NRMA v Parkin (No. 2)

[2004] NSWSC 496

CITATION:	NRMA v Parkin (No. 2) [2004] NSWSC 496
HEARING DATE(S):	2 June 2004
JUDGMENT DATE:	10 June 2004
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Extensions granted. No condition imposed.
CATCHWORDS:	CORPORATIONS - management and administration - requisition of meeting to consider amendment of objects of corporation - previous court decision extends time for calling, and holding, meeting - application for another order further extending time for calling, and holding, meeting - circumstances when such a second application can be entertained - consideration of factors relevant to granting of extensions - whether condition to be imposed on granting of extensions
LEGISLATION CITED:	Corporations Act 2001 (Cth)
CASES CITED:	Brimaud v Honeysett Instant Print Pty Ltd (Supreme Court of New South Wales, 19 September 1998, McLelland J, unreported) Licul and Others v Corney (1976) 180 CLR 213 National Parks and Wildlife Service v Pierson [2002] NSWCA 273; (2002) 55 NSWLR 315 NRMA v Parkin [2004] NSWSC 296 National Roads and Motorists' Association Limited v Parkin [2004] NSWCA 153 Nominal Defendant & Manning [2002] NSWCA 80; (2000) 50 NSWLR 139
PARTIES :	National Roads and Motorists' Association Limited - Plaintiff John Parkin - Defendant
FILE NUMBER(S):	SC 2771/04
COUNSEL:	TF Bathurst QC; R McHugh - Plaintiff JB Whittle SC; JV Gooley - Defendant
SOLICITORS:	Corrs Chambers Westgarth - Plaintiff Turner Freeman - Defendant

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

CAMPBELL J

10 JUNE 2004

2771/04 NATIONAL ROADS AND MOTORISTS ASSOCIATION LIMITED v JOHN PARKIN (No. 2)

JUDGMENT

1 HIS HONOUR: On 2 June 2004 I heard an application by National Roads and Motorists’ Association Limited (“NRMA”) relating to a requisition which the defendant had served on NRMA on 18 March 2004. The application was for orders under section 1322(4)(d) Corporations Act 2001 (Cth) extending the time for calling the meeting requested by that requisition to and including 20 July 2004, and extending the time for holding that meeting to and including 13 August 2004. At the conclusion of the hearing I made the orders NRMA requested, and declined to impose any condition on those orders. As the hearing concluded at 6pm, I did not give the reasons for those orders at the time they were made. These are the reasons.

Factual Background to the Application

2 On 18 March 2004 the defendant served a requisition on NRMA, for a general meeting to consider certain proposed amendments to its Constitution.

3 On 22 March 2004 NRMA filed an Originating Process in the Court, seeking declarations that the requisition was void, that any meeting held to consider the resolution set forth in the requisition would not be held for a proper purpose, and a declaration that the directors of NRMA were not required to call and hold a general meeting for the purpose of considering the resolution. Alternatively, the Originating Process sought extensions of time for the calling and holding of the meeting, to a time which would enable the meeting to be held on the same day as the Annual General Meeting of NRMA.

4 On 8 April 2004 I heard and determined that application: NRMA v Parkin [2004] NSWSC 296. All NRMA’s attacks on the validity of the requisition, and on whether there was an obligation to call a meeting at all, were rejected. NRMA’s application to extend time for holding of the meeting until the Annual General Meeting was also rejected.

5 A fallback proposition which NRMA put in that litigation was that, if the time for the holding of the meeting was not extended until the day of the Annual General Meeting, it should be extended to a time which gave enough time for the very large task of preparing, printing, and mailing notice of the meeting to NRMA’s two million or so members to be carried out. NRMA’s alternative case was that it was not practically possible for the meeting to be held prior to mid-July. The only alternatives which were presented to the Court for consideration at that hearing, were that there should be an extension until the time of the Annual General Meeting, or until mid-July. At the time of that hearing, the date for the Annual General Meeting had not been fixed, but it was expected to be in October or November 2004.

6 Immediately after I had delivered oral reasons deciding that a case had not been made out for a delay of any longer than mid-July, there was discussion with Counsel about which precise date was a convenient one. It was as a result of that discussion that I ordered that the time for the calling of the meeting be extended up to and including 22 June 2004, and that the meeting be held on or before 20 July 2004.

7 On 23 April 2004 the solicitors for the defendant first became aware that NRMA intended to file a Further Originating Process, seeking a further extension of time. On 27 April those solicitors were informed by NRMA that the further application would be based on cost savings which would be achieved if notice of the meeting could be sent to members with the bi-monthly magazine which NRMA sends to most of its members, The Open Road. Those proceedings were actually begun on 10 May 2004, by the filing of an Originating Process in Court.

