Metalicity Ltd v Nex Metals Explorations Ltd - [2022] WASC 234

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   METALICITY LTD -v- NEX METALS EXPLORATIONS LTD [2022] WASC 234
CORAM:   HILL J
HEARD:   30 JUNE 2022
DELIVERED          :   30 JUNE 2022
PUBLISHED           :   22 JULY 2022
FILE NO/S:   COR 97 of 2022
BETWEEN:   METALICITY LTD
Plaintiff
AND
NEX METALS EXPLORATIONS LTD
Defendant

Catchwords:

Corporations - Meetings - General meeting convened by member - Proxies - Whether procedure for receipt of proxies specified in notice of general meeting irregular - Whether substantial injustice

Corporations - Meetings - General meeting - Meeting convened by company invalid for inadequate notice - Validation by s 1322 unless court declares meeting invalid - Appropriate relief to be granted

Corporations - Meetings - Application under Corporations Act 2001 (Cth) s 249G - Whether impracticable to call meeting of the defendant's shareholders

Legislation:

Corporations Act 2001 (Cth), s 249F, s 249G, s 249HA, s 249R s 250B, s 1322(2), s 1324

Result:

Notice of meeting called by plaintiff pursuant to s 249F of the Corporations Act 2001 (Cth) declared invalid
Meeting called by defendant adjourned for 21 days
Plaintiff's originating process dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	P E Cahill SC & C C Spencer
Defendant	:	S Penglis SC

Solicitors:

Plaintiff	:	Tottle Partners
Defendant	:	Lavan

Cases referred to in decision:

Beck v Tuckey Pty Ltd [2004] NSWSC 357; (2004) 49 ACSR 555
Bisan Ltd v Cellante [2002] VSC 430; (2002) 173 FLR 310
Carpathian Resources Ltd v Highmoor Business Corporation [2010] FCA 1294
CellOS Software Ltd v Wong [2017] FCA 95; (2017) 118 ACSR 501
Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771
Northwest Capital Management v Westate Capital Ltd [2012] WASC 121; (2012) 264 FLR 424
Re Allied Resource Partners Pty Ltd [2017] FCA 923; (2017) 122 ACSR 345
Re Compactions Systems Pty Ltd [1976] 2 NSWLR 477
Re Golden West Resources Ltd [2008] FCA 1362; (2008) 170 FCR 409
Re Opera Photographic Ltd [1989] 1 WLR 634
Sandy v Yindjibarndi Aboriginal Corporation RNTBC [2019] WASC 322
Wun v CellOS Software Ltd [2018] FCA 1947

HILL J:

Each of the plaintiff and defendant are public companies, listed on the Australian Securities Exchange (ASX). The plaintiff seeks orders pursuant to s 249G of the Corporations Act 2001 (Cth) (Act) for the court to order that a meeting of the defendant's shareholders be called to consider resolutions to remove the existing directors of the defendant and replace them with directors nominated by the plaintiff. The plaintiff also seeks ancillary orders, pursuant to s 1319 of the Act, in relation to the conduct of the meeting.
The background to this application arises out of the plaintiff's concerns in relation to the voting on similar resolutions at the defendant's annual general meeting. The plaintiff says that its concerns can only be addressed by a party other than the defendant (including its share registry) having the conduct of any meeting which will consider these resolutions.
In this case, whether the court will exercise its discretion to order a meeting under s 249G of the Act depends, to a significant degree, on the validity of two separate notices of meetings of the defendant's shareholders which are convened for 4 July 2022. Both meetings seek to have the same resolutions considered and voted on by shareholders. These resolutions are identical to the resolutions the plaintiff seeks to be the subject of any meeting ordered by the court. The plaintiff accepts that the question as to whether the court should exercise its discretion to make any order under s 249G of the Act depends on the validity of the notices that have been issued by the plaintiff and defendant.[1] If these notices are valid, the plaintiff does not press for orders under s 249G of the Act. However, if these notices are declared invalid, the plaintiff contends orders should be made by the court to call a meeting of shareholders of the defendant.
[1] ts 58 - 59.
The first notice of meeting that was issued is a meeting called by the plaintiff pursuant to s 249F of the Act (s 249F Notice). This notice, which is dated 24 March 2022, called a meeting to be held at 9.00 am on 4 May 2022, at the offices of the plaintiff's solicitors. The directors of the defendant have resolved on two separate occasions to postpone this meeting. It is now scheduled to be held at 9.00 am on 4 July 2022, at the offices of the plaintiff's solicitors.
The second notice of meeting, dated 3 June 2022, is a meeting called by the defendant for 8.00 am on 4 July 2022 at 195 Adelaide Terrace, Perth (Second Notice).
Given the urgency of the matter, at the conclusion of the hearing, I gave brief reasons for the orders I made declaring the s 249F Notice to be invalid and adjourning the meeting convened by the Second Notice for three weeks until 25 July 2022. At the time, I indicated that more fulsome reasons would be provided in due course. These are those reasons.

