Campbell v Jervois Mining Ltd
[2009] FCA 401
•24 April 2009
FEDERAL COURT OF AUSTRALIA
Jervois Mining Ltd, in the matter of; Campbell v Jervois Mining Ltd
[2009] FCA 401
CORPORATIONS – Extraordinary General Meeting – Appointment of proxy – whether Chairman in breach of direction given by proxy‑givers – validity of resolutions – s 250A(4)(c) of the Corporations Act 2001 (Cth) – proxy form and contract construction – whether Chairman’s intention construed as direction – Company Constitution – Common law duty of agency.
Corporations Act 2001 (Cth): ss 174, 249, 250A(4)(c)
Whitlam v Australian Securities and Investments Commission (2003) 57 NSWLR 559, cited
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, followed
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165, followed
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289, followed
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1, followedIN THE MATTER OF JERVOIS MINING LTD (ABN 52 007 626 575)
RICHARD MALCOLM CAMPBELL, NORMAN ALFRED SECKOLD and ALTINOVA NOMINEES PTY LTD v JERVOIS MINING LTD (ABN 52 007 626 575)
VID 232 of 2009
GOLDBERG J
24 APRIL 2009
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 232 of 2009
IN THE MATTER OF JERVOIS MINING LTD (ABN 52 007 626 575)
BETWEEN: RICHARD MALCOLM CAMPBELL
First ApplicantNORMAN ALFRED SECKOLD
Third ApplicantALTINOVA NOMINEES PTY LTD
Fourth Applicant
AND: JERVOIS MINING LTD (ABN 52 007 626 575)
Respondent
JUDGE:
GOLDBERG J
DATE OF ORDER:
24 APRIL 2009
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The originating process filed on 8 April 2009 be dismissed.
2. The applicants pay the respondent’s costs of and incidental to the originating process.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 232 of 2009
IN THE MATTER OF JERVOIS MINING LTD (ABN 52 007 626 575)
BETWEEN: RICHARD MALCOLM CAMPBELL
First ApplicantNORMAN ALFRED SECKOLD
Third ApplicantALTINOVA NOMINEES PTY LTD
Fourth Applicant
AND: JERVOIS MINING LTD (ABN 52 007 626 575)
Respondent
JUDGE:
GOLDBERG J
DATE:
24 APRIL 2009
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
BACKGROUND
The proceeding before the Court arises out of an Extraordinary General Meeting (“the EGM”) of members of the respondent, Jervois Mining Ltd (“the Company”) on 2 April 2009 at which a number of resolutions were put before the members. Some resolutions were passed and some resolutions were not passed. Two members of the Company have challenged the validity of the resolutions on the basis of their claim that the Chairman of the meeting, in whose favour proxies had been given by numerous members, did not cast votes in accordance with the directions of the members contained in the proxy forms appointing him as their proxy to vote at the EGM on their behalf.
The first applicant, Mr Richard Campbell, holds shares in the Company personally and through a superannuation fund of which he is one of the trustees. He was appointed a director of the Company on 29 July 2008 and remained a director until he was removed by one of the resolutions passed at the EGM on 2 April 2009. Mr Campbell challenges the validity of the resolution removing him as a director as well as challenging other resolutions. There is now no second applicant in the proceeding. The third applicant, Mr Norman Seckold, holds a significant parcel of shares in the Company personally and through the fourth applicant, Altinova Nominees Pty Ltd. A resolution to elect Mr Seckold as a director of the Company was one of the resolutions put to the EGM on 2 April 2009 but it was not passed.
On 6 February 2009 the Company received a request pursuant to s 249 of the Corporations Act 2001 (Cth) (“the Act”) from 124 members of the Company including Mr Campbell, for the directors of the Company to call, and arrange to hold, an EGM of the Company to consider the following resolutions:
“1.The removal of Duncan Campbell Pursell as Director.
2.The removal of Malcolm Lindsay Jansen as Director.
3.Removal of all other Directors who have been appointed by Directors and have not been re‑elected by Members.
4.The appointment of Norman Alfred Seckold as a Director.
5.The appointment of Peter James Nightingale as a Director.
6.The appointment of Melanie Jaye Leydin as a Director.
7.The confirmation of the appointment of Richard Malcolm Campbell as a Director.”
