Colbern Nominees Pty Ltd v Prime Minerals Ltd - [2009] WASC 289

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COLBERN NOMINEES PTY LTD -v- PRIME MINERALS LTD [2009] WASC 289

CORAM: LE MIERE J

HEARD: 14 SEPTEMBER 2009

DELIVERED : 25 SEPTEMBER 2009

FILE NO/S: COR 175 of 2009

MATTER :Prime Minerals Ltd ACN 120 658 497

BETWEEN: COLBERN NOMINEES PTY LTD
Plaintiff
AND
PRIME MINERALS LTD
Defendant

Catchwords:

Corporations - General meeting called by members - Meeting postponed by directors - Whether period of postponement exceeds period specified in company's constitution - Whether postponed meeting is to be held at a reasonable time - Turns on own facts

Legislation:

Acts Interpretation Act 1901 (Cth), s 36
Corporations Act 2001 (Cth), s 105, s 249F, s 249R, s 249Q, s 250R, s 1324
Interpretation Act 1984 (WA), s 61

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr S K Dharmananda & Mr T P O'Leary
Defendant: Mr M L Bennett & Mr W C J Zappia

Solicitors:

Plaintiff: Blakiston & Crabb
Defendant: Lavan Legal

Case(s) referred to in judgment(s):

Associated Beauty Aids Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1965) 113 CLR 662
Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429
Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771
Fiore v Carlton Football Club Ltd [2002] VSC 455; (2003) 21 ACLC 145
Howard v Mechtler [1999] NSWSC 232; (1999) 30 ACSR 434
McPherson v Mansell (1994) 16 ACSR 261
NRMA v Snodgrass [2002] NSWSC 590; (2002) 42 ACSR 371
Pinnacle VRB Ltd v Ronay Investments Pty Ltd [2000] VSC 330; (2000) 35 ACSR 240
Prowse v McIntyre (1961) 111 CLR 264
Smith v Paringa Mines Ltd [1906] 2 CH 193

LE MIERE J:

Introduction

By its amended originating process the plaintiff applies for relief under s 1324 of the Corporations Act 2001 (Cth) (the Act) and under the inherent jurisdiction of the court. The plaintiff seeks orders:
(a)requiring the defendant by its board to proceed with the meeting on 7 October 2009, or to hold the meeting called for 7 October 2009 at a reasonable time and place in accordance with s 249R of the Act;
(b)restraining the defendant from holding a meeting called for 7 October 2009 on 16 November 2009;
(c)a declaration that the purported resolution of the board of the defendant to postpone the general meeting of members called for 7 October 2009 to 16 November 2009 is invalid.

