NRMA v Scandrett
[2002] NSWSC 1038
•30 October 2002
CITATION: NRMA v Scandrett [2002] NSWSC 1038 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 5261/02 HEARING DATE(S): 30 October 2002 JUDGMENT DATE: 30 October 2002 PARTIES :
National Roads and Motorists' Association Limited (Plaintiff)
Ian Morris Scandrett (First Defendant)
William Snodgrass (Second Defendant)
JUDGMENT OF: Campbell J
COUNSEL : D J Hammerschlag SC; R G McHugh (Plaintiff)
A G Hartnell, solicitor (Defendants)SOLICITORS: Corrs Chambers Westgarth (Plaintiff)
Atanaskovic Hartnell (Defendants)CATCHWORDS: CORPORATIONS - management and administration - requisition of general meeting under section 249D Corporations Act 2001 - extension of time for calling of meeting - circumstances justifying extension of time LEGISLATION CITED: Corporations Act 2001 CASES CITED: National Roads and Motorists Association Limited v Snodgrass (2002) 42 ACSR 371 DECISION: Order for extension of time for calling meeting made
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST
CAMPBELL J
WEDNESDAY 30 OCTOBER 2002
5261/02 NATIONAL ROADS AND MOTORISTS’ ASSOCIATION LIMITED v IAN MORRIS SCANDRETT & ANOR
JUDGMENT
1 HIS HONOUR: These are proceedings begun by the National Roads and Motorists’ Association Limited seeking declarations that two requisitions which have been served on NRMA are invalid. Those requisitions are ones which were served on 18 October 2002.
2 The requisitions were served in a context where, over the last couple of months, five of the directors of NRMA have resigned, and the existing board has appointed replacements for them, using provisions of the NRMA Constitution which enables the existing board to fill casual vacancies.
3 The first of the requisitions seeks the calling of a general meeting of members to consider a resolution to remove the five people who have been appointed to fill casual vacancies. The second requisition seeks the calling of a general meeting to consider a resolution, the purport of which is that, if anyone else comes to be appointed to fill a casual vacancy between the date when the polls for some resolutions which were considered at a special general meeting of the company on 17 October 2002 are declared, and the date concluding on the day after all polls for resolution considered at the 2002 annual general meeting of the company are declared, those persons should also be removed as directors.
4 NRMA contends that these requisitions are not ones which it is obliged to carry out. It does so on the basis of legal argument about the scope of the obligation to call a meeting on requisition of members, contained in section 249D of the Corporations Act 2001, and of some case law which has interpreted like provisions. It says the proposed resolutions are ones which a general meeting would have no power to pass, and so there is no obligation on NRMA to call a meeting to enable those resolutions to be considered.
5 Section 249D lays out a time frame for the calling of a meeting on requisition. There is a requirement for the directors to call the meeting within 21 days after the request for a meeting is given to the company. There is a further requirement for the meeting to be held not later than two months after the request is given to the company.
6 As Windeyer J has remarked in National Roads and Motorists Association Limited v Snodgrass (2002) 42 ACSR 371, the NRMA is no ordinary company.
7 There is evidence before me that it has approximately two million members. There is also evidence that there is a huge logistical task involved in calling a meeting of this organisation. That logistical task includes finding a venue large enough to hold the thousands of people who might be expected to turn up at such a meeting, in conditions appropriate for the holding of the company meeting.
8 It also includes the need for checking the legality of the various documents which need to be sent to members in connection with the meeting (which includes not only the notice of meeting itself, but requisitioners’ statements made under section 249D of the Corporations Act, and statements of affected directors, made under section 203D of the Corporations Act.)
9 The task of printing and posting the material, once it has been settled, is enormous. The evidence satisfies me that it would not be possible for the NRMA to comply with the time limits which are imposed by section 249D.
10 The application before me today has two elements to it. The first is to make directions for the hearing, as soon as can conveniently be done, of the NRMA’s challenge to the legality of the requisitions. The second is to make an order under section 1322 of the Corporations Act extending the time for calling of the meeting. The two aspects of the application obviously interact one with the other, as the date when a hearing can occur will influence the timing of when it is that the directors will be in a position to call a meeting.
11 The evidence before me establishes not only that there is a vast logistical task involved in calling the meeting of the NRMA, but also that it is very expensive. The evidence suggests that the cost is somewhere between $3.5 million and $4.5 million.
12 The requisitionists, realising these practical difficulties and costs, and also realising that, if the NRMA is right in saying that the requisitionists seek the calling of a meeting to consider resolutions which it is not legally open to the meeting to pass, it would be a waste of time and resources to call a meeting, accept that it would be appropriate to extend the time for the calling of a meeting to a date after the court has been able to determine whether the NRMA’s contentions about the requisitions being flawed are correct, or not. There is no dispute that section 1322 enables the Court to make such an order.
13 In these circumstances, I am satisfied that it is appropriate to extend the time for the calling of a meeting. It is possible for the court to make time available on 18 November 2002 for the final hearing of the matter. I am satisfied that in these circumstances, it is appropriate to extend the time for the calling of the meeting to 25 November 2002 in the first instance. I say, “in the first instance” because, depending on what happens at the hearing, it might be appropriate for the judge who hears the matter on a final basis to further extend that time. It will be a matter for that judge to decide, in the light of the circumstances then before him.
14 The parties have agreed on an interlocutory timetable which aims at an end point of a hearing on 18 November 2002.
15 I order, pursuant to section 1322(4) of the Corporations Act, that the time for the calling of the meeting requested by the requisition which is Annexure A to the originating process and the time for the calling of the meeting requested by the requisition which is Annexure B to the originating process in this matter, be extended to 25 November 2002 in the first instance. I also give directions for preparation of the hearing in accordance with the short minutes of order which I initial, date today’s date and place with the papers.
16 In addition, I direct the parties to exchange with each other, and lodge with the Associate to Palmer J by noon on Friday, 15 November 2002 written outlines of submissions in the matter.
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