Evidence on the application

In support of its application, the plaintiff relied on ten affidavits:
(a)three affidavits of Justin Charles Barton, the managing director of the plaintiff, filed 3 June 2022 (First Barton affidavit),[2] 7 June 2022 (Second Barton affidavit), and 15 June 2022 (Third Barton affidavit);
(b)an affidavit of Michael Phillip Bowen filed 7 June 2022. Mr Bowen is a legal practitioner and partner of Thomson Geer who the plaintiff proposes as the independent chair if a meeting is ordered to be called by the court;
(c)an affidavit of Martin Roy Jones filed 8 June 2022. Mr Jones is the general manager, corporate governance of Boardroom Pty Ltd, who the plaintiff proposes as the independent meeting services provider if a meeting is ordered to be called by the court;
(d)[4] and attachment 'ELT3' of the affidavit of Evan Leslie Taylor, a solicitor employed by the plaintiff's solicitors, filed 8 June 2022,[3] and Mr Taylor's supplementary affidavit filed 28 June 2022;
(e)an affidavit of Christian Omar Hernandez, the state manager of the client relationship group of Link Market Services, who was appointed by the plaintiff to collate proxy forms for the s 249F meeting, filed 15 June 2022; and
(f)two affidavits of Audrey Pieterse, a solicitor employed by the plaintiff's solicitors, filed 24 June 2022 and 28 June 2022.
[2] Save for the second sentence of [47]: ts 30.
[3] ts 31.
The defendant relied on four affidavits being:
(a)three affidavits of Kenneth Malcolme Allen, the managing director of the defendant, filed 13 June 2022 (First Allen affidavit), a supplementary affidavit filed 28 June 2022 (Second Allen affidavit) and a further supplementary affidavit filed 28 June 2022 (Third Allen affidavit); and
(b)an affidavit of Saju Shamsudin Lailabeevi, the defendant's account manager at Advanced Share Registry Ltd, filed 22 June 2022.
Both parties filed comprehensive written submissions prior to the hearing. These submissions, together with the oral submissions of senior counsel for each of the parties, were of significant assistance in determining the matter on an urgent basis, as well as preparing these written reasons.

Procedural background

On 3 June 2022, the plaintiff filed an originating process seeking orders pursuant to s 249G of the Act for the court to order a meeting of the defendant's shareholders. A certificate of urgency accompanied the originating process.
The originating process was listed for an initial directions hearing on 9 June 2022. At that time, directions were made to program the matter through to a final hearing on 21 June 2022.
On 13 June 2022, the defendant filed an application for declaratory and injunctive relief in respect of the s 249F Notice. Specifically, the defendant sought orders for the s 249F Notice to be declared invalid and the plaintiff to be restrained from holding a meeting of members of the defendant at 9.00 am on 4 July 2022.
On 14 June 2022, the plaintiff sought leave of the court to issue a subpoena to Advanced Share Registry Ltd (the share registry of the defendant) pursuant to O 36B r 2(2B)(c)(ii) of the Rules of the Supreme Court 1971 (WA) (Rules). The draft subpoena required leave because it was returnable on the day prior to trial in a proceeding where a defence was not required to be filed. The draft subpoena sought five categories of documents, being: all proxy forms received for the annual general meeting; all records of the date and time of receipt of the proxy forms; any documents evidencing proxies that were submitted online including information regarding the shareholder's name, the date and time of receipt of the online proxy and the internet protocol address from which the proxy was submitted; any documents evidencing votes submitted online during the annual general meeting; and any documents relating to that date, time and method of distribution of the Second Notice.
The application was opposed by the defendant on the basis that:[4]
(a)the originating process did not seek any orders or declarations in respect of the validity of the resolutions at the annual general meeting;
(b)at its highest, the plaintiff's evidence was nothing more than an unsubstantiated 'concern' in respect of the voting at the annual general meeting; and
(c)the defendant expressly rejected any allegation of fraud, interference, or improper conduct with respect to the annual general meeting.
[4] Email from Lavan to the Associate to Hill J dated 14 June 2022.
Under the Rules, for the court to grant leave to issue a subpoena returnable on a day prior to trial, the court must be satisfied there are exceptional circumstances. In considering what are 'exceptional circumstances' for the purposes of O 36B r 2(2B), Le Miere J in Sandy v Yindjibarndi Aboriginal Corporation RNTBC stated that:[5]
The words 'exceptional circumstances' have their ordinary meaning. 'Exceptional' means 'out of the ordinary' or 'unusual', rather than 'unique'. The party requesting the issue of a subpoena should be able to demonstrate the precise issues in respect of which the documents are required.
[5] Sandy v Yindjibarndi Aboriginal Corporation RNTBC [2019] WASC 322 [4].
The plaintiff contended the documents sought in the subpoena were relevant to the issues raised in the originating process because its concerns in relation to the conduct of the annual general meeting is a basis upon which it contends the court should order the convening of a meeting under s 249G of the Act. The plaintiff's evidence was that between 72% and 75% of the defendant's shareholders voted at the most recent annual general meeting and that 110 million more votes were cast at this meeting compared to the previous annual general meetings of the defendant.
At the time, I accepted that while there may be explanations for the significant increase in voting, none had been proffered by the respondent. For this reason, I did not accept that the plaintiff's evidence was merely an unsubstantiated 'concern'. I considered that the documents sought by the plaintiff were necessary to fairly prepare and present its case at the hearing and granted leave to the plaintiff to issue the subpoena, subject to the removal of the final category which concerned the Second Notice. This was because the originating process did not, at that stage, raise any issue in respect of the Second Notice and accordingly this category was not relevant to the issues in the proceeding. The subpoena required production of the documents by 9.00 am on 20 June 2022.
On 15 June 2022, the plaintiff filed an amended originating process. The amendments concerned the Second Notice and sought orders declaring the Second Notice to be invalid and restraining the defendant from holding a meeting of its members at 8.00 am on 4 July 2022.
On the evening of 15 June 2022, the solicitors for the defendant requested an urgent directions hearing arising out of the filing of the amended originating process. The matter was relisted for directions on 16 June 2022. At that hearing, orders were made vacating the hearing on 21 June 2022 and reprogramming the matter through to a final hearing on 30 June 2022.
On 20 June 2022, orders were made for the plaintiff to have leave to access, uplift and copy the documents produced on subpoena by Advanced Share Registry Ltd. Later that day, the plaintiff sought leave to issue three further subpoenas. Each of these subpoenas were addressed to internet service providers to enable the plaintiff to ascertain the identity of the users who had lodged multiple online proxies for the defendant's annual general meeting. The application was not opposed by the defendant. On 21 June 2022, orders were made granting leave for these subpoenas to be issued returnable on 24 June 2022.
On 28 June 2022, the solicitors for the plaintiff requested the matter be listed for directions on an urgent basis. The matter was relisted that morning and orders were made requiring the defendant to produce for inspection certain documents that were referred to in the First Allen affidavit. Later that day, the defendant filed the Third Allen affidavit which addressed the matters that were the subject of these orders.