The facts

The facts giving rise to this application are not in dispute. The plaintiff (Colbern Nominees) is a substantial shareholder in the defendant (Prime) and holds at least 5% of the votes that may be cast at a general meeting of Prime. On 5 August 2009 Colbern Nominees gave notice to the directors of Prime of its intention to move resolutions removing the current directors at a meeting of the members of Prime.
On 6 August Prime caused a writ to be issued out of this court claiming damages against Landlife Corporation Pty Ltd (Landlife), Mr Brett Matich and Colbern Nominees. I will refer to the proceedings commenced by that writ as CIV 2416 of 2009. On 11 August Prime made an ASX announcement concerning the commencement of CIV 2416 of 2009. Prime said that the writ claimed damages for equitable compensation for breach of fiduciary obligations, account of profits or such other or further relief that the court considers fit against Landlife, Brett Match and Colbern Nominees pursuant to a corporate advisory proposal between Prime and Landlife entered into in January 2007. Prime said that the proceedings arise out of an alleged breach by the defendants of their obligations to Prime pursuant to an agreement to provide Prime on an exclusive basis with services in relation to the identification of potential acquisitions or other corporate transactions for Prime, pursuant to which Landlife was paid a retainer of $15,000 per month by Prime. It further said that in February 2007 the defendants facilitated the sale of the Peary Land project in Northern Greenland to Ironbark Gold Ltd for a payment of $6 million and the issue of three million shares and six million options in Ironbark Gold Ltd. Prime alleges that the opportunity to acquire the project should have been disclosed to, and offered to, Prime.
On 12 August 2009 Colbern Nominees gave notice of a general meeting of shareholders of Prime to be held at the Parmelia Hilton Hotel on Wednesday 7 October at 11 am for the purpose of transacting the business referred to in the notice. The items of business referred to in the notice are three resolutions to remove the current directors, three resolutions to appoint Brett Matich, Bruce Robert Errol Franzen and Warren Richard Dunne as directors and a further resolution to remove all persons appointed as a director of Prime between 5 August 2009 and the time of the commencement of the meeting. On 17 August Prime made an ASX announcement that it had received a copy of documents in relation to the general meeting called by Colbern Nominees. In its announcement Prime recommended that shareholders take no action with respect to the meeting documents until such time as Prime had had the opportunity to write to its shareholders in relation to the meeting.
On 19 August the board of Prime resolved to postpone the meeting called by Colbern Nominees. Prime made an ASX announcement that it had exercised the power vested in it pursuant to Prime's constitution to postpone the shareholder meeting for a period of 40 days to 16 November 2009 at 4 pm at The Esplanade River Suites, Como. The announcement by the executive chairman of Prime, Vincent Hyde, included:
Information in relation to Colbern Nominees
The sole shareholder, director and secretary of Colbern Nominees is Mr Marc Clifton. Colbern Nominees acquired its shares in Prime prior to the listing of Prime on ASX in relation to the vend of certain tenements to Prime at a deemed issue price of 10 cents per share. Colbern Nominees has disclosed to ASX that it holds shares in Prime on behalf of the Colbern Trust. Colbern Nominees, however, has failed to respond to a beneficial tracing notice sent by Prime requiring Colbern Nominees to disclose who it holds the shares in Prime on trust for.
As announced to ASX on 6 August 2009, Colbern Nominees (along with others) is being sued by Prime in the Supreme Court of Western Australia. Further details in relation to this litigation is set out below.
Mr Marc Clifton is the stepson of Mr Dan Matich. Mr Dan Matich is the principal of D&L Tenement Services Pty Ltd which until recently was Prime's tenement manager, being paid a fee of $2,300 per month plus expenses. On 17 July 2009 Prime wrote to D&L Tenement Services Pty Ltd requesting the handover of Prime's files and a comprehensive report in relation to each tenement within 14 days. Prime has received in response a request for payment of money but has still not received any of the information requested. Prime has subsequently engaged the service of a new tenement manager at the rate of $280 per month.
Background on nominees for Board
Mr Brett Matich and a company that he is the sole director and shareholder of, Landlife Corporation Pty Ltd (Landlife Corporation) are also being sued by Prime pursuant to the Supreme Court proceedings referred to above.
Landlife Corporation has been a consultant to Prime since January 2007, having been engaged on a retainer of $15,000 per month to provide, amongst other things, corporate advice on acquisitions, sales and divestments, takeovers and mergers, joint ventures or strategic alliances with partners or other corporate transactions which enhance shareholder value. Landlife Corporation has received a total of in excess of $500,000 from Prime over the period of the consultancy either in fees or reimbursements. In early 2009 your Board reviewed this arrangement and asked Landlife Corporation for a report on its activities to justify the continuation of the consultancy. Within a week I received a telephone call from Mr Brett Matich demanding to be appointed as a director of Prime.
