Legal Research
Cases
Link Agricultural Pty Ltd v Shanahan

Link Agricultural Pty Ltd v Shanahan

Link copied

Case Copied 29 July 1998 53 min read

Contents

On this page

SUPREME COURT OF VICTORIA

COURT OF APPEAL Not Restricted

No. 8269 of 1997

LINK AGRICULTURAL PTY. LTD. (ACN 007 038 975)

Applicant

- and -

MICHAEL SHANAHAN

Firstnamed Respondent

(Firstnamed Plaintiff)

- and -

ALLAN McCALLUM

Secondnamed Respondent

(Secondnamed Plaintiff)

- and -

PIVOT LIMITED (ACN 004 080 264)

Thirdnamed Respondent

(Defendant)

---

JUDGES:	BATT, KENNY and BUCHANAN, JJ.A.
WHERE HELD:	MELBOURNE
DATES OF HEARING:	2 and 3 June, 1998
DATE OF PUBLICATION OF REASONS:	29 July, 1998
DATE OF JUDGMENT:	31 July, 1998
MEDIA NEUTRAL CITATION:	[1998] VSCA 3

---

CATCHWORDS

Corporations Law - Leave to be added as a party to bring appeal -

Extension of time - Rule in Foss v. Harbottle - Standing of shareholder to appeal - Infringement of personal right - General meeting - Whether wrongful exclusion of proxy votes - Whether stipulation for special resolution for appointment of replacement director a procedural irregularity - The Corporations Law, ss.227, 252, 1322.

APPEARANCES:	Counsel	Solicitor
For the Applicant	Mr. D.M.B. Derham, Q.C.	Cooper & Wicks
with Mr. I.D. Martindale
For the Respondents	Mr. S.P. Whelan, Q.C.	Blake Dawson Waldron
with Ms J. Dodds-Streeton

BATT, J.A.:

I have had the benefit of reading in draft the reasons for judgment of Kenny, J.A. I agree in her Honour's conclusions and with the reasons she assigns for them.
KENNY, J.A. :
This proceeding concerns the polls held at the Annual General Meeting of Pivot Ltd. ("Pivot") on 15 December 1997. Pivot is incorporated as a company limited by shares. The company's activities have an agricultural focus and most of its shareholders are farmers.

A. BACKGROUND

Link Agricultural Pty. Ltd. (“Link”), Michael Stanley Shanahan and Allan McCallum are shareholders in Pivot. Link applies, first, for an extension of time in which to make application for leave to appeal from a judgment delivered on 30 January 1998 by a judge of the Court and, secondly, for leave to be joined as appellant in order to bring the appeal. There are two substantive issues raised by the appeal, if leave is given. The first is whether or not the Chairman ought to have permitted votes which were to be cast by Mr. Shanahan as proxy for a large number of shareholders to be included in the count for the election of directors after it was found that Shanahan had inadvertently failed to lodge the relevant voting paper in one or other of the ballot boxes. The second is whether or not a special resolution was required for the appointment of a director in the place of a director removed by ordinary resolution at the meeting.
The circumstances in which these proceedings are brought are as follows. Over the past couple of years, the members of the board of directors have differed markedly about certain aspects of the company's policy and, as a result, steps were taken last year by a number of shareholders to secure a differently constituted board.

Link Agricultural v. Shanahan & Ors 35 BUCHANAN, J.A. A notice "requisitioning…

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.

Keep reading for free

Create a free CaseChat account to read Link Agricultural Pty Ltd v Shanahan and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [1998] VSCA 3
Decision Date: 29 July 1998

CaseChat Overview and Summary

In the case of Link Agricultural Pty Ltd v Shanahan, the dispute centred on the validity of a chairman's ruling and the procedural correctness of a director's appointment. The parties involved were Link Agricultural Pty Ltd, a company, and Shanahan, a shareholder, along with other shareholders and directors. The central issue was whether the chairman's ruling on 15 December 1997 was valid and if the votes cast via proxy were duly considered. Another issue was whether an ordinary resolution was sufficient for the appointment of a new director in place of McDougall.

The court had to decide whether the chairman's ruling on 15 December 1997 was valid and if the votes cast via proxy were properly considered. Additionally, the court examined whether the appointment of McCallum as a director required an ordinary or a special resolution under the Corporations Law and the company’s articles of association. The returning officer's evidence that an alternative count including the proxy votes would have elected Watson instead of Cox led the court to consider whether Watson was duly elected. The board's reliance on the company’s articles of association for requiring a special resolution for McCallum's appointment was also scrutinized.