On 27 February 2009 the Company sent a notice of EGM (dated 26 February 2009) to the members of the Company giving notice that an EGM of the members of the Company would be held at the Institute of Chartered Accountants, Level 3, Bourke Place, 600 Bourke Street, Melbourne at 11.00am on Thursday 2 April 2009. An Explanatory Statement and Proxy Form were attached to the notice sent to each member. The notice included an agenda which set out the matters to be considered at the meeting, namely the consideration and if thought fit the passing of the following resolutions:
“1.That Mr Richard Malcolm Campbell be and is by this resolution removed from office as a director of this Company.
2.That with effect from the passing of this resolution and in accordance with section 136 of the Corporations Act 2001, the regulations contained in the printed document produced to this general meeting and signed by the Chairman for identification purposes are hereby approved and adopted as the constitution of the Company in substitution for and to the exclusion of the existing constitution of the Company.
3.That for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 500,000,000 shares on the terms and conditions set out in the Explanatory Statement.
4.That Mr Duncan Campbell Pursell be and is by this resolution removed from office as a director of this Company.
5.That Mr Malcolm Lindsay Jansen be and is by this resolution removed from office as a director of this Company.
6.That Mr Derek Alan Foster be and is by this resolution removed from office as a director of this Company.
7.That Prof Kenneth David Collerson be and is by this resolution removed from office as a director of this Company.
8.That Mr Norman Alfred Seckold be elected as a director of this Company.
9.That Mr Peter James Nightingale be elected as a director of this Company.
10.That Ms Melanie Jaye Leydin be elected as a director of this Company.
11.That Mr Richard Malcolm Campbell, having been appointed by the Board as an additional Director during the year, and retiring as a director at the annual general meeting in accordance with the constitution of the Company, be elected as a director of this Company.”
The notice of the EGM contained four Notes which included the following:
“3.A shareholder entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified number of shares or a specified proportion of the shareholder’s voting rights. If the shareholder appoints two proxies and the appointment does not specify this number or proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company.
4.A proxy form is attached. If required it should be completed, signed and returned to the Company’s registered office (Level 20, 114 William Street, Melbourne) or Computershare Investor Services Pty Ltd, Yarra Falls (452 Johnson Street, Abbotsford) or faxed to +61 3 9473 2555 in accordance with the instructions set out in the proxy form so as to be received by not later than 11am (AEDST) on 31 March 2009.”
THE PROXY FORM
The proxy form attached to the notice was in the form of the sample in Schedule A to these reasons. It consisted of two pages. There was an issue between the parties as to whether the proxy form, strictly so‑called, comprised both pages (as the Company submitted) or only the second page (as the applicants submitted). Having regard to the conclusion which I have reached on the principal issue in the proceeding, nothing turns on whether the proxy form executed by the members of the company and returned to Computershare Investor Services Pty Limited (“Computershare”) (which maintained the Company’s share register) comprised both pages or only the second page.
I draw attention to the following aspects of the proxy form:
(a)On the first page under the heading “Appointment of Proxy” the following was stated:
“Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.”
(b)In the section headed “STEP 1”, it gave members the option to appoint either the Chairman of the Meeting or another person to act as his, her or its proxy and in the absence of the appointment of either, the proxy appointed was the Chairman of the Meeting;
(c)In the section headed “STEP 1”, it was stated that the proxy was appointed to act generally at the meeting on the member’s behalf and to vote in accordance with, what was expressed as, “the following directions (or if no directions have been given, as the proxy sees fit) ...”;
(d)The items of business to be considered at the EGM were set out in the section headed “STEP 2” and opposite each of the eleven items there were three empty boxes in columns headed “For”, “Against” and “Abstain” which could be marked by a member. Each of the eleven proposed resolutions was identified;
(e)Towards the bottom of the proxy form on the last line of the section headed “STEP 2” and just above the place for the signature of the member there appeared the statement “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.”
There was included with the notice sent to members a letter to members dated 27 February 2009 signed by Mr Pursell as Managing Director. In that letter:
·shareholders were asked to reject the proposal that the entire present board, with the exception of Mr Campbell, be removed and that the board be replaced by nominees of the group of shareholders who requested the meeting;
·it was recommended that shareholders remove Mr Campbell as a director;
·Mr Pursell said he considered that shareholders should vote to retain the balance of existing Board members.