Landlife Corporation was also issued with shares in Prime prior to its listing on ASX at an issue price of 1 cent per share.
Mr Warren Dunne is a close friend of Mr Paul Matich, the father of Dan and Brett Matich. Mr Dunne is a co‑director with me on another company, Power Resources Limited. Mr Dunne has previously told me that he manages a car park in Fremantle. At a Board meeting of Power Resources Limited on 29 July 2009 I asked Mr Dunne if he had any corporate or mining experience and his answer was no.
Your Board is unable to provide you with any information about Mr Robert Franzen other than the information set out in the meeting documents prepared by Colbern Nominees.
…
The Supreme Court litigation
The Supreme court litigation relates to the contract between Prime and Landlife Corporation pursuant to which Landlife Corporation agreed on an exclusive basis to provide certain services to Prime. Your Board has recently discovered that Landlife Corporation appears to have breached its obligations to Prime and diverted a substantial opportunity to another company, and accordingly commenced the Court proceedings.
Prime contends that in breach of its obligations to Prime, Landlife Corporation facilitated the sale of the Peary Land project in northern Greenland to Ironbark Gold Limited in or about February 2007, which resulted in the payment of $6 million and the issue of 3 million shares and 6 million options in Ironbark Gold Limited to Colbern Nominees. Prime is seeking various relief against the defendants in that action including damages, orders for the payment of equitable compensation and an account of profits.
Your Board is concerned that in the event Colbern Nominees was successful in procuring the appointment of Mr Brett Matich and its other nominees to the Prime Board that Prime's rights pursuant to this litigation may be compromised, given that the defendants in that action are Colbern Nominees, Mr Brett Matich and Mr Matich's company, Landlife Corporation.
Prime therefore intends to seek an expedited trial of the Supreme Court proceedings so that if possible those proceedings can be finalised prior to the shareholder meeting at which you will be asked to decide who you want to manage your Company.
…
Postponement of General Meeting
Your Board considers it is in the best interests of all shareholders for the legal dispute between Prime and its shareholder, Colbern Nominees, Colbern Nominees' nominee for the Board (Mr Brett Matich) and Mr Matich's company, Landlife Corporation, to be finalised if at all possible before shareholders are required to decide who you wish to manage your Company going forward.
On this basis the Board has exercised the power vested in it pursuant to Prime's Constitution to postpone the shareholder meeting for a period of 40 days to 16 November 2009 at 4.00pm at the Esplanade River Suites, 112 Melville Parade, Como. The postponement will also give shareholders the opportunity to consider Prime's Annual Report prior to making a decision as to the composition of the Board.
The new date and location of the meeting have been chosen to minimise inconvenience to shareholders in circumstances where Prime has traditionally held its AGM at this venue and has already made arrangements to hold the Company's 2009 AGM at the same venue on the morning of 17 November 2009.
On 24 August 2009 Prime placed an advertisement in The Australian newspaper giving notice that the proposed meeting of members of Prime called for 11 am on 7 October 2009 at the Parmelia Hilton Hotel had been postponed to 4 pm, 16 November 2009 and will now be held at The Esplanade River Suites, Como.
On 1 September the solicitors for Colbern Nominees wrote to the directors of Prime in relation to the announcements by Prime concerning the meeting of Prime's members that Colbern Nominees had called pursuant to s 249F of the Act for 7 October 2009. Colbern Nominees' solicitors said that Colbern Nominees considered that:
(a)the proposed (postponed) meeting time is not reasonable contrary to s 249R of the Act;
(b)the board of Prime has not exercised bona fide the power to postpone the 7 October meeting, vested in the board by Prime's constitution; and
(c)the purported postponement by the board of the 7 October meeting does not comply with cl 12.2(c) of Prime's constitution.
Colbern Nominees' solicitors requested by 12 pm on 2 September 2009 an explanation as to the reason for the purported postponement of the 7 October 2009 meeting together with the minutes of the meeting at which Prime had resolved to postpone the 7 October 2009 meeting. Colbern Nominees' solicitors did not receive the information they had requested.
On 4 September 2009 Colbern Nominees commenced the present proceedings.
In the meantime, between 1 ‑ 4 September 2009 Colbern Nominees received a number of proxies from Prime shareholders. The proxy forms reveal that shareholders holding 19, 397,832 shares, or 59.66% of the shares issued in Prime, appointed the chairman of the meeting or the proxy holder to vote in favour of the resolutions that the current directors be removed as a director. The proxies reveal that the same shareholders favour the appointment of Mr Franzen as a director and that a substantial number, but less than 50%, favour the appointment of Brett Matich and Mr Dunne as directors.