Factual background

The plaintiff and its wholly‑owned subsidiary Kym Mining Pty Ltd (Kym Mining) and the defendant are parties to a joint venture agreement dated May 2019.[6]
[6] First Barton affidavit [9].
At present, the defendant has 267,014,768 shares on issue and approximately 760 shareholders. The defendant has three directors, being Mr Allen, Mr Thomas Francis Percy QC and Mr Hock Hoo Chua.
In September 2021, the plaintiff made an off‑market takeover offer for the shares in the defendant. There have been a number of disputes in relation to this takeover and numerous applications have been made to the Takeovers Panel. As at 2 June 2022 (the day prior to the commencement of the proceedings), the plaintiff and Kym Mining owned approximately 34.21% of the issued share capital of the defendant.[7]
[7] First Barton affidavit [8].
On 17 February 2022, the plaintiff issued a notice to the defendant pursuant to s 203D of the Act giving notice that it intended to call and arrange a meeting pursuant to s 249F of the Act to remove the existing directors of the defendant and to appoint Mr Alexander James Neuling, Mr Barton and Mr Kevin David O'Sullivan as directors of the defendant.[8]
[8] First Barton affidavit 'JB18'.
On 3 March 2022, the defendant issued a notice of meeting for its annual general meeting to be held at 2.00 pm on 31 March 2022.[9] The resolutions to be considered at this meeting included the re‑election of Mr Percy QC and the appointment of the additional directors nominated by the plaintiff in its s 203D notice.
[9] First Barton affidavit 'JB10'.
The notice of meeting provided that proxies for the meeting could be lodged online via the share registry of the defendant, by mail, by facsimile, by email or in person. In order to lodge an online proxy for the meeting, the following information was required: the holder identification number of the shareholder, the company name or code, the country and the postcode of the shareholder as recorded in the defendant's share register.[10] Where an online proxy is lodged, the information that is recorded by the defendant's share registry includes the name of the shareholder, the name or title of the proxy holder, whether the proxy is directed or undirected, the date and time of receipt of the online proxy, and the internet protocol (IP) address from which the proxy emanated.[11]
[10] First Barton affidavit [17], [21].
[11] First Barton affidavit [33].
At the time of the annual general meeting, the plaintiff and Kym Mining owned 88,500,612 shares in the defendant or approximately 33.14% of the issued share capital of the defendant.
At the annual general meeting, Mr Percy QC was re‑elected and the resolutions to appoint Mr Neuling, Mr Barton, and Mr O'Sullivan were not carried. Following the annual general meeting, the defendant lodged an announcement with the ASX. This announcement disclosed that:[12]
(a)the re-election of Mr Percy QC was passed on a poll. 109,739,697 votes were voted in favour of the resolution and 92,551,370 votes against. That is, the resolution was carried by 17,188,327 votes; and
(b)202,291,067 shares were voted in relation to each of resolutions 4, 5 and 6 which equated to 75.76% of the total number of issued shares in the defendant. 88,530,612 shares were voted in favour of these resolutions and 113,592,794 shares against these resolutions. That is, the resolutions failed by 25,062,182 votes.
[12] First Barton affidavit [31], 'JB13'.
The turnout at the annual general meeting for the year ending 30 June 2021 was significantly greater than at the annual general meeting for the year ending 30 June 2020 (59,578,617 shares voted) and the year ending 30 June 2019 (81,350,727 shares voted).[13]
[13] First Barton affidavit [32].
On 24 March 2022, the plaintiff issued the s 249F Notice to the defendant's shareholders.[14]
[14] First Barton affidavit 'JB20'.
On 1 April 2022, the solicitors for the plaintiff wrote to the defendant's then solicitors requesting production of a number of documents including details of the IP address from which each of the online proxies was lodged. On 4 April 2022, the defendant by its then solicitors responded to this letter and 'vehemently' denied there had been any interference with the voting process or that there was any improper conduct in the conduct of voting at the annual general meeting.[15]
[15] First Barton affidavit 'JB15'.
On 8 April 2022, following conferral between the solicitors, the defendant's then solicitor informed the plaintiff's solicitors that they were 'waiting on something from the share registry that may assuage your client's concerns'.[16] No further information or documents were produced by the defendant prior to the commencement of these proceedings.[17]
[16] First Barton affidavit 'JB16'.
[17] First Barton affidavit [36].
Following the issue of the s 249F Notice, correspondence passed between the parties' solicitors in relation to its validity. The initial letter from the defendant's solicitors contended that the s 249F Notice was invalid on several grounds. First, it reduced the time frame within which shareholders could lodge a proxy for the meeting, contrary to s 250B(1) of the Act. Second, the s 249F Notice was misleading in failing to inform shareholders they could send their proxy forms directly to the defendant up until 9.00 am on 2 May 2022. Third, the defendant contended that in failing to include or permit virtual attendance or participation in the meeting, the s 249F Notice contravened s 249F(2) and s 249R of the Act. In addition, the defendant raised concerns about the appointment of Link Market Services to receive proxy forms for the meeting as well as the validity of resolution 7, which sought to remove any director appointed to fulfil a casual vacancy from 17 February 2022 until the commencement of the meeting.[18]
[18] First Barton affidavit 'JB21'.
On 26 April 2022, the plaintiff's solicitors conceded that resolution 7 should not be put to the meeting but otherwise rejected the contention that the s 249F Notice was invalid.[19]
[19] First Barton affidavit 'JB22'.
On 29 April 2022, the directors of the defendant resolved to postpone the s 249F meeting until 9.00 am on 25 May 2022. This was the subject of both an announcement to the ASX[20] and advertisement in the Australian Financial Review.[21] On 23 May 2022, the directors of the defendant again resolved to postpone the s 249F meeting until 9.00 am on 4 July 2022. This was announced to the ASX on 23 May 2022 and advertised in the Australian Financial Review on 24 May 2022.[22]
[20] First Barton affidavit 'JB23'.
[21] First Barton affidavit 'JB24'.
[22] First Barton affidavit 'JB25'.