The Company’s share register was maintained by Computershare in accordance with s 174 of the Act. Computershare was also responsible for the ultimate receipt, collation and tallying of the proxy forms delivered by members to the Company.
Prior to the commencement of the EGM Computershare had prepared electronically what has been called a “live tally” of the votes represented in the proxy forms delivered by members. This included a tally of the votes represented in the proxy forms which were referred to by Computershare as “open‑useable” proxies, that is to say proxy forms where no direction had been given by the member submitting the proxy to the Chairman as to whether the Chairman should vote for or against resolutions or abstain from voting on resolutions. These proxy forms were also referred to in the course of the hearing as “undirected proxies”.
Prior to the commencement of the EGM on 2 April 2009 Mr Campbell had access to Computershare’s live tally of the votes represented in the proxy forms which were “open‑useable” proxies. Mr Campbell said that the final live tally of such votes disclosed the following proxy votes (one share gave an entitlement to one vote) in relation to each resolution:
(a) Resolution 1: 110,200,374
(b) Resolution 2: 109,377,058
(c) Resolution 3: 111,551,660
(d) Resolution 4: 105,496,066
(e) Resolution 5: 107,278,411
(f) Resolution 6: 107,374,411
(g) Resolution 7: 107,518,411
(h) Resolution 8: 108,254,411(i) Resolution 9: 107,374,411
(j) Resolution 10: 107,374,411
(k) Resolution 11: 108,072,513
A number of members who had delivered open‑useable proxy forms to the Company or to Computershare attended the EGM in person. They were required to revoke their appointment of a proxy in order to attend the EGM as a member. As a result the open‑useable proxies available to the Chairman and other nominated persons were reduced. The number of open‑useable proxies available to the Chairman at the time the polls were taken also included 108,000 open‑useable proxies that had not been collected by any nominated persons resulting from the non‑attendance at the EGM and therefore, “or failed”, that is, were given to the Chairman (within the meaning of that expression in “STEP 1” of the proxy form).
The total number of open‑useable proxies available to the Chairman at the time the polls were taken was:
(a) Resolution 1: 91,527,531
(b) Resolution 2: 87,879,670
(c) Resolution 3: 90,054,272
(d) Resolution 4: 86,799,223
(e) Resolution 5: 86,597,023
(f) Resolution 6: 86,693,023
(g) Resolution 7: 86,837,023
(h) Resolution 8: 87,597,023(i) Resolution 9: 86,693,023
(j) Resolution 10: 86,693,023
(k) Resolution 11: 88,419,670
THE RESULT OF THE EGM
The EGM was held on 2 April 2009. At the commencement of the meeting Mr Duncan Pursell announced that he was the Chairman of the Meeting and that there would be a poll in relation to each of the resolutions. (Presumably, although there was no evidence Mr Pursell was Chairman because, in accordance with cl 38.1 of the Company’s Constitution, Mr Pursell had been nominated as such Chairman). The Chairman then put each of the resolutions to a poll.
After the meeting concluded the Company formally announced in a letter to the Australian Securities Exchange (“ASX”) its tally of the votes cast at the meeting in relation to each resolution and advised as to whether or not each motion had been passed.
The result of the resolutions was that:
(a) the motion to remove Mr Campbell as a director was carried;
(b)the motions to appoint Mr Seckold, Mr Nightingale and Ms Leydin as directors were not carried;
(c)the motions to remove Mr Pursell, Mr Jansen, Mr Foster and Professor Collerson as directors were not carried;
(d)the motions to adopt a new Constitution and to approve of the directors placing up to 500,000,000 shares were carried.
