
Case(s) referred to in decision(s):
Biodiesel Producers Ltd v Stewart [2007] FCA 722
Barren v Potter [1914] 1 Ch 895
Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771
Drillsearch Energy Limited v McKerlie [2009] NSWSC 517
Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACSR 345
Kirby v Centro Properties Ltd [2008] FCA 1505; (2008) 253 ALR 65
Mitropoulos v Greek Orthodox Church (1993) 91 NSWLR 630; (1993) 10 ACSR 134
Nenna v Australian Securities & Investments Commission (ASIC) [2011] FCA 1193; (2011) 284 ALR 386
Toole v Flexihire Pty Ltd (1991) 6 ACSR 455
HILL J:
On 28 November 2019, the plaintiff, Anglo Australian Resources NL filed an originating process under s 1325A of the Corporations Act 2001 (Cth) (Corporations Act). The plaintiff asserts that there is an association between the defendants (within the meaning of that term of the Corporations Act, s 12). The plaintiff contends that by reason of the association, the defendants have contravened s 671B and s 606 of the Corporations Act, and seeks remedial orders in respect of the alleged contraventions.
Procedural history of application
On 29 November 2019, the plaintiff filed an interlocutory application seeking orders in respect of a general meeting scheduled to be held on 20 December 2019. This meeting has been convened following receipt by the plaintiff of a notice from the fifth defendant given on 29 October 2019. The plaintiff seeks orders that the time limited by s 249D(5) of the Corporations Act for the plaintiff to hold the general meeting be extended until further order, or alternatively, that the defendants be restrained from voting at the general meeting.
On 6 December 2019, at the request of the first defendant, the plaintiff's interlocutory application was listed for mention. On that date, I made orders for the filing and serving of affidavits and submissions by the parties. These orders included the filing of an affidavit from the plaintiff 'evidencing any decision or authorisation on the part of the plaintiff with respect to the commencement of the proceedings'. The interlocutory application was otherwise adjourned for hearing before me on Friday, 13 December 2019 at 9.30 am.
On 6 December 2019, the plaintiff filed a third affidavit of Graeme Ian Smith sworn 6 December 2019 in compliance with this order.
On 11 December 2019, the second, third and fourth defendants filed an interlocutory application seeking declaratory relief and orders for the dismissal, or alternatively a stay, of the proceedings, on the basis that the proceedings had been commenced without proper authority. In support of the application, the second to fourth defendants filed an affidavit of Peter Andrew Stern. This application was listed before me on an urgent basis at not before 4.00 pm on the afternoon of 12 December 2019.
Shortly prior to the hearing of the second to fourth defendants' application, the plaintiff filed a further interlocutory application. The interlocutory process sought orders for the joining of John Load Cecil Jones as second plaintiff in the proceedings. This application was filed by Bennett & Co as solicitors for the proposed second plaintiff. No objection was taken by the defendants to me hearing this application at the same time as the second to fourth defendants' application.
Shortly prior to the hearing of the application, the plaintiff filed a fifth affidavit of Graeme Ian Smith sworn 12 December 2019. This affidavit attested to events that had occurred on 12 December 2019, in respect of the authority of Bennett & Co to act on behalf of the plaintiff in these proceedings.
The first defendant together with the fifth and sixth defendants appeared at the hearing of the interlocutory process and supported the second to fourth defendants' application.
At the conclusion of the hearing, I made orders staying the proceedings until further order of the court and dismissing the interlocutory process filed on behalf of the proposed second plaintiff. I gave brief oral reasons for my decision and indicated that I would publish reasons subsequently. These are the reasons for my decision.
Summary of facts
On 29 October 2019, the fifth defendant gave notice of a requisition to convene an extraordinary general meeting of the plaintiff to consider three motions. The first is to remove Mr Graeme Smith as a director, the second is to remove Mr John Jones as a director and the third is to appoint Mr David Willis as a director.
