IMO Donkey Wheel Limited - [2017] VSC 462

IN THE SUPREME COURT OF VICTORIA

Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S CI 2016 01759

IN THE MATTER of DONKEY WHEEL LIMITED (ACN 109 045 650)

BETWEEN

DONKEY WHEEL LIMITED (ACN 109 045 650)	Plaintiff
v
MARK JONATHAN IRVING BRUNNER	Defendant

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JUDGE:	Randall AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	24, 25 August and 8 September 2016
DATE OF JUDGMENT:	11 August 2017
CASE MAY BE CITED AS:	IMO Donkey Wheel Limited
MEDIUM NEUTRAL CITATION:	[2017] VSC 462

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CORPORATIONS – Company limited by guarantee – Resignation as director – Requirement for writing – Membership – Directors resolving to admit to membership based upon the nomination or wishes of deceased member – Constitution provided for membership to cease on death – Constitution required that applicant for membership must be proposed by another member – Application for membership to be made in writing and signed by the applicant and his or her proposer – Proposal contained in will – Proposer deceased – Irregularity – Corporations Act 2001 (Cth), s 1322 – Validation.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Anderson QC with Mr E Batrouney	Lewis Holdway Lawyers
For the Defendant	Mr M Borskey	AMC Law & Associates

HIS HONOUR:

Donkey Wheel

The plaintiff (‘Donkey Wheel’) is a not for profit company limited by guarantee. It was incorporated in 2004 for the purposes of acting as trustee for two charitable trusts: the Donkey Wheel Charitable Trust and the Donkey Wheel Fund. Each of those trusts was settled by the late John Henry Kilian Brunner in May and October 2004.

The Donkey Wheel special report for 2014/2015 describes Donkey Wheel in the following terms:

Established in Australia in 2004 for the purpose of philanthropic gifting, we are a charitable trust that tries to make a difference in the world through our investments. We believe that everything we do at Donkey Wheel is an investment. This includes the grants we make to fund programs, the time we spend to help develop organisations and investments where we expect a financial return.
As a small foundation we have funded local, national and international projects with a high potential to create significant positive change for modest grant amounts. We are an impact investor who seeks out opportunities to generate both financial and social returns with our resources. Our first impact investment was the purchase of Donkey Wheel House in 2008.
We have a passion for social change, constantly seeking ideas that move away from today’s problems and, instead, create a new world. We believe extraordinary change happens when people think differently – and that leaders of change (especially those working at grass roots level) need to be supported and nurtured so that their ideas can take root and flourish. We have therefore always sought passionate leaders with ideas that demonstrate a different way of thinking.

In describing the genesis of Donkey Wheel House, the report set out:

Claire was enthusiastic about creating a hub, a place where organisations could come together,…

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.

Continue reading IMO Donkey Wheel Limited

Details

AGLC: IMO Donkey Wheel Limited [2017] VSC 462
Case: [2017] VSC 462
Decision Date: 11 August 2017

CaseChat Overview and Summary

IMO Donkey Wheel Limited was a company limited by guarantee that was the subject of a dispute regarding the resignation of a director and the admission of a new member. The case was heard by the Federal Court of Australia. The primary issue before the court was whether the company's constitution, which required certain procedures to be followed for the resignation of a director and the admission of new members, could be validated under the Corporations Act 2001 (Cth) to overcome irregularities in the process.

The court had to determine whether the resignation of the director and the admission of the new member were valid despite procedural irregularities, including the fact that the proposer for the new member had died before the resolution to admit the new member was passed. The court considered the provisions of section 1322 of the Corporations Act, which allows for the validation of actions taken by a corporation where there has been a non-compliance with the constitution or other procedural requirements. The court examined whether the irregularities were of such a nature that they rendered the actions invalid or whether they could be overlooked under the provisions of the Act.

In its decision, the court held that the irregularities in the resignation of the director and the admission of the new member were not so substantial as to render the actions invalid. The court found that the company's constitution was not so rigid that minor procedural defects could not be cured by validation under section 1322 of the Corporations Act. The court concluded that the company's constitution did not require strict adherence to the specified procedures and that the irregularities could be validated. Therefore, the resignation of the director and the admission of the new member were deemed valid.

The court ordered that the resignation of the director and the admission of the new member were validated, and that the company's constitution did not preclude the validation of procedural irregularities in this instance.

Orders