NRMA v Parkin

[2004] NSWSC 296

Reported Decision: 49 ACSR 386

Supreme Court

CITATION:	NRMA v Parkin [2004] NSWSC 296
HEARING DATE(S):	8 April 2004
JUDGMENT DATE:	8 April 2004
JURISDICTION:	Equity Corporations List
JUDGMENT OF:	Campbell J
DECISION:	Proposed resolutions valid. Extension of time granted for calling and holding of meeting to minimum time reasonably necessary for meeting to be called and held.
CATCHWORDS:	CORPORATIONS - constitution and legal capacity - requisition of meeting to amend objects of company - whether proposed resolutions void for uncertainty - whether resolution invalid because it proposes an object inconsistent with an existing object - CORPORATIONS - management and administration - requisition of meeting to consider amendment of objects of corporation - whether directors obliged to submit resolution to a meeting if proposed objects are void for uncertainty - whether proposed objects are void for uncertainty - whether resolution seeking to include new objects void by reason of conflict with existing objects - whether resolution proposed for an improper purpose - extension of time for calling and holding of meeting - whether extension of time for four months beyond minimum extension needed to enable meeting to be called is justified by saving in expense of calling meeting
LEGISLATION CITED:	Companies Act 1908 (Eng) Corporations Act 2001 (Cth) Industrial Relations Act 1996
CASES CITED:	BWN Industries Pty Ltd v Downey (1993) 11 ACSR 777 Cotman v Brougham [1918] AC 514 The Council of the Upper Hunter District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Humes Limited v Unity APA Ltd (No.1) (1987) 11 ACLR 641 NRMA Insurance Group Ltd v Spragg (2001) 38 ACSR 174 NRMA Limited v Scandrett (2002) 171 FLR 232 NRMA Ltd v Snodgrass (2001) 52 NSWLR 383 Street v Queensland Bar Association (1985) 168 CLR 461 Ngurli Ltd v McCann (1953) 90 CLR 425 Totally and Permanently Incapacitated Veterans' Association of New South Wales Ltd v Gadd (1998) 28 ACSR 549
PARTIES :	National Roads and Motorists' Association Limited - Plaintiff John Parkin - Defendant
FILE NUMBER(S):	SC 2063/04
COUNSEL:	T Bathurst SC; R McHugh - Plaintiff J Whittle SC; J V Gooley - Defendant
SOLICITORS:	Corrs Chambers Westgarth - Plaintiff Turner Freeman - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

CAMPBELL J

THURSDAY 8 APRIL 2004

2063/04 NATIONAL ROADS AND MOTORISTS’ ASSOCIATION LIMITED v JOHN PARKIN

JUDGMENT – Ex Tempore (Revised 14 April 2004)

1 HIS HONOUR: National Roads and Motorists’ Association Limited (“NRMA”) is a company limited by guarantee. It has received a requisition from members, requiring it to call a general meeting. NRMA disputes the validity of that requisition, and, in the alternative, seeks a longer time than the Corporations Act 2001 (Cth) provides both to call, and to hold, the meeting.

2 NRMA has been engaged in negotiations concerning the terms of employment of patrol officers employed by it since March of 2003. Most, if not all, of the patrol officers who are employed by it are members of the Australian Manufacturing Workers’ Union. The defendant in this case, Mr Parkin, is the Assistant State Secretary of that union and has been involved in the conduct of those negotiations.

Conditions of Employment of Patrol Officers

3 There are some 408 patrol officers employed by NRMA. The basis on which they are employed varies between patrol officers. Prior to 1989, after satisfying a 12-month qualifying period all NRMA patrol officers could work on what are referred to as “home start” conditions, where the officer could commence the work shift at his or her place of residence, take meals at the place of residence and complete the shift at the place of residence. Before 1989 all patrol officers worked on what are referred to as fixed day roster conditions where the patrol officers work five days on and two days off with the days off being fixed each week according to seniority. This had the effect that longer serving patrol officers had the weekends off while newer employees did not.

4 Those employment conditions were ones which NRMA stopped making available to new employees in 1989, but people who were already employed on that basis could continue to be so. There are some 50 patrol officers who remain on that type of roster today.

5 In March 1989 the existing officers were able to transfer to new rotating rosters, or else they could stay on fixed day rosters. The rotating rosters meant they worked on a 12 week rotating roster, which gave them every third weekend off.

6 Of the 408 patrol officers now employed, some operate as home start patrols, whilst others operate under what is referred to as "Option 3" patrol officer conditions. That is where a patrol officer commences the work shift at a designated start point, takes meals at the vicinity of his or her last job or a lunchroom provided by NRMA and completes the shift in the vicinity of the start point. That set of working condition commenced in 1989 for all new patrol officers. All of the Option 3 patrol officers work on a rotating shift roster.

