New South Wales Rugby League Limited & ORS. v Australian Rugby Football League Limited
[1999] NSWCA 9
•23 February 1999
Reported Decision: 30 ACSR 354
New South Wales
Court of Appeal
CITATION: NEW SOUTH WALES RUGBY LEAGUE LIMITED & ORS. v. AUSTRALIAN RUGBY FOOTBALL LEAGUE LIMITED & ORS. [1999] NSWCA 9 FILE NUMBER(S): CA 40182/98 HEARING DATE(S): 5 February 1999 JUDGMENT DATE:
23 February 1999PARTIES :
New South Wales Rugby League Limited ACN 002 704 751
Colin William Love,
Michael Hill,
Nicholas George Politis,
Victor Joseph Byrne (Appellants/Cross-Respondents)Australian Rugby Football League Limited ACN 003 107 293
David Barnhill (Cross-Respondent)
Queensland Rugby Football League Limited ACN 009 878 013
Kevin James Brasch
John Norman McDonald,
Ross Allan Livermore
Benjamin Henry Wall
Ronald Henry Wilkinson (Respondents/Cross-Appellants)JUDGMENT OF: Meagher JA at 1; Powell JA at 2; Sheppard AJA at 85
LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S) : ED 5026/98 LOWER COURT JUDICIAL OFFICER: Hamilton J
COUNSEL: B.W. Collins QC/R.J. Weber (Appellants/1-5 Cross-Respondents)
B.A.J. Coles QC/C.R.C. Newlinds (Respondents/Cross-Appellants)
A.S. Bell (6 Cross-Respondent)SOLICITORS: Colin W. Love & Co. (Appellants/1-5 Cross-Respondents)
Baker & McKenzie (Respondents-Cross-Appellants)
McLaughlin & Riordan (6 Cross-Defendant)CATCHWORDS: Companies - Articles of Association - Construction of - Directors - Appointment removal and retirement DECISION: Appeal upheld; Cross-Appeal dismissed
371 MEAGHER JA: I agree with Powell JA.
2 POWELL JA: Although the principal question for determination in the proceedings at first instance and on the appeal was:
Whether the purported appointment` of the Third Respondent (“Mr. Brasch”) as the Chairman of the Directors of the First Respondent (“the ARL”) at the Annual General Meeting of the ARL on 15 December 1998 was null and void and of no effect.
the answer to that question depends upon the answer to be given to a further question:
Who constituted the Board of Directors which, for the purposes of Article 33 of the Articles of Association of the ARL, was required to appoint the Chairman of Directors.
3 In addition to those two questions, the proceedings and the appeal called for the answer of a further question:
Whether by reason of the resolution of the Board of Directors of the ARL held on 9 July 1998 which resolution was:
“That Mr. D. Barnhill be appointed Acting Chief Executive/General Manager until the end of the current financial year and that the position be advertised with a view to a person being appointed permanently from 1 November 1998”.
the Sixth-Cross-Respondent (“Mr. Barnhill”) became the Chief Executive and a Director of the ARL.
4 The answer to those questions depends upon the proper construction to be accorded to the Articles of Association of the ARL, which Articles of Association, I regret to say, are anything but a shining example of the draftsman’s art.
5 Some, at least, of the difficulties in the construction of the Articles of Association of the ARL appear to stem from amendments to the Articles which have been made over the years, which amendments do not appear fully to have recognised the effect of the changes which were from time to time made.
6 Although the materials which are before the Court are less expansive than might have been wished, it seems tolerably plain that the ARL was incorporated at the behest of the First Appellant (“the NSWRL”) and the Second Respondent (“the QRL”) on 23 May 1986 pursuant to the provisions of the Companies (NSW) Code as a company limited by guarantee, the corporators - of whom there were seven, four from New South Wales and three from Queensland - in all probability holding office with either the NSWRL or the QRL but that is a matter of little consequence.
7 The ARL appears to have been incorporated to take over the role and functions of an unincorporated body known a the Australian Rugby Football League, the affairs of which body - in the Articles of Association of the ARL referred to as “ARL”, the ARL being referred to in those Articles as “the League” - appear as if they may have been controlled by an executive chairman and representatives of the NSWRL and the QRL - there may also have been a general manager but this is not clear.
8 At the time of the incorporation of the ARL the Articles of Association provided (inter alia):
“33. The Board of Directors of the League shall appoint an Executive Chairman on such terms and conditions as it thinks fit provided that the Executive Chairman of the ARL holding office at the date of adoption of these Articles shall continue in office under the terms and conditions of his contract of employment with the ARL until his successor is appointed by the Board of Directors of the League.
The Executive Chairman shall enjoy and be entitled to all powers, authorities, rights, functions and privileges of a director in addition to and without derogation from the powers, authorities, rights, functions and privileges of the office of Executive Chairman.
34. The number of the directors shall be seven (7) and shall be comprised of:
(a) the Executive Chairman;
(b) three persons nominated by the New South Wales Rugby League Limited or its successor at law;
(c) three persons nominated by the Queensland Rugby Football League Limited or its successor at law.
35. At each Annual General Meeting the directors shall elect from among their members a Deputy Chairman provided that while the Executive Chairman and the League is a resident of the State of New South Wales the Deputy Chairman will be elected from the three directors nominated by the Queensland Rugby Football League Limited and provided further that if the Executive Chairman of the League is a resident of the State of Queensland the Deputy Chairman will be elected from among the three directors nominated by the New South Wales Rugby League Limited.
36. The Deputy Chairman of the ARL in office at the date of adoption of these Articles shall continue in office until his successor is elected at the Annual General Meeting next after that date.
………40. The Office of an Executive Chairman or of a director shall be vacated if he:………(e) Resigns his office by notice in writing to the company; or………(h) Ceases to be a member or if he ceases to be a member of the State League by which he is nominated; or(i) If notice is received from a State League withdrawing his nomination as a representative of the League.
………41. At every annual general meeting of the League after the adoption of these Articles the Executive Chairman and all directors shall retire from office.………43. The company at the annual general meeting at which a director retires in manner aforesaid shall fill up the vacated offices by electing a member thereto provided always that any person so elected shall first be nominated by a State League and in default the retiring Director shall be deemed to have been re-elected unless at such meeting it is resolved not to fill up such vacated office.………”
9 At the time of the incorporation of the ARL the Executive Chairman of the unincorporated body was Mr. K.R. Arthurson, who thus became the Executive Chairman of the ARL, a position which he continued to hold until 30 July 1996, following which day he became the non-executive chairman of the ARL until late February 1997.
10 At some stage, Mr. R.A. Abbott who, after the incorporation of the ARL, had been appointed Secretary of the ARL was appointed Secretary/General Manager - later he appears to have been appointed as General Manager.
11 Although the position is not entirely clear, it would seem probable that, in February 1990 - that being the time at which, at that time, the Annual General Meeting of the ARL was held - Article 34 of the Articles of Association was amended:
(a) by deleting the word and number “seven (7)” and substituting the word and numeral “nine (9)”;
(b) by deleting the word “three” in Article 34(b) and substituting in lieu thereof “four (4)” persons and adding at the end thereof “one of whom shall be the person for the time being occupying the office of the General Manager of the New South Wales Rugby League Limited”; and
(c) by deleting the word “three” in Article 34(c) and substituting in lieu thereof “four (4)” and adding at the end thereof the words “one of whom shall be the person for the time being occupying the office of Managing Director of the Queensland Rugby Football League Limited”.
12 At the Annual General Meeting held in February 1992, the Articles of Association of the ARL were further amended by deleting Articles 33 to 45 inclusive and substituting fresh Articles. For present purposes the following new Articles might be noted - Article 34 of the new Articles reproduced the original Article 34 as amended in 1990:
“33. The Board of Directors of the League shall appoint an Executive Chairman who shall be employed on such terms and conditions as it may from time to time determine fit. The Executive Chairman shall become a Director at the time of his appointment and shall subject to Article 42 continue in the office of Director until the termination of his employment as Executive Chairman.
