Australian Securities and Investments Commission v Whitlam

[2004] HCATrans 91

[2004] HCATrans 091

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S447 of 2003

B e t w e e n -

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Applicant

and

NICHOLAS RICHARD WHITLAM

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 APRIL 2004, AT 9.53 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please your Honours, I appear with my learned friend, MR A.S. BELL, for the applicant.  (instructed by Australian Securities and Investments Commission)

MR A.J.L. BANNON, SC:   If the Court pleases, I appear with my learned friend, MR J.H. STEPHENSON, for the respondent.  (instructed by Watson Mangioni)

GLEESON CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, against us in the written submissions there is taken what, if good, is a most powerful reason not to grant special leave.  I refer to the pleading.  May I take your Honours to the application book 158.  As your Honours know, the particular issue upon which we seek special leave to appeal relates to the conduct, as we allege it, and as I now submit we have always alleged it, by which the respondent took certain steps of act and omission in relation to proxy forms.  At 158, paragraph 8, in the opening line of the pleading – the pleading is a line and a half and the particulars are the lines that follow – it is quite correct, exactly as my learned friends put it in writing against us here, that the premise upon which we based the foundation for the disqualification of orders sought, granted at first instance and overturned in the Court of Appeal was that Mr Whitlam had failed to vote.

GLEESON CJ:   Was this ever pleaded as a case of attempt?

MR WALKER:   No.  I do not want to qualify that at all, no, and that is why I am going straight to the pleading point.  But the particulars (i), (ii) and (iii) limit and announce the factual case, that is, bereft of legal conclusion, which is what the expression “failed to vote” is pregnant with.  When we went to the facts in the particulars, those are the facts upon which the case remained continuously and still remains as the basis of the claim for relief.

GLEESON CJ:   But if the Court of Appeal was right in its legal conclusion about the consequences of what happened the most that can be said is, is it not, that your opponent’s client attempted to fail to vote?

MR WALKER:   Yes.  Your Honour is referring, I think, to one of the legal points.  There is another legal point ‑ ‑ ‑

GLEESON CJ:   That is about the breach of director’s duties.

MR WALKER:    ‑ ‑ ‑ which, if correct, again, is another powerful reason why an appeal should lose.  However, in our submission, the general importance of that point is precisely a reason why we should get special leave.

GLEESON CJ:   That went off on a pleading point, did it not?  Did not the Court of Appeal say that they could think of ways in which a case might have been put about breach of director’s duty if the facts were as alleged by you, but that case was not pleaded? 

MR WALKER:   Yes.  May I qualify that by taking your Honours to two passages in the judgment.  At page 214 in the application book, one can see the various manners in which, on behalf of Mr Whitlam, the possible arguments in relation to breach of director’s duties were met, have been run below – those are quotations from Justice Gzell’s reasons below – and the Court of Appeal noted that it was, in fact, a matter of submission before the primary judge – paragraph 148.

GLEESON CJ:   Paragraph 160 was what I had in mind, on page 220.

MR WALKER:   Yes.  Could I start with paragraph 159, though, before 160.  There is, in those last two sentences of that paragraph, clearly enunciated the reasoning by which we lost the point which was the only point which prevented the Court of Appeal from ordering a retrial.  But for that point, there would have been a retrial ordered.  That point is one where it would be fatuous for me to submit to your Honours that there is not a deal to be said on the side of Mr Whitlam.  There was and there is a deal to be said.  However, in our submission, there are powerful reasons, all canvassed by the learned trial judge, on the other side as well.  That is the hallmark in an area of commercial and legal importance of a special leave question, where there are powerful statements to be made on both sides.  The reference to causation, causal connection, in paragraph 159 ‑ ‑ ‑

GUMMOW J:   I am sorry, but what would the breach be?

MR WALKER:   The breach in this case?

GUMMOW J:   Yes.

MR WALKER:   The breach consisted of taking steps which were calculated to frustrate the proxyholders’ directions as to the casting of their votes.

GUMMOW J:   But were (a) ineffective to do so. 

MR WALKER:   Which were ultimately ineffective to do so.

GUMMOW J:   Whether you say “ultimately” does not matter.  In the end, they were ineffective.   Point 1, and, point 2, this postulates some intent, does it, the use of the word “frustrate”?