8 Meanwhile, on 27 April 2004 the NRMA filed a Notice of Appeal against part of the decision I had made on 8 April 2004. The part appealed against was my declining to grant declaratory relief. There was no appeal against my decision concerning the extension of time. Expedition of that appeal was sought, and granted.

9 The Court of Appeal heard argument on the appeal on 12 May 2004. The Court reserved its judgment. As the extension of time which I had ordered on 8 April 2004 would require steps to be taken in preparation for the meeting very soon after 12 May 2004, the Court of Appeal made orders, either by consent or without opposition from the defendant, extending the time for the calling of the meeting to 6 July 2004, and extending the time for holding the meeting to 13 August 2004.

10 On 25 May 2004 the Court of Appeal dismissed NRMA’s appeal, with costs: National Roads and Motorists’ Association Limited v Parkin [2004] NSWCA 153.

11 On 28 May 2004 NRMA received a further requisition from the defendant. It gave notice of the requisitionists’ intention to move a resolution at the next general meeting of NRMA, in the following terms:

“That the first resolution contained in the requisition of meeting pursuant to s.249D of the Corporations Act 2001 delivered to the National Roads & Motorists’ Association Limited on 18 March 2004 be amended as follows:
(i) by deleting the sixth word “employed” and substituting therefore the word “engaged”
(ii) by deleting the words “their current working conditions undermined” and substituting therefore the words “employment conditions different from those described in the document entitled National Roads & Motorists’ Association Limited Patrol Officers’ Enterprise Agreement 2001 imposed upon them as a result of any act of the company.”

12 NRMA has at all relevant times had an agreement with Australia Post under which it is entitled to reduced postage rates for The Open Road and other publications. One of the conditions on which those reduced rates are available is that the item posted contains only one “personalisation”. While the contract defines a personalised item by reference to a statutory definition, it is, in broad terms, a statement of identifying attributes of a person, such as a name and address. At the time of my decision on 8 April 2004 negotiations between NRMA and Australia Post were under way, concerning amendments to that contract. Those negotiations were not, at that time, far advanced. Mr Grant, the Deputy General Counsel of NRMA, gave evidence, which I accept, that since 8 April 2004 NRMA has set up a Project Group to manage the events and procedures associated with and necessary for the calling and holding of the Special General Meeting. He gives evidence, which I accept, that discussions with Australia Post about amendments to the contract only “commenced in earnest” when the Project Group was set up.

13 The Project Group of NRMA has devised a proposal whereby many of NRMA’s members will be sent, inside the transparent plastic envelope, a group of documents which, going from the top, consist of:

(a) a folded proxy form, (described in para [15] below);

(b) a Notice of Meeting (plus any statement under section 249P Corporations Act 2001 (Cth), and possibly a statement by the directors concerning the proposed resolutions);

(c) a reply paid envelope for return of proxy;

(d) a copy of The Open Road.

14 The requisition which NRMA received on 28 May 2004 is a requisition under section 249N Corporations Act 2001 (Cth). NRMA will submit it for consideration at the general meeting called to consider the resolutions in the requisition served on 18 March 2004. Notice of the resolutions contained in both the requisitions of 18 March, and 28 May will be given to members in the one Notice of Meeting.

15 NRMA has devised a method of formatting and folding a piece of paper, of such size that the paper as folded is the same size as a copy of The Open Road. The piece of paper is folded once, at a position a little below half way down its length. Thus, when folded, a rectangular strip at the top of the front of the page is still visible. In this rectangular strip NRMA proposes to print the name, address and a personal identification number allotted to the member for the purpose of voting at a meeting. When the paper is folded, those details will be used by Australia Post as the address to which the plastic envelope containing documents is sent. When the paper is in its folded position, immediately below that rectangular strip will appear text directing the attention of a member to the fact that there is a Notice of Meeting included in the package. When the piece of paper is unfolded, immediately below the rectangular strip will appear the text of a proxy form.

16 Shortly before 27 April 2004 agreement was reached between NRMA and Australia Post that the special postage rates under the agreement would apply to a “personalisation” of members which consisted of their name, address, and personal identification number. That agreement will mean that the plastic envelope containing the meeting materials and The Open Road can be posted at the reduced rates.

17 Approximately 1.6 million of NRMA’s approximately 2 million members receive a copy of The Open Road every two months. NRMA would need to supply those members who did not receive a copy of The Open Road with notice of the meeting by a specially sent notice. However, if it is able to give notice of the meeting to the majority of members by sending the notice along with a copy of The Open Road, in the manner I have indicated, it will make a saving of approximately $700,000 on costs of acquiring, assembling and posting the materials for the meeting, in comparison with the costs if notice of the meeting could not be given with a copy of The Open Road.

18 Despatch of any one edition of The Open Road occurs over a period of approximately three weeks. If sufficient time were to be allowed for the giving of the notice of the meeting to the last of the people to whom The Open Road was posted, taking into account the time for receipt of proxies prior to the meeting, it would be necessary for the meeting to be delayed, so that it was held no sooner than 13 August 2004.