Expiry, then Termination, of the Enterprise Agreement

7 The patrol officers are currently employed under an enterprise agreement arrived at under the Industrial Relations Act 1996 of New South Wales. The term of that enterprise agreement expired on 31 March 2003, but it continues to apply under section 42(1) of the Industrial Relations Act. The patrol officers' employment is also subject to a State award, the Metals, Engineering and Associated Industries (State) Award, which provides conditions of work for people who perform work of the type described in the award, and who are not covered by enterprise agreements.

8 The NRMA has given notice of termination of the enterprise agreement. That notice was given on 9 March 2004. The notice is of the period required by the legislation, namely, three months. The effect of giving that notice is that the enterprise agreement will cease to apply on 10 June 2004.

Present State of Negotiations

9 Ever since the expiry of the term of the enterprise agreement in March 2003 there have been negotiations between the NRMA and the union. The most recent meeting in those negotiations occurred on 26 February 2004. On 3 and 4 March 2004 there were held what were described as "split meetings" of the patrol officers. This involved the patrol officers meeting in two groups on consecutive days. Each of those meetings was split into two halves so that NRMA conducted the first half and the union conducted the second half without NRMA being present.

10 The outcome of those meetings was that the patrol officers decided that they should reject the latest offer that NRMA had made to them, should withdraw the offer they had made to NRMA, and that they should seek to put their case to a general meeting of the NRMA.

11 On 5 March 2004, Mr Parkin wrote to Mr Nockles, who is handling the negotiations for the NRMA, saying:

“Following the two split mass meetings held on Wednesday and Thursday of this week, I need to inform you that the AMWU members who attended those meetings voted unanimously to reject the package that was sent to them by the NRMA. I further need to inform you that the same members unanimously voted to [take] the offer titled “Final Draft” which was presented by the AMWU, off the bargaining table. There was also a decision made at this meeting to call for a general meeting of NRMA members to deal with the issues of maintaining current working conditions for patrolmen and to eliminate the discriminatory practice of having two sets of working conditions for Patrolmen who carry out identical work. The proposed timetable for filing for the general meeting is 18th March 2004.
If, during that two week period you wish to discuss further proposals in regard to the patrolmen’s enterprise agreement, the delegates and myself will be available to talk to you at any time. Those discussions will only be based around the continuance of the existing agreement and perhaps some minor changes that may accommodate some of your needs.
Should you wish to contact me to discuss this further, please call me on …”

12 Mr Parkin also wrote on 5 March 2004 to Mr Turnbull, who is the President of the NRMA, saying:

“Please find attached, a copy of my letter to Richard Nockles regarding the outcomes of the split meetings of NRMA patrolmen.
If there is anything in this proposal that you feel you could assist with, the convenor and I would be happy to discuss it with you.
I would like to take this opportunity to request a meeting with you in your capacity as President of the Board of Directors of the NRMA Motoring & Services. Jeff Cohen and myself would like to meet with you on either the 18th or 19th of March. If you are not available on these dates, we would ask that another of your board members meets with us in your absence.
I look forward to an early reply on this matter as it is an issue of great importance to the Patrol Officers who work for you.”

Mr Parkin’s Explanation of the Union Position to Munro J

13 On 10 March 2004 the NRMA and the union appeared in the Australian Industrial Relations Commission before Munro J, and each party explained to his Honour its view of where the negotiations had reached. In the course of that hearing Mr Parkin, who was appearing for the union that day, explained the decision of the split meetings in this way:

" ... It was eventually agreed among our members that perhaps Tony Stewart, the CEO, was right. Perhaps what we needed was a circuit breaker and perhaps what we needed was to decide whether or not the existing conditions that the NRMA patrol men work under were worth saving. The only difference we have is that the NRMA, and Tony Stewart particularly, wants this Commission to play that role. We have said that we think it's more appropriate that the people who pay for the services that the NRMA provide should make that decision, which is why we have come to a position of calling on a general meeting of the NRMA.”

14 Mr Parkin further explained to Munro J on that occasion that:

" ... We think that the NRMA members will actually care about whether or not their service remains the same which is what we are trying to do.”

15 He also said to his Honour:

" ... Our members' position is that we will go to a meeting of members of NRMA and ask them what their position is on this issue and if we can't get it resolved in the meantime, that is exactly what we will do.”

The Requisition

16 On 18 March 2004 a requisition was served on NRMA for a general meeting. The requisition consisted of some 206 pages and 4,284 signatures. The terms of the requisition were as follows

“Pursuant to Section 249(D) of the Corporations Act and Clause 9.2 of the National Roads and Motorists Association Limited Constitution, we, the following members of the National Roads and Motorists Association call upon the Directors of the NRMA to arrange for and hold a General Meeting.
In accordance with Section 249 (D)(b) of the Corporations Act, we would propose the following special resolutions be considered and if thought fit passed by the General Meeting:
1. The constitution shall be amended to insert at 3, Objects, a new paragraph (E) in the following terms:
“(E) To ensure that Patrol Officers employed to provide road side assistance to the membership of the NRMA, are not disadvantaged in the provision of such service by having their current working conditions undermined”.
2. The constitution shall be amended to insert at 3, Objects, a new paragraph (F) in the following terms:
“(F) To ensure that fair and equitable remuneration and working conditions are available to all employees, further ensuring that such a package does not discriminate against existing Option 3 Patrol Officers”.
Further pursuant to Section 249P of the Act, we hereby appoint John Parkin as our representative for the purposes of providing a statement.”