Legal framework

There are two types of general meeting ‑ the annual general meeting and other general meetings. A public company must have an annual general meeting to be held at least once in every calendar year and within the period of five months after the end of the company's financial year. Section 250R of the Act provides that the business of an annual general meeting may include consideration of the annual financial report, directors' report and auditor's report and the election of directors even if not referred to in the notice of meeting.
Section 249R of the Act provides that a meeting of the members of a company must be held at a reasonable time and place. The requirement applies to both annual general meetings and other general meetings of members. The section imposes an obligation on directors when deciding the time and place of a general meeting to have regard to the convenience of members in being able to attend at a meeting. In Howard v Mechtler [1999] NSWSC 232; (1999) 30 ACSR 434 members of the St George Budapest Soccer Club Ltd requisitioned the convening of a meeting to consider a special resolution to remove a number of the directors and to elect others in their place. The directors did not convene the meeting and the requisitionists purported to convene a meeting a 6 pm on 30 December 1998. Austin J held that the time and place was not inherently an unreasonably time to hold a meeting:
Section 249R, which was also introduced on 1 July 1998, says that a meeting of a company's members must be held at a reasonable time and place. Again, the Explanatory Memorandum for the Bill, which introduces that provision, is unhelpful. However, once again my opinion is that the section does not create any new substantive law. In Smith v Sadler (1997) 25 ACSR 672, Young J was able to find a similar constraint in the general law, particularly the law with respect to fraud on the power to convene a meeting. He held that a meeting convened at premises to which the plaintiff would be denied access was not convened at an appropriate place.
In the present case there is evidence that the time and place of the meeting were inconvenient, at least to some of the plaintiffs who were unable to attend. However, there is also evidence which implies that the plaintiffs as a group had decided to boycott the 30 December meeting. Therefore I am not persuaded that they would have been there even if it had been held at a time when they were free to attend. Moreover, the time limits established by Article 26 require that the requisitionists must act swiftly after the failure of the secretary to convene the meeting within fourteen days of the requisition. Effectively it would have been necessary to hold the requisitioned meeting in early January, if not late December, at a time which presumably would have been equally inconvenient, in order to fit within the forty‑day period permitted by Article 26.
Finally, I am not persuaded that the time and the place of 6 pm on 30 December 1998 was inherently an unreasonable time. It may be that some people would be on vacation at that time, but as far as I am aware many people continue to work between Christmas and New Year's Day, other than upon public holidays or during the vacations which they choose to take. Therefore I am not persuaded by the submission that s 249R be invoked to strike down the meeting [39] ‑ [41].
Section 249F of the Act provides that members with at least 5% of the votes that may be cast at a general meeting of the company may call, and arrange to hold, a general meeting. The members calling the meeting must pay the expenses of calling and holding the meeting. The meeting must be called in the same way, so far as is possible, in which the general meetings of the company may be called. Section 249Q, which provides that a meeting of a company's members must be held for a proper purpose, and s 249R, which provides that a meeting of a company's members must be held at a reasonable time and place, apply to a meeting convened by members pursuant to s 249F.
Directors have no power to postpone a meeting of the company properly convened unless the constitution expressly authorises them to do so: McPherson v Mansell (1994) 16 ACSR 261; Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429; Smith v Paringa Mines Ltd [1906] 2 CH 193. Clause 12.2(c)(i) of Prime's constitution confers upon the directors the power to postpone a meeting of members. This raises the question whether the provisions of s 249F on their proper construction permit such a postponement by the directors under the constitution. In Pinnacle VRB Ltd v Ronay Investments Pty Ltd [2000] VSC 330; (2000) 35 ACSR 240 Beach J held that a provision of a company's constitution granting to the directors power to postpone the holding of any general meeting for a period of up to 21 days applied to a meeting called pursuant to s 249F. M W Shand QC has doubted the correctness of the decision of Beach J: Shand M W, 'The Postponement by the Directors of Meetings Convened by a Member under s 249F of the Corporations Law' (2001) 19 Company and Securities Law Journal 160.
In Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771 Central, a member of the defendant company, purported to call a general meeting of the company for 3 November 2004 to consider resolutions to remove the directors and elect others. The board resolved that this general meeting should be postponed until the date of the annual general meeting on 29 November 2004, when the election of directors was also to be considered. Central commenced proceedings against the company. The board passed a resolution specifying the time and place of the meeting, to be held immediately prior to the annual general meeting. Clause 13.4 of the constitution provided that the board may postpone, cancel or change the place for a meeting of members by giving written notice to the ASX. Central claimed that the purported resolution of the board to postpone the meeting was invalid on the ground that cl 13.4 of the constitution cannot, as a matter of law, and does not as a matter of construction, apply to a meeting convened pursuant to s 249F of the Act. Emmett J held that cl 13.4 is not inconsistent with the provisions of s 249F and does not of itself derogate from the right conferred by s 249F of the Act. Further, Emmett J held that, as a matter of construction of the constitution, cl 13.4 of the constitution applies to the meeting convened by the notice of meeting [32]. Emmett J made the following observation about the exercise of the power to postpone a meeting called pursuant to s 249F:
On the other hand, the circumstances in which it will be proper for the board to postpone or change the place for a meeting called pursuant to s 249F, or to cancel such a meeting, will be limited and such powers must, of necessity, be exercised extremely sparingly so as not to frustrate the right conferred by s 249F. If the directors change the place, as well as the time, they must have some justification for doing so. The directors cannot arbitrarily postpone or change the place for the meeting. Nevertheless, the powers exist. The question is whether they have been validly exercised in the present case [33].