The Executive Chairman shall enjoy and will be entitled to all powers, authorities, rights, functions and privileges of a Director in addition to and with derogation from the powers, authorities rights, functions and privileges of the office of Executive Chairman.
………35. At each Annual General Meeting the Directors shall elect from among their members a Deputy Chairman provided that while the Executive Chairman of the League is a resident of the State of New South Wales the Deputy Chairman will be elected from among the Directors nominated by the Queensland Rugby Football League Limited pursuant to Article 34(c) and the provided further that if the Executive Chairman of the League is a resident of the State of Queensland the Deputy Chairman will be elected from among the Directors nominated by the New South Wales Rugby League Limited pursuant to Article 34(b).36. A person elected as Deputy Chairman in accordance with the provisions of the preceding Article, shall subject to the provisions of Article 52 hold office until the Annual General Meeting following that at which he was elected.
37. At every Annual General Meeting of the League after the adoption of these Articles all Directors other than the Executive Chairman shall retire from office.
38. Subject to Article 52 a retiring Director shall be eligible for re-election.
39 (a) Not later than seven (7) days prior to every Annual General Meeting, each State League shall notify the General Manager of the persons nominated in accordance with the provisions of Article 34 for appointment to the office of Director for the ensuing year. These nominations shall be referred to the Annual General Meeting and the persons nominated shall be appointed to the office of Director.
(b) A person appointed as Director pursuant to the preceding paragraph shall subject to Article 42 hold office until the Annual General Meeting following that at which he was appointed.
………42. The office of a Director shall be vacated if:………(e) He resigns his office by notice in writing to the company………(i) Notice other than a notice under the provisions of Article 39 is received from a State League withdrawing his nomination by that League;(j) Being a person occupying the Office of Executive Chairman he ceases to occupy that Office;
(k) Being a person occupying the Office of General Manager of the New South Wales Rugby League Limited he ceases to occupy that Office;
(l) Being a person occupying the Office of Managing Director of the Queensland Rugby Football League Limited he ceases to occupy that Office.
………”
13 The materials which are before the Court suggest that, later in the same year the Articles of Association of the ARL were further amended by substituting for the existing Article 12 a new Article 12 reading:
“12. An Annual General Meeting of the League shall be held not later than the last week in December in each year.”
14 Although that new Article does not appear in the form of Articles relied on by the parties at trial - that form of Articles contains the original form of Article 12 which provided for the Annual General Meeting to be held not later than the last week in February in each year - the Annual General Meeting appears thereafter to have been held in December of each year.
15 Although it is not clear when it was that this occurred, it would seem that, at some time prior to December 1993, the Board of Directors of the ARL had decided to appoint a “Chief Executive” that post being fulfilled in December 1993 by Mr. J.R. Quayle who, as the General Manager of the NSWRL, was also a Director of the ARL.
16 Although it is not entirely clear that this was so, it would appear that, in June 1996, the Articles of Association of the ARL were further amended by deleting therefrom the phrase “Executive Chairman” wherever appearing and by substituting therefore the word “Chairman”. One of the curiosities which flowed from this amendment was that Article 1 of the Articles of Association - the interpretation Article which had theretofore provided that “ ‘Executive Chairman’ means the person employed by the League in that capacity” thereafter provided “ ‘Chairman’ means the person employed by the League in that capacity”, notwithstanding that as from the date - 30 June 1996 - of the retirement of Mr. Arthurson as Executive Chairman and his assumption of the office of non-executive Chairman the Chairman of the ARL did not have any contract of employment with the ARL.
17 Although it is not clear that this was so, it would appear likely that, at the same time - which appears to have been in late February 1997 - as Mr. Arthurson retired as non-executive Chairman of the ARL, Mr. Quayle resigned as Chief Executive of the ARL and retired as a Director of the ARL.
18 Although it would appear that the terms of his appointment had not been finalised by 8 April 1997 - the relevance of which date will shortly appear - it is said that, in early 1997, Mr. N.D. Whittaker was appointed Chief Executive of the ARL for a three year term.
19 On 8 April 1997, the Articles of Association of the ARL were further amended by deleting the existing Article 34 and by substituting therefore the following:
“34. The number of Directors shall be ten (10) and shall be comprised of:
(a) the Chairman;
(b) the Chief Executive;
(c) four (4) persons nominated by the New South Wales Rugby League Limited or its successor at law;
(d) four (4) persons nominated by the Queensland Rugby Football League Limited or its successor at law one of whom shall be the person for a (sic) time being occupying the office of Managing Director of the Queensland Rugby Football League Limited.”
20 At the same meeting, the Fourth Respondent, Mr. J. N. McDonald, a nominee of the QRL, was appointed Chairman.
21 Although the materials which are before the Court do not contain any record of a special resolution further amending the Articles of Association of the ARL, the copies of the Articles of Association put forward, on the one hand, by the Appellants and, on the other, by the Respondents - which copies, but for the notation “Revised December 11, 1997” appearing at the foot of each page in the copy put forward by the Respondents, are identical - contain, in lieu of the form of Article 33 which was substituted for the original Article 33 as the result of the amendments adopted in February 1992, an article in the following terms:
“33. The Board of Directors shall at the date of effect of the operation of this Article and subsequently at each Annual General Meeting appoint a Chairman of Directors. The person so appointed shall be entitled to all powers, authorities, rights, functions and privileges of a Director.”
and in lieu of the form of Article 37 which in February 1992 was substituted for the original Article 37, an Article in the following terms:
“37. At every Annual General Meeting of the League after the adoption of these Articles all Directors shall retire from office.”
22 Although the notation to which I have earlier referred would seem to suggest that the substituted Article 33 had been adopted at the Annual General Meeting of the ARL held in December 1997, the Minutes of that meeting contain no record of any amendment to the Articles of Association at that time. Nonetheless, as both parties have proceeded upon the basis that the current Articles of Association of the ARL contain an Article 33 and an Article 37 in the terms which I have set out above, the Court would appear to have no alternative but to proceed upon that basis and, perhaps, to proceed upon the basis that the amendment had been effected at some time prior to the Annual General Meeting of the ARL in December 1997.
23 However, to return to the narrative:
24 What is said to have been the Annual General Meeting of the ARL for 1997 was held on 9 December 1997 in Brisbane. Those recorded as having been present were Mr. McDonald - in the Minutes described as Chairman - Messrs. Barnhill, Bellew, Fitzgerald and Lockwood - those four persons apparently being the NSWRL’s nominees as Directors for the purposes of the 1996 Annual General Meeting - and Messrs. Brasch, Livermore, Wall and Weber - those four being apparently the QRL’s nominees as Directors for the purposes of the 1996 Annual General Meeting. It is clear that, although not within the meeting room at the time, there were also present on the premises Messrs. Millward and Politis, who, in addition to Messrs. Barnhill and Fitzgerald, had been nominated by the NSWRL as Directors for the purposes of the 1997 Annual General Meeting.
25 Although it seems to have been suggested on the hearing that, prior to the 1998 Annual General Meeting of the ARL, there had been no disagreement as to the procedure to be followed at an Annual General Meeting and, in particular, there had been no disagreement as to the parties entitled to attend and to vote at an Annual General Meeting, the Minutes of the Annual General Meeting held on 9 December 1997 would indicate that that was not so. Thus, those Minutes record that, after the question of the Minutes of the previous Annual General Meeting and the Annual Report had been dealt with, and when the meeting proceeded to the election of a Chairman, Mr. Lockwood said “that before proceeding he wished the Board to give consideration to legal advice as to the eligibility to vote”, at which time, Mr. Whittaker then tabled a letter addressed to him in his capacity as Chief Executive to which letter there was attached a copy of an Opinion provided by Mr. Weber of counsel. Thereafter, following discussion during the course of which it was proposed that the election of a Chairman be deferred pending receipt of further legal advice, a proposal which was lost, Mr. McDonald said that the election of Chairman would proceed and, after a poll was demanded and held, Mr. McDonald was declared elected.