MR WALKER:   Yes.  The intent point is – we have dealt with that in our written submissions.  That is a separate point upon which the Court of Appeal ruled in orthodox fashion in relation to findings of credibility and that, in our submission, is one in which this Court would have been in just as good a position as the Court of Appeal on discrete matters of relevant and limited record.  Can I go back to point 1, however, which is, with respect ‑ ‑ ‑

GUMMOW J:   The phrase, “in as good a position”, Mr Walker, is a sort of a sand trap, really.

MR WALKER:   Yes.  A better position in that your Honours in this Court – as good a position in terms of capacity, your Honour, is what I refer to. 

GLEESON CJ:   You would be seeking an order for a new trial?

MR WALKER:   Yes.

GLEESON CJ:   Is it fair to say that what the Full Court said was that the conclusion of fact reached by Justice Gzell was affected by errors in his reasoning, but it was not necessarily wrong – that would have to be determined at a new trial if that was all there was to it?

MR WALKER:   Exactly so.  Application book 211, paragraph 137, makes it crystal clear that the legal issue which is at the forefront of our special leave application was the difference between a retrial or not.

GLEESON CJ:   Then they went on to say, even assuming that the ultimate conclusion of fact by Justice Gzell was correct, there were two allegations of contravention that are presently relevant.  The first, on page 158, was an allegation that:

the defendant failed to vote against Resolution 6 in accordance with the instructions of the 3,973 members. 

And as a matter of law, regardless of what he was attempting to do, he did not fail to vote.

MR WALKER:   That is right.

GLEESON CJ:   The second alleged contravention was –

MR WALKER:   159.

GLEESON CJ:    ‑ ‑ ‑ that he acted in breach of his duties as a director.  The Court of Appeal said, regardless of what he attempted to do, having regard to the way the case was pleaded and the particular kind of breach of director’s duty alleged, even if Justice Gzell’s conclusion of fact was right, he did not act in breach of that duty, although we can think of other ways in which a case of breach of duty could have been, but was not, pleaded.

MR WALKER:   Yes.  We do not seek, as it were, to revive or give life for the first time to other ways, rather, we seek to challenge the importance and – so far as the interests of the parties are concerned, transcending simply this case – the important conclusion found at the foot of paragraph 159 on page 220 of the application book.  The reasoning – this is in danger of being a travesty, and I am simply trying to put it as a summary – the reasoning has at its core the proposition that the owing of a duty to proxyholders, at least in the circumstances argued in this case, excludes the legal possibility of a simultaneous breach of duty, upon breach of that duty to proxyholders, owed to the company.  In our submission, neither logic nor policy compelled that result.

GLEESON CJ:   What he did, factually, as alleged by you, was attempting to fail to vote.

MR WALKER:   Yes.

GLEESON CJ:   The Court of Appeal said that even if he did attempt to fail to vote on behalf of the shareholders as a proxy, that did not involve a breach of his duty as a director.

MR WALKER:   Not because it was an ineffective attempt – not for that reason – but because that was not a breach of duty as a director.  Of course, the circumstance which gives rise to the special leave qualities of that question are highlighted by recalling that he was the proxyholders qua chairman, he was the chairman qua president, he was the president qua director, and that, of course, is precisely what their Honours are referring to by the expression “a causal connection”.

GLEESON CJ:   Now, what was the particular duty as a director that he owed and that he breached if he attempted to fail to vote?

MR WALKER:   It is, of course, his general duty under 232 that he breached, but the particular conduct which constituted the breach of that general duty ‑ ‑ ‑

GLEESON CJ:   That is a general duty, is it not, to act bona fide for the benefit of the company as a whole?

MR WALKER:   Yes.  As your Honours have seen from our written submission in this Court, the way in which we put the particular aspect of the conduct which constituted breach of that extremely general duty is that this was conduct calculated to subvert the expression of opinion at the most formal and powerful organ of the company, namely, its general meeting.  That, in our submission, is axiomatically acting against the interests of the company as a whole, that is, to take steps which are calculated to deny the expression of opinion on a matter placed before the company in general meeting.

We submit, of course, that the breach is accomplished by the doing of that conduct.  It is not to be tested – to go back to your Honour Justice Gummow’s question about what ultimately happened – it is not to be tested by what others did to retrieve the situation, or even by what the respondent in this Court did by way of cooperating with that retrieval.

GUMMOW J:   I know.  I can see all that, but, at the basic practical level, this is a very strange factual situation, is it not, to test this question of the position of a director qua proxyholders and qua company ‑ ‑ ‑

MR WALKER:   Your Honour, it would be idle for me to contest that.  May I simply put it this way  ‑ ‑ ‑

GUMMOW J:    ‑ ‑ ‑ with the prospect of it only being resolved with a further trial as to the requisite mental elements.