The issues

The application raises two issues. First, Colbern Nominees contends that 16 November 2009 is not a reasonable time for the holding of the general meeting called by the plaintiff. Second, Colbern Nominees contends that the directors' purported postponement of the meeting from 11 am on 7 October to 4 pm on 16 November is a postponement for a period exceeding 40 days and hence is a breach of the constitution which confers on the directors the power to postpone the proposed meeting for a period not exceeding 40 days.
Colbern Nominees does not submit that cl 12.2(c)(i) of the constitution does not apply to a meeting convened pursuant to s 249F of the Act. The plaintiff agrees that the directors have the power to postpone the meeting called pursuant to s 249F for a period not exceeding 40 days. It is therefore not necessary to consider whether cl 12.2(c)(i) of the constitution, as a matter of law or as a matter of construction, applies to the meeting convened pursuant to s 249F of the Act. It is not necessary to consider whether or not the postponement for a period of 40 days renders nugatory, or substantially affects, the statutory right conferred by s 249F and unlawfully interferes with the exercise of that statutory right.
The plaintiff does not submit that the directors' decision to postpone the meeting to 16 November 2009 was made for an improper purpose or is otherwise an abuse of power.
It is convenient to first consider the meaning of 'not exceeding 40 days' in cl 12.2(c)(i) of Prime's constitution and hence whether the decision to postpone the general meeting to 16 November 2009 was beyond the power conferred on the directors by cl 12.2(c)(i) of the constitution.