Following the further postponement of the s 249F meeting, the solicitors for the parties exchanged correspondence to attempt to reach agreement as to the basis on which a meeting of the defendant's shareholders would be held to consider the resolutions.[23] Regrettably, the parties were unable to reach agreement.
[23] First Barton affidavit 'JB26' - 'JB31'.
On 3 June 2022, the plaintiff commenced these proceedings. At that time:
(a)the defendant had not issued the Second Notice; and
(b)the defendant had not commenced any proceedings to challenge the validity of the s 249F Notice.
On the afternoon of 3 June 2022, the defendant announced to the ASX that it had convened a meeting of its shareholders to be held at 8.00 am on 4 July 2022.[24] At that time, Mr Allen believed that if the notice and proxy form was provided to Advanced Share Registry Ltd on 3 June 2022, the Second Notice and proxy form would be dispatched to shareholders that same day.[25]
[24] Second Barton affidavit 'JB36'.
[25] Second Allen affidavit [14].
In relation to the dispatch of the Second Notice, the evidence before the court is that:
(a)on 3 June 2022, the defendant's share register, Advanced Share Registry Ltd, received a request from the defendant to dispatch the Second Notice to the defendant's shareholders together with an accompanying proxy form;[26]
(b)on 4 June 2022, the defendant confirmed its instructions to dispatch the Second Notice and proxy form;[27]
(c)between 7 June 2022 and 8 June 2022, hard copies of the Second Notice and personalised proxy forms were printed for dispatch to the defendant's shareholders by post;[28]
(d)on 8 June 2022, hard copies of the Second Notice and personalised proxy forms were lodged with Australia Post for postage to 653 Australian shareholders and 17 international shareholders;[29]
(e)on 8 June 2022, the Second Notice and personalised proxy forms were sent by email to shareholders who have elected to receive communications electronically.[30]
[26] Affidavit of Saju Shamsudin Lailabeevi filed 22 June 2022 [7].
[27] Affidavit of Saju Shamsudin Lailabeevi filed 22 June 2022 [9].
[28] Affidavit of Saju Shamsudin Lailabeevi filed 22 June 2022 [10] - [12].
[29] Affidavit of Saju Shamsudin Lailabeevi filed 22 June 2022 [14] - [17].
[30] Affidavit of Saju Shamsudin Lailabeevi filed 22 June 2022 [19] - [21].
Ms Cinzia Donald, a partner of Lavan, the defendant's solicitors, has been engaged to attend the general meeting called by the defendant and to provide advice in relation to the conduct of the meeting.[31]
[31] First Allen affidavit [12].
Mr Barton's evidence is that the plaintiff did not receive the Second Notice or the proxy form for this meeting until 13 June 2022.
On 13 June 2022, the First Allen affidavit was filed in opposition to the plaintiff's application. In this affidavit, Mr Allen deposed that he:
did not lodge a proxy for, or vote electronically at, [the defendant's] annual general meeting held on 31 May 2022 (AGM) with respect to a shareholder other than myself or entities within my control or whose authority I held to lodge a proxy on their behalf.
On 28 June 2022, the Third Allen affidavit was filed which addressed the matters that were the subject of my orders of 28 June 2022. Mr Allen's evidence was that between 15 March 2022 and 29 March 2022, he lodged votes on behalf of 26 shareholders in relation to the defendant's annual general meeting. Mr Allen deposed that:
At the time I lodged the online votes, I understood that I held the authority of the relevant shareholder to do so. I have explained the circumstances in which I received such authority below.
Between 15 and 29 March 2022, Mr Allen had similar conversations with 21 of the defendant's shareholders to the following effect. Mr Allen noted that the defendant was the subject of a hostile takeover bid by the plaintiff and that the plaintiff was trying to remove the current board of directors of the defendant and appoint three new directors. At the annual general meeting the resolutions to be voted on included the adoption of the remuneration report, the re‑election of Mr Percy QC and the appointment of three new directors proposed by the plaintiff. Mr Allen expressed the opinion to each of the shareholders that he considered it was inappropriate in the middle of a takeover bid for the plaintiff to attempt to circumvent the takeover process. His evidence is that:[32]
The member said to me words to the effect that they were happy for me to lodge online votes on their behalf in a manner I saw fit.
[32] Third Allen affidavit [8.2].
Mr Allen then gives evidence of his conversations or text message exchanges with each of these shareholders. In relation to a number of these shareholders, the authorisation on which Mr Allen relies was not given by the shareholder (or a director of the shareholder) but by others (such as a stockbroker, family member, or friend).[33]
[33] Third Allen affidavit [16.5] - [16.6], [17], [32], [37] - [41], [49] - [50], [58] - [59], [68] - [70], [71], [74], [75].

