NSX Ltd v Pritchard - [2009] FCA 584

FEDERAL COURT OF AUSTRALIA
NSX Limited v Pritchard [2009] FCA 584
CORPORATIONS – request by members under s 249D(1) of Corporations Act 2001 (Cth) (the Act) that directors “call” meeting of members to remove existing directors and to appoint replacement directors – whether directors “called” meeting within the 21-day period referred to in s 249D(5) of the Act – what constitutes “calling” of meeting – whether sufficient that directors resolved that meeting be held at specified time on specific date at specified place, notified Australian Stock Exchange, and resolved that notice of meeting be settled and sent to members.
Held: No. At least actual sending of notices to members was essential to calling of meeting.
WORDS AND PHRASES – “to call” – meaning of “to call” in relation to company meeting requisitioned under s 249D of the Corporations Act 2001 (Cth).
Companies Act 1936 (NSW)ss 94, 95
Companies Act 1961 (NSW) ss 137, 138
Companies Code ss 241, 242
Corporations Act 2001 (Cth) ss 249D, 249E
Re Ariadne Australia Ltd [1991] 2 Qd R 377, distinguished
Vawdon v South Sydney Junior R.L. Club [1975-1976] CLC ¶40-248, referred to
NSX LIMITED (ACN 089 447 058) v STEVEN SHANE PRITCHARD, PAUL ERNEST SEYMOUR, WINPAR HOLDINGS LIMITED (ACN 003 035 523), FINANCIAL & ENERGY EXCHANGE LIMITED, GORDON BRADLEY ELKINGTON and THE NEWCASTLE EXCHANGE PTY LIMITED (ACN 129 342 409)
NSD 413 of 2009
LINDGREN J
22 MAY 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 413 of 2009

IN THE MATTER OF NSX LIMITED (ACN 089 447 058)

BETWEEN:
NSX LIMITED (ACN 089 447 058)
Plaintiff

AND:
STEVEN SHANE PRITCHARD
First Defendant

PAUL ERNEST SEYMOUR
Second Defendant

WINPAR HOLDINGS LIMITED (ACN 003 035 523)
Third Defendant

FINANCIAL & ENERGY EXCHANGE LIMITED
Fourth Defendant

GORDON BRADLEY ELKINGTON
Fifth Defendant

THE NEWCASTLE EXCHANGE PTY LIMITED
(ACN 129 342 409)
Sixth Defendant

JUDGE:

LINDGREN J

DATE OF ORDER:

22 MAY 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The application be dismissed
2.The parties have liberty to apply on 3 hours’ notice if an order is to be sought pursuant to the reasons for judgment.
3.The parties file and serve submissions in chief on costs by Tuesday 26 May 2009.
4.The parties file and serve submissions in reply on costs by Friday 29 May 2009.
5.The proceeding be stood over to 3 June 2009 for judgment in relation to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 413 of 2009

IN THE MATTER OF NSX LIMITED (ACN 089 447 058)

BETWEEN:
NSX LIMITED (ACN 089 447 058)
Plaintiff

AND:
STEVEN SHANE PRITCHARD
First Defendant

PAUL ERNEST SEYMOUR
Second Defendant

WINPAR HOLDINGS LIMITED (ACN 003 035 523)
Third Defendant

FINANCIAL & ENERGY EXCHANGE LIMITED
Fourth Defendant

GORDON BRADLEY ELKINGTON
Fifth Defendant

THE NEWCASTLE EXCHANGE PTY…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read NSX Ltd v Pritchard and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2009] FCA 584
Decision Date: 22 May 2009

CaseChat Overview and Summary

NSX Ltd brought an application in the Supreme Court of Victoria against the defendants, shareholders of NSX, seeking orders in relation to the convening of a general meeting. The dispute arose from a request under section 249D(1) of the Corporations Act 2001 (Cth), which required NSX to call a general meeting if the directors failed to do so within 21 days of receiving the request. The defendants had posted notices convening a meeting on 28 May 2009, arguing that the directors had not validly called a meeting within the prescribed period. The primary legal issues concerned whether the directors had effectively called a meeting on 17 April 2009 and if the defendants' power under section 249E(1) to convene a meeting was triggered. The court had to determine if the directors' actions on 17 April 2009 constituted a valid call of a meeting under section 249D(5) and if the defendants' convening of a meeting on 28 May 2009 was justified.