MR WALKER:   Your Honour, can I put it this way.  Strange facts will practically always be a true description of cases that throw up the frustration of proxyholders’ attempts to vote.  That is, they will always be idiosyncratic, they will always have before them more or less unpleasant pre‑histories of controversy within corporate dealing.

GUMMOW J:   Yes, sure.

MR WALKER:   They will always be strange in that sense.  It will always be strange for a chairman to do something of this kind.

GUMMOW J:   Most breaches of fiduciary duty become important because there has been some illicit profit derived or there has been some injury inflicted.  That is why the courts get involved.  Otherwise, the courts would be sitting day in day out, trying rather hypothetical disputes with finger pointing.

MR WALKER:   Yes.  There is nothing hypothetical about actual conduct and there is nothing, in our submission, merely moot or excessively striving in a regulator seeking to vindicate the cleaving to legal standards of people with large powers buttressed by privileges granted by statute.  With great respect, we accept that the cases which will correctly and in a proportionate way attract most ‑ ‑ ‑

GUMMOW J:   That gives this regime a penal flavour, really.  There might not be anything wrong with that, but that is what seems to be involved.

MR WALKER:   Disqualification is disqualification.

GUMMOW J:   Yes.

MR WALKER:   Whether that be corrective, deterrent, for the protection ‑ ‑ ‑

GUMMOW J:   Then the question becomes whether we should get involved, where there has been this misfire as to the relevant mental element.

MR WALKER:   Your Honour, there is no doubt, with respect, that that ought to loom large in your considerations as to special leave, but the way in which that aspect of the case is presented is discrete, has been thoroughly examined by the courts below, and therefore present this case as a vehicle in which a very important aspect of corporate regulation ought to be tested.  When one does things by reason of one’s office as a director – and the expression “by reason of” is intended to capture, neutrally, what the Court of Appeal would call the causal connection – is it the case that Parliament has adequately cast a cloak of regulation over those actions by general requirements as to the standards of conduct required from directors, borrowing from the language of equity?  In our submission, that is of fundamental importance, particularly in an era where regulation displays a spectrum of prescription and proscription from the most general and all‑embracing to the most specific.

GLEESON CJ:   Do you challenge the conclusion of the Court of Appeal that in the events that happened the shareholders who sent in the relevant proxies did not fail to vote?  In other words, do you challenge the conclusion of the Court of Appeal that in the events that occurred, regardless of what your opponent’s client might have intended or attempted, the votes were effective and properly counted?

MR WALKER:   We do raise that, 231, ground 4.

GLEESON CJ:   You raise it.  Your client wishes to challenge that conclusion?

MR WALKER:   Yes, your Honour.

GUMMOW J:   Really?

MR WALKER:   That is not to the forefront of my special leave application.  If that were alone, quite different considerations would apply because that is the interpretation of a highly specific provision.

GUMMOW J:   It also involves a whole lot of third parties.

MR WALKER:   Yes, your Honour.

GLEESON CJ:   Is it ASIC’s contention that in the events that happened in relation to this meeting those votes should not have been counted?

MR WALKER:   I think it is proper to say, your Honour, that ground 4, as it appears in the draft appeal, leaves that as an unarticulated conclusion and is defective to that extent.

GLEESON CJ:   It might be thought that ASIC would be contending to the contrary of that.

MR WALKER:   It might be, yes, your Honour.

GUMMOW J:   What does that leave us?

MR WALKER:   Your Honour, there is nothing in the documents that my client brings to this Court which conveys an ambition to invalidate the votes, from which it must follow that the answer to your Honour’s question is no.

GLEESON CJ:   Yes, Mr Bannon.

MR BANNON:   Can I say something briefly about the potential for any factual question to be reconsidered by this Court on any grant of special leave, and that is to say that there is no ‑ ‑ ‑

GLEESON CJ:   I do not think anybody is suggesting that we should make findings of fact about whether Justice Gzell’s ultimate conclusion was right or wrong.

MR BANNON:   Yes.  The starting point is that it must be a retrial.

GLEESON CJ:   Yes.

MR BANNON:   Next, could I take your Honours to page 159 of the application book.  Paragraph 10, which pleads the breach of director’s duty, is predicated plainly on the conclusion that there was a failure to vote – the conduct of the defendant in failing to vote.