The announcement which the Company made to the ASX set out the manner in which votes represented in proxies had been voted in respect of each resolution in the following terms:
“The results of the resolutions put to the extraordinary general meeting held today are as follows:
1) Removal of Mr Richard Campbell as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 825,339,060 760,561,832 3,785,457 110,200,374 The motion was carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 926,443,545 784,014,274 3,793,271
2) Adoption of a new Constitution
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 1,471,126,615 112,604,919 7,873,132 109,377,058 The motion was carried as a special resolution on a poll the details of which are:
For Against Abstain 1,592,991,040 114,484,919 7,870,132
3) Placement of Shares
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 1,443,253,552 133,419,808 9,757,704 111,551,660 The motion was carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 1,562,016,565 140,575,822 9,754,704
4) Removal of Mr Duncan Campbell Pursell as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 773,695,747 820,413,973 1,375,938 105,496,066 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 795,767,670 918,205,483 1,372,938
5) Removal of Mr Malcolm Lindsay Jansen as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 750,050,355 827,391,250 16,261,708 107,278,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 774,106,823 924,980,560 16,258,708
6) Removal of Mr Derek Alan Foster as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 763,533,152 827,037,717 2,114,444 107,374,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 787,589,620 924,723,027 2,111,444
7) Removal of Prof Kenneth Collerson as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 764,524,524 826,102,678 2,836,111 107,518,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 788,580,992 923,931,988 2,833,111
8) The appointment of Mr Norman Seckold as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 769,675,727 819,045,120 3,833,465 108,254,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 787,729,181 923,602,630 3,833,465
9) The appointment of Peter Nightingale as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 764,831,330 823,805,031 4,797,951 107,374,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 782,908,784 927,466,355 4,797,951
10) The appointment of Ms Melanie Leydin as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 763,278,241 824,730,120 3,631,951 107,446,411 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 781,427,695 928,391,444 3,631,951
11) Confirm appointment of Mr R Campbell as Director
The instructions given to validly appointed proxies in respect of the resolution were as follows:
For Against Abstain Proxy’s discretion 771,377,127 816,598,693 3,838,390 108,072,513 The motion was not carried as an ordinary resolution on a poll the details of which are:
For Against Abstain 794,402,050 916,010,650 3,838,390
By Order of the Board.”
An inspection of the proxy forms appointing the Chairman of the Meeting as the proxy of a member has disclosed that the Chairman of the Meeting, Mr Pursell, in respect of proxies given to him as Chairman which:
(a)did not contain a specific direction from the member giving the proxy to vote “For”, “Against” or “Abstain” in respect of the eleven resolutions;
(b)did contain the statement that the proxy was appointed to act generally at the meeting on the member’s behalf and to vote in accordance with what were expressed as “the following directions (or if no directions have been given, as the proxy sees fit) …”;
(c)did contain the notation that “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business”;
(which are referred to hereafter as “undirected proxies”),
voted in the following way in respect of each of the eleven resolutions:
(i) in favour of resolutions numbered 1, 2 and 3;
(ii) against resolutions numbered 4 – 11 inclusive.
If the Chairman had voted these undirected proxies given to him in favour of the resolutions, that is to say in accordance with the notation on the proxy form that the Chairman intended to vote undirected proxies in favour of each item of business, the result would have been that under:
(a) Resolution 1, Mr Campbell would have been removed as a director;
(b) Resolution 2, a new Constitution would have been and was adopted;
(c) Resolution 3, the placement of shares was passed;
(d) Resolution 4, Mr Pursell would have been removed as a director;
(e) Resolution 5, Mr Jansen would have been removed as a director;
(f) Resolution 6, Mr Foster would have been removed as a director;
(g) Resolution 7, Professor Collerson would have been removed as a director;
(h) Resolution 8, Mr Seckold would have been appointed as a director;(i) Resolution 9, Mr Nightingale would have been appointed as a director;
(j) Resolution 10, Ms Leydin would have been appointed as a director;
(k)Resolution 11, Mr Campbell’s appointment as a director would have been confirmed.
This result would have come about as a result of the votes which are set out in Schedule B to these reasons.
The applicants sought the following relief:
(a)an injunction restraining the Company from giving effect to the results of the resolutions put to the EGM on 2 April 2009 as set out in the announcement to the ASX;
(b)a declaration that the correct tally of the votes cast in relation to each resolution put to the EGM is as set out in Schedule B to these reasons;
(c)a declaration that Mr Campbell, Mr Seckold, Mr Nightingale and Ms Leydin are and were validly elected as directors of the Company in accordance with the voting tally set out in Schedule B to these reasons as from 2 April 2009;
(d)a declaration that Mr Pursell, Mr Jansen, Mr Foster and Professor Collerson are and were removed as directors of the Company in accordance with the voting tally set out in Schedule B to these reasons as from 2 April 2009;
(e)a declaration that the new Constitution of the Company is and was adopted in accordance with the voting tally set out in Schedule B to these reasons as from 2 April 2009;
(f)a declaration that the placement of shares is and was approved in accordance with the voting tally set out in Schedule B to these reasons.