26 The Minutes further record:
“The Chief Executive advised that nomination by the New South Wales Rugby League were Messrs. Barnhill, Fitzgerald, Millward and Politis and the Queensland Rugby League nominations were Messrs. Brasch, Wall, Weber and Livermore.
The nominations were received and endorsed.”
27 Despite this, Messrs. Millward and Politis were not admitted to the meeting.
28 The Minutes of the meeting further record that the meeting then proceeded to the election of a Deputy Chairman. At that time, so it seems, Mr. McDonald noted that Mr. Lockwood - who seems as if he may previously have been the Deputy Chairman and may have been nominated by the NSWRL for appointment as Chairman at the 1997 Annual General Meeting - had not been nominated as a director by the NSWRL and was therefore ineligible to stand for election to the office of Deputy Chairman. There appears then to have been discussion and an adjournment, following which the Minutes record:
“Mr. Lockwood announced that the nominations by the New South Wales League for Directors for the ensuing year were now Messrs. Lockwood, Barnhill, Fitzgerald and Millward.
It was resolved that these nominations be accepted in lieu of those previously advised.
The meeting then proceeded with the election of Deputy Chairman and Mr. Lockwood was declared elected.”
29 The Minutes further record that, after other business:
“Mr. Lockwood said he wished to register his concern a the voting procedures which operated during the course of the meeting and that there would in due course be a motion for the New South Wales League with a view to changing the Articles to provide for the amendment.
Mr. Bellew said that the League had sent a notice of the meeting and business to be transacted to all current Directors. He could not accept that a Director could take part in discussion on some issues and be excluded from others.”
30 Finally, the Minutes record:
“The meeting was closed at 12 noon after which Messrs. Millward and Politis, New South Wales Directors, who were present on the premises, were invited to join the Board to hear a report by the Chief Executive on negotiations with News Limited.
………”
31 In the light of what I have earlier recorded, the reference to Mr. Politis as a New South Wales League Director seems a little curious.
32 Be all that as it may, subsequent events would tend to indicate that, at some time thereafter and prior to 9 July 1998 - the relevance of which date will shortly appear - the NSWRL withdrew its nomination of Mr. Barnhill as a Director, nominating Mr. Politis in his stead but with Mr. Barnhill as an alternate Director.
33 It would appear that, on 27 May 1998, Mr. Whittaker tendered his resignation as Chief Executive of the ARL with effect from 9 July 1998.
34 A meeting of the Board of Directors of the ARL was held on 9 July 1998, that meeting being attended by Messrs. McDonald, Whittaker, Barnhill, Fitzgerald, Lockwood, Millward, Brasch, Livermore, Wall and Weber, Mr. Barnhill attending in his capacity as alternate Director, Mr. Politis being overseas. In the course of that meeting, the question of a replacement for Mr. Whittaker was discussed. The Minutes of the meeting, which Minutes were prepared by Mr. Livermore - the Managing Director of the QRL and thus a Director nominated by the QRL - record (inter alia):
“
………Mr. Livermore indicated the need to have a person fulfil the ARL position as soon as possible and nominated Mr. Barnhill.Messrs. Barnhill and Whittaker sought and were granted leave of the meeting to enable the further discussion to take place.
Following further discussion and on the motion of Messrs. Livermore and Brasch it was decided unanimously that Mr. D. Barnhill be appointed Acting Chief Executive/General Manager until the end of the current financial year and that the position be advertised with a view to a person being appointed permanently from 1 November 1998.”
35 A salary package was later agreed upon with Mr. Barnhill.
36 Although, in the Affidavit which he swore in these proceedings, Mr. McDonald sought to suggest that Mr. Barnhill was not appointed to an office which would entitle him to become a voting Director of the ARL it is to be noted that the Minutes of the meeting of the Board of Directors held on 4 August 1988 record not only that:
“John McDonald declared the meeting open and welcomed David Barnhill to his first meeting as Chief Executive of the Australian Rugby League. He thanked all members for attending and encouraged input from the delegates on all issued (sic) in the agenda.”
but recorded under the heading “Business Arising” a number of matters in respect of which “the Chief Executive’s actions (were) endorsed” and, in respect of other matters referred to in the Minutes directed action to be taken by “the Chief Executive”. Although, in his Affidavit, Mr. McDonald also seemed to suggest that Mr. Barnhill attended meetings of the Board of Directors only when Mr. Politis was absent, this is clearly not so.
37 Despite the terms of the resolution appointing Mr. Barnhill as Acting Chief Executive/General Manager, and despite the fact that, in early October 1998, Mr. Barnhill reminded Mr. McDonald of the need to advertise for applicants for the position, no advertisements were, in fact, published and Mr. Barnhill continued to act as Chief Executive and to attend meetings of the Board of the ARL.
38 The validity of the events which occurred in late November and early December 1998 is, to say the least, doubtful, for the materials which are before the Court do not disclose any resolution of the Board of Directors as to the convening of the Annual General Meeting of the ARL, or as to the changing of the date first fixed for the holding of that meeting, or as to the holding of a meeting of Directors, nor do the materials which are before the Court disclose that notice of such Annual General Meeting was given to all the members of the ARL or that notice of the holding of the meeting of Directors was given to all those, who prior to 15 December 1998, were Directors of the ARL and still less that notice of the holding of a meeting of Directors was given to all those who had been nominated for appointment as Directors at the Annual General Meeting. The record which I set out hereunder is thus merely a record of what is said to have occurred.
39 On 20 November 1998, Mr. Livermore, writing as the Managing Director of the QRL, wrote to Mr. Barnhill a letter recording that the QRL’s nominees for appointment to the Board of Directors for the 1999 year were Mr. McDonald as Chairman, Messrs. Brasch, Wall, Wilkinson and himself as Directors and Mr. Barrett as alternate Director.
40 Thereafter, on 25 November 1998, Mr. Barnhill, as Chief Executive, and purporting to act “by order of the Board”, forwarded to Mr. McDonald and Mr. Livermore - and, one assumes, to the other Directors of the ARL - a notice of the Annual General Meeting of the ARL to be held at 11.00 a.m. on Tuesday, December 8, 1998, the business of that Annual General Meeting being said to be:
“1. to receive and consider the Balance Sheet, the Profit and Loss Accounts and the Reports of the Directors and the Auditors in respect of the financial year ended 31 October 1998;
2. to elect nine (9) Directors:
(i) Chairman;
(ii) Four persons nominated by the NSW Rugby Football League Limited or its successor at law;
(iii) Four persons nominated by the QLD Rugby Football League Limited or its successor at law;
3. to elect a Deputy Chairman;
4. to appoint the Company’s Auditors for 1999
5. to transact such other business of which due notice has been given.”
41 It is said by Mr. McDonald that, thereafter, on 30 November 1998, he received from Mr. Barnhill a facsimile advising that the ARL’s Annual General Meeting would be held on 15 December 1998 and that a meeting of the ARL’s Board of Directors would be held at the conclusion of the Annual General Meeting - no copy of that facsimile forms part of the material which is before the Court. The material which is before the Court does not disclose by what authority that facsimile - copies of which appear as if they were sent to the other Directors of the ARL - was sent by Mr. Barnhill.
42 The evidence discloses that on, 8 December 1988, the Second Appellant (“Mr. Love”) - who seems to be the Chairman of the NSWRL - spoke on the telephone with Mr. McDonald and sought to have the Annual General Meeting rescheduled for 18 December 1998. In the event, however, that was not done, but Mr. McDonald indicated that no objection would be taken if the NSWRL’s nominations for appointment as Director were not received seven days prior to the Annual General Meeting.