Legal requirements for the convening of a valid meeting of members

Before turning to consider the validity of each of the notices of meeting, it is necessary to consider the requirements of the Act and the defendant's constitution (Constitution) in relation to meetings of the defendant's shareholders.

Relevant provisions of the Corporations Act

Part 2G.2 of the Act governs meetings of members of companies. Division 2 of pt 2G.2 sets out a number of ways in which meetings of shareholders can be called. Relevantly, for the purposes of this application, s 249F provides that:
(1)Members with at least 5% of the votes that may be cast at a general meeting of the company may call, and arrange to hold, a general meeting. The members calling the meeting must pay the expenses of calling and holding the general meeting.
Section 249F(2) requires the meeting to be called in the same way, so far as is possible, in which general meetings of the company may be called.
Division 3 of pt 2G.2 of the Act sets out the requirements for the calling of meetings of members. Section 249HA(1) of the Act, which only applies to listed companies, provides that:
[A]t least 28 days notice must be given of a meeting of a company's members.
Division 5 of pt 2G.2 governs the holding of the meetings of members. Section 249R of the Act requires a meeting of shareholders to be held at a reasonable time and location or locations.
Division 6 of pt 2G.2 governs the appointment of proxies and body corporate representatives. Pursuant to s 250A(1) of the Act, an appointment of a proxy is valid if it is signed by the member of the company making the appointment and contains the following information:
(a)the member's name and address;
(b)the company's name;
(c)the proxy's name or the name of the office held by the proxy;
(d)the meetings at which the appointment may be used.
Section 250B of the Act sets out the requirements for the receipt of proxies and provides that:
(1)For an appointment of a proxy for a meeting of a company's members to be effective, the following documents must be received by the company at least 48 hours before the meeting:
(a)the proxy's appointment;
(b)if the appointment is signed, or otherwise authenticated in a manner prescribed by the regulations made for the purposes of subsection 250A(1), by the appointer's attorney - the authority under which the appointment was signed or authenticated or a certified copy of the authority.
(2)If a meeting of a company's members has been adjourned, an appointment and any authority received by the company at least 48 hours before the resumption of the meeting are effective for the resumed part of the meeting.
(3)A company receives a document referred to in subsection (1):
(a)if the document is given by means of an electronic communication in accordance with section 253RA - when the document is received by the company;
(b)otherwise, when the document is received at:
(c)the company's registered office;
(d)a place specified for the purpose in the notice of meeting.
…
(5)The company's constitution (if any) or the notice of meeting may reduce the period of 48 hours referred to in subsection (1) or (2). [emphasis added]
Section 250BA(1) of the Act, which only applies to listed companies, requires that a notice of meeting must specify at least one of the following:
(a)a place for the purposes of receipt of proxy appointments and proxy appointment authorities;
(b)sufficient information to allow members to comply with section 250B by means of an electronic communication.

The Constitution[34]

[34] Affidavit of Evan Leslie Taylor filed 8 June 2022, 'ELT3'.

Clauses 14 and 15 of the Constitution govern meetings of members and voting by members. Clause 14.1(d) requires notices of meeting to be given in writing in the manner provided in the Constitution and in accordance with the Act and the Listing Rules. Clause 14.1(e) requires every notice to specify a place and a fax number for the purpose of receipt of proxy appointments and 'may' also specify an electronic address for the same purpose. Notices of meeting are also required to be accompanied by a form of proxy which satisfies the requirements of the Listing Rules and the Act.
Clause 15.3(a) of the Constitution provides that the instrument appointing the proxy and the power of attorney, if any, must be received by or on behalf of the company at such place, fax number or electronic address notified in the notice of meeting not less than 48 hours before the meeting or adjourned meeting at which the person named in the instrument proposes to vote (emphasis added).
Clause 27(d) of the Constitution deems that a notice sent by post is received the day after the date of its posting.

Circumstances in which a court will order a meeting under s 249G of the Act

Section 249G of the Act gives the court the power, on the application of any director or any member entitled to vote at the meeting, to order a meeting of the company's members to be called if it is 'impracticable' to call the meeting in any other way.
There are two components to this section. First, the applicant must show that it is 'impracticable' to call the meeting in any other way. Second, if this is established, the court has a discretion whether or not to order a meeting to be called.
Impractability extends not only to the calling of the meeting but also the conduct of the meeting.[35] The question as to whether it is impracticable to call or conduct a meeting is a factual question which requires the court to look at the circumstances of the particular case and consider whether, as a practical matter, the meeting of the company can be conducted.[36]
[35] Beck v Tuckey Pty Ltd [2004] NSWSC 357; (2004) 49 ACSR 555 [45].
[36] Beck v Tuckey Pty Ltd [40].
Courts have exercised their discretion to order the calling and conduct of a meeting in circumstances where shareholders refuse to attend a meeting and so there is or will be no quorum for the meeting,[37] and where there is a deadlock between directors.[38]
[37] Re Opera Photographic Ltd [1989] 1 WLR 634.
[38] Northwest Capital Management v Westate Capital Ltd [2012] WASC 121; (2012) 264 FLR 424 [171].