The plaintiff took steps to convene an extraordinary general meeting of its shareholders and on 19 November 2019 dispatched a notice of meeting and accompanying documents to shareholders. The notice of meeting included two statements: one from Mr Jones and Mr Smith setting out the reasons they considered shareholders should vote against the proposed resolutions; and the other from Mr Peter Stern which put forward reasons as to why shareholders should vote in favour of the proposed resolutions.
From 1 November 2019, there have been a number of changes to the directors of the plaintiff. Between 1 November 2019 and 26 November 2019, the directors of the plaintiff were Mr Jones, Mr Smith and Mr Stern.
On 27 November 2019, Mr David Sanders, a partner of Bennett & Co, was appointed a director of the plaintiff for the purposes of chairing the annual general meeting of the plaintiff held on 28 November 2019. Five resolutions were considered by shareholders at the annual general meeting, including the re‑election of Mr Smith as a director, the ratification of two issues of shares and the approval of a 10% placement facility.[1] While Mr Smith was re‑elected as a director of the company, the remaining resolutions concerning the issues of shares by the company failed.[2]
[1] Affidavit of Graeme Ian Smith sworn 27 November 2019, 'GIS20'.
[2] Fourth Affidavit of Graeme Ian Smith sworn 12 December 2019, 'GIS57'.
Mr Sanders resigned as a director of the plaintiff on 28 November 2019.
On 28 November 2019, Mr David Varcoe was appointed a director of the plaintiff.[3]
[3] Fifth Affidavit of Graeme Ian Smith sworn 12 December 2019 [3].
The evidence of Mr Smith is that from about 8 November 2019, he discussed with Mr Jones the possible need to take action 'to ensure that the Corporations Act was fully complied with'.[4] His evidence is that the decision to issue these proceedings was taken on 25 November 2019 at a meeting at Bennett + Co that was attended by Mr Smith, Mr Jones and three representatives of Bennett & Co. It appears from Mr Smith's affidavit that Mr Stern was not invited to the meeting nor given notice of it. The explanation provided for this is that Mr Smith considered that Mr Stern had a material personal interest in the subject matter of the meeting.[5]
[4] Third Affidavit of Graeme Ian Smith sworn 6 December 2019 [5].
[5] Third Affidavit of Graeme Ian Smith sworn 6 December 2019 [8].
In respect of his material personal interest, Mr Smith's evidence is:[6]
I did not consider that I had a material personal interest. I was not concerned with how people voted at the Annual General Meeting or the Extraordinary General Meeting – I was concerned that the requirements of the Corporations Act should be fully complied with.
[6] Third Affidavit of Graeme Ian Smith sworn 6 December 2019 [9].
A further meeting took place between Mr Smith, Mr Jones and Mr Varcoe at approximately 12.40 pm on Thursday, 12 December 2019. Representatives of Bennett & Co were also present at this meeting. Mr Smith's evidence was that:[7]
During the meeting Mr Varcoe stated that he was prepared to allow us to be present at the meeting to consider and to vote on a resolution to ratify my and Mr Jones's decision to commence the proceedings if the fact that resolutions for the removal of Mr Jones and I as directors of AAR meant we had a material personal interest in deciding to commence these proceedings, for the purposes of the Corporations Act and for all other purposes.
The ratification of the proceedings was put to a vote and was unanimously carried with Mr Varcoe, Mr Jones and me all voting in favour of the resolution.
[7] Fifth Affidavit of Graeme Ian Smith sworn 12 December 2019 [9] - [10].
Mr Stern was not invited to this meeting nor given notice of it.
Meetings of directors of the plaintiff are governed by article 12 of its constitution. Meetings of directors may be convened by a director or the company secretary on the written request of a director. There is no specific timeframe for the notice required to be given for a directors' meeting.
Pursuant to article 12.15 of the plaintiff's constitution, a quorum for a directors meeting is the greater of half of the total number of directors then in office or two. This clause goes on to state that 'for the purposes of this article, a quorum is present at a meeting of the directors during the consideration of the matter only if at least two directors entitled to vote on any motion that may be moved at the meeting in relation to that matter are present.'[8]
[8] Affidavit of Graeme Ian Smith sworn 27 November 2019, 'GIS-2'.