CONTENTIONS
The applicants claimed that as a result of the Chairman failing, refusing or neglecting to vote proxies given to him which were undirected proxies in favour of each item of business which was before the EGM in each of the eleven resolutions, the Chairman:
(a)breached cl 50.6 of the Constitution of the Company which was in effect at the time of the EGM and provided:
“A proxy may vote or abstain as he or she chooses except to the extent that appointment of the proxy indicates the manner in which the proxy will vote on any resolution. The proxy must vote or abstain on a poll or show of hands in accordance with any instructions on the appointment.”
(b)breached s 250A(4)(c) of the Act which provides:
“An appointment may specify the way the proxy is to vote on a particular resolution. If it does:
(a) …
(b) …
(c)if the proxy is the chair – the proxy must vote on a poll, and must vote that way; and
(d) …”
(c)breached his duty at common law to vote all the undirected proxies given to him in accordance with the intention of the Chairman noted on the proxy form which the applicants contended was an instruction to him as to how the proxy was to be voted.
The Company denied that the Chairman committed the breaches claimed by the applicants. In relation to the allegation that the Chairman breached cl 50.6 of the Constitution the Company contended that:
(a)the appointment of a proxy contained in the proxy form did not provide instructions as to how the proxy was to vote or alternatively, the only instruction was one to the effect that the proxy could vote as the proxy saw fit;
(b)the appointment of the proxy did not indicate the manner in which the proxy would vote on any resolution;
(c)the words “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business” appearing in the section headed “STEP 2” where none of the “For”, “Against” and “Abstain” boxes had been marked by the member in respect of any item of business did not form part of the appointment of the proxy. The appointment of the proxy was confined to the section on the front page of the proxy form under the heading “Appointment of Proxy” and subheading “Voting 100% of your holding” (emphasis in original) and the section headed “STEP 1” and in any event did not specify the manner in which the Chairman would vote but merely stated the present intention of the Chairman, which intention was nonsensical because:
(i)votes in favour of the resolutions were obviously contradictory, particularly in relation to resolutions 1 and 11;
(ii)votes in favour of the resolutions were contrary to the Chairman’s letter dated 27 February 2009;
(iii)the stated intention of the Chairman was contrary to a sample proxy form posted on the Company’s website which provided for votes in the same terms as the Chairman’s letter;
(iv)the section of the proxy form headed “Appointment of Proxy” stated, inter alia, under the subheading “Voting 100% of your holding”, “Direct your proxy how to vote by marking one of the boxes opposite each item of business”.
As to the allegation of a breach of s 250A(4)(c) of the Act, the Company contended that the operation of that section is confined by its terms to proxies which specify the way in which the proxy is to vote on a particular resolution and has no application to undirected proxies.
In relation to the allegation of a breach of a common law duty by the Chairman, the Company admitted that the proxy holder owed a duty at common law to the proxy‑giver (but to no other person) to act in accordance with instructions of the proxy given but contended that the instructions were to vote as the proxy saw fit.
The Company also contended that:
(a)if there has been a breach of any common law duty then such a breach is only enforceable at the suit of the proxy‑giver against the proxy holder and not by any action of the applicants;
(b)if there has been a breach of s 250A(4)(c) of the Act or of cl 50.6 of the Constitution, the Court should not grant the applicants the relief sought in circumstances where there is no allegation made by any proxy‑giver that the proxy‑giver intended that the Chairman as proxy holder should vote in favour of each of the resolutions and not as the Chairman saw fit;
(c)if there has been a breach of s 250A(4)(c) of the Act or cl 50.6 of the Constitution the consequence of such breach is that the votes so cast are invalid, in which case the results of the resolutions remain the same, and the result is not that they are counted in a manner claimed by the applicants.
THE PROPER CONSTRUCTION OF THE PROXY FORMS
The principal issue to be determined is the proper construction of the form of the undirected proxies, that is to say, did they constitute a direction to the Chairman of the meeting to vote the members’ shares in favour of each resolution or did they constitute a direction to the Chairman of the meeting to vote the members’ shares as the Chairman saw fit?