Notices of Meeting

I turn now to consider the validity of the two notices of meeting that have been issued to the defendant's shareholders. I propose to address them in the order in which they were convened; namely, the s 249F Notice and then, the Second Notice.

Validity of the s 249F Notice

The defendant raises several concerns in respect of the s 249F Notice.
The primary issue the defendant identified is in relation to the information in the s 249F Notice regarding the process for the lodgment of proxies. The defendant contends that the s 249F Notice contravenes s 250B of the Act, is misleading and does not comply with the mandatory requirements of the Constitution in failing to provide a facsimile number for the lodgement of proxies.
The plaintiff submitted that the objections raised by the defendant were 'hypothetical', particularly given the postponement of the meeting on two occasions by the directors of the defendant. Senior counsel for the plaintiff emphasised that the proxy form expressly stated that the proxies had to be received by the company by 9.00 am on 2 May 2022 and that they recommended proxy forms be returned to Link Market Services although this was not compulsory. Senior counsel for the plaintiff drew attention to the fact that no evidence had been adduced by the defendant that any shareholders were in fact misled by the information in the s 249F Notice or proxy form.
Relevantly, the s 249F Notice states under the heading 'voting by proxy':[39]
To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.
[39] First Barton affidavit 'JB20' p 248.
It then states on the following page under the heading 'Appointment of Link Market Services as Proxy Collector':[40]
In order for a proxy appointment to be effective, the relevant Proxy Form must be completed, signed and received by the Company as per the Corporations Act by no later than 9:00 am (WST) on Monday, 2 May 2022.
[40] First Barton affidavit 'JB20' p 249.
Under the same heading, the following paragraphs are printed in bold:[41]
If you wish to appoint a proxy, the Convening Shareholder recommends that you return your completed and signed Proxy Form to Link in accordance with the instructions on the Proxy Form.
Please note that if you wish to return your Proxy Form to Link, in order for your appointment of proxy to be effective, Link will need to forward your Proxy Form to the Company so that it is received by the Company by no later than 9:00 am (WST) on Monday, 2 May 2022. In order for Link to do so, please complete, sign and return your Proxy Form to Link in accordance with the details appearing on the Proxy Form, as soon as possible, and in any event no later than 9:00 am (WST) on Tuesday, 26 April 2022. [emphasis added]
[41] First Barton affidavit 'JB20' p 249.
The proxy form - which is annexed to the notice of meeting -[42] includes directions to shareholders as to how to lodge their vote. These include by mail (which is care of Link Market Services) or by hand (which is the physical address of Link Market Services). The form also contains a telephone number for enquiries which is the phone number of Link Market Services.
[42] First Barton affidavit 'JB20' p 259 - 260.
The proxy form sets out the steps for the lodgement of a valid proxy being the appointment of a proxy, the voting directions given to the proxy, and the signature of the shareholder. Relevantly, step 2 states in bold that:[43]
Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the Meeting. [emphasis added].
[43] First Barton affidavit 'JB20' p 259.
On the second page of the proxy form, details are provided as to how to complete and lodge the proxy form. In relation to the lodgement of the proxy form, it includes the notation in bold that:[44]
Please return your proxy voting instruction to Link Market Services by 9:00 am (WST) on Tuesday, 26 April 2022. [emphasis added]
[44] First Barton affidavit 'JB20' p 260.
The form states that to be valid, Link Market Services will need to receive and forward proxy forms to the defendant by 9.00 am (WST) on Monday, 2 May 2022. The form repeats the addresses for delivery by post and by hand. Neither of these addresses are the contact details of the defendant, but are of Link Market Services.
The evidence before the court is and I find that Link Market Services received 40 proxy forms from shareholders of the defendant from the date the s 249F Notice was issued until the morning of 2 May 2022. All of these forms were forwarded by email to the defendant, copied to Mr Allen, and sent separately by email to Advanced Share Registry Ltd.[45] Since 2 May 2022, a further two proxy forms have been received. Mr Hernandez has deposed he will forward these in a similar fashion prior to the date of the postponed meeting together with any additional proxy forms that are received.[46]
[45] Affidavit of Christian Omar Hernandez filed 15 June 2022 [5] - [8].
[46] Affidavit of Christian Omar Hernandez filed 15 June 2022 [13].
Section 250B(1) of the Act does not prevent proxy forms being handled by a third party prior to them being received by the company.[47] However, notwithstanding this, it is my view that there are three defects with the s 249F Notice and the attached proxy.
[47] Carpathian Resources Ltd v Highmoor Business Corporation [2010] FCA 1294; Northwest Capital Management v Westate Capital Ltd [2012] WASC 121; (2012) 264 FLR 424; CellOS Software Ltd v Wong [2017] FCA 95; (2017) 118 ACSR 501; Wun v CellOS Software Ltd [2018] FCA 1947; cf Bisan Ltd v Cellante [2002] VSC 430; (2002) 173 FLR 310 and Re Golden West Resources Ltd [2008] FCA 1362; (2008) 170 FCR 409.
First, while I accept the s 249F Notice indicates that in order for it to be effective it must be signed and received by the company by no later than 9.00 am on 2 May 2022 (ahead of what was supposed to be a meeting on 4 May 2022) and that the plaintiff only recommends that shareholders return their completed proxy form to Link Market Services, neither the proxy form nor the s 249F Notice contain contact details of the defendant as an alternative means by which they can return their completed proxy. In my view, in failing to include the address of the company, which as senior counsel for the defendant submits is a requirement of s 250BA of the Act, I consider the notice is defective.
Second, as set out above, the s 249F Notice states that proxy forms are to be lodged 'in any event no later than 9.00 am (WST) on Tuesday, 26 April 2022' so that the forms can be received by the defendant by no later than 9.00 am on 2 May 2022. In my view, the language used by the plaintiff, particularly the words 'by no later than', suggests this is a requirement that must be complied with in order for the proxy to be valid. In doing so, I consider the plaintiff has effectively extended the time referred to in s 250B(1) of the Act by a further six days and represented to shareholders that they have only a short time to exercise their right to vote.
Third, the proxy failed to include details of a facsimile number, which is a mandatory requirement of the defendant's Constitution. No alternative means of how a shareholder may electronically provide their proxy is identified. I consider that, by failing to identify a means by which a shareholder can attend to the lodgement of a proxy within a short period of time prior to the period referred to in s 250B(1) of the Act, shareholders may believe the only way they can exercise their right to vote at the meeting is by personal attendance at the meeting.
In my view, the combination of these matters are defects which could lead shareholders to be misinformed of the requirements relating to the lodgment of proxies for the meeting, particularly in relation to the absence of any information regarding the lodgment of proxies by facsimile as required by the Constitution. While these defects may have been able to be remedied by the plaintiff by further notice to shareholders, no attempt was made to do so. In these circumstances, I consider that these defects are likely to cause substantial injustice to shareholders that cannot be remedied by any order of the court other than by declaring the notice of meeting to be invalid.