GLEESON CJ:   I think it emerged in discussion with Mr Walker, but the whole case, as I understand it, was pleaded and conducted upon the basis that the contraventions arose out of a failure to vote, not an attempt to fail to vote.

MR BANNON:   Exactly.

GLEESON CJ:   I understood Mr Walker to say, in the last concluding seconds of his submission, that his client does not wish to contend that in the events that occurred there was a failure to vote.

MR BANNON:   Yes.  The only breach of director’s duty which was ever pleaded was predicated on the existence of a failure to vote.  That is the material fact alleged and the only material fact alleged.  The particulars do not constitute the material fact, so that the short point is, paragraph 10 does not provide any vehicle within which any wider issue can be argued on any special leave application.  Secondly, if one looks at the Court of Appeal’s commencement of the consideration of this issue, at application book 214, paragraph 148, the opening lines:

It was submitted before the primary judge, on behalf of the appellant, that even a deliberate failure to vote –

in other words, that was addressing on the assumption that, contrary to our primary submission, there was an effective vote –

would not constitute a breach of the appellant’s duties as a director –

Of course, that submission did not need to be made, if the trial judge accepted that there was a failure to vote.

GLEESON CJ:   Mr Walker says that paragraph 159, in the second half of it, raises an important question of principle that arose for decision by the Court of Appeal and would arise for decision by us.  What do you say about that?

MR BANNON:   It only arises if there is a failure to vote.  That is demonstrated by paragraphs 160 and 161, where the Court of Appeal toyed, if I may use that word, with potential other ways in which the case might have been put.  One sees in the concluding line of 160:

If so, both duties would have required him to vote as directed.

Well, the short answer to that is, he did vote as directed, as found by the Court of Appeal and not challenged.  Equally, 161, your other alternative way of looking at a potential breach, at application book 221, line 10:

the member would generally require that this direction be followed –

Again, the direction, that is, to vote in accordance with the instructions.  Once one assumes that there was a finding that he did vote, again, neither of those ways arise.

GLEESON CJ:   Was it ever argued at first instance or in the Court of Appeal that, in paragraph 10 of the statement of claim at the top of 159, the words “in failing to vote” do not mean “in failing effectively to cast a vote”, they meant no more than “in failing to sign the relevant form”?

MR BANNON:   Well, for our part, we say no.

GUMMOW J:   What was the status of these rules about voting?

MR BANNON:   They were simply rules which the chairman himself ‑ ‑ ‑

GUMMOW J:   They were drawn up by Deloittes, were they?

MR BANNON:   Prepared by Deloittes, approved by Deloittes, under their contract to assist in facilitating the voting procedure.

GUMMOW J:   But adopted at any stage by the company in a meeting?

MR BANNON:   Yes, adopted by the chairman.

GUMMOW J:   By the chairman?

MR BANNON:   Yes.  In other words, there was no rule of law that they had to be followed.

GUMMOW J:   That is not what I am anxious to find out.

MR BANNON:   Ultimately, it was the chairman’s decision as to whether or not any vote be accepted.  So it was a completely discretionary power within the province of the chairman, who was Mr Whitlam.

GUMMOW J:   There is some discussion of it at page 16 of the application book, paragraph 12 – I think it is the primary judge’s judgment.  There was:

a contract with NRMA to provide returning officer services to the company . . . Mr Hullah drafted the adjudication rules ‑ ‑ ‑

MR BANNON:   That is right.

GUMMOW J:   It is this word “rule”.

MR BANNON:   Yes, it has no significance other than it was a system to be followed at the meeting.  Our submissions refer to some transcript of Mr Hullah ‑ ‑ ‑

GUMMOW J:   Wait a minute.  Is there some power under the constituent laws of the NRMA which authorises the chairman to adopt rules in this way?

MR BANNON:   Yes – at least, to decide the validity of a vote.

GUMMOW J:   Yes.

MR BANNON:   So for the purposes of facilitating that, he could establish rules, one would assume.  There was evidence from Mr Hullah that he approved these rules and that the signing – we have referred to this, but it did not appear in the application book.  I have the page.  It was to this effect, that the purpose of the signature requirement was simply to identify that you had the right proxyholder casting the vote.  If I could just hand up one page of that.  Mr Hullah agreed, having regard to the system which was adopted at the meeting – this is on this page at point F down to N ‑ ‑ ‑

GUMMOW J:   This is the Deloittes man?

