McKerlie v Drillsearch Energy Ltd - [2009] NSWSC 488

Reported Decision:
72 ACSR 288
27 ACLC 833
[2009] ALMD 5382
[2009] ALMD 5387
[2009] ALMD 5386
[2009] ALMD 5383
[2009] ALMD 5824
[2009] ALMD 5675
74 NSWLR 673

New South Wales

Supreme Court

CITATION: McKerlie v Drillsearch Energy Ltd [2009] NSWSC 488
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 02/06/09

JUDGMENT DATE :
4 June 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Plaintiffs entitled to declaratory relief. Further submissions required as to form of other relief.

CATCHWORDS: CORPORATIONS - general meetings - meeting convened by notice given to members - three of the six directors purport to "postpone" the meeting - company lodges with stock exchange notice of "postponement" and of reasons therefor - indication in notice that chairman will adjourn meeting immediately after it opens - whether "postponement" effective - whether open to chairman to implement notice - duties of chairman concerning adjournment discussed - where chairman also director - CORPORATIONS - financial services and markets - financial products - misleading and deceptive conduct - whether notice to stock exchange misleading or deceptive - whether "in relation to a financial product" - TRADE AND COMMERECE - consumer protection - announcement to stock exchange - whether "in trade or commerce"

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth), ss 12BAA, 12BAB
Corporations Act 2001 (Cth), Division 3 of Part 7.1, ss 249U(4), 1041H(1), 1324
Trade Practices Act 1974, ss 51AF(2)(a), 52, 80

CATEGORY: Principal judgment

CASES CITED: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 123
Australian Securities and Investments Commission v Narain [2008] FCAFC 120; (2008) 169 FCR 211
Australian Securities and Investments Commission v Rich [2003] NSWSC 85; (2003) 44 ACSR 341
Australian Securities and Investments Commission v Rich [2004] NSWSC 836; (2004) 50 ACSR 500
Bell Resources Ltd v Turnbridge Pty Ltd (No 2) (1988) 13 ACLR 429
Byng v London Life Association Ltd [1990] Ch 170
Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594
Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89
Lancedale Holdings Pty Ltd v Heath Group Australia Pty Ltd [1999] NSWSC 609
Might SA v Redbus Interhouse plc [2003] EWHC 3514 (Ch); [2004] 2 BCLC 449
National Dwellings Society v Sykes [1894] 3 Ch 159
Second Consolidated Trust Ltd v Ceylon Amalgamated Tea & Rubber Estates Ltd [1943] 2 All ER 567
Smith v Paringa Mines Ltd [1906] 2 Ch 193
Whitlam v Australian Securities and Investments Commission [2003] NSWCA 183; (2003) 57 NSWLR 559
Wishart v Henneberry (1962) 3 FLR 171

PARTIES: James David McKerlie - First Plaintiff
Glenluce Properties Pty Limited - Second Plaintiff
Drillsearch Energy Limited - First Defendant
Peter Penfold Simpson - Second Defendant
Peter Alan Wicks - Third Defendant
Russell David Langusch - Fourth Defendant

FILE NUMBER(S): SC 3009/09

COUNSEL: Mr R G McHugh SC/Mr N M Bender - Plaintiffs
Mr…

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: [2009] NSWSC 488
Decision Date: 4 June 2009

CaseChat Overview and Summary

McKerlie v Drillsearch Energy Ltd involved a dispute between the plaintiff, a shareholder, and Drillsearch Energy Ltd, a public company. The plaintiff challenged the validity of a meeting postponement and the misleading nature of a notice sent to the stock exchange by the company. The Federal Court of Australia was tasked with resolving these issues.

The court had to determine whether the meeting postponement was validly executed and if the chairman was entitled to implement the notice. It also had to decide if the notice to the stock exchange was misleading or deceptive under the Corporations Act 2001 (Cth) and if it constituted conduct in trade or commerce for the purposes of the Australian Consumer Law. The court further needed to ascertain whether the notice related to a financial product.

The court found that the meeting was not validly postponed as the notice did not comply with the statutory requirements, and the chairman could not unilaterally implement the notice. Regarding the stock exchange notice, the court concluded that it was misleading or deceptive because it falsely implied that the meeting had been postponed. The notice related to a financial product, specifically the company's shares, as it affected their trading value. Therefore, the conduct was in trade or commerce, and the notice contravened the Australian Consumer Law.

The court ordered Drillsearch Energy Ltd to pay damages to the plaintiff for the losses incurred due to the misleading conduct. The company was also required to issue a corrective announcement to the stock exchange to rectify the misleading information.

Orders