McComiskie v Smith

Case [2024] QSC 77

SUPREME COURT OF QUEENSLAND

CITATION:

McComiskie v Smith [2024] QSC 77

PARTIES:

CATHERINE MCCOMISKIE, PATRICIA MARY CANNING & PAUL VINCENT GLEESON

(applicants)

v
THERESE SMITH

(first respondent)

MARGARET WOLFF
(second respondent)

GLEESON PROPERTIES PTY LTD
ACN:009 984 187
(third respondent)

FILE NO/S:

BS No 2748 of 2024

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

5 April 2024

DELIVERED AT:

Brisbane

HEARING DATE:

3 April 2024

JUDGE:

Crowley J

ORDER:

1.   Application dismissed.

2.   Parties to bear their own costs.

CATCHWORDS:

CORPORATIONS – MANAGEMENT AND ADMINISTRATION – OFFICERS OF CORPORATION – DIRECTOR – APPOINTMENT – where the parties are members of the third respondent company and are related family members – where the members are beneficiaries of family trusts of which the company is a trustee – where the company was incorporated under the Companies Act 1961 (Qld) – where the company adopted the provisions of Table A in its constitution with modifications – where Paul Gleeson resigned as a director on the grounds of ill health – where the applicant contends there was a right of option for Paul Gleeson to rejoin the board – where a decision to divest and distribute the assets to the beneficiaries was subsequently made – where Paul Gleeson sough to resume his position as a director – where the managing director gave notice that Paul Gleeson’s appointment as a director was not valid on grounds that there was a conflict of interest – where a general meeting was held with the applicants in attendance – where the minutes record the purported appointment of Paul Gleeson as a director – where there were four directors at the time of the general meeting – where a resolution was validly passed to increase the number of directors to five – where the applicants argue that the shareholders have an inherent power at common law to appoint a director upon an ordinary resolution passed at general meeting which has not been excluded – whether on the proper construction of the company constitution Paul Gleeson was validly appointed as a director of Gleeson Properties Pty Ltd

Civil Proceedings Act 2011 (Qld), s 10

Companies Act 1961 (Qld), Sch 4 Table A
Corporations Act 2001 (Cth), s 1274B

BP Refinery v Shire of Hastings (1977) 180 CLR 266, cited
DVT Holdings v Bigshop.com.au [2002] NSWSC 571, cited
Grant v John Grant Pty Ltd (1950) 82 CLR 1, considered
Link Agricultural Pty Ltd v Shanahan, McCallum & Pivot Ltd [1999] 1 VR 466, cited
Re Railway & Transport Health Fund Limited (2020) 150 ACSR 14, considered
Wood v Inglis (2008) 68 ACSR 420, cited
Worcester Corsetry Limited v Witting [1936] 1 Ch 640, distinguished

COUNSEL:

B Kidston for the applicants

B O’Donnell KC with J Sargent for the first and second respondents  No appearance for the third respondent

SOLICITORS:

Keir Steele Waldon Lawyers for the applicants

Cowen Schwarz Marschke for the first and second respondents
No appearance for…

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AGLC
McComiskie v Smith [2024] QSC 77
Case
[2024] QSC 77
Decision Date

CaseChat Overview and Summary

McComiskie v Smith involved a dispute between family members who were members of Gleeson Properties Pty Ltd, a proprietary company. The issue before the court was whether Paul Gleeson was validly reappointed as a director of the company. Gleeson had previously resigned on the grounds of ill health, and the applicants argued that he had a right of option to rejoin the board. However, the managing director claimed that Gleeson's reappointment was invalid due to a conflict of interest. The applicants contended that the shareholders had an inherent power to appoint a director through an ordinary resolution at a general meeting, a power that had not been excluded.

The court examined the company's constitution, which had been adopted under the Companies Act 1961 (Qld), and compared it to relevant case law. The key issue was the proper interpretation of the constitution's provisions regarding the appointment and number of directors. The court held that the company's constitution allowed for the number of directors to be increased or reduced by an ordinary resolution at a general meeting, without specifying a minimum number. This was different from the case of Worcester, where the court had ruled that directors held office for a fixed term. The court concluded that the articles in the company's constitution did not limit the term of directors and allowed for their unrestricted appointment.

The court ultimately dismissed the application, finding that Paul Gleeson was not validly reappointed as a director. The court also ordered that each party bear their own costs.

Orders

Orders of the court

1. Application dismissed.

2. Parties to bear their own costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Ultimately, none of the cases beyond Worcester that have been provided advance the principle stated in Worcester any further. They are not determinative of the issues in this application. It remains a question of construing the particular articles in the Constitution of this Company, according to the principles that I have outlined. Nevertheless, the cases are instructive.Conclusion I have undertaken the exercise of construction in light of the principles that I have identified above. In doing so, I have borne in mind that the Company is a small proprietary company, with five members, all of whom being related family members who are beneficiaries of family trusts of which the Company is a trustee. I also have regard to the objects for which the Company was established, as set out in cl. 3 of the Memorandum of Association. It does seem to me from the whole of the Constitution that it is apparent the objective intention of the articles as drafted and adopted, is that directors would hold office for unrestricted terms. There would be no need for any regular retirements or rotations or nominations for reappointment, such as might be the case under other articles or other constitutions of other companies, and that there would be likely few occasions to change directors, which I consider reflects the nature and purpose of the Company. As I have noted, the result in Worcester is not determinative, but it does remain instructive. That is particularly so when comparison is made between the articles in that case and those here. I consider that the articles here are materially different from those in Worcester. In particular, contrast can be made between art. 12 in Worcester and art. 7 of the Company’s Constitution. Article 12 in Worcester provided: Unless otherwise determined by a general meeting, the number of directors shall not be less than two nor more than seven.Whereas the Company’s art. 7, which has been adopted in lieu of Table A reg. 63 states:Unless and until otherwise determined by the Company in a general meeting, the number of directors shall not exceed ten. The subscribers to the Memorandum of Association shall in writing determine the first director or directors. Whilst in Worcester the relevant article dealt with both the minimum and maximum number of directors, here the article in question provides for a maximum of 10, unless otherwise determined by the company, but does not refer to a minimum. In Worcester, art. 83 which was the particular article there relevant to and related to the inherent power stated:The company may from time to time in general meeting increase or reduce the number of directors, and may also determine in what rotation the increased or reduced number is to go out of office. The first part of that article corresponds with the amended reg. 67, here. But what is omitted here are the words: “And may also determine in what rotation the increased or reduced number is to go out of office”, so that the article simply reads: The company may, from time to time, by ordinary resolution passed at a general meeting, increase or reduce the number of directors.

Ratio Decidendi

Legal Principle Established

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