17 That requisition invoked section 249D Corporations Act 2001, which provides:

“ Calling of general meeting by directors when requested by members
(1) The directors of a company must call and arrange to hold a general meeting on the request of:
(a) members with at least 5% of the votes that may be cast at the general meeting; or
(b) at least 100 members who are entitled to vote at the general meeting.
(1A) The regulations may prescribe a different number of members for the purposes of the application of paragraph (1)(b) to:
(a) a particular company; or
(b) a particular class of company.
Without limiting this, the regulations may specify the number as a percentage of the total number of members of the company.
(2) The request must:
(a) be in writing; and
(b) state any resolution to be proposed at the meeting; and
(c) be signed by the members making the request; and
(d) be given to the company.
(3) Separate copies of a document setting out the request may be used for signing by members if the wording of the request is identical in each copy.
(4) The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company.
(5) The directors must call the meeting within 21 days after the request is given to the company. The meeting is to be held not later than 2 months after the request is given to the company.”

While the requisition also invoked Clause 9.2 of the Constitution, no argument was based on that Clause, and I will give it no further consideration.

How the Signatures were Collected

18 The requisition was in the form, often adopted for a petition, of a standard form of printed text on numerous pages, with provision for people to sign immediately below that standard form of text. Officers in the NRMA noticed that the first signatory on quite a few of the pages was someone who was a patrolman. A sample of ten of the requisition forms was given to a person who keeps the records of the NRMA's call centre, and that person was able to ascertain that, in relation to the documents that he was examining, the signatories other than the patrol officer were people who that patrol officer had seen in the course of his duties for NRMA, over a period of days from when the form was first started to be filled out.

19 There was no evidence put on in the case by the defendant. I would infer that many of the signatures were ones which were solicited at the time by patrolmen from people who they attended in the course of their duties. The nature of their duties is such that the people who they attend are members of the NRMA, because only members are entitled to receive the services of patrolmen.

The Orders NRMA seeks

20 On 22 March 2004 an originating process was filed in the Court seeking the following orders:

“1. An order that the defendant be appointed, pursuant to Part 8, Rule 13 of the Supreme Court Rules, to represent all persons who have executed documents in the form of the requisition identified annexed and marked “A” .
2. A declaration that the purported exercise of the power in section 249D(1) of the Corporations Act 2001 by the defendant (or by any of the persons whom he has been appointed to represent in these proceedings) to request the plaintiff’s directors to call and hold a general meeting of members by presenting to the plaintiff the said requisition is void.
3. A declaration that an extraordinary general meeting of members of the plaintiff held only to consider the resolutions set forth in the said requisition would not be held for a proper purpose.
4. A declaration that, notwithstanding the said requisition, the directors of the plaintiff are not required to call and hold an extraordinary general meeting of members of the plaintiff for the purpose only of considering the said resolutions.
5. Alternatively to prayers 2, 3 and 4:
(a) an order pursuant to section 1322(4)(d) of the Corporations Act 2001 extending the time fixed by section 249D(5) for calling the meeting requested by the said requisition up until and including the time of calling the annual general meeting of members of the plaintiff for the year 2004; and
(b) an order pursuant to section 1322(4)(d) of the Corporations Act 2001 extending the time fixed by section 249D(5) for holding the said meeting up until and including the time of holding the annual general meeting of members of the plaintiff for the year 2004.
6. Further or other orders as the Court sees fit.”

21 The first of those orders has already been made by consent.

Invalidity of the Requisition Because Resolutions Would be Void for Uncertainty

22 One basis on which the NRMA submits that the requisition is void is that the resolutions which are contained in it are ones which would be invalid if passed. The proposition implicit in the NRMA's submission here is that the obligation imposed by section 249D for directors to call a meeting is one which is impliedly limited so that only resolutions which would be valid if passed can be proposed. No-one has chosen to contest that proposition in this case, and I shall assume it is correct.

23 The particular type of invalidity NRMA relies on is voidness for uncertainty. NRMA submits that there would be no obligation on the Directors to put a resolution that the Constitution be amended if the new clauses proposed were so vague as to be completely meaningless. NRMA relies on the statement of Young J in Totally and Permanently Incapacitated Veterans’ Association of New South Wales Ltd v Gadd (1998) 28 ACSR 549, at 556, that “one would think that if the resolution was so vague as to be completely meaningless using the strict test applied to commercial documents in cases such as Upper Hunter District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429”, the directors would have no obligation to put the resolution to a meeting. His Honour went on to say: "However, where there is merely some vagueness about the resolution it would seem to me that it would be the duty of directors to put the matter to the meeting".