Validity of Second Notice

On the evidence before me, I find that the Second Notice was dispatched:
(a)on 8 June 2022 by email to shareholders who elected to receive information electronically;
(b)on 8 June 2022 to 653 shareholders who elected to receive communications by post. This is the significant majority of the shareholders of the defendant. By reason of cl 27(d) of the Constitution, these shareholders are deemed to have received the notice on 9 June 2022.

The defendant conceded that it had not complied with the notice provisions in the Act.[48] However, senior counsel for the defendant submitted this was a procedural irregularity that, pursuant to s 1322 of the Act, did not invalidate the meeting unless the court considered the irregularity had caused or may cause substantial injustice that cannot be remedied by any order of the court.
[48] Defendant's submissions [75].
Section 1322 of the Act relevantly provides that:
(1) In this section, unless the contrary intention appears:
(a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and

(b) a reference to a procedural irregularity includes a reference to:
(i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and

(ii) a defect, irregularity or deficiency of notice or time.

(2) A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.

I accept that the defect in the notice given to shareholders in relation to the Second Notice is a procedural irregularity under s 1322(1) of the Act. I have carefully considered whether the failure to give adequate notice has caused or may cause substantial injustice to shareholders. There is no evidence before the court that this defect has caused substantial injustice. For that reason, the question for the court is whether, in the court's opinion, the irregularity may cause substantial injustice that cannot be remedied by any order of the court.
In this regard, the court is required to consider whether there is any real and not merely insubstantial or theoretical prejudice that will be suffered by making any order and weigh this against any prejudice to the company and other members if an order is not made.[49]
[49] Re Compactions Systems Pty Ltd [1976] 2 NSWLR 477, 493; Re Allied Resource Partners Pty Ltd [2017] FCA 923; (2017) 122 ACSR 345 [32].
In reaching my conclusion, I have taken into account the following matters. First, the resolutions which are proposed to be put to members at the meeting scheduled for 8.00 am on 4 July 2022 for the removal of all existing directors of the defendant and the appointment of directors nominated by the plaintiff are very important. Section 249HA of the Act uses mandatory terms in requiring at least 28 days' notice of any meeting of a listed company to be given. The legislature has made it clear by other provisions of the Act that it considers resolutions for the removal of directors of public companies to be of particular importance.[50] This implies a need to ensure that the requirements as to notice are strictly adhered to when a resolution of such importance is being put to members.
[50] Corporations Act 2001 (Cth), s 203D.
Second, there is no evidence before me that suggests there is any particular urgency in the meeting proceeding on 4 July 2022.
Third, in my view, there is a significant risk that shareholders will not have an appropriate opportunity to be informed of the orders I propose to make, which meeting or meetings the orders govern and consider how this may impact on their vote prior to the time and date by which proxies must be lodged in respect of the meeting the subject of the Second Notice, which requires proxies to be lodged by 8.00 am on 2 July 2022. In this regard, I consider there may be a substantial injustice to shareholders in being deprived of the opportunity to vote on the resolutions which may have a significant impact on the future management and direction of the defendant.
While I accept the court has a residual discretion under s 1322 of the Act to overlook the requirement of notice in an appropriate case, I do not consider the present circumstances of this case are sufficiently compelling to act in a manner which is contrary to the specific wording of s 249HA.
Given this finding, it is unnecessary for me to consider the alternate arguments under s 249R of the Act or to form any concluded view on that issue. It is sufficient for me to state that I consider the convening of a meeting of shareholders immediately prior to a second meeting but at a different place, at which the same resolutions are to be considered is unlikely to be considered a reasonable time or location.[51] This is particularly the case where an inference may reasonably be drawn that the only apparent reason for the timing of the proposed meeting is to ensure that it be held prior to a meeting convened by a significant shareholder.
[51] Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546; (2004) 213 ALR 771 [67].
The remaining issue is whether the defect in notice can be remedied by any order of the court, such as the adjournment of the meeting, or whether it is necessary to declare the Second Notice invalid in its entirety. My preliminary view was that:
(a)there was a real risk that shareholders were likely to be confused by the calling of two meetings to be held on the same day to consider the same resolutions;
(b)this confusion might not be addressed by the declaration I propose to make in relation in relation to the s 249F meeting and the adjournment of the meeting called by the Second Notice; and
(c)any substantial injustice arising out this confusion might only be addressed by declaring the Second Notice also to be invalid.
However, having giving the matter careful consideration and, in particular, taking account of the submissions made by senior counsel for the plaintiff, it is my view that, in the particular circumstances of this case, the defect in the Second Notice and the substantial injustice I have identified can be cured by ordering an adjournment of the meeting together with a requirement that shareholders be clearly informed about what has occurred and which meeting is proceeding. Had the plaintiff not agreed that the defect in the Second Notice could be cured by an adjournment and appropriate notice being given to shareholders, I would have declared the Second Notice also to be invalid.
My provisional view was that the adjournment should be for a period of 21 days. The primary reasons for this length of adjournment were my concerns that there was a reasonable likelihood that shareholders would be confused by the receipt of two notices of meeting considering the same resolutions, the timing of these meetings (being scheduled for 8.00 am and 9.00 am on the same date but at different venues) and the late stage at which these orders have been made compared to the date of the meetings.
In my view, in order to address the identified risk of substantial injustice, it is necessary for a notice to be given to shareholders, dispatched in accordance with the provisions in the Constitution. The notice needs to explain to shareholders what has occurred in these proceedings and which meeting has been adjourned. It should remind shareholders to vote at the adjourned meeting and give them the opportunity to lodge proxies and, if necessary, to lodge proxies which change their vote.