Postponement for a period not exceeding 40 days

This question turns on the meaning of 'postpone the proposed meeting for a period not exceeding 40 days' in cl 12.2(c)(i) of Prime's constitution.
Generally, the law takes no account of fractions of a day, each separate period of time is calculated by excluding the day on which the act or events takes place and including the first or final day of the period depending on whether the period is expressed to be 'before' or 'after' the act or event.
In Prowse v McIntyre (1961) 111 CLR 264 Windeyer J observed that:
… the law in reckoning time by days ordinarily takes no account of fractions of a day. The result is that, whenever a period of days has to be computed from an act or event that occurs within the space of a day, a decision must be made whether to start the reckoning from the beginning or the end of that day. Much the same question arises when a period is to be calculated up to the time when an act is done or an event happens (280).
Justice Kitto observed:
The beginning of a day is nothing but the end of the day before, and the end of the day is nothing but the beginning of the next (274).
In Associated Beauty Aids Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1965) 113 CLR 662 Barwick CJ said:
There is no general rule as to the consequences of the use of the preposition 'from', whether it be in the computation of the period of time, or in any other connexion. In general, in computing a period of time from a date, the period will commence at the end of the day of that date, but there is no universally operating rule to that effect … (668).
Interpretation Act provisions in all jurisdictions provide that where a period is to be calculated from a particular day or event, the time is to be reckoned exclusive of that day or the day of that event: Acts Interpretation Act 1901 (Cth) s 36; Interpretation Act 1984 (WA) s 61. Similarly, s 105 of the Act provides that in calculating how many days a particular day, act or event is before or after another day, act or event, the first‑mentioned day, or the day of the first‑mentioned act or event, is to be counted but not the other day, or the day of the other act or event. None of those provisions apply to the interpretation of Prime's constitution but they are relevant to the usual and ordinary way of calculating periods of time.
The principles for calculating time referred to in Prowse v McIntyre, Associated Beauty Aids Pty Ltd v Commissioner of Taxation and the Interpretation Acts accord with ordinary usage and understanding. In calculating time, according to ordinary usage and understanding, if the time is to be calculated by the hour, the calculation is from the moment of beginning. If the calculation is by the day, the day of beginning is not included in the calculation. The calculation begins on the following day and ends at the end of the last day.
If ordinary usage and understanding is applied to determine the meaning of 'the directors may … postpone the proposed meeting for a period not exceeding 40 days' then a meeting called for 11 am on 7 October 2009 may be postponed to any time before the last moment of 16 November 2009.
Words and phrases take colour from their surroundings. The meaning of words and phrases must take account of their context and purpose. The context and purpose of cl 12.2(c)(i) of Prime's constitution do not require that the words 'the directors may … postpone the proposed meeting for a period not exceeding 40 days' bear other than their usual and ordinary meaning. No purpose is advanced by interpreting the period of 40 days to expire at the hour of the 40th day corresponding to the hour at which the postponed meeting was called. Such an interpretation is contrary to ordinary usage and understanding. No purpose is advanced by calculating the period of 40 days so as to include the day of the postponed meeting. To interpret the words 'postpone the proposed meeting for a period not exceeding 40 days' in that way would be contrary to ordinary usage and understanding. That can be illustrated by an example. Suppose the provision empowered the directors to 'postpone the proposed meeting for a period not exceeding two days'. If the day of the proposed meeting was included in the period then the meeting could be postponed no later than the day following the postponed meeting. That would be contrary to the ordinary and natural meaning of 'postpone the proposed meeting for a period not exceeding two days'.
In postponing the meeting to 4 pm on 16 November 2009 the directors postponed the meeting for a period not exceeding 40 days. The plaintiff's first ground fails.