The proxy forms are, in my opinion, to be considered and construed as commercial documents. They are, in substance, directions or appointments by a principal to an agent authorising the agent to act on behalf of the principal in a particular way. In such circumstances there is a duty upon the agent (the proxy) to abide by the direction or instruction given by the principal (the shareholder): Whitlam v Australian Securities and Investments Commission (2003) 57 NSWLR 559 at 600‑601 at par [152].
The Company filed four affidavits sworn by four shareholders in the Company who had completed and lodged proxy forms in which they had appointed the Chairman of the meeting as their proxy but had not otherwise marked any of the “For”, “Against” or “Abstain” boxes on the form. Those shareholders said that they did not provide any directions as to how the proxy was to vote and that they appointed the proxy to vote as he saw fit. They said they appointed the Chairman as their proxy expecting that Mr Pursell, Managing Director, was to be Chairman and that they expected at the time they completed the proxies that the Chairman would vote in favour of resolution 1 (the removal of Mr Campbell as a director), against resolutions 4, 5, 6 and 7 (the removal of the current Board) and against resolutions 8, 9, 10 and 11 (the appointment of the alternate board). The shareholders said that at no point of time did they expect, or want, their proxy to vote in favour of all resolutions put forward at the EGM.
The secretary of the Company, Mr John Lawrence Neill, said in an affidavit that between 14 and 16 April 2009 he had received 16 letters from shareholders who provided an “open‑useable proxy” (that is to say, undirected proxies) to the Chairman and who were concerned that the applicants were submitting that the votes cast as a consequence of these open‑useable proxies should be counted as affirmative votes for each of the eleven resolutions and not as cast by the Chairman of the meeting.
This evidence (the four affidavits of the shareholders and Mr Neill’s evidence in his affidavit) is not admissible in relation to the proper construction of the proxy forms sent in by the shareholders and the proper construction of the direction given to the proxy in these proxy forms.
It is well settled, in particular, by recent High Court authority, that the meaning of commercial contracts in documents and their proper construction is to be determined objectively, although regard may be had to all the surrounding circumstances known to the relevant parties at the time the document was created and that the subjective belief or understanding of the parties in relation to the document is not relevant or admissible: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461‑462; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 179; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at 292‑293; Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1 at 12‑13 per Weinberg J, at 22 per Kenny J, at 50 per Lander J.
The Company did not submit otherwise on the issue of the proper construction of the proxy forms. Rather, it submitted that evidence as to what the members who submitted proxy forms intended by the manner in which they filled out the proxy forms was relevant to issues which might arise in relation to the form of relief the Court might grant if the Court was disposed to find in the applicants’ favour on the issue of the proper construction of the proxy forms. I deferred consideration of the admissibility of this evidence on the basis submitted by the Company until it became necessary to consider the relief to be granted to the applicants. Having regard to the view I have formed, that the applicants’ claim fails on the principal issue whether the undirected proxies constituted a direction to the Chairman to vote in favour of each of the eleven resolutions, it is not necessary to consider the nature of the relief to be granted to the applicants. In those circumstances, it became unnecessary to determine the admissibility of the evidence contained in the four affidavits and the relevant part of Mr Neill’s affidavit.
As I noted earlier (par [6]) above) there was an issue between the parties as to whether the proxy forms which were executed by the shareholders were constituted by one or two pages. The proxy forms sent out to shareholders consisted of two pages. The first page was addressed to the shareholders and contained instructions as to how the proxy form was to be signed. It contained a heading “Appointment of Proxy” under which there appeared the following:
“Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.
…”The second sheet of paper was the actual proxy form as set out in Schedule A to these reasons.
The Company submitted that the proxy form to be interpreted and construed was the two page document whereas the applicants submitted that only the second page was the relevant document to construe.
The applicants submitted that the “appointment” of the proxy was constituted by the second page of the proxy form. I accept that submission for the following reasons:
(a)clause 50.1 of the Company’s Constitution states that “a Member who is a natural person may appoint a proxy by a written appointment signed by the appointor or the appointor’s attorney”;
(b)it is clear from the layout of the second page of the proxy form that it is the document which constitutes the proxy;
(c)there was evidence from the relevant officer of Computershare, which I accept, that it was only the second page which was received by Computershare.