Application for court ordered meeting under s 249G of the Act

In this case, the plaintiff contended there were 'irreconcilable differences' between the parties in relation to the convening of a meeting to consider the resolutions proposed by the plaintiff, as well as how any meeting of shareholders should be conducted.[52]
[52] Plaintiff's submissions [59].
The evidence before the court was that the plaintiff had not utilised the procedure under s 249D of the Act because of concerns the directors of the defendant would 'delay and control' the process, particularly in light of their concerns as to the conduct of the annual general meeting.[53] The plaintiff emphasised that it called a meeting pursuant to s 249F which has been postponed on two occasions by the directors of the defendant and was now challenged by the defendant. It contended that the fact that each of the plaintiff and defendant had called a meeting of shareholders to consider the same resolutions was evidence of the impractability of holding a meeting that was not convened by the court. In these circumstances, the plaintiff submitted that its proposal that there be an independent share registry engaged to collate the proxies and an independent chairperson of the meeting were 'essential' to the conduct of a meeting that would not lead to further disputation between the parties.[54] In their written submissions, the plaintiff expressed a concern as to the substantial delay in holding any meeting of shareholders to consider the resolutions.
[53] First Barton affidavit [47].
[54] Plaintiff's submissions [65] - [66].
In oral submissions, senior counsel for the plaintiff drew attention to Mr Allen's conduct in lodging proxies on behalf of shareholders prior to the annual general meeting as set out at [44] - [46] as evidence that it was 'impracticable' to hold or conduct a meeting that was not convened by the court.
Senior counsel for the defendant submitted that Mr Allen's conduct was 'irrelevant' to the matters before the court as the plaintiff does not seek any orders in relation to the conduct of the annual general meeting. It was contended that these 'concerns' at their highest do not go to the impractability of holding a meeting or support the making of orders under s 249G of the Act.
I do not accept the submission that the conduct of Mr Allen in lodging on-line proxies on behalf of numerous shareholders on contested resolutions was irrelevant or that this conduct can be appropriately characterised as a 'concern'. However, given that no orders are sought by the plaintiff in relation to the resolutions at the annual general meeting and there is a possibility that Mr Allen's conduct may be the subject of complaint or further action, it is not appropriate that I make any findings in relation to his conduct. It is sufficient for the purposes of these proceedings for me to state that my preliminary view is that the Act and the Constitution require proxies to be lodged personally by shareholders, unless a corporate representative has been appointed or a power of attorney granted.
That said, there is no evidence before the court that this conduct has occurred on previous occasions or that there is a basis on which I could draw an inference that this conduct will occur in the future. If this was the case, it may well be that I would be satisfied there was an evidential basis for a conclusion that it was impracticable to call a meeting and that I should exercise my discretion to order the calling and conduct of a meeting under s 249G of the Act. However, given the fulsome disclosure that has been made by Mr Allen as well as the retention of Ms Donald to attend and advise the defendant as to the conduct of the general meeting the subject of the Second Notice, I am not satisfied at this stage that it is impracticable for a meeting of the defendant's shareholders to be called and conducted in the manner proposed by the defendant.
Given that a meeting of shareholders of the defendant will be proceeding within the next 21 days to consider resolutions that the plaintiff proposes be the subject of any meeting convened under s 249G of the Act, I do not consider any orders should be made under that section.

Conclusion

For the reasons set out above, at the conclusion of the hearing, I declared that the s 249F Notice issued by the plaintiff was invalid.
In addition, because of the inadequacy of notice in relation to the Second Notice, I determined that the meeting scheduled for 8.00 am on 4 July 2022 could not proceed. I ordered that this meeting be adjourned until 9.00 am on 25 July 2022.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
FD
Associate to the Honourable Justice Hill
22 JULY 2022