A reasonable time

What is a reasonable time for holding a meeting of the company's members is a question of fact to be determined in all the circumstances. The plaintiff makes no complaint about the hour of the day at which the meeting is to be held. The plaintiff's case is that the meeting is to be held at an unreasonable time, time meaning the day on which the meeting is to be held, 16 November 2009. The defendant accepted the requirement in s 249R of the Act that a meeting be held at a reasonable time includes a requirement that it be held on a day or date that is reasonable.
The plaintiff put forward five reasons why 16 November 2009 is not a reasonable time for holding the meeting. The first reason is that the AGM is on the next day. The defendant submitted that whilst it has foreshadowed its intention to hold the AGM on 17 November 2009 it has not yet called that meeting and it might hold the meeting on any day up to and including 30 November 2009. I find it unnecessary to explore that point further. I do not agree that a meeting held on 16 November is to be held at an unreasonable time by reason that the AGM is to be held the next day. To put it another way, a meeting held on 16 November 2009 may be a meeting held at a reasonable time notwithstanding that the AGM is to be held the following day. There may be circumstances when holding a meeting on the day before the AGM, either alone or in combination with other factors, renders the time of the meeting not reasonable but there is no general rule or principle that it is unreasonable to hold a general meeting on the day before the AGM.
Second, the plaintiff says that 16 November 2009 is an unreasonable time at which to hold the meeting because the AGM is to consider matters pertaining to the composition of the board, as is the requisitioned meeting. It may be inconvenient to members to have to consider matters pertaining to the composition of the board at two separate meetings rather than at one meeting. However, if, as here, there must be two separate meetings it is not necessarily more inconvenient that the requisitioned meeting be held the day before the AGM than a month or any other period before the AGM.
The third ground advanced by the plaintiff is that as a general rule, it is not appropriate to have meetings so close to each other. The plaintiff says the existence of such a general rule is supported by the words of Windeyer J in NRMA v Snodgrass [2002] NSWSC 590; (2002) 42 ACSR 371, [15] and Emmett J in Central Exchange Ltd v Rivkin Financial Services Ltd [67].
In NRMA v Snodgrass the opposing factions of the NRMA had commenced two separate proceedings as members, in which they requested the directors to call meetings of the company for the purpose of considering resolutions for the removal of certain directors. The NRMA sought an order for extension of the time fixed for calling and holding the meeting until the time of the annual general meeting on the grounds of cost, impossibility of complying with the statutory times and that a delay of a further two months to coincide with the annual general meeting would not cause prejudice or injustice to the requisitionists and would save considerable expense. Before setting out the passage in the judgment of Windeyer J, relied upon by the plaintiff, it is necessary to refer to the NRMA. Windeyer J observed that it is no ordinary company. The number of members who would be entitled to notice was somewhere between 1.8 ‑ 2 million people. The demutualisation of the company had been a prolonged and difficult process. Windeyer J accepted that two months was necessary for the sending out of notice of the meeting with appropriate materials [17]. Windeyer J made the following observations:
Under the constitution of NRMA and the provisions for appointment of directors, the year 2002 is not an election year. In other words the existing directors will remain in office after the annual general meeting. What the plaintiff seeks is an extension of time to hold the meetings requisitioned so that they will be either put as part of the business of the annual general meeting or at a meeting convened to take place immediately before the annual general meeting, or I think as a last resort on the day prior to the date fixed for the annual general meeting. The only advantage of this last suggestion is the advantage of hiring the same venue for 2 consecutive days.
I do not consider blanket type factional removal resolutions are suitable for debate at an annual general meeting of this company in a non‑election year. It is essential that the financial and other statutory business of this meeting be given proper attention which is unlikely to happen in the heated atmosphere which is almost certain to be generated by these proposed resolutions. Nor do I consider it a good idea to consider them in a separate meeting on the same date but prior to the annual general meeting. One can take judicial notice of the fact that on past experience that would make it very difficult to determine a certain time for the commencement of the annual general meeting and members attending both could well be worn out well before the annual general meeting came to an end. A meeting summoned for the day prior to the annual general meeting has some attraction but on balance not sufficient to justify such an order. The reasons for this are that the result of the meeting could throw the annual general meeting into disarray. It is possible that six directors only would remain. On what seems to be the present balance of power it might be difficult for them to conduct the annual general meeting. It is also possible that as a result of the meeting the company would have no directors. It is not beyond the bounds of possibility that members may be so disillusioned and fed up with the ructions at directors' level in their company that they would vote in favour of both the Snodgrass and the Dupree resolutions thinking that administration in some form might be preferable to the existing position. This consideration would also apply if the resolutions became part of the business at an annual general meeting [14] ‑ [15].
Windeyer J did not purport to state any general rule about the reasonableness of a requisitioned general meeting being held on the same day or the day prior to the annual general meeting. His Honour's comments were directed to the particular company and the particular circumstances of the meeting.