I consider that the first page of the proxy form was no more than an explanation to members as to the proxy form and the manner in which it was to be completed.
The applicants submitted that the central issue for determination was whether the conduct of the Chairman in not voting the undecided proxies in favour of each item of business constituted a breach of one or more of:
(a) clause 50.6 of the Company’s Constitution in effect at the time of the meeting;
(b) section 250A(4)(c) of the Act;(c) the Chairman’s relevant duty at common law.
The applicants submitted that the Chairman’s intention stated at the foot of “STEP 2” in the proxy form amounted to an indication as to the manner in which the Chairman would vote on each item of business and that once the proxy form was executed by the proxy‑giver, it became the proxy‑giver’s document indicating the manner in which the proxy was directed. It followed, submitted the applicants, that the Chairman was expressly prohibited by cl 50.6 of the Constitution from voting the undirected proxies other than in accordance with that indication and direction. The applicants submitted further that cl 50.6 placed a positive obligation on the Chairman to vote the undirected proxies in such a way.
The applicants submitted that the words in the section of the undirected proxies marked “STEP 1” did not amount to an indication or instruction to the Chairman to vote as the Chairman saw fit. It was submitted that those words must be read together with the Chairman’s intention and so read together, the reference to “the following directions” in “STEP 1” must be a reference to all of “STEP 2” of the proxy form which included the indication of the Chairman’s intention.
The Company contended that the statement of the intention of the Chairman in “STEP 2” of the proxy form was “obviously nonsensical” because:
(a)votes in favour of the resolutions were obviously contradictory, particularly in relation to resolutions 1 and 11;
(b)votes in favour of the resolutions were contrary to the Chairman’s letter dated 27 February 2009;
(c)the stated intention of the Chairman was contrary to a sample proxy form posted on the Company’s website.
I do not accept that the statement of the intention of the Chairman on the proxy form was nonsensical, that is, that it made no sense. It does give rise to an arguable inconsistency within the four corners of the proxy form which is to be resolved by attempting to reconcile the arguable inconsistent provisions on the proxy form by reference to the proper construction of the proxy form, determined objectively.
One or other of resolutions 1 and 11 may have been otiose or in substance a duplication but that was brought about by the Company’s secretary, Mr Neill, adding the resolutions numbered 1, 2 and 3 to the list of resolutions which the 124 shareholders had requested be put before the EGM. Resolutions 1 and 11 were not contradictory; rather they required consideration of the same substantive issue, whether Mr Campbell should be a director of the Company to be addressed twice.
The letter of 27 February 2009 signed by Mr Pursell as Managing Director, not in his capacity as Chairman of the Company or Chairman (or proposed Chairman) of the EGM asked shareholders to reject the proposal to remove the then “entire present Board with the exception of Mr Richard Campbell” and to replace the Board with nominees of the group of shareholders who had requested the calling of the EGM. The letter concluded with a recommendation that shareholders remove Mr Campbell as a Director of the Company and retain the balance of the Board. Undirected proxies voted by the Chairman of the Meeting in favour of resolutions (or items) 4 to 11 would be inconsistent with, or not in accordance with the request and recommendation to shareholders contained in the letter. However the letter, albeit part of the surrounding circumstances leading up to, and resulting in, the completion of the proxy forms by members and their delivery to the Company or to Computershare, does not dictate or require that the intention of the Chairman noted in “STEP 2” of the proxy form be ignored or disregarded. It remains part of the four corners of the proxy form to be construed.
The sample proxy form posted on the Company’s website is to be regarded similarly. It does not have the effect that the intention of the Chairman noted in “STEP 2” of the proxy form is to be ignored or disregarded.
The Company submitted that upon the proper construction of the proxy form alone, one was led to the conclusion that an appointment which did not contain specific directions in “STEP 2” by marking the boxes in “STEP 2” “For”, “Against” and “Abstain” in respect of the eleven items of business gave rise to an appointment in favour of the proxy holder entitling the proxy to act generally at the meeting and to vote as the proxy saw fit.