43 On 10 December 1998, Mr. Barnhill, writing as the Chief Executive of the ARL, wrote to Mr. McDonald a letter in the following terms:
“I wish to advise that a meeting of the Board of Directors of the Australian Rugby Football League Limited shall be held on Tuesday 15 December 1998 at the conclusion of the AGM in the Board Room, NSW Leagues Club, 1st Floor, 165 Phillip Street, Sydney.
The relevant agenda and Board papers are enclosed.”
(The materials which are before the Court do not include copies of the Agenda and Board papers said to have been enclosed.)
44 Even if one assumes that a similar letter was forwarded to the others of the then existing Directors of the ARL it is clear that no similar letter was forwarded to those who were to become the NSWRL’s nominees as Directors, for those nominees were not notified to Mr. Barnhill until 14 December 1998.
45 On 14 December 1998 Mr. Livermore, writing as the Managing Director of the QRL, wrote again to Mr. Barnhill withdrawing the QRL’s previous nominations as Directors and substituting therefore Mr. Brasch as Chairman, Messrs. McDonald, Livermore, Wall and Wilkinson as Directors and Mr. Barrett as alternate Director.
46 On the same day, the Acting General Manager of NSWRL wrote to Mr. Barnhill informing him:
“… The NSWRL Board has resolved to nominate the following persons to the ARL Board:
Chairman Mr. Colin Love
Director Mr. Colin Love
Director Mr. Nick Politis
Director Mr. Michael Hill
Director Mr. Bob Millward
Director Mr. Vic Byrne
Following a meeting at 9.00 a.m. tomorrow and prior to the ARL AGM one of the five nominated Directors will be designated as the alternate Director.”
47 On the following day, the Acting General Manager of the NSWRL wrote to Mr. Barnhill a further letter withdrawing its letter of the previous day and recording as the NSWRL’s nominations to the ARL Board Messrs. Love, Politis, Hill and Byrne.
48 Shortly after 9.00 a.m. on 15 December 1998 there was a meeting between Messrs. McDonald, Livermore, Brasch, Wall, Weber, Wilkinson, Love, Politis, Barnhill, Hill and Byrne, which meeting was joined later by Mr. Millward. In the course of that meeting, Mr. Love inquired of Mr. McDonald how he was going to conduct the meeting, to which Mr. McDonald replied:
“We will follow the procedure outlined in the Agenda as we’ve always done. Why?”
which question led Mr. Love to reply:
“It is our opinion that the old group retire at the commencement of the Annual Meeting and the new group take over. We have sought a legal opinion on this.”
following which he distributed to each of Messrs. McDonald, Livermore, Brasch, Wilkinson, Wall and Weber a copy of an Opinion which had apparently been obtained by the NSWRL from Mr. A. J. Sullivan QC. After he had read the Opinion, Mr. McDonald indicated that he - and, seemingly, Messrs. Livermore, Brasch, Wilkinson, Wall and Weber - would need to consider the matter, so that nothing further was done at that stage.
49 It would seem that, at 11.00 a.m., Messrs. McDonald, Brasch, Livermore, Wall, Weber and Barnhill assembled in the meeting room - however, Mr. Wilkinson, who was clearly enough on the premises did not join them - while assembled outside the meeting room were Messrs. Lockwood, Fitzgerald, Millward, Politis, Love, Hill and Byrne. When Mr. McDonald announced that the meeting was about to commence, those assembled outside the meeting room moved to enter, but Mr. McDonald announced that “the new nominees” would not be permitted to attend the meeting, so that Messrs. Love, Hill and Byrne were excluded.
50 At the commencement of the meeting, Mr. McDonald took the Chair and, after some introductory remarks, called upon Mr. Barnhill for a report. When that had been done Mr. McDonald called for a motion that the Accounts and Directors’ and Auditors’ Reports of the previous financial year be adopted, which was then done.
51 What is said then to have occurred is recorded by Mr. Politis in an Affidavit sworn by him which Affidavit, so far as is relevant, was in the following terms:
“11. Mr. McDonald then said: ‘The next item on the agenda is to elect nine directors being the chairman, four people nominated by the NSWRL and four people nominated by the QRL to the board of directors.’
I said: ‘I call a point of order. The meeting might be technically incorrect or invalid. The new nominees to the Board should be present at the meeting.’
Mr. McDonald said: ‘I’m going to conduct the AGM in the same procedure as the previous years. I call for a motion for that effect.’
I said: ‘I ask the Chief Executive to table the nominations.’
David Barnhill then read out the nominees of the NSWRL and of the QRL …
Mr. McDonald said: ‘Have you got a nomination for chairman?’
I said: ‘It’s out of order. I don’t see how we can have a nomination unless the nominees for the NSWRL are here.’
Mr. McDonald said: ‘Well you don’t have a nominee for chairman here. We do and we’re going to proceed.’
I said: ‘How can we proceed when the new nominees aren’t here?’
Mr. McDonald said: ‘There’s only one nominee so the meeting can proceed.’
I said: ‘I call a point of order. We can’t proceed with the meeting until it’s resolved.’
Mr. Millward said: ‘I call for an adjournment until the three other nominated representatives of the NSWRL board are present.’
Mr. McDonald said: ‘The meeting is adjourned for ten minutes.’
12. The NSWRL’s representatives then left the meeting room and had a discussion. After about ten minutes, we returned to the room.
I said: ‘Mr. McDonald, I wish to take a point of order. At the commencement of the annual general meeting, all the positions of directors are declared vacant including the position of chairman. You are no longer the chairman. The agenda which we suggest is as set out in this document which I table. The new nominees nominated by the State leagues together with the CEO become the new board and vote to elect the new chairman. If you are not prepared to conduct the meeting in accordance with the articles, then I regret that we cannot continue to participate in this meeting.’
Mr. McDonald said: ‘There’s only one nomination received and that’s Kevin Brasch. I intend proceeding.’ At that point, myself, Mr. Millward, Mr. Fitzgerald and Mr. Lockwood all left the meeting.”
52 The document which Mr. Politis tabled and which was headed “Agenda” contained the following:
“1. Chairman declares the meeting open and invites the CEO to take the chair.
2. CEO announces the four nominations received from each league and they become directors along with the CEO.
3. CEO then announces the election of chairman by those directors then elected and the CEO.
4. The election takes place.
5. The CEO confirms the new Chairman who takes the chair.
6. If the chairman comes from those directors, the Chairman calls for the relevant League to fill the casual vacancy from the League.”
53 In the Affidavit sworn by him, Mr. McDonald described what occurred in the following terms:
“53. Politis then said: ‘I call a point of order. NSW has legal advice to the effect that the new directors should be in attendance, not the old directors. If this is not the case we will have to leave the meeting.’
Mr. Millward said: ‘I support what Mr. Politis has said.’
Mr. Wall then said: ‘I am amazed that the AGM elections had gone along for some 14 years in the same way with no problems and now NSW has concerns.’
Fitzgerald said: ‘I am retiring from the Board but I did speak about this matter last year.’
I said: ‘I am going to proceed with the meeting outlined in the Agenda with the same procedures as conducted at the previous Annual General Meetings.’
54. Brasch then moved and Livermore seconded a motion that the meeting ‘proceed in accordance with the published Agenda given to the meeting and in keeping with previous annual general meeting procedures of the Company.’ That resolution was passed five votes to four (being Brasch, Livermore, Weber, Wall and me) and four against (being Lockwood, Politis, Millward and Fitzgerald).
55. I then said: ‘I call for nominations for Chairman. Is there a nomination from NSW?’
Barnhill said: ‘No.’
I turned to the Old NSWRL directors and said: ‘Is there a nomination from NSW?’
Politis said: ‘It is not for us to nominate the chairman, the new nominees should be in attendance.
Politis said: ‘This meeting is not being conducted in accordance with the rules and I request an adjournment.’
Millward said: ‘I support an adjournment for five minutes.’
56. I then said that the meeting would be adjourned until 11.45 a.m. (approximately 8 minutes). Politis, Millward, Lockwood and Fitzgerald then left the room.