First Resolution Invalid on Upper Hunter Test?

24 The first proposition that NRMA puts is that the resolutions which are proposed would, if passed, be invalid on the Upper Hunter test. The specific criticisms which it makes of the first resolution are, first of all, that it establishes as an object that the company "ensure" that a particular result is achieved. This, NRMA says, is not the kind of objective which is appropriate to include in the objects clause of the corporation.

25 I do not see why that should be so. An object of a corporation is something it seeks to achieve. If a corporation has an object of “ensuring” something happens, then attainment of that “something” has a special degree of importance in the activities of the company. I see no legal reason why the members of a company cannot agree that, whatever else the company might do, its activities will be organized so as to seek to ensure that some particular result is brought about at least when (as is the case with what the first resolution says the Company should ensure) that result is not illegal and is within the practical power of the Company to bring about. Of course if the “something” the Company was to seek to ensure it brought about was itself described in a way which was void for uncertainty, the object would be invalid – but by reason of the void description of the “something”, not by reason of the requirement to ensure it is brought about.

26 Next, NRMA says that it is unclear whether the "current working conditions" referred to are those at the time the resolution is passed, or whether they are those applicable from time to time thereafter, so as to ratchet any subsequent improvement which there might be in working conditions. One can readily see, as well, that another possibility which might be open is that the "current working conditions" which were proposed to be referred to were those at the date of the delivery of the requisition.

27 Next, NRMA submits that the phrase "current working conditions" is inherently ambiguous. It might refer to the conditions to which patrol officers are legally entitled, or it might refer to those which they actually have in practice. NRMA submits that if the latter is the case, it might be difficult to identify them with any certainty or precision.

28 Next, NRMA says that there are no criteria for determining whether the working conditions as a whole were "undermined". They point to the fact that working conditions are a complex of pay and conditions, and that it is possible for some of the integers in that mix to change, perhaps some in a way which is more advantageous to the workers, or perhaps some in a way which is less advantageous to the workers, and for it not to be possible to say whether the working conditions as a whole have been undermined.

29 Next, NRMA says that the wording of the first resolution is one which introduces an object of the company which is directed to the ability of the patrol officers to provide roadside assistance - what it aims to ensure is that they are not "disadvantaged" in providing roadside assistance by having their current working conditions undermined. NRMA points out that this requires a judgment to be made about whether any particular undermining of current working conditions is one which will actually have the effect of "disadvantaging" the patrol officers in the provision of roadside service. The NRMA submits that, given the difficulties that there are in deciding what count as "current working conditions”, and what counts as “undermining" those conditions, that an object of the type the first resolution seeks to introduce would impose a task which cannot be performed.

30 Finally, the NRMA says that the resolution is unclear as to whether it applies only to existing patrol officers, or also to patrol officers who were employed after the date that the resolution is passed.

31 The approach to construction of commercial documents which is contained in the Upper Hunter case is summarised by Sir Garfield Barwick at 118 CLR 437, as,

"so long as the language employed by the parties ... is not so obscure and incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention, the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial agreements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved."

The way this test is applied in practice is that if the Court is capable of putting a meaning on the wording of the document, then it is not void for uncertainty – it has the meaning which the Court decides it has, no matter how difficult the task of ascertaining that meaning might have been.

32 All the difficulties which NRMA has pointed to concerning the first resolution are ones which, it seems to me, are capable of resolution by a Court. The construction of the object which the first resolution seeks to introduce will undoubtedly provide occasions for difficulty. I can see the possibility of an argument that the fact that there are so many occasions for difficulty inherent in it means that it is not the wisest course to include such a clause in the objects of the company. But that is a different question to whether, if included, it would be void for uncertainty.

33 In making that last observation, I am not expressing any view about whether it would or would not be a wise course to include that clause in the objects of the company. That question is simply not before me.

34 I also recognize that a decision about the validity of a notice requisitioning a meeting should have regard to the possibility that ambiguities in the resolutions in the notice can be debated and amendments to the motion can be proposed (NRMA Ltd v Snodgrass (2001) 52 NSWLR 383 at 387), and that the power to amend a motion at a meeting is not unlimited.

35 I conclude that the first resolution proposed is not one which is void by reason of being uncertain.

Second Resolution Invalid on Upper Hunter?

36 The second resolution is one which NRMA also criticises trenchantly for its difficulties of expression.

37 The second resolution contained the same opening words as the first resolution, that the object is said to be to “ensure” that a particular conclusion is arrived at. For the same reasons as apply to the first resolution, that is not enough to invalidate the resolution.

