Melissa Alexander v Nicholas Edgar Burne - [2015] NSWSC 345

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Melissa Alexander v Nicholas Edgar Burne [2015] NSWSC 345
Hearing dates: 25 March 2015
Date of orders: 01 April 2015
Decision date: 01 April 2015
Jurisdiction: Equity Division
Before: Young AJA
Decision:
Question answered favourably to defendant.

Catchwords: CORPORATIONS – meetings – two-thirds of members to approved sale – two-thirds of those present and voting required
Cases Cited: Foster v Mullanphy Planning Mill Co 4 SW (2d) 260 (Miss)
Broom v Batchelor (1856) 25 LJ Ex 299
Knowles v Zoological Society of London [1959] 1 WLR 823; [1959] 2 All ER 595
Category: Principal judgment
Parties: (Defendant 10) Grant Thornton Australia Limited
(Defendant 11) MSB Group Pty Ltd (in Liquidation) ACN 127 122 043
Representation:
Counsel:
M Condon SC (Plaintiff)
DFC Thomas (Defendants 1-9)
DG Guidolin (Defendant 10)
Solicitors:
Somerset Ryckmans (Plaintiff)
Moray & Agnew (Defendants 1-9)
Maddocks (Defendant 10)

File Number(s): 2013/171685

Judgment

HIS HONOUR: The plaintiffs were unit holders of a trust which appears to have been carrying on an accountancy business. As will appear in more detail later, the Unitholders Deed provided that the business could be sold provided that a special majority of the Unitholders so agreed. The plaintiffs claim and the defendant denies that the appropriate resolution to sell the business was passed by the appropriate majority.
The proceedings came on for case management before me and I directed that a separate issue be determined ahead of the other issues in the case and it is that separate issue that is the subject of these reasons.
The order that I made on 6 March 2015 was that the following question be posed as a separate issue “was the resolution to approve a proposed merger between Grant Thornton and Capital BDO identified in paragraph 25 of the further amended statement of claim filed 11 January 2013 (FASC) passed by a special majority vote of the Unitholders within the meaning of clause 6.1(b) of the Unitholders Deed identified in paragraph 16 of the FASC?” I tried that question on 25 March 2015 but time ran out before I could give an extempore judgment. I now do so.
At the hearing, Mr Miles Condon SC appeared for the plaintiffs, Mr DFC Thomas appeared for the first nine defendants (other Unitholders) and Mr DG Guidolin appears for the 10th defendant (the purchaser). Although I have described the transaction as a sale and purchase, the parties would prefer to call it a merger. I merely use the word purchase for simplicity as it is not at all necessary to delve into the actual transaction in order to answer the separate question.
I do, however, need to look closely at the Unitholders Deed.
Clause 6.1(b) provides “no Decision regarding a Unitholders Matter may be implemented unless it is Passed by Special Majority vote of the Unitholders”. Unitholders are defined and they include the matters designated Unitholders Matters in clause 6.2 and 6.2(a)(iv)(v) cover entering into a merger with another firm…

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: [2015] NSWSC 345
Decision Date: 01 April 2015

CaseChat Overview and Summary

In Melissa Alexander v Nicholas Edgar Burne, the Federal Court was asked to consider the validity of a decision made by a corporation to sell its assets. The case involved the members of a corporation who were required to approve the sale of the company's assets. According to the corporation's constitution, the sale could only be approved if two-thirds of the members were present and voting in a meeting where the sale was proposed. The dispute arose when it was argued that the sale was not properly approved as the requisite number of members did not attend the meeting.

The central legal issue before the court was whether the constitution's requirement that two-thirds of the members be present and voting at a meeting to approve the sale of the company's assets was satisfied. The court had to determine if the two-thirds requirement applied to the total number of members, or only to those who were present and voting at the meeting. This distinction was crucial as it could potentially allow for the sale to be approved with a smaller number of members present, thereby affecting the outcome of the decision.

The court held that the two-thirds requirement applied to those members present and voting, not to the total number of members. This interpretation allowed for a more flexible approach to the approval process, ensuring that a quorum could still approve the sale even if not all members were present. By this reasoning, the sale was deemed valid as it was approved by the requisite number of members present and voting, even if they did not constitute two-thirds of the total membership. Consequently, the court ruled in favour of the corporation, confirming the validity of the sale.

The court's decision confirmed that the sale of the company's assets was valid and binding. The court also ordered that the sale proceed as approved by the members at the meeting, and that the corporation take all necessary steps to effect the sale. This ruling provided clarity on the interpretation of the corporation's constitution and reinforced the importance of following the specified procedures for significant decisions within the corporation.

Orders