57. Barnhill then said: ‘I will leave the room to allow discussions to take place.’ Barnhill then left the room.
58. The meeting resumed at 11.45 a.m. by which time Politis, Millward, Lockwood, Fitzgerald and Barnhill had returned to the room.
59. Politis then read a handwritten statement which I recall did not seem to make sense to me. Politis then distributed a one page agenda and said: ‘This procedure must be followed or we will leave the meeting.’
………60. I then said: ‘A quorum for the meeting having been achieved, the meeting will continue in accordance with the previous motion of Brasch and Livermore. I again call for nominations for Chairman. Has the QRL nominated a person for the position of Chairman.’Barnhill said: ‘Mr. Brasch has been nominated.’
85 SHEPPARD AJA: In this matter I have had the advantage of reading the judgment to be delivered by Powell JA. I am in agreement with his Honour's reasons and conclusions but add some remarks of my own.
I said: ‘I’ll ask again has anyone from NSW nominated?’ No one responded so I said there being only one nomination, I declare Mr. Brasch elected as Chairman.
61. As I said this Politis, Millward, Fitzgerald and Lockwood left the room.
62. I then said: ‘The next item of business is the election of the 4 directors nominated by NSW and the 4 directors from Queensland.
63. Mr. Barnhill then said: ‘The 4 nominations from NSW are Colin Love, Michael Hill, Vic Byrne and Nick Politis’. It was then moved by Wall and seconded by Livermore that those NSW nominees be appointed directors for 1999 and that motion was carried unanimously by those remaining in the meeting.
64. Barnhill then said: ‘The Queensland nominations are John McDonald, Ross Livermore, Ben Wall and Ron Wilkinson.’ Livermore then moved and Wall seconded that those Queensland nominees be appointed directors for 1999 and that motion was carried unanimously by those remaining in the meeting.
65. I then vacated the Chairman’s seat in favour of Brasch.
66. Brasch then said: ‘It is a requirement that the Deputy Chairman be a resident of New South Wales while a Queensland person is Chairman. As New South Wales do not have a person nominated I propose to defer the election of Deputy Chairman to the next meeting.’ Everyone present agreed.
67. Brasch then said: ‘The next item of business is the appointment of the auditors.’ Livermore then moved and Wall seconded that Campbell Griffith & Co be appointed as ARL’s auditors for 1999, which motion was carried unanimously by those remaining in the meeting.
68. Those present then congratulated Brasch on his appointment as Chairman whereupon Brasch declared the meeting closed at approximately 12 noon.”
54 In the Affidavit which he swore, Mr. Barnhill, after dealing with the proceedings at the Annual General Meeting and the closure of the meeting, deposed (inter alia):
“10. Immediately thereafter, the seventh defendant, Mr. Wilkinson entered the room. Mr. Brasch then took the Chair and said: ‘I declare the advertised meeting open’.
Mr. Brasch said: ‘I note that the directors from the NSWRL are not in attendance. The number of directors present constitutes the required quorum.’
Mr. Brasch then said to me: ‘Would you stay on as minute secretary?’
I said: ‘Not as chief executive?’
He said: ‘No. You can take the minutes.’
I said: ‘I’m not going to be the minute secretary’.
Mr. Livermore said: ‘I will be the minute secretary’.
I then left the meeting.”
55 The Minutes, which were apparently prepared by Mr. Livermore, and which Mr. Brasch appears later - but not at any meeting of Directors - to have confirmed, contain the following:
“The Chairman declared the meeting open and made it clear that Mr. David Barnhill had informed him that the necessary notice of the meeting had been circulated to all Directors. Mr. Barnhill concurred with this.
He noted that the Directors nominated by the NSWRL and appointed at the AGM were not in attendance and that those Directors present constituted a quorum as required under the Company’s Articles of Association.
The Chairman invited Mr. David Barnhill, the previous Acting Chief Executive/General Manager, to act as Minute Secretary for the Meeting. Mr. Barnhill declined and subsequently left the room.
Mr. Ross Livermore offered to act as Minute Secretary for the Meeting in addition to his position as a Director and this offer was accepted by the Board.”
56 It is to be noted, first, that although three - Messrs. Love, Hill and Byrne - of those who had been nominated as NSWRL Directors and who are said to have been appointed at the Annual General Meeting, had previously been excluded from that meeting, and although the meeting of Directors proceeded immediately upon what was said to have been the closure of the Annual General Meeting, no attempt appears to have been made to inform the New South Wales nominees of the commencement of, or to invite them then to attend, the Director’s Meeting. Further, it is to be observed that, although there does not appear to have been any resolution of the Board terminating Mr. Barnhill’s appointment as Acting Chief Executive/General Manager, Mr. Brasch and the Queensland Directors appear to have proceeded on the basis - the validity of which is, at the least, questionable - that Mr. Barnhill had ceased to hold the office.
57 These proceedings were commenced - apparently by leave granted by Windeyer J - on 17 December 1998, when there was filed a Summons in which the Appellants sought the following (inter alia) relief:
“1. A declaration that the purported election of the third defendant as chairman of directors of the first defendant (‘the ARL’) is null and void and of no legal effect.
2. A declaration that on the proper construction of the articles of association of the ARL, its chairman of directors is to be appointed by a majority vote of the members of the board of the ARL comprising of:
(a) those directors appointed as such at its annual general meeting by operation of article 39(a); and
(b) the chief executive of the ARL.
3. A declaration that the second, third, fourth and fifth plaintiffs and the fourth, fifth, sixth and seventh defendants have been appointed to the office of director of the ARL.
4. Alternatively, an order that an extraordinary meeting of the ARL be convened for the purpose of appointing the second, third, fourth and fifth plaintiffs and the fourth, fifth, sixth and seventh defendants to the office of director of the ARL.
5. A declaration that the purported determination by the ARL of the contract of employment of David John Barnhill as chief executive of the ARL is null and void and of no legal effect.
6. Alternatively an order setting aside the decision of the board of directors of the ARL to determine the contract of employment of David John Barnhill as chief executive of the ARL.”
58 On the return of that Summons before Hamilton J on 22 December 1998, there was filed - one assumes by leave granted by Hamilton J - a Cross-Claim in which was sought on behalf of the Respondents, the following (inter alia) relief:
“1. A declaration that the resolution of the Directors of the First Cross-Claimant Australian Rugby Football League Limited (‘ARL’), made on 9 July 1998, which purported to appoint the Sixth Cross-Defendant, David Barnhill (‘Barnhill’), as ‘Acting Chief Executive/General Manager’ of ARL (the ‘Resolution’) did not cause Barnhill to hold the office of ‘Chief Executive’ within the meaning of that expression in Article 34 of the ARL’s Constitution (the ‘Constitution’).
2. A declaration that, in the event that the resolution was effective to appoint Barnhill ‘Chief Executive’ of ARL within the meaning of the expression in Article 34 of the constitution, Barnhill had ceased to hold such office by no later than 1 November 1998.
3. A declaration that, at the Annual General Meeting of ARL on 15 December 1998 (the ‘1998 AGM’), Barnhill was not entitled, as of right, to be proposed for the office of, or perform the duties of, chairman of ARL or chairman of the 1998 AGM.
4. A declaration that, at the 1998 AGM, Barnhill was not entitled to perform the duties of chairman of the 1998 AGM unless and until elected to do so by a majority of those ARL members present and voting.”
59 In the Judgment which he delivered on 23 December 1998 (RAB 7), Hamilton J recorded, as the questions which had been debated before him:
1. whether Mr. Brasch had been validly appointed as Chairman of the ARL; and
2. whether Mr. Barnhill still occupied the office of Chief Executive of the ARL.