MR BANNON:   That is right.  The evidence was that the system which was adopted was that, for persons such as Mr Whitlam, the Deloittes staff specifically prepared his papers, handed them to him and stood and waited while he filled them out and held a box for him to receive them.  Now, what Mr Whitlam did on the relevant paper was to indicate which way the votes were to be voted – which is the critical thing, the manifestation of intention – and he put them in the box, the only purpose of which was to receive the vote.

So that the only purpose the signature had would be in the ordinary case of somebody in the audience who was not known to the system, but there was no identification issue with Mr Whitlam.  He was instantly recognisable where he sat on the podium.  So it was not, in a sense, any cast‑iron rule.  It was for the chairman, ultimately, to ‑ ‑ ‑

GUMMOW J:   Yes, well, the attempt not to vote would be a failure in observing self‑imposed procedures.

MR BANNON:   That is right.  The evidence of Mr Hullah was also collected there, the effect of which is to say the failure to vote could only be effected if the absence of the signature was noticed.  He said if it was noticed it would inevitably be brought to his attention.  There were lawyers at the meeting specifically for the purpose of assisting Mr Hullah and he said, inevitably, it would go to their attention. 

So a case calculated to bring about a certain result would require considerations of factual questions as to whether it was within Mr Whitlam’s ken as to what was likely to happen, whether he thought that the solicitor was competent, whether he thought that the solicitor would have taken a view about identification which was consistent with every consideration given by every lawyer in relation to this matter, or a view which, idiosyncratically, we say, the solicitor on the night took.

If I could just come back to answer the Chief Justice’s question, that paragraph 10 of the pleading, when it says:

failed to vote against Resolution 6 in accordance with the instructions of the 3,973 members. 

That can only mean passing an ineffective vote, with respect.  Lastly, could I say, the two attempts made by the Court of Appeal to formulate some sort of different case which was not pleaded have resulted in my learned friend today for the first time, with respect, putting forward another version, which is to say he took steps which were calculated to result in a lack of vote.  Now, the words “calculated to” have some significance and have received discussion ‑ ‑ ‑

GUMMOW J:   It can mean either “apt to”, in the ordinary course, or it can mean “designed to”.  It is an ambiguous term.

MR BANNON:   Yes.  Exactly.  If it means apt to, if the conclusion is correct and not challenged that these steps could not have resulted in an ineffective vote, then there could be no breach of duty.  If it goes to state of mind, then that raises a question which should have been pleaded out and should have been the subject of cross‑examination and addressed, and it was not.  At the end of the day, ASIC really proposes to debate what can only be described as a very fine point, dancing on the head of a pin.

GLEESON CJ:   Is it right to say that in relation to this aspect of the case ‑ I realise there was another matter that does not seem to be before us ‑ there were two contraventions alleged, one of section 250A and one of section 232(2)? 

MR BANNON:   There was an allegation of contravention of 250A, but the trial judge said that that was not a civil penalty provision and it did not really arise.

GUMMOW J:   But it can exacerbate the other default, can it not?

MR BANNON:   It could, if you had to rely on 206C, as it then was, which said if you had two contraventions you could get a banning order, but if you had a civil penalty provision, such as a breach of director’s duty, you did not need a second contravention.

GLEESON CJ:   So, directly, we are only concerned with the allegation of a contravention of 232(2)?

MR BANNON:   That is right, but at the heart of that is the legal conclusion, failure to vote.  At the end of the day, what, really, ASIC seeks to take up is what, with respect, we say is a completely inappropriate vehicle to put forward an argument which has not even yet been precisely articulated, was not addressed below and, with respect, we say is not something which either has any sufficient prospects of success or, alternatively, is not an appropriate vehicle, nor does the justice of the case require it. 

GLEESON CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, the passage I took you to in chief at 214, paragraph 148 of the Court of Appeal reasons, in our submission, rather diminishes the suggestion that my choice of the word “calculated” introduces something novel so far as the present respondent is concerned.  After all, their argument is there paraphrased in the Court of Appeal that:

even a deliberate failure to vote in accordance with –

et cetera.  It is difficult to imagine a more wholehearted acceptance for the purpose of arguing out the issues between the parties on appeal by my learned friend than that choice of the word “deliberate”. 

