Clarke v Australian Computer Society Incorporated - [2019] FCA 2175

FEDERAL COURT OF AUSTRALIA

Clarke v Australian Computer Society Incorporated [2019] FCA 2175

File number:

NSD 1892 of 2019

Judge:

WIGNEY J

Date of judgment:

23 December 2019

Catchwords:

CORPORATIONS – claim by member of incorporated association to set aside special resolution passed at general meeting of that association and the resulting permission given by the registrar-general under the Associations Incorporation Act 1991 (Cth) to the association to apply to the Australian Securities & Investments Commission for registration as a company limited by guarantee – where special resolution put to the vote of the members to change the association to a company limited by guarantee and to replace existing rules with a new constitution compliant with the Corporations Act 2001 (Cth) – where special resolution passed by one vote – where applicant claimed that the association’s rules concerning notification of proposed alteration to its rules not complied with – where applicant claimed that notice of meeting not sent to members in accordance with the rules – where applicant claimed that explanatory memorandum was materially misleading – where applicant claimed that decision that proxies were invalid miscarried – where applicant claimed that chair of the meeting breached his duties by restricting debate at the general meeting – consideration of whether notice of general meeting was sent to members where access provided by way of hyperlink – consideration of whether notice of meeting was materially misleading – consideration of whether proxies were invalid by reason of clerical errors – consideration of power to correct clerical errors in a proxy form – consideration of whether chair of meeting breached his duties as chair by adopting a procedure which unjustifiably restricted debate of the special resolution– applicant’s contentions concerning the notice of meeting, invalidation of proxies and conduct of meeting upheld – consideration of whether the various breaches were material – special resolution set aside

Legislation:

Acts Interpretation Act 1901 (Cth) s 28A

Acts Interpretation Act 1954 (Qld) s 39

Associations Incorporation Act 1991 (ACT) ss 14(1), 14(2), 16(b), 16(c), 18(1)(b)(i), 18(1)(b)(iii), 30, 32, 32(1), 33(1), 48, 49, 53, 60(1), 60(2), 68, 69, 70, 82(1), 83, 82(3), 124, 127(2)(a), Pt 4 Div 4.4, Pt 6, Sch 1

Civil Law (Wrongs) Act 2002 (ACT) Ch 9

Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law s 18

Corporations Act 2001 (Cth)

Electronic Transactions (Queensland) Act 2001 (QLD) s 11

Fair Work (Registered Organisations) Act 2009 (Cth)

Federal Court of Australia Act 1976 (Cth) s 22

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 9(3)

Cases cited:

Austar Finance Group Pty Ltd v Campbell [2007] NSWSC 1493; 215 FLR 464

Byng v London Life Association Ltd [1990] Ch 170

Campbell v The Australian Mutual Provident Society (1906) 7 SR (NSW) 99

Carruth v Imperial Chemical Industries Ltd [1937] AC 707

Conveyor & General Engineering Pty Ltd v Basetec Services Pty Ltd [2015] 1 Qd R 265

Crosby v Kelly [2012] FCAFC 96; 203 FCR 451

Devereaux Holdings Pty Ltd v Pelsart Resources…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2019] FCA 2175
Decision Date: 23 December 2019

CaseChat Overview and Summary

The applicant, Clarke, sought to set aside a special resolution passed at a general meeting of the Australian Computer Society Incorporated (ACS). Clarke claimed that the resolution to change ACS from an incorporated association to a company limited by guarantee and to adopt a new constitution was invalid due to several procedural errors and misleading information. The Federal Court examined whether the notice of the meeting was adequate, whether proxies were invalid, and whether the chair of the meeting restricted debate improperly. The court found that the notice of the meeting was inadequate, proxies were invalid due to clerical errors, and the chair’s conduct restricted debate unjustifiably. Despite these findings, the court needed to determine whether these breaches were material enough to invalidate the special resolution. Ultimately, the court ruled that the special resolution was invalid and set it aside, along with the permission granted to ACS to apply for registration as a company limited by guarantee.

The primary legal issues before the court were whether the special resolution passed at the general meeting was valid and whether the procedural breaches were material. The court had to consider whether the notice of the meeting was properly provided, whether the proxies were valid despite clerical errors, and whether the chair's conduct during the meeting was appropriate. The applicant argued that these procedural breaches rendered the resolution invalid. The court acknowledged the breaches but focused on their materiality. Given the significant nature of the changes proposed by the resolution, the court concluded that the procedural breaches were indeed material and warranted setting aside the special resolution. The court also found that the permission for ACS to apply for registration as a company limited by guarantee was invalid due to the invalidated resolution.

Orders

Orders of the court

1. The convening of the general meeting of the first respondent held on 25 October 2019 was invalid.

2. The special resolution purportedly passed at the general meeting held on 25 October 2019 was invalid.

THE COURT ORDERS THAT:

1. The special resolution purportedly passed at the general meeting held on 25 October 2019 be set aside.

2. The permission granted to the first respondent by the second respondent pursuant to s 82(3) of the Associations Incorporation Act 1991 (ACT) to apply to the Australian Securities & Investments Commission for registration be set aside.

3. The proceeding be listed for a case management hearing on a date to be fixed in February 2020 for the consideration of what further steps should be taken in the proceeding, including what, if any, orders or directions should be made concerning the holding of a further general meeting of the first respondent.

4. The first respondent pay the applicant’s costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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