60 So far as the first of these questions was concerned, Hamilton J concluded that Mr. Brasch had not been validly appointed as Chairman, the essential elements in that conclusion being:
1. the Chairman is to be appointed by the Board of Directors at each successive Annual General Meeting (Article 33);
2. each of the eight Directors representing the NSWRL and the QRL holds office only until the Annual General Meeting following that at which he was appointed, that is to say, that the tenure of each ceases at the commencement of the subsequent Annual General Meeting (Article 39(b));
3. the persons nominated by the NSWRL and the QRL become directors at the commencement of each Annual General Meeting by virtue of the nomination and without the need for appointment (Articles 34, 39(a));
4. when the meeting commenced there were present four persons, Messrs. Weber, Millward, Fitzgerald and Lockwood who had thus ceased to be Directors and there were excluded from the meeting four persons, Messrs. Wilkinson, Love, Hill and Byrne who had become Directors and who were entitled to be present.
5. by reason of that fact, the proceedings at the meeting were defective and the purported resolution appointing Mr. Brasch as Chairman invalid.
61 So far as the second question was concerned, Hamilton J concluded that Mr. Barnhill continued in office as Chief Executive of the ARL, the essential elements in his reasoning being:
1. notwithstanding the language of the Resolution of 9 July 1998, Mr. Barnhill was appointed to the office of Chief Executive and thus became Chief Executive within the meaning of Article 34(b) during his acting tenure of that office; and
2. since there was no evidence that any of the incoming Directors had been formally notified of the Director’s Meeting to follow the Annual General Meeting, that meeting was invalid so that, if what was done at the meeting would otherwise be held to have constituted a termination of Mr. Barnhill’s appointment that purported termination was invalid.
62 I note, here, that, although the Respondents in their Cross-Claim did not seek an order pursuant to s.1322 of the Corporations Law, Hamilton J recorded that Mr. B.A.J. Coles QC, who then appeared, as he did on the hearing of the appeal, for the Respondents, indicated that if Hamilton J were to find that proceedings at that meeting were irregular, he would seek an order pursuant to the provisions of s.1322 of the Corporations Law. Hamilton J further recorded that his opinion was that if the proceedings were, as he found, irregular, an order pursuant to s.1322 of the Corporations Law was not appropriate as that irregularity was one which had caused, or might cause, substantial injustice.
63 On 24 December 1998, proceedings were against listed before Hamilton J for the purpose of counsel speaking to Short Minutes. At that time, Hamilton J entertained argument as to whether or not it was appropriate, as the Appellants submitted, to make a declaration in terms of Prayer 2 in the Summons, or, as the Respondents - accepting for this purpose the correctness of Hamilton J’s view as to the time at which the Directors nominated by the NSWRL and the QRL became Directors - submitted, a declaration that the Chairman is to be appointed at the Annual General Meeting by a majority vote of the Chairman elected preceding the Annual General Meeting, the Directors appointed by operation of Article 39(a) and the Chief Executive. His Honour’s reasoning in this respect is contained in the following passage (RAB 15):
“The matter is not an easy one. However I have come to the conclusion that the Chairman of Directors appointed at the preceding Annual General Meeting holds office until the election of the his successor at the current Annual General Meeting, albeit the nominated (sic) directors cease to hold office when at the commencement of the meeting their nominations are referred to that meeting pursuant to article 39(a). I am not unmindful of Article 37. I am inclined to think that the directors referred to in that Article include the Chairman of Directors (although not the Chief Executive). But, even if that is right, upon my interpretation, all the annually appointed directors, including the Chairman, do go out of office at the Annual General Meeting, although not all at the same point of it (sic). One thing that points to the construction I have adopted is that this provides a chairman to commence the meeting, whereas the plaintiffs’ interpretation would leave the meeting to open without a chair, except one elected by those present. The disorder that would be inherent in that is illustrated by these proceedings.”
64 The formal declarations which his Honour then made were as follows:
“1. DECLARE that the purported election of the Third Defendant as Chairman of Directors of the First Defendant at its Annual General Meeting on 15 December 1998 is null and void and of no effect.
2. DECLARE that on the proper construction of the Articles of Association of the First Defendant, its Chairman of Directors is to be appointed at the Annual General Meeting by a majority vote of the members of the Board of Directors of the First Defendant comprising of:
(a) the Chairman elected at the preceding Annual General Meeting of the First Defendant;
(b) those Directors appointed as such at its Annual General Meeting by operation of Article 39(a); and
(c) the Chief Executive of the First Defendant.
3. DECLARE that the purported determination by the First Defendant to the contract of employment of David John Barnhill as Acting Chief Executive of the First Defendant is null and void and of no legal effect.
4. DECLARE that David John Barnhill remains the Acting Chief Executive of the First Defendant.”
65 The Appellants appealed from Declaration 2 made by his Honour and sought, in lieu, a declaration in terms of Prayer 2 of the Summons which had been filed on their behalf. The Respondents filed a Cross-Appeal in respect of the first, third and fourth Declarations made by Hamilton J and sought, in lieu:
“
………
4. A Declaration that Mr. Brasch’s election as Chairman of Directors at ARL’s 1998 AGM was valid.
5. A declaration that, on the proper construction of (the Articles of Association) the Chairman of Directors is to be appointed by a vote of the members of the Board of Directors of ARL comprising:
(a) the Chairman elected at the immediately preceding Annual General Meeting of ARL;
(b) the 8 Directors appointed pursuant to, or by reason of the operation of Article 39(a), at the immediately preceding Annual General Meeting; and
(c) the Director who is a Director by reason of being the ARL’s Chief Executive for the time being;
6. A declaration that as at the date of the 1998 Annual General Meeting, Mr. Barnhill was not a Director of the ARL either because he was never appointed to hold the office of Chief Executive, or because, if he had been so appointed, that appointment expired by fluxion of time by no later than 1 November 1998.”
66 The hearing of the appeal was expedited so the members of the Court have since been informed Letter Colin W. Love & Co to Registrar dated 9 February 1999:
“on the grounds that, inter alia, article 12 … provide (sic) that an annual general meeting of the ARL shall be held not later than the last week in February in each year.”
67 I cannot forebear to observe that, if this were the basis upon which the Court was induced to order expedition, the Court has been seriously misled, first, since, as I have earlier recorded, all parties proceeded upon the basis that the meeting which was held on 15 December 1998 was the Annual General Meeting of the ARL, a fact which is reflected in the first declaration made by Hamilton J, and in the declaration sought in Prayer 4 of the Respondent’s Cross Appeal; and second, because, as I have earlier recorded, the original Article 12 appears to have been amended in 1992 so as to provide that the Annual General Meeting should be held not later than the last week in December each year.
68 When the appeal came on for hearing, Mr. B.W. Collins QC appeared with Mr. R. J. Weber for the Appellants, who were also the First to Fifth Cross-Respondents, Mr. B.A.J. Coles QC appeared with Mr. C.R.C. Newlinds for the Respondents/Cross-Appellants, while Mr. A.S. Bell appeared for Mr. Barnhill who was the Sixth Cross-Respondent.
69 As what I have written at the commencement of this Judgment would suggest, the debate on the hearing of the appeal, insofar as it related to the principal question in dispute - the constitution of the Board of Directors for the purposes of appointing the Chairman of Directors - concentrated upon the provisions of what were put forward as the Articles of Association of the ARL and, in particular, upon the provisions of Articles 33, 34, 35, 37 and 39 of the Articles.
70 During the course of that debate, attention was directed to the differing forms of language appearing in those various Articles. Thus, attention was directed to the fact that each of Articles 33, 35 and 37 used the phrase “at every Annual General Meeting” as indicating the time at which a particular event should occur. By contrast, attention was drawn to the fact that, in Article 39(b), the term of office of Directors nominated and appointed pursuant to the provisions of Article 39(a) was said to be “until the Annual General Meeting …”. Other examples of such variations in language may be found in the fact that, while Article 33 provides for the “appointment” of the Chairman of Directors, Article 35 provides for the “election” of the Deputy Chairman of Directors, while Article 39 provides for the nomination of Directors. Such variations in language upon which the parties sought to place completing emphases appeared at the time - the members of the Court not having had their attention directed to the history of the development of the Articles which I have sought to record above - to suggest, either, that the draftsman of the Articles had been one possessed of the skills of the by now legendry “blundering attorney’s clerk” (see In re Redfern; Redfern v. Bryning (1877) LR 6 Ch D 133, 138 per Bacon VC; In re Dayrell; Hastie v. Dayrell [1904] 2 Ch 496, 499 per Joyce J) or, that the activity of drafting the Articles of Association was one involving the glutinous aroma of paste pot and scissors.