38 NRMA submits that there are no criteria for deciding what count as "fair and equitable remuneration and working conditions". NRMA points out that the ambit of the second resolution is wider than the first, in that it applies to all employees, not merely to patrol officers. The fact that it applies to all employees will, it submits, magnify the difficulties of deciding what count as fair and equitable remuneration and working conditions. One practical problem which this poses was put by NRMA rhetorically by asking whether, for instance, if employees were to be employed on terms of remuneration and working conditions which were award conditions, that could be said not to be fair and reasonable, given that the award conditions have been determined by an industrial arbitration body as being ones appropriate for workers in those particular categories.

39 NRMA points to the "further ensuring" phrase at the end of the second resolution, and says that there will be significant difficulties in the application of that clause. The clause uses a criterion for judging the "package" (which NRMA accepts refers to the combination of remuneration and working conditions) of "not discriminating against existing Option 3 patrol officers.”

40 The law is familiar with the use of the concept of non-discrimination as a test for actions. However NRMA points out that the familiar examples of non-discrimination as a legally applied test are ones where the legal obligation not to discriminate specifies the criterion with respect to which discrimination is not to occur - as happens when legislation prohibits discrimination on the basis of race, or sex, or age. NRMA submits that the object in the second resolution, because it fails to provide a criterion by reference to which one is to decide whether or not discrimination is occurring, will provide an impossible task for those called on to administer it.

41 The way in which the concept of discrimination is used in the law is illustrated in Street v Queensland Bar Association (1985) 168 CLR 461 at 571, where Gaudron J said:

“the framework of anti discrimination legislation has, to a considerable extent, affected our understanding of what is involved in discrimination because most anti discrimination legislation tends to proceed by reference to an expressed declaration that a particular characteristic is irrelevant. It is largely unnecessary to note that discrimination is confined to different treatment that is not appropriate to a relevant difference. It is equally unnecessary to note that, if there is a relevant difference, a failure to accord different treatment appropriate to that difference also constitutes discrimination.”

42 Similarly, McHugh J at 581 said:

“discrimination can arise just as readily from a law which treats as equals those who are different as it can from a law which treats differently those whose circumstances are not materially different.”

43 I would readily accept that it would be necessary, in construing the object set out in the second resolution, to decide what is the criterion by reference to which it is seeking to say discrimination cannot occur. However, I do not see that task as one which is inherently incapable of being performed, difficult as it might be to actually perform it. Nor do I see the other difficulties of construction to which NRMA points as ones incapable of resolution.

44 I do not find that the second resolution is uncertain in accordance with the criterion for uncertainty laid down by the Upper Hunter case.

Apply Cotman v Brougham Instead of Upper Hunter?

45 NRMA submitted that the criterion for uncertainty of an object of a corporation ought, on reflection, be taken to be not the Upper Hunter test, but rather a test outlined by Lord Wrenbury in Cotman v Brougham [1918] AC 514. There, his Lordship was considering section 9 of the then legislation governing corporations, the Companies Act 1908 (Eng), which spoke of the “objects specified in the memorandum.” Lord Wrenbury said, at 522:

“My Lords I cannot doubt that when the Act says that the memorandum must “state the objects” the meaning is that it must specify the objects, that it must delimit and identify the objects in such plain and unambiguous manner as that the reader can identify the field of industry within which the corporate activities are to be confined.”

46 That statement was made, of course, at a time when the doctrine of ultra vires applied to corporations. Now it has been abolished by section 125 Corporations Act 2001. Section 125 provides:

“(1) If a company has a constitution, it may contain an express restriction on, or a prohibition of, the company's exercise of any of its powers. The exercise of a power by the company is not invalid merely because it is contrary to an express restriction or prohibition in the company's constitution.
(2) If a company has a constitution, it may set out the company's objects. An act of the company is not invalid merely because it is contrary to or beyond any objects in the company's constitution.”

47 The objects in a company's constitution, if a company chooses to have one, do not, under section 125, delimit the field of activity which it is legally possible for the company to engage in. They might have other purposes, like acting as a factor which management ought take into account in making decisions. Thus, there is not the same need as there was, when the doctrine of ultra vires continued in existence, for there to be a publicly available statement of what the company could and could not do.

48 Further, in NRMA Limited v Snodgrass (2001) 52 NSWLR 383 at 387 the New South Wales Court of Appeal accepted that it was appropriate to apply the Upper Hunter test in deciding whether a proposed amendment of a constitution was so vague as to be meaningless. I recognise that it does not appear to have been argued in the Court of Appeal that any test other than the Upper Hunter one was appropriate, but nonetheless, the fact that Young J has recently accepted the test, with only the slight reservation possibly involved in saying “one would think”, that the Upper Hunter test is to be applied, and that the Court of Appeal has actually applied the test, provides me with a strongly persuasive reason for adopting it as the appropriate test. I do so. Thus, I do not need to consider how the proposed resolutions stand when measured against Lord Wrenbury's test.