Whether this Application should be Entertained at all

19 When this matter was first before me for directions I raised a question of how, when NRMA put its case concerning an extension of time on 8 April 2004 and had that case determined, it could make a fresh application, seeking a different extension, on the basis of different materials. As the case has developed, there is no live question between the parties about that matter. However, as it goes to a question which is tantamount to whether the application is an abuse of process, and the court has its own interest independent of that of the parties, in being satisfied its process is not being abused, I shall give it brief consideration.

20 If, immediately after I had made orders in this matter on 8 April 2004, a major postal strike had erupted, so that the factual basis on which my earlier decision had been made was rendered inapplicable, there is nothing in section 1322(4) which would prevent a court from considering the matter afresh, taking into account that new factor. The extension of time which the Court of Appeal granted on 12 May 2004 was itself an order under section 1322(4), arising from the fact, which had arisen since my order of 8 April 2004, that the Court of Appeal wished to reserve its decision on the appeal. In giving these examples, I am not suggesting that it is only circumstances arising since a first decision which would justify a second application under section 1322(4) for an extension of time.

21 I accept the submission of Mr Whittle SC that an order under section 1322(4)(d) to extend time is one which is intrinsically capable of being modified or rescinded. It does not decide in any final way rights between parties, although such an order operates to determine rights until such time as it might be modified or rescinded: cf Spencer Bower, Turner and Handley, The Doctrine of Res Judicata, 3rd ed para [162]. Thus, my previous decision does not give rise to any res judicata. It is a separate question (and one not necessary to answer for present purposes) whether a decision under section 1322(4) extending time is final for the purpose of deciding whether leave to appeal is needed: Licul and Others v Corney (1976) 180 CLR 213 at 225.

22 It is clear that a decision under section 1322(4) extending time is not interlocutory in the same way that the appointment of a provisional liquidator, or the granting of an interlocutory injunction is interlocutory – it is not an order which is designed to regulate relations between litigating parties in the period before the rights of those litigating parties can be finally determined. Concerning that type of interlocutory order a court will often not be prepared to consider a second application that is in substance identical to the first, unless there has been a material change of circumstances since the first application or discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett Instant Print Pty Ltd (McLelland J, Supreme Court of New South Wales, 19 September 1998, reported in Ritchie’s Supreme Court Procedure, Vol. 2, para 13,047).

23 Concerning interlocutory orders as a whole, because there is a wide variety of types of interlocutory order, there is no general rule whereby a second interlocutory application, that is in substance identical to the first, should always be refused unless there has been a change of circumstances or unless the second application rests on evidence which could not with reasonable diligence have been obtained for use in the first application: Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139 at [44] – [45], [71], [122]. For all types of interlocutory application, the only limit on the Court considering a second application is what the interests of justice require in the particular case: Nominal Defendant v Manning [2000] NSWCA 80; (2000) 50 NSWLR 139 at 161, [97]; National Parks and Wildlife Service v Pierson [2002] NSWCA 273; (2002) 55 NSWLR 315 at 318, [19]. That principle applies likewise to a second application to extend time under section 1322(4).

24 In the present case, the evidence about the costs savings which would be made if the Notice of Meeting and accompanying documents were to be sent to members with The Open Road, was not evidence which was available at the time of the previous hearing.

25 There has always been a provision in NRMA’s Constitution, in Clause 28(a) which says:

“Where this Constitution, the Act or other legislation requires or permits a document to be served on, given, sent or dispatched to, any person … the document, may be served on the person unless this Constitution, the Act or other legislation provides otherwise:
…
(iv) by publication in or accompanying the [Open Road] …”

However until such time as agreement had been reached with Australia Post that the reduced postage rates ordinarily applicable to The Open Road would apply to a package with the particular contents and get up that is now proposed, the savings resulting from sending the meeting materials with The Open Road were not in practical terms available. This amounts to a material new fact, arising since my decision of 8 April 2004. That is enough to make it not an abuse of process for NRMA to make this fresh application.

Discretionary Factors About Whether the Extension Should be Granted

26 Mr Bathurst QC, for NRMA, puts that the extension which is now sought is only for an additional ten days from the date of 3 August 2004 already fixed by the Court of Appeal for the holding of the meeting, that no substantial injustice will result to anyone from that short extension, and that a significant saving of the order of $700,000 will be made.

27 Mr Whittle SC, for the defendant, points out that the effect of the order, if made, would be that the meeting was being held nearly five months after it was requisitioned, and nearly three months after the time prescribed by the Corporations Act 2001 (Cth) for the meeting to be held. I do not regard that submission as a persuasive one, in circumstances where it was never practically possible for this particular meeting to be held within the two month period from requisition which is laid down by the Corporations Act 2001 (Cth), and when that two month period was always subject to the possibility of being extended under section 1322.