I have referred to Central Exchange Ltd v Rivkin Financial Services Ltd earlier in these reasons. In that case the company contended that, for a number of reasons, 3 November 2004 was not a reasonable time for the holding of a general meeting. Emmett J found that the proposed meeting of 3 November 2004 had been validly postponed by the decision of the board and hence, even if 3 November 2004 was not a reasonable day on which to hold the proposed meeting, there was no need to consider the exercise of any power conferred on the court to restrain the holding of the meeting on 3 November 2004 [79]. However, in the course of his judgment Emmett J made the following observations concerning whether 3 November 2004 was a reasonable time for the holding of a general meeting:
Generally, the calling of a general meeting within a very short time prior to the time already fixed for another general meeting would offend the requirement that the second meeting to be called be held at a reasonable time. In the ordinary scheme of things, it is undesirable for two general meetings of the members of a company to be within a short time of each other. A fortiori, when the business to be conducted at one of two meetings to be held in close proximity to each other is substantially the same as part of the business to be conducted at the other, it would be undesirable to have two meetings.
Under cl 3.3 of the constitution, each of the present directors of the company must retire at the next annual general meeting of the company, which, by the operation of the Act, must be held no later than 30 November 2004 in any event. Any other person who may be appointed as a director by the board of the company prior to the annual general meeting would also be required to retire.
The company has received the requisite nomination and consent forms for the election of Messrs Khan, Ryan and Cato. The consequence is that, but for the notice of meeting, the substance of resolutions 1‑6 proposed in the notice of meeting, being the question of the future composition of the board, would be part of the business of the annual general meeting to be held 26 days after the proposed meeting of 3 November 2004.
The shareholders may be put to inconvenience by having to attend two meetings on different days. There is likely to be confusion by reason of there being two notices in respect of different meetings dealing with much the same subject matter, namely the composition of board. More particularly, shareholders will have only 27 days in which to consider resolutions for removal of directors. In the ordinary course, under s 203D of the Act, a resolution for the removal of directors of a company, in the absence of any provision in the constitution of the company, requires a minimum of 2 months' notice. Even if there is provision in the constitution of a company, the provision may not reduce the period below 28 days. Holding the proposed meeting on 3 November 2004 may deprive members of ample opportunity to consider balanced information concerning the composition of the board [67] ‑ [70].
Emmett J went on to say that if he had concluded that the postponement of the proposed meeting for 3 November 2004 was not effective he may have been disposed to conclude that having regard to all of the circumstances 3 November was not a reasonable day on which to hold the proposed meeting when the annual general meeting had to be held no later than 30 November 2004. His Honour did not consider that 3 November 2004 may be an unreasonable time at which to hold the meeting because it was close to the date of the annual general meeting. Indeed, his Honour held that the postponement of the meeting to the date of, or the day before, the annual general meeting was valid.
The fourth reason advanced by the plaintiff is that, depending on the result of the requisitioned meeting held on 16 November 2009, the AGM may fall into disarray. It cannot be assumed that an annual general meeting is likely to fall into disarray because a general meeting of members held the previous day may vote to remove current directors. Everything depends upon the circumstances. The evidence does not satisfy me that the result of the requisitioned meeting held on 16 November 2009 may result in the AGM held the following day falling into disarray. Counsel for the plaintiff submitted that the outcome of the meeting of 16 November 2009 might be that the current directors are removed and no directors, or only one director, is elected to the board. If that were to occur then it would be in the best interests of the company and its members that the AGM proceed the next day. The business of the AGM may include the election of directors even if not referred to in the notice of the meeting. At the AGM the members would have the opportunity to resolve the membership of the board. The business of the meeting of 16 November 2009 is limited. There is no evidence that the meeting might continue beyond that day or that the members might be so exhausted as to be unable to properly deal with the business of the AGM.
The final reason advanced by the plaintiff is that there have already been proxies received which suggest that the current board would be removed if the requisitioned meeting were to proceed on 7 October 2009. The plaintiff referred to Fiore v Carlton Football Club Ltd [2002] VSC 455; (2003) 21 ACLC 145. In Fiore the company sought an extension of time in which a general meeting of members was to be called pursuant to s 249D of the Act. The court was not concerned whether a proposed meeting date was unreasonable and contravened s 249R of the Act.
I am not satisfied that a postponed meeting is not held at a reasonable time by reason only that the postponement causes a delay in the holding of the meeting and there is a likelihood that the members would vote at the meeting to remove the directors. The plaintiff disavowed any allegation that the decision of the directors to postpone the meeting was made for an improper purpose or was an abuse of power. The application is confined to the case that the day before the AGM, 16 November 2009, is not a reasonable time at which to hold the meeting. The time of the meeting is not unreasonable by reason only that the directors may remain in office longer than if the meeting had not been postponed.
It is not for the court to determine whether it is more convenient for the members for the meeting to be held on 7 October 2009 or 16 November 2009. The court may only intervene if it is satisfied that 16 November 2009 is not a reasonable time at which to hold the meeting. I am not satisfied that the reasons advanced by the plaintiff, either separately or in combination, make 16 November 2009 not a reasonable time at which to hold the meeting. The evidence before the court does not establish that 16 November 2009 is not a reasonable time at which to hold the meeting.
The plaintiff's application will be dismissed.