The Company submitted that the words appearing at the foot of “STEP 2”, “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business”, did not form part of the direction given by the proxy‑giver to the proxy holder upon the proper construction of the proxy form, but merely conveyed a statement of intention on the part of the Chairman of the Meeting.
I consider that the Company’s construction of the proxy form is objectively the correct construction. By marking the box in “STEP 1” appointing the Chairman of the Meeting the proxy, or by not completing that box or the box next to it for the appointment of another person to be the proxy and by not completing or marking any of the boxes in “STEP 2” marked “For”, “Against” and “Abstain”, the member was giving a direction to the Chairman of the Meeting to vote as the proxy, that is as the Chairman, saw fit. By adopting that course the member was not giving the Chairman a direction to vote in favour of each item of business. When one turns to “STEP 2” and the words at the bottom of “STEP 2”, “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business”, I consider that this was no more than an indication, albeit, at that time, a present indication, of the manner in which the Chairman, whoever that was, intended to vote. I do not consider that an indication of the manner in which the Chairman intended to vote undirected proxies was thereby converted into a “direction” by the shareholder as to how the Chairman should vote.
The “following directions” is a reference to the boxes under the headings “For”, “Against” and “Abstain” headings in “STEP 2”. To be a direction, what is said to be the direction must emanate from the proxy‑giver or member. If the member did not mark any of the boxes in the three columns under the “For”, “Against” and “Abstain” headings, the consequence was that no direction had been given by the member. The words at the foot of the section “STEP 2”, “The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business” is not a statement that emanates from the member; rather it is an indication of the intention of the Chairman of the Meeting. So understood, it is not properly described as or referred to as a “following direction”.
It follows, therefore, that consistently with cl 50.6 of the Company’s Constitution the Chairman, as proxy, did not vote on the poll otherwise than in accordance with “any instructions” on his appointment. Further, consistently with s 250A(4)(c) of the Act, the Chairman has not voted the undirected proxies contrary to the way the Chairman was appointed to vote in the proxy form.
It also follows that the Chairman has not acted in breach of such common law duty as he owed to the members or proxy‑givers consistently with the appointment contained in the proxy forms.
It is therefore unnecessary to consider the submissions made by the Company as to why the relief sought by the applicants was not available to them if I had found that there was a breach of cl 50.6 of the Constitution, s 250A(4)(c) of the Act or a breach of the common law duty relied on by the applicants.
The application in the originating process should be dismissed and the applicants should pay the respondent’s costs of and incidental to the application.
I certify that the preceding fifty‑two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate:
Dated: 24 April 2009
Counsel for the Applicants: D H Denton S.C. with R L Enbom Solicitor for the Applicants: O'Donnell Salzano Lawyers Pty Ltd Counsel for the Respondent: E N Magee QC with M S Osborne Solicitor for the Respondent: Fitzpatrick Legal
Date of Hearing: 17 April 2009 Date of Judgment: 24 April 2009 SCHEDULE A
SCHEDULE B
1. The removal of Richard Campbell as Director
For: 926,443,545
Against: 784,014,274Abstain: 3,793,271
2. Adoption of a new constitution
For: 1,592,991,040
Against: 114,484,919Abstain: 7,870,132
3. Placement of shares
For: 1,562,016,565
Against: 140,575,822Abstain: 9,754,704
4. Removal of Duncan Campbell Pursell as Director
For: 882,508,893
Against: 831,464,260Abstain: 1,372,938
5. Removal of Malcolm Lindsay Jansen as Director
For: 860,645,846
Against: 838,441,537Abstain: 16,258,708
6. Removal of Derek Alan Foster as Director
For: 874,224,643
Against: 838,088,004Abstain: 2,111,444
7. Removal of Professor Kenneth Collerson as Director
For: 875,360,015
Against: 837,152,965Abstain: 2,833,111
8. The appointment of Norman Seckold as Director
For: 875,268,204
Against: 836,063,607Abstain: 3,833,465
9. The appointment of Peter Nightingale as Director
For: 869,543,811
Against: 840,831,328Abstain: 4,797,951
10. The appointment of Melanie Leydin as Director
For: 868,062,718
Against: 841,756,421Abstain: 3,631,951
11. Confirm appointment of Richard Campbell as Director
For: 882,763,720
Against: 827,648,980Abstain: 3,838,390
0
6
0