Article 12.26 of the Constitution governs the validity of acts of directors. It provides that:[9]
All acts done at a meeting of the Directors or of a committee of Directors, or by a person acting as a Director are, notwithstanding that it is afterwards discovered that:
(a)there was a defect in the appointment or continuance in office of a person as a Director or of the person so acting; or
(b)a person acting as a Director was disqualified or was not entitled to vote,
as valid as if the relevant person had been duly appointed or had duly continued in office and was qualified and entitled to vote.
[9] Affidavit of Graeme Ian Smith sworn 27 November 2019, 'GIS-2'.
Legal principles
The defendants raised a number of objections in respect of the meeting authorising Bennett & Co to commence these proceedings including that it was not a directors' meeting of the plaintiff. The primary objections were that the second defendant did not receive notice of the meeting and that each of Mr Smith and Mr Jones have a material personal interest in the matter and accordingly could not vote on any resolution to authorise the commencement of proceedings.
Notice of meeting
The second to fourth defendants do not dispute that the second defendant has a material personal interest in respect of any resolution which concerns the general meeting scheduled to occur on 20 December 2019. However, they contended that this did not mean that the plaintiff was not required to give the second defendant notice of the meeting.
The plaintiff disputed that there was any requirement to provide notice to the second defendant of the meeting. This was on the basis that the only business to be conducted at the meeting was a resolution on which the second defendant could not vote.
In the absence of a contrary provision in the Constitution of a company, each director of a company is entitled to notice of a directors' meeting.[10] Where time limits for the giving of notice are set out in the Constitution, these time limits must be complied with.[11] Otherwise the period of notice must be fair and reasonable.[12] What is fair and reasonable will depend on the circumstances. Accordingly, if there is an urgent matter that is required to be decided at a board meeting, short notice will be considered to be reasonable.
[10] Mitropoulos v Greek Orthodox Church (1993) 91 NSWLR 630; (1993) 10 ACSR 134.
[11] Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACSR 345.
[12] Toole v Flexihire Pty Ltd (1991) 6 ACSR 455.
In my view, even if Mr Stern was not entitled to vote on any resolution, he was entitled to receive notice of any directors' meeting. The question is, then, whether the failure to provide notice of the meeting invalidates the meeting. While proper notice is a pre‑requisite of a properly constituted meeting,[13] the failure to give notice of the meeting can, in appropriate circumstances, be held considered to be a procedural irregularity.[14] If I were satisfied that it was a procedural irregularity, it would be open for me to make an order pursuant to s 1322 of the Corporations Act.
[13] Barren v Potter [1914] 1 Ch 895.
[14] See the discussion in Nenna v Australian Securities & Investments Commission (ASIC) [2011] FCA 1193; (2011) 284 ALR 386 [40] and following; Biodiesel Producers Ltd v Stewart [2007] FCA 722.
Ultimately, for the reasons set out below, it was not necessary for me to consider whether to make an order pursuant to s 1322 of the Corporations Act in respect of either of the meetings.
Material personal interest
The defendants contend that both Mr Smith and Mr Jones have a material personal interest in the holding of the extraordinary general meeting to consider resolutions for their removal and that, as a result, neither of them could participate in any decision to commence these proceedings. On this basis, it is asserted that they did not have authority to appoint Bennett & Co as the company's solicitors or to authorise the commencement of these proceedings on behalf of the plaintiff. As a consequence, the defendants submit that these proceedings ought be dismissed or, alternatively, stayed.
In support of this contention, the defendants referred me to the decision of Barrett J in Drillsearch Energy Ltd v McKerlie.[15] In that case, Barrett J, in an ex tempore judgement in respect of a similar application in a similar factual scenario to the one before this court, stated:[16]
Each of the [directors] has an obvious personal interest in resisting attempts to obtain a resolution of shareholders unseating him — the more so since a decision to remove could legitimately be regarded as an endorsement of the adverse criticisms that have been circulated.