So far as paragraphs 8 and 10 of the pleading point is concerned, application book paragraphs 158 and 159, picking up a matter that your Honour the Chief Justice raised with my learned friend, on my instructions, it was not put – I think I made this clear in chief – it was not

put that this was a failed attempt pleading.  I refer to the course of argument, for which I call in aid, for example, page 214 of the application book, to make good our answer to what I concede is otherwise a powerful argument against special leave in terms of the issues framed, joined and argued.

GLEESON CJ:   But that is what it must be, on analysis, must it not?  If the true view of the law is that in the events that occurred those votes were effectively cast and if, as a matter of fact, as found by Justice Gzell, the respondent failed to sign the form for the purpose of preventing the votes taking effect as votes, then what was involved was an attempt to fail to vote.

MR WALKER:   Yes.  I do not seek to evade that that is the correct description of it.  I describe the conduct differently because the breach does not inhere in there being an attempt.  The breach inheres in there being the conduct particularised, the factual matters particularised, under paragraphs 8 and 10 of the pleading, pages 158 and 159 of the application book, which remain all and only the facts upon which we relied and would rely in terms of the breach of 232.

They amount, as it happens, by way of a general description, to an attempt and when you add other facts and legal conclusions they amount to a failed attempt, but the gravamen of the case is their nature as conduct, both act and omission.  After all, as your Honours appreciate, the last of the acts or omissions in time referred to under paragraph 10 was that Mr Whitlam, when confronted with the unsigned paper, did nothing to correct the error.

It is true, of course, that others, after a to‑and‑fro, decided that that omission to sign would not invalidate the vote.  That is true, but, in our submission, that does not at all detract from the seriousness of the matter in terms of the act or omission charged and particularised as a matter of fact, issue joined in the Court of Appeal.  But for their decision that that cast no light on a breach of duty as director, they would have ordered a retrial, and, in our submission, they are the best judges.  They were ideally placed to assess how issue was joined by the course of conduct at first instance and before them.  May it please your Honours.

GLEESON CJ:   We will adjourn for a short time to consider the course we will take. 

MR BANNON:   Your Honours, I hesitate to say this, my friend seemed to be relying on the second particular, to fail to vote.  I hesitate to correct him.  There was a finding by your Honour that that second particular was not made out, that a failure to sign after being confronted with it represented a failure to vote.

GLEESON CJ:   You were right to hesitate.

MR BANNON:   I am sorry.

AT 10.27 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.31 AM: 

GLEESON CJ:   On the central issue of fact in this case, the Court of Appeal came to the conclusion that the reasoning of the trial judge was affected by material errors, although those errors did not necessarily mean that the ultimate conclusion reached by the trial judge was incorrect.  If that had been all there was to the matter, the Court of Appeal would have sent the case back for a new trial.  However, the court decided the case against the present applicant substantially on two grounds. 

First, central to the case pleaded against the respondent was an allegation that, in the events that had occurred, there had been a failure to vote in respect of certain shares.  The Court of Appeal concluded, as a matter of law, that even if the facts found by Justice Gzell had been correct, there was no failure to vote.  In that respect, the decision of the Court of Appeal is not attended by sufficient doubt to warrant the grant of special leave to appeal. 

Secondly, the Court of Appeal, in relation to the allegation of a contravention of section 232(2), considered the possibility that even if there had been no failure to vote, there might, nevertheless, on some other basis, have been found to be a breach of the respondent’s duties as a director.  After considering the way the case was pleaded and conducted and various possibilities, the court expressed the following conclusion: 

In our opinion, a finding of breach of s 232(2) was not open on the way the case was put by the respondent.  This was a charge of serious misconduct, and as such had to be formulated with precision.  Neither of the two possibilities we have raised was canvassed in the case, either in the pleadings or in the twelve‑day hearing before the primary judge.  Even now, they have not been advanced by the respondent, either in a Notice of Contention or in any other appropriate way.  In relation to them, natural justice has not been afforded to the appellant.  It would not in those circumstances be right for this Court to consider and rule upon some new basis which it has itself formulated, such as these two possibilities. 

The court held that, on the way the case had been pleaded and conducted, there was no contravention of section 232(2) and that in the circumstances it would be inappropriate to consider or leave open the possibility of putting the case for such a contravention on some other and different basis.  The decision of the Court of Appeal in respect of that aspect of the matter does not raise an issue suitable to a grant of special leave to appeal to this Court.  The application for special leave to appeal is refused with costs. 

We will adjourn for a short time to reconstitute. 

AT 10.35 AM THE MATTER WAS CONCLUDED