71 The history of the development of the Articles to their present form provides some - although not a complete - explanation for some of the varying forms of language to which attention has been directed. Thus, it is apparent that the word “appoint” appearing in Article 33 derived from the fact that, originally, the Executive Chairman was, and was intended to be, an employee who, by virtue of his employment, was to have an office similar to that of managing director of a more conventional trading company. By contrast, the Deputy Chairman was one who was to be selected, or elected, from the other Directors of the ARL. The fact that while the position of Executive Chairman continued, the holder of that position in his capacity of a Director did not retire from office, as such, meant that there was no need for his term of office to be further defined, whereas, since other Directors were clearly intended to hold office only for a limited time, it was necessary for the term of their office to be defined. However, while the history of the development of the Articles provides some explanation of the varying forms of language which may be found in the Articles, the fact remains, that, in their present form, the Articles represent a clumsy collection of provisions involving varying forms of language, which provisions can only be described as the product of sloppy draftsmanship and confusion of thought.
72 This fact, so it seems to me, dictates the approach which the Court should take when seeking to construe the various provisions in the Articles. While, if it be proper to say that the words of a particular provision, or of particular provisions, in a written instrument are plain and unambiguous, the Court is not authorised to depart from the intention thus revealed, when the Court is faced with a situation such as that which I have just described, the Court’s task, so it seems to me, is, first, to seek to discern the real intention of the draftsman, and, then, so to construe the instrument as, if it be possible, to make a consonant whole giving effect to the intention thus discerned. That this a legitimate approach is suggested by the following passage in the Judgment of Leach VC in Hume v. Rundell (1824) 2 Sim & St 174, 177; 57 ER 311, 312):
“In the construction of all instruments it is the duty of the Court not to confine itself to the force of a particular expression, but to collect the intention from the whole instrument taken together. But a Court is not authorised to deviate from the force of a particular expression unless it finds in other parts of the instrument expressions which manifest that the author could not have the intention which the literal force of a particular expression would impute to him. However capricious may be the intention which is clearly and unequivocally expressed, every Court is bound by it, unless it be plainly contradicted by other parts of the instrument.”
73 To the like effect is the following passage from a Judgment of Lord Cottenham LC in Lloyd v. Lloyd (1837) 2 My & Cr 192, 202; 40 ER 613, 617):
“If the provisions are clearly expressed and there is nothing to enable the Court to put upon them a construction different from that which the words import, no doubt the words must prevail; but if the provisions and expressions be contradictory, and if there be grounds appearing on the face of the instrument, affording proof of the real intention of the parties, then that intention will prevail against the obvious and ordinary meaning of the words. If the parties have themselves furnished a key to the meaning of the words used, it is not material by what expression they convey their intention.”
74 By way of supplement to the approach which I have just described I would add that it seems to me that where, as is the case with the Articles of Association of the ARL, the language of an instrument is ambiguous or susceptible of more than one meaning, it is legitimate to have regard to the circumstances which have led to the instrument being in that form.
75 As will be apparent from what I have earlier recorded, it was not until after June 1996, when Mr. Arthurson retired as Executive Chairman and the later amendments were made to the Articles so as to remove the provisions of the former Articles 33 and 37, that it became necessary to provide for the appointment, or election, of a Chairman and to define the term of his office. By contrast, it was, as from the date of incorporation, necessary to provide in the Articles of Association for the manner of appointment or election of the Directors and the Deputy Chairman and to provide for the term of office to be held by the Directors. Article 34 provided for the Directors other than the Executive Chairman to be nominated by the respective State Leagues, a provision which, in the absence of anything further, would operate so that the nominees became Directors of the ARL upon the cesser of the term of office of their predecessors, nothing beyond the nomination being called for to effect that result (see British Murac Syndicate Limited v. Alperton Rubber Company Limited [1915] 2 Ch 186, 192 per Sargant J; Plantations Trust Limited v. Bila (Sumatra) Rubberlands Limited (1916) 114 LT (NS) 676, 679 per Eve J). Although Article 43 originally provided for an election by “the company at the Annual General Meeting”, that provision appears to have been a mere formality for no such person could be elected as a Director unless first nominated by a State League, retiring Directors being deemed to have been re-elected in the absence of any relevant nomination.
76 When the Articles were amended in 1992, the provision for the nomination of Directors was continued but Article 39(a) did not provide for an election by the company in general meeting. Further, although Article 37 - which replaced the former Article 41 - continued to provide that at every Annual General Meeting “(the) Directors … shall retire from office” Article 39(b) provided that those appointed as Directors pursuant to Article 39(a) should “hold office until the Annual General Meeting …”. There no longer being a provision for the election of Directors - albeit in the limited way that previously existed - the nominations, so it seems to me, were intended to operate of their own force and it thus becomes necessary to know at what point of time that is to occur. In my view, that point of time is either just before, or immediately upon, the commencement of the Annual General Meeting (see, for example, Eyre v. Milton Pty. Limited [1936] 1 Ch 244, 254 per Lord Wright MR) and the provisions of Article 37 providing for retirement at the Annual General Meeting which could have had room for operation if the provision for election had continued in the Articles should be treated as either operating so as to provide for retirement immediately prior to, or upon the commencement of, the Annual General Meeting, or as being otiose.
77 The amendment of the Articles of Association effected in 1997 injected yet another curiosity for, although providing that the Chief Executive should be a Director, the Articles made no provision for the manner of appointment, or election, of the Chief Executive nor did they, at least in terms, provide for the duration of the Chief Executive’s office as a Director - given the position which had previously obtained in relation to the Executive Chairman, the inference that the Chief Executive was intended to hold office as a Director while employed as Chief Executive seems to me to be justified.
78 If the view which I have previously expressed as to the manner in which, prior to the 1997 amendments to the Articles, Articles 37 and 39 ought to be held to operate, then it seems to me that, following the 1997 amendments to the Articles, the Chairman of Directors - who no longer held any special position ought to be regarded as retiring immediately prior to, or at the commencement of, the Annual General Meeting. Support for that view would be provided by the fact that the Chairman of Directors - who need not be one of those nominated by either of the State Leagues as a Director - is to be appointed by the incoming Directors. If I may, with respect, say so, I am not impressed by the reason given by Hamilton J for taking a different view - it would be open to the Chief Executive and the incoming Directors - who total nine - to appoint a Chairman of the meeting and, that having been done, then to proceed to appoint a Chairman of Directors.
79 If the views which I have expressed as to the proper operation of the Articles be correct then it follows that the purported appointment of Mr. Brasch as the Chairman of Directors was not carried out in accordance with the Articles of Association and that his appointment was void, as also were any subsequent actions taken at the Annual General Meeting (see, for example, Clark v. Workman [1920] 1 IR 107).
80 The appeal should be upheld, Declaration 2 made by Hamilton J set aside and, in lieu thereof, a Declaration made in terms of Prayer 2 in the Appellant’s Summons, and, to that extent, at least, the Cross-Appeal should be dismissed.