There is in my view no doubt that each of the three, …, has a "personal interest" in what is, in terms, the only part of the relief sought in the proceedings that goes beyond mere stand-alone declarations and compensation orders which one cannot think could involve a great deal of money. I refer, of course, to the claims for orders restraining the holding of the general meeting.
I am also of the opinion that the personal interest of each of the three was, in the context of the directors' meeting of 2 June 2009, "material" in the sense in which that expression has been interpreted in the case law to which I was referred, in particular McGellin v Mount King Mining NL. In that case, Murray J said of the statutory predecessor to s 195(1):
"'Material' in this context, I think, means that the interest involves a relationship of some real substance to the matter under consideration or the contract or arrangement which is proposed. In that way the nature of the interest should be seen to have a capacity to influence the vote of the particular director upon the decision to be made, bearing in mind that both the article and the section are concerned with that aspect of a director's fiduciary duties which relates to the resolution of conflict of interest which must, of itself, be of a real or substantial kind. The interest with which both the article and the section are concerned should be of a kind as to give rise to a conflict of that character. If that test is met, it seems to me not to matter that the nature of the interest may be described as direct or indirect, or vested in interest or contingent. It is the substance of the interest, its nature and capacity to have an impact upon the ability of the director to discharge his or her fiduciary duty which will be important."
In summary, each of [the directors] was in a position at the director's meeting where his own tenure was under threat. Each knew that he stood to come under fire at the general meeting and potentially to be unceremoniously dismissed by shareholders in the context of articulated criticisms which might then well be regarded as vindicated and therefore justified. Each had a clear interest in the question of the creation of a forum for debate and decision on the question of his removal, or the avoidance of the creation of such a forum. That interest, of its nature, was amply capable of shaping each relevant director's conduct. The contention that each of the three directors, …, had a "material personal interest" in the question submitted for the board's consideration on 2 June 2009 concerning institution of these proceedings is well-founded. (citations omitted)
[15] Drillsearch Energy Limited v McKerlie [2009] NSWSC 517.
[16] Drillsearch Energy Limited v McKerlie [22] - [25].
I was also referred to the decision of Emmett J in Central Exchange Ltd v Rivkin Financial Services Ltd.[17] In that case, the directors resolved to postpone a general meeting at which their removal was sought for a period of 26 days so that it would be held at the same time as the annual general meeting of the company at which each director was required to retire. Emmett J stated that:[18]
It is difficult to see why, absent some specific benefit that flows from remaining in office for an additional 26 days, the question of whether the directors should be permitted to do so would constitute a matter in which the directors have a material personal interest. Nothing has been advanced by Central to suggest that there is some specific benefit that would flow to the present Directors from remaining in office until 29 or 30 November 2004 rather than 3 November 2004. For example, there is no evidence of loss of remuneration payable to them as Directors of the Company by reason of their removal. I do not consider that the interest of the Directors in remaining in office for that period is a material interest in the circumstances of the present case. I do not consider that the postponement of the proposed meeting constitutes a matter in which the Directors have a material personal interest within the meaning of s 195. (emphasis in original)
[17] Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771.
[18] Central Exchange Ltd v Rivkin Financial Services Ltd [39].
The plaintiff denied that either Mr Jones or Mr Smith had a material personal interest in the outcome of the meeting and contended that there was no material before the court on which the court could draw this conclusion. On this basis, the plaintiff submitted that Messrs Jones and Smith had properly authorised Bennett & Co on behalf of the plaintiff to commence these proceedings. In the alternative, Bennett & Co referred to the meeting that had occurred on 12 December 2019 attended by Mr Varcoe, as well as Messrs Jones and Smith, as providing the necessary authorisation for the commencement of the proceedings.
Section 195 of the Corporations Act relevantly provides that:
(1)A director of a public company who has a material personal interest in a matter that is being considered at a directors' meeting must not:
(a)be present while the matter is being considered at the meeting; or
(b)vote on the matter.
…
(2)The director may be present and vote if directors who do not have a material personal interest in the matter have passed a resolution that:
(a)identifies the director, the nature and extent of the directors interest in the matter and its relation to the affairs of the company; and
(b)states that those directors are satisfied that the interest should not disqualify the director from voting or being present.