Inconsistency with an Existing Object

49 Another basis on which the NRMA submits that the resolutions ought not proceed is based upon the fact that the objects contained in the Constitution of NRMA now contain a clause 3(c) as follows:

“3. OBJECTS
The objects of the Company are:
…
(c) To provide present and former employees of and contractors to the Company and the families of such persons with conditions, facilities and benefits conducive to good working of the Company, and without limiting the generality of this object to provide for the welfare of such persons whether by way of grants of money or other aid, superannuation or otherwise.”

50 NRMA submits that the resolutions which are proposed are in conflict with that object.

51 Clause 3(c) sets as an object of the company providing employees with conditions of work which are conducive to the good working of the company, leaving it to the judgment of the directors, or whoever else might be entrusted with the decision making power, to decide whether any particular set of pay and working conditions for employees is, or is not conducive to the good working of the company. The resolutions which are proposed adopt different criteria for the remuneration and working conditions of employees, and it is submitted that those provisions are inconsistent with those set out in clause 3(c). I accept that, to some extent, there is an inconsistency. That does not mean, however, that the resolutions are ones which would be invalid if passed. If they were passed, it would mean that the objects of the company were stated, to some extent, to involve aiming to achieve two things which were at least partly inconsistent, so far as pay and conditions for the employees was concerned. However, that does not mean that the resolutions are ones which are void for uncertainty.

52 A depressingly large part of the work of the Court is taken up with working out how inconsistencies in documents should be resolved. Adopting these particular resolutions which the requisitionists seek to have passed would mean that the Constitution of NRMA would be a document which would have such an inconsistency in it, which might in some circumstances need to be resolved. That does not mean that any resolution which the requisitionists seek to have passed is one which is uncertain.

Resolutions Proposed for an Improper Purpose?

53 The next basis upon which NRMA attacks the resolutions is by submitting that they are propounded for an improper purpose. NRMA submits that the requisition is being used primarily as an instrument in an employment dispute, and that its dominant purpose is to apply pressure on the company in order to persuade it to accept the patrol officers’ offer as to working terms and conditions.

54 While it is clear enough that the union members who are patrol officers have been the moving force in requisitioning the meeting, they are a significant minority of the members who have joined in the requisitioning of the meeting. The large number of members who have signed the requisition is well in excess of the statutory minimum number of 100. The terms of the requisition document involve expressly appointing Mr Parkin as the representative of each of the requisitionists for the purpose of providing a statement under section 249P of the Act. I would accept that, in providing that statement, Mr Parkin was acting with the authority of those members, and that any purpose which Mr Parkin had in providing that statement counts in law as the purpose of those members. However, the requisitioning of the meeting is a collective act of all the members who have signed the requisition. The requisitioning of the meeting is a separate act to providing a statement under section 249P. It is the requisitioning, not the provision of a section 249P statement, which triggers the obligation of the directors to call the meeting. If one were to say that the requisition was made for an improper purpose, one would need to attribute that purpose to the requisitionists as a whole.

55 There are significant difficulties in my view in attributing the purposes of Mr Parkin when requisitioning the meeting to all the requisitionists. Notwithstanding those significant difficulties, I will proceed on the assumption that the intention of Mr Parkin can be attributed to all requisitionists. The requisitioning of a meeting under section 249D involves the requisitionists exercising a statutory power created by that section. Such a power is one which cannot be used for an ulterior purpose: Ngurli Ltd v McCann (1953) 90 CLR 425 at 438; Humes Limited v Unity APA Ltd (No.1) (1987) 11 ACLR 641 at 645; BWN Industries Pty Ltd v Downey (1993) 11 ACSR 777 at 783 per Hayne J. The way in which that test has been applied is exemplified in the decision of Beach J in Humes Limited v Unity APA at 646, where his Honour said, that a requisitionist, at least in the time when it was requisitioning the meeting, and had not proceeded to a stage of calling the meeting if the directors failed to do so,

... is entitled to act in furtherance of its own interests, provided however that its requisition for the meeting is bona fide, in that its objective is to have the resolutions passed and not simply to harass the company and its directors.”

56 In NRMA Limited v Scandrett (2002) 171 FLR 232 at 243 Palmer J summarised the law as follows:

“For the sake of completeness, I should deal with Mr Einfeld’s submission that if a requisitionist has more than one purpose in exercising the requisition power under s 249D(1), one proper and the other improper, then the power is invalidly exercised.
In my opinion, this submission confuses the purpose for which a requisition is made with the motive of the requisitionist in making it. If the purpose for which the requisition is made is truly to have a meeting of members convened in order to consider and, if thought fit, to pass the resolution, then it does not matter that the requisitionist is motivated to pursue that purpose by ill-will or self interest.
The rationale underlying the law in this regard is the same as that which applies in the law relating to abuse of process. In Williams v Spautz (1992) 174 CLR 509; 107 ALR 635, the majority said (at CLR 526; ALR 650) that an abuse of process occurs when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or for some collateral advantage beyond what the law offers.
However, if a litigant institutes proceedings to invoke a remedy for which the law provides in such proceedings, then there will not be an abuse of process “even if the [plaintiff] is spurred on by intense personal animosity, even malice, against the defendant: it is not the law that only a plaintiff who feels goodwill towards a defendant is entitled to sue”: Swansson v R A Pratt Properties Pty Ltd (2002) 42 ACSR 313 at 321; Dowling v Colonial Mutual Life Assurance Society Ltd (1915) 20 CLR 509 at 521–2; 21 ALR 425 at 435-6; IOC Australia Pty Ltd v Mobil Oil Australia Ltd (1975) 11 ALR 417 at 426-7; 2 ACLR 122 at 131.”