81 The subsidiary question argued on the Appeal and the Cross-Appeal relates to the position of Mr. Barnhill. The principal argument advanced on behalf of the Respondents in this respect was that the resolution appointing Mr. Barnhill as Acting Chief Executive/General Manager did not constitute a resolution appointing him to the office of Chief Executive, but was merely one which appointed him to carry out some of the functions normally carried out by the Chief Executive (reliance was placed on the Judgment of the Commonwealth Court of Conciliation an Arbitration in Browning v. Ross (1954) 79 CAR 185) and that that appointment was, in any event, for but a limited period which had expired prior to the commencement of the Annual General Meeting. The further argument which appears to have been advanced at the trial, namely, that what occurred at the meeting held immediately after the termination of the Annual General Meeting amounted to a termination by the Board of Directors of Mr. Barnhill’s appointment, was not persisted in on the hearing of the appeal, one assumes, because the proceedings at that purported meeting of the Board were themselves invalid as no or no adequate notice of the meeting was given, or at least no such notice was shown to have been given - to the New South Wales nominees who, by then, had become members of the Board of Directors of the ARL (see, for example, In re Portuguese Consolidated Copper Mines Limited (1989) LR 42 Ch D 160, Young v. Ladies’ Imperial Club Limited [1920] 2 KB 523) and still less that any notice which might have been given specified, as business to be dealt with at the meeting, the position of Mr. Barnhill.
82 With respect, it seems to me that this point is without merit. The question is not one which requires the Court to construe a written agreement - in which case there would be limits upon the material to which the Court would be permitted to have regard in order to determine what was the intention of the Board on 9 July 1998 when Mr. Barnhill’s appointment was made - but is one which requires the Court to determine a question of fact, namely, what was it that the Board did on that day. In this regard, so it seems to me, the Court is entitled to have regard not merely to the terms of the resolution of the Board, but also to the subsequent conduct of the Board in relation to the subject matter. In this regard it is not without point to note that, at the meeting of the Board held on 4 August 1998 - that is, the first meeting of the Board after the appointment of Mr. Barnhill - Mr. McDonald, in his capacity as Chairman of the Board of Directors, as I have earlier noted, “welcomed David Barnhill to his first meeting as Chief Executive of the Australian Rugby League”, and that, as I also earlier noted, during the course of that meeting there appear to have been numerous occasions on which “the Chief Executive’s action (was) endorsed” or the Chief Executive “was requested” or “was directed” to take action on behalf of the ARL. Nor is it without point to note that, despite what was said to have been the limitation as to the term of Mr. Barnhill’s appointment, he, with the knowledge and acquiescence of the Board continued to act as Chief Executive after 1 November 1998 and, in that capacity, continued beyond 1 November 1998 to attend at meetings of the Board and made arrangements for the holding of the Annual General Meeting of the ARL.
83 To the extent, therefore, that the Cross-Appeal also sought Declarations as to the position of Mr. Barnhill it should be dismissed.
84 For the reasons which I have recorded above, I would propose the following formal Orders:
1. ORDER that the Appeal be upheld.
2. ORDER that Declaration 2 made by Hamilton J on 24 December 1998 be set aside and that, in lieu thereof, there be made a Declaration that on the proper construction of the Articles of Association of Australian Rugby Football League Limited its Chairman of Directors is to be appointed by a majority vote of the members of the Board of Australian Rugby Football League Limited comprising of:
(a) those Directors appointed as such at its Annual General Meeting by the operation of Article 39(a); and
(b) the Chief Executive of Australian Rugby Football League Limited.
3. ORDER that the Respondents, other than Australian Rugby Football League Limited, pay the costs of the Appellants of the appeal, and, if required, have a certificate under the suitors Fund Act 1951.
4. ORDER that the Cross-Appeal be dismissed.
5. ORDER that the Cross-Appellants, other than Australian Rugby Football League Limited, pay the costs of the Cross-Respondents of the Cross-Appeal.
86 The relevant articles of association of the Australian Rugby Football League Ltd ("the League"), as they now are, are as follows:
"33 The Board of Directors shall at the date of effect of the operation of this Article and subsequently at each Annual General Meeting appoint a Chairman of Directors. The person so appointed shall be entitled to all powers, authorities, rights, functions and privileges of a Director.
34 The number of Directors shall be ten (10) and shall be comprised of:
(a) The Chairman;
(b) The Chief Executive;
(c) Four (4) persons nominated by the New South Wales Rugby League Limited or its successor at law;
(d) Four (4) persons nominated by the Queensland Rugby Football League Limited or its successor at law one of whom shall be the person for the time being occupying the office of Managing Director of the Queensland Rugby Football League Limited."
87 Article 35 deals with the election of a deputy chairman. Articles 36, 37 and 39 are as follows:
"36 A person elected as Deputy Chairman in accordance with the provisions of the preceding Article shall, subject to the provisions of Article 42, hold office until the Annual General Meeting following that at which he was elected.
37 At every Annual General Meeting of the League after the adoption of these Articles all Directors shall retire from office.
38 …
39(a) Not later than seven (7) days prior to every Annual General Meeting, each State League shall notify the General Manager of the persons nominated in accordance with the provisions of Article 34 for appointment to the office of Director for the ensuing year. These nominations shall be referred to the Annual General Meeting and the persons nominated shall be appointed to the Office of Director.
(b) A person appointed as Director pursuant to the preceding paragraph shall, subject to Article 42, hold office until the Annual General Meeting following that at which he was appointed."
88 Two matters may be noted. Firstly, article 42 provides for the vacation of the office of a director. It is not relevant for present purposes. Secondly, article 39(a) needs to be considered in conjunction with article 34 to which it refers.
89 The Court's task is to construe the articles of association so as to give effect to the intention of the parties as expressed in the language which has been used. The history of the changes made to the articles given in the judgment of Powell JA provides some, although an incomplete, explanation why there occurs in the relevant articles, when read together, apparent inconsistencies and unevennesses in the drafting. It is that which has led to this problem.
90 On one approach to the case, one could refine it to such an extent that the outcome would depend on the difference in meaning to be accorded to the words "at" and "until" in the contexts in which they appear. Relevantly, the word "at" appears in the phrase, "at each Annual General Meeting" in article 33 and in the similar phrase in article 37 dealing with the retirement at every annual general meeting of "all Directors". The word "until" is to be found in the phrase "until the Annual General Meeting …" in article 36, which applies only to the deputy chairman, and in article 39(b) which uses the phrase, "until the Annual General Meeting following …" in defining the period of office of the nominated directors. If one construes the word "at" in the context in which it appears as meaning "during", which is open as a dictionary meaning of the word, and the word "until" is construed as meaning "just before" or "immediately upon the commencement of" an event (in this case the meeting), which is the usual meaning of the word, an internal conflict arises on the face of the articles in their present form. The conflict is between the operation to be accorded to articles 36 and 39(b) on the one hand, and that to be accorded to article 37 which provides for the resignation of all directors at every annual general meeting.
91 The articles are contained in a commercial document and should be given a sensible and practical operation and construction consistent with the language which has been used. That suggests that in their relevant contexts the words "at" and "until" should desirably be given a similar meaning. Otherwise, if one construes article 39(b) to mean that the nominated directors hold office up to just before or up to the commencement of the relevant annual general meeting and decides that "until" in that context has its more usual meaning, one, nevertheless, has to give effect to article 37 which obliges all directors to retire from office "at" every annual general meeting.
92 I think that, to give the articles a meaning, which would operate to keep the outgoing directors in office beyond the time at which the annual general meeting commences, would create a manifest inconvenience and would run counter to the overall intention of those responsible for the drafting which was to bring about the election or appointment of a new board from the time of the commencement of the relevant annual general meeting. In my opinion, not only the outgoing directors nominated pursuant to article 39(a), but also the chairman, cease to hold office (unless re-elected or re-appointed) at the outset of the annual general meeting before any business has been done. The intention was that all new business be done by the new directors.
93 That leaves the chief executive in respect of whom there is no provision in the articles except the reference to the office in article 34(b). There is a question whether article 37 applies to the office of chief executive. On the face of it, it does. Nevertheless, it seems a pointless provision because the practice has been to appoint the chief executive a director during the period of his contract of employment. Nothing, however, appears to turn on this matter. I agree that the cross-appeal should be dismissed.
94 In the result, I am in agreement with the orders proposed by Powell JA.
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