In my view, for the following reasons, I consider that each of Messrs Smith and Jones have a material personal interest in resisting their removal as directors and, accordingly, in the holding of the general meeting at which their removal is sought. As such, I consider that each of Mr Smith and Mr Jones has a material personal interest in the commencement of any proceedings which seek to delay or prevent the meeting from going ahead.
First, the resolutions at the general meeting seek to remove Mr Smith and Mr Jones from office. Second, given the correspondence that has passed between the parties, each of these directors knew that it was likely that he would be criticised at the general meeting. Third, given the outcome at the recent general meeting at which three of the resolutions were not passed, despite being recommended by the directors, it was possible that each of them would be removed as directors if the general meeting went ahead. In my view, these matters, both separately and collectively, had the capacity to influence the vote of a director in relation to a decision to adjourn or otherwise postpone the meeting.
Accordingly, none of Mr Smith, Mr Jones, nor Mr Stern could participate in any decision concerning the general meeting of the company as each had a material personal interest in the meeting or the commencement of any proceedings to restrain the holding of the general meeting. As a consequence I find that the decision by Mr Smith and Mr Jones on 25 November 2019 to instruct Bennett & Co to commence the proceedings was a contravention by them of their statutory duties under s 195 of the Corporations Act.
Turning then to the meeting on 12 December 2019, the evidence is that only three directors were present at this meeting; two of which were Mr Jones and Mr Smith. Neither could vote on the only resolution which was to be considered at this meeting; namely whether to ratify the decision to commence these proceedings. The only director who could consider this resolution was Mr Varcoe. Accordingly, it is my view that there was no quorum at the meeting held on 12 December 2019 and no valid resolutions were passed.
Mr Bennett sought to rely on article 12.26 of the Constitution as validating the resolution of directors. In my view, article 12.26 does not assist the plaintiff. The express terms of article 12.26 requires the defect to have been discovered after the meeting. In this case, each of Mr Jones and Mr Smith were on notice of the objection taken by the defendants. In my view, article 12.26 cannot validate a resolution where the quorum relies on the presence of directors who could not be present at the meeting. Even if I am wrong in this regard, and article 12.26 technically preserves the validity of the resolution, the decision of directors to ratify the commencement of these proceedings to seek orders preventing the meeting of members occurring depended on statutory contraventions by two of the three directors who were present and voted.
In my view, in the exercise of the court's inherent jurisdiction, these matters are sufficient to cause the court to order a stay of the proceedings until further order of the court in the exercise of its inherent jurisdiction so that the processes of the court are protected from abuse.
Application to join Mr Jones as a plaintiff
On 12 December 2019, Mr Jones filed an application to be joined to the proceedings as the second plaintiff. The evidence before the court is that Mr Jones is a shareholder of the plaintiff. As such, Mr Jones has standing to seek orders pursuant to s 1325A of the Corporations Act.
The defendants opposed the application on the basis that the proceedings had been commenced without authorisation and that accordingly there were no valid proceedings which Mr Jones could join.
I accept that Mr Jones has standing to commence proceedings against the defendants pursuant to s 1325A of the Corporations Act. However, for the reasons set out above, in circumstances where Mr Jones has a material personal interest in the outcome of the general meeting, Bennett & Co cannot act for both the plaintiff and Mr Jones. There is a conflict or, at the very least, an appearance of conflict in acting for both the company and one of its directors. In my view, if Mr Jones wishes to commence proceedings, he is required to instruct independent solicitors.
As a rule of practice, plaintiffs cannot be separately represented.[19] As such, unless Bennett & Co could act for Mr Jones, Mr Jones could not be added as a plaintiff in the proceedings.
[19] Kirby v Centro Properties Ltd [2008] FCA 1505; (2008) 253 ALR 65 [10].
For these reasons, in the exercise of the court's inherent jurisdiction to protect its processes from abuse, I dismissed the application to join Mr Jones as a plaintiff.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill23 DECEMBER 2019
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