57 I adopt that statement as the appropriate test, as in my view it is completely consistent with what Beach J said, and with the common law’s limitation on exercise of a power.

58 In the present case, I do not find that Mr Parkin has submitted the resolution without really wanting it to be put and passed. His position, in March before the requisition was submitted, was that if some solution to the industrial dispute, satisfactory to him, could be arrived at, then it might not have been necessary for the resolution to be put. However, if no such satisfactory solution can be arrived at, then the evidence shows, it seems to me, that he wishes the resolutions to be considered by the members and, if they think fit, passed. There is nothing in the terms of the resolutions which suggests that the objects of the company which are proposed to be adopted are ones which will apply only in solving the industrial dispute which is now on foot. The inherent tendency of the resolutions, if passed, would be to provide a basis for arguing, indefinitely into the future, that the terms of remuneration and working conditions of the NRMA's employees ought be determined taking into account the criteria expressed in the resolutions. It is by no means inherently impossible that members of a corporation might decide that they wish its affairs to be conducted so that there was that sort of limitation, forever in the future, on the way in which the working conditions and remuneration of employees were decided. Hence it cannot be said that the terms of the resolutions themselves show that they could not have been bona fide proposed.

59 In having the potential to improve the employees’ bargaining position in future negotiations over wages and conditions there could be real advantage for Mr Parkin in having the resolutions passed. It is for these reasons that I am not prepared to conclude that he does not really want the resolutions put to the meeting, and if the members think fit, passed. Thus, the attack on the resolutions as an abuse of process fails.

Extension of Time for Calling and Holding Meeting

60 The next argument which NRMA puts is that, if the resolutions are put, there ought be an extension of time in which to call, and hold, a meeting of members.

61 While section 249D(5) imposes an apparently mandatory time frame for the directors to call a meeting, and for the meeting to be held, there is power under section 1322 Corporations Act to extend those time frames. The relevant portions of section 1322 are:

“(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
…
(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
…
(6) The Court must not make an order under this section unless it is satisfied:
…
(c) in every case—that no substantial injustice has been or is likely to be caused to any person.”

62 Evidence has been presented in the present case, of a kind similar to that which the Court has seen in other cases when meetings of NRMA have been requisitioned, demonstrating the sheer impossibility of NRMA complying with the statutorily prescribed time limits. I will not rehearse the detail of the logistical difficulties which are involved in calling a general meeting of the company, and providing the members, who are some two million in number, with the documentation required for it.

63 The proceedings in the present case were, as I have said, started four days after the requisition was presented to NRMA. Some work has been done in preparation for the calling of a special meeting. However, I would accept that the practicalities of calling the meeting are such that it would not be realistic for it to be called to be held any earlier than mid July 2004.

64 In this respect I note that some criticism was levelled, in address, at NRMA for not having in some respects acted faster than it has. In circumstances where that criticism was not put to Mr Grant, the deponent of the affidavit sworn for NRMA, I am not in a position of knowing whether Mr Grant would have had a satisfactory answer to it, and I am not prepared to act on it.

65 If the meeting were to go ahead as a meeting at which no other business was transacted, then the evidence shows that the cost of calling the meeting would be of the order of $4.3 million. If the resolutions were to be put on the same day as the Annual General Meeting, a saving of the order of $2.3 million of those costs would occur. NRMA has made some plans for its 2004 Annual General Meeting, but not yet fixed on a date. The current expectation is that it will be held in October or November of 2004. Because NRMA's financial year ends on 30 June, section 250N Corporations Act has the effect that NRMA will be required to hold its Annual General Meeting for the 2003/2004 financial year by 30 November 2004, unless the Court otherwise orders, or unless ASIC grants an extension of time under section 250P.

66 A restriction on the making of an order under section 1322(4) is that contained in section 1322(6)(c) whereby the Court is prohibited from making an order unless it is satisfied that no substantial injustice has been or is likely to be caused to any person.