The court ruled that the chairman's ruling on 15 December 1997 was invalid, aligning with the lower court's decision. Given the error in the chairman's ruling, the court found it appropriate to set aside the ruling and declare the votes validly cast, leading to Watson's election. The court also considered it open to declare McCallum duly elected due to the alternative count result. Regarding the second issue, the court concluded that the board's requirement for a special resolution for McCallum's appointment, based on the company's articles of association, was not in line with the Corporations Law, which permits an ordinary resolution for such appointments. Consequently, the court found the board's and chairman's actions to be erroneous.

The court ordered that the chairman's ruling on 15 December 1997 be set aside, the proxy votes be considered valid, and Watson be declared duly elected. Additionally, the court declared that McCallum's appointment did not require a special resolution and should have been valid under an ordinary resolution.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In my view, the chairman's ruling on 15 December 1997 was invalid, as the judge below held. There being error shown, it was not only appropriate for the Court to intervene to set aside the chairman's ruling, as the judge below did, it was also open to the Court to declare positively the effect in law of the matters upon which the chairman had erroneously ruled and hence to declare that the chairman was, in the circumstances of the case, bound to accept Shanahan’s proxyholder card: see, e.g., ANZ Nominees Ltd. v. Allied Resources Corporation Ltd. & Ors. (1984) 2 A.C.L.C. 783, at 789 and Oliver v. John Dalgleish & Ors. [1963] 1 W.L.R. 1274, at 1279- 1280. But was it open to his Honour to declare the votes validly cast and Watson duly elected? The returning officer gave evidence that, whilst the chairman’s ruling was pending, he had made an alternative count, including the proxy votes in the result, which would have seen Watson, not Cox, returned as elected. In this circumstance, it was, I think, open to his Honour to declare Watson duly elected by the meeting on 15 December 1997. In view of the conclusion I have reached on this aspect of the case, it is not necessary to address separately the respondents' further submission that the proxy votes for which Shanahan was responsible had in fact been validly cast, notwithstanding Shanahan’s error. 2. Whether an ordinary resolution was sufficient to appoint a replacement director The second issue raised by the appeal concerned the appointment of McCallum as a director in place of McDougall. At the beginning of these reasons, I referred to the members' requisition, under s.252 of the Corporations Law, to include in the notice of the Annual General Meeting, first, an ordinary resolution "in accordance with Section 227 of the Corporations Law" for the removal of McDougall as director and, secondly, an ordinary resolution "in accordance with Section 227 of the Corporations Law" for the appointment of McCallum as director in place of McDougall. Section 227 of the Corporations Law relevantly provides: When the board came to give notice of the Annual General Meeting, it gave notice that the resolution for the appointment of McCallum in the place of McDougall was to be treated as a special, rather than an ordinary, resolution (although the resolution for the removal of McDougall continued to be treated as an ordinary resolution). At the meeting on 15 December 1997, the chairman (at this stage, Cox) maintained the position that the resolution for the appointment of McCallum needed to be a special resolution. Upon the declaration of the poll, the chairman announced that the votes in favour of McCallum (73.2%) were insufficient to pass a special resolution and the resolution failed. In requiring a special resolution for the appointment of McCallum, the board (as constituted prior to the meeting) and Cox relied on Pivot’s articles of association, particularly Articles 79, 93 and 95. They read as follows: "79(1) The shareholders' Directors will have power at any time and from time to time to appoint any person as a Director either to fill a casual vacancy or as an addition to the Board but so that the total number of Directors does not at any time exceed the maximum permitted number. (2) Any person chosen to fill a casual vacancy amongst the class of shareholders' Directors will only retain his office for so long as the vacating Director would have held office if no such vacancy had occurred. (3) Any person first chosen as an addition to the class of shareholders' Directors after the first adoption of this Article will hold office only until the conclusion of the next following annual general meeting of the Company but at that meeting will be eligible for re-election and will be taken into account in determining the number of shareholders' Directors who are to retire by rotation for re-election at that meeting. ... . 93. The Company at any general meeting at which any shareholders' Directors retire in accordance with these Articles will fill the vacated office by electing a like number of qualified persons to be shareholders' Director. ... . 95. The Company may by special resolution remove any shareholders' Director before the expiration of his period of office and appoint another qualified person in his place. The person so appointed will hold office during such time only as the shareholders' Director in whose place he is appointed would have held office if he had not been removed."