28 A more relevant consideration, in my view, is that the order involves an extension, of the order of one month, from the mid-July date which I earlier held was the earliest by which the meeting could practicably be held. In my earlier decision I was not prepared to grant an extension of the order of four months beyond that date because such an extension would not sit well with Parliament’s intention, in creating the right for requisitionists to call a meeting, that the meeting, once called, not be unduly delayed. A delay of one month, when there is a significant costs saving, does not give me this same concern.

29 I also take into account that the defendant has either consented to, or not opposed, the Court of Appeal’s extension of the time for holding of the meeting to 3 August 2004. However, I do not regard that extension as of equal weight to the extension which arose from the practical impossibility of holding the meeting any earlier than mid-July. I recognise that the defendant’s acquiescence in that extension arose because the defendant accepted the practical reality that, once the Court of Appeal made clear it would not be delivering an ex tempore judgment, it would be foolish to require preparations for a meeting to be undertaken, if there was a real prospect that the Court of Appeal might decide that there was no obligation to hold a meeting at all. The need for that extension was also caused, however, by NRMA’s action in lodging an appeal at all. When NRMA has itself contributed to the delay in this way, it is too simple to regard this application as just an application for a ten day extension.

30 I also take into account that the defendant has been involved in the making of the further requisition of 28 May 2004. That further requisition was made after the reasons for judgment of the Court of Appeal were available. Both the reasons for judgment of the Court of Appeal, and my earlier reasons for judgment, dealt with the question of ambiguity of the resolutions proposed to be put to the meeting. The further requisition of 28 May 2004 is, it seems, an attempt to lessen some of those problems of ambiguity. By the further requisition, delivered more than two months after the original requisition, the defendant has tried to improve the prospects of a resolution along the general lines of that proposed by the requisition of 18 March 2004 being passed.

31 Another discretionary matter Mr Whittle relied upon is that it is NRMA’s practice to send various advertising brochures to members along with The Open Road. The Notice of Meeting is so important, he submits, that it should not be distributed in such a way that, to a person opening the envelope, the Notice of Meeting and documents connected with the meeting might appear to be part of a collection of inclusions with the magazine which are of no great importance. He submits that the Notice of Meeting and other documents related to the meeting should go out separately, rather than impose upon members this possibility of distraction from the importance of the documents. Mr Whittle thus submits that when the purpose of the extension which NRMA seeks is to allow the meeting materials to be distributed with The Open Road, the Court should not facilitate service being effected in a way which detracts from the importance of the meeting materials, and so should refuse the extension of time.

32 Section 249J Corporations Act 2001 (Cth) does not prescribe any particular manner in which notice of a requisitioned meeting must be given to members – it may be given in any of the various ways set out in section 249J(3). One of those ways set out in section 249J(3)(d) permits notice to be given by any means that the company’s constitution permits. NRMA’s Constitution contains, in Clause 28(a)(iv) the provision that I have earlier mentioned enabling service of documents with The Open Road.

33 When service of the meeting documents with The Open Road is permitted by the combined operation of section 249J(3)(d) and NRMA’s Constitution, I do not accept Mr Whittle’s submission. Further, the top page which is visible through the plastic envelope will contain a statement informing the recipient that there are documents relating to the meeting inside. I do not accept that there is a real risk that a recipient of moderate attentiveness would not realise that the envelope contained documents relating to a general meeting of NRMA.

34 Section 1322(6)(c) requires the Court not to extend time unless satisfied that no substantial injustice has been, or is likely to be, caused to any person. Mr Whittle SC puts that, while there is no specific evidence of prejudice to anyone arising from the extension of the time for holding of the meeting, every day of delay is in some way prejudicial, in that the resolution is not being determined. When there is no evidence of any particular consequence flowing to anyone from that failure of the resolution to be determined, I do not accept that the mere fact of delay amounts to substantial injustice.

35 In all these circumstances, I am satisfied that the extension NRMA seeks is an appropriate one to grant, and that no substantial injustice has been or is likely to be caused to any person by granting it.

Condition on Extension

36 Section 1322(4) Corporations Act 2001 (Cth) empowers the Court to make an order for an extension of time on conditions. Mr Whittle SC submits that, if the order is made extending the time, in circumstances where it is known that it is NRMA’s intention to send notices of meeting to approximately eighty percent of its members with a copy of The Open Road, the Court should impose a condition that no mention be made of the meeting in The Open Road. Any directors’ comment, or other editorial comment, concerning the meeting should, he submits, be confined to statements made in the Notice of Meeting itself.

37 When the Corporations Act 2001 (Cth), as applied to NRMA, permits service of the notice with The Open Road, I see no reason for restricting the content of The Open Road when that mode of service is availed of.

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Last Modified: 06/15/2004