67 In NRMA Insurance Group Ltd v Spragg (2001) 38 ACSR 174 Santow J summarised the law concerning this requirement (para 27):

“In that regard I should note that the cases have determined that “injustice” within s 1322(6)(c) requires 'the Court to consider real, and not merely insubstantial or theoretical prejudice' ( Elderslie Finance Corp Ltd v ASC (1993) 11 ACSR 157; 11 ACLC 787 at 790) and that a degree of prejudice to a person or persons may be outweighed by the 'overwhelming weight of justice': Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477; (1976) 2 ACLR 135 at 150. Moreover, as I said in Super John Pty Ltd v Futuris Rural Pty Ltd (1999) 32 ACSR 398 at 402 [14]:
'...detriment per se is not the same as substantial injustice; that must depend on whether the remedial order in giving rise to that detriment is unjust in the sense of causing such prejudice overall as to be unfair or inequitable, taking into account the interests of all of those directly affected by such dispensation.'“

68 Any consideration by the Court of whether it is satisfied that no substantial injustice has been or is likely to be caused to any person must take into account the forensic framework in which that decision comes to be made. In the present case, when there has been an opportunity for the defendant to put on evidence of any specific prejudice which he might suffer, or other union members might suffer, and no such evidence has been put on, the Court is entitled to assume that there is no such prejudice which does not emerge from the evidence which has been put on by NRMA.

69 The evidence of NRMA shows that, come 10 June 2004, the patrolmen will revert to working under award conditions, if some other decision is not arrived at before 10 June. While I have the impression from the evidence that this is a result which they would probably not welcome, the evidence gives me no feel for the nature or extent of the differences that there are in their pay and conditions under the enterprise agreement compared to what they would be under the award.

70 The people who need to be taken into account in deciding whether an extension would cause substantial injustice are not only the patrol officers, but also the requisitionists, who I would infer have taken the view that the question should be debated of whether the affairs of the NRMA should be conducted hence forth on the basis that the resolutions are passed and the new objects come to be part of the constitution.

71 The opportunity which the requisitionists would be denied, if the resolution were to not be put to a meeting until as late as the Annual General Meeting, is the opportunity to have the affairs of NRMA conducted on the basis that the resolution is the clauses contained in the resolution are part of the objects of the company. That opportunity is one which will be a reality only if the resolution is passed. The extent of the likelihood that it might or might not be passed is something for which, at present, I have no basis for forming a view. The non-requisitionist members must also be taken into account – they have an interest in the Company’s assets not being spent unnecessarily, or unwisely.

72 On the evidence, there are only two alternatives for the extension of time for the holding of the meeting - an extension to the time of the Annual General Meeting, or only to mid July. The question of whether either of those alternatives is unjust in the sense of causing such prejudice overall as to be unfair or inequitable, taking into account the interests of all those directly affected by the dispensation, is one which I find difficult. It should be said, however, that the present working conditions of the employees are ones which they have a legal right to continue working under only until the expiry of the enterprise bargaining agreement. It is not as though delay in putting the resolution to the meeting will deprive them of anything to which they have a legal right, so far as pay and conditions go.

73 There is one respect in which deprivation of a legal right enters into this weighing process. That concerns the legal right which is created by section 249D itself to have a resolution submitted to a meeting and decided upon. It cannot be said that the requisitionists have a legal right to have that resolution submitted to a meeting and decided upon within any particular period of time, given the power of extension contained in section 1322. However, it would be a frustration of Parliament's intention in creating the right for requisitionists to call a meeting if the meeting, once called, were unduly delayed. I also bear in mind that the first question the Court has to ask is what case has been made out for an extension of time under section 1322(4)(d), and it is only in considering possible answers to that question that any further question arises, of whether a particular extension would cause substantial injustice.

74 In all the circumstances, I have come to the view that it would not be appropriate to delay the calling of the requisitioned meeting for as long as the Annual General Meeting. The delay in doing so would be of the order of four months beyond what is necessary to achieve the presentation of the resolution to a meeting in an orderly way, and within the practical confines of an organisation as large as NRMA.

75 The fact that calling the special meeting will involve the expenditure of some $2.35 million more than would be required to be spent if the resolution were to be put to the Annual General Meeting or on the same day as the Annual General Meeting is a significant matter. The NRMA, however, has of the order of two million members, and the amount of money which is expended in this fashion, more than would be needed if the resolution were to be put to an Annual General Meeting, is thus of the order of $1 a member. I am told the standard fee for membership of NRMA is $77 per annum. Put in that context, it does not seem to me that the case has been made out for a delay of any longer than mid July.

Costs

76 The defendant seeks an order for costs. The defendant accepts that, having failed in opposition to any extension, it ought not receive all of its costs. It proposes it should receive 75 per cent of the costs.

77 The NRMA has failed in the challenges it made to the validity of the resolutions, and also has failed to obtain an extension of the time for holding the meeting up to the time of the Annual General Meeting. I will make the defendant’s proposed order concerning costs.

Orders

78 I order that:

(1) the time for the calling of the meeting be extended up to and including 22 June 2004;

(2) the meeting be held on or before 20 July 2004; and

(3) NRMA pay 75 per cent of the costs of the defendant.

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Last Modified: 06/10/2004