The court found that the directors had indeed called a meeting on 17 April 2009, as they had resolved to convene the meeting and announced it to the ASX, which satisfied the requirements of section 249D(5). Consequently, the power under section 249E(1) was not activated because the directors had fulfilled their obligation. The court also dismissed the suggestion that the directors acted oppressively towards the defendants, noting that they acted in good faith based on legal advice. The application was dismissed, and the court ordered the parties to consider whether further orders were necessary and provided directions for submissions on costs. The proceeding was stood over for judgment on costs.

Orders

Orders of the court

1. The application be dismissed

2. The parties have liberty to apply on 3 hours’ notice if an order is to be sought pursuant to the reasons for judgment.

3. The parties file and serve submissions in chief on costs by Tuesday 26 May 2009.

4. The parties file and serve submissions in reply on costs by Friday 29 May 2009.

5. The proceeding be stood over to 3 June 2009 for judgment in relation to costs.

Note:

Background

Background to the litigation

Section 249E(1) provides:(1)Members with more than 50% of the votes of all of the members who make a request under section 249D may call and arrange to hold a general meeting if the directors do not do so within 21 days after the request is given to the company.FACTS On Friday, 27 March 2009, NSX received a written request from nine of its shareholders (including the defendants) who collectively were entitled to cast at least five percent of the votes able to be cast at a general meeting, requiring NSX to “call a general meeting to consider and if thought fit pass” resolutions for the removal of the existing six directors and the election of three directors. It is not disputed that the request satisfied the terms of s 249D(1). On 30 March 2009, NSX announced to the Australian Stock Exchange (the ASX) that it had received the request and that the directors intended to convene a general meeting in accordance with the Act, the date of which would be announced once that date was determined. On Friday 17 April 2009, which was the last day within the 21 day period referred to in s 249D(5) of the Act, NSX’s directors resolved: (a)that the directors call a meeting of shareholders to be held at 12:00pm on 27 May 2009 at the offices of Blake Dawson in Melbourne;(b)that the Company Secretary be authorised to announce the details of the meeting in an ASX announcement dated 17 April 2009; and(c)that a notice of the meeting be sent to shareholders in accordance with the notice provisions of NSX’s constitution, and the Managing Director and Company Secretary be authorised to finalise the notice with the involvement of Mr Peadon, one of the Company’s directors.The date 27 May 2009 referred to in para (a) was the last day of the two-month period referred to in the second sentence of s 249D(5). On the same day, Friday 17 April 2009, NSX announced to the ASX that it had determined that an extraordinary general meeting in response to the request of which NSX had advised the ASX on 30 March 2009, was to be held as described in [6](a) above. The announcement also stated that a notice of the meeting and proxy form would be mailed to shareholders in due course. On Saturday 18 April 2009, the defendants, who, it was not disputed, were members of NSX with more than 50% of the votes of all of the nine members who had made the request under s 249D, posted notices to NSX’s members convening a general meeting of members to be held on 28 May 2009. The only ground of invalidity of the defendants’ notice that NSX raised was that the power given by 249E(1) had not been enlivened because the directors had themselves called a meeting in conformity with the obligation imposed on them by s 249D(5).ISSUES The issues that arise are as follows:1.Did the directors “call” the meeting for the purposes of s 249D(5) by reason of what they did on Friday 17 April 2009?2.Was the power given to members by s 249E(1) to call and arrange a general meeting enlivened?3.In the light of the answers given to questions (1) and (2), what orders are to be made?1. DID THE DIRECTORS “CALL” THE MEETING FOR THE PURPOSES OF s 249D(5) BY REASON OF WHAT THEY DID ON FRIDAY 17 APRIL 2009?

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LINDGREN J

The fourth defendant submitted that the directors have acted oppressively toward the members generally, and the defendants in particular, and that an order should be made under s 233(1)(c) of the Act to the effect that the meeting fixed for 27 May 2009 shall not proceed. So far as the evidence reveals, the directors acted in good faith, believing on legal advice that they had “called” a general meeting on 17 April 2009. I have no hesitation in rejecting the suggestion of oppression.CONCLUSION There is no cross claim by the defendants and they have not suggested a form of order or a source of power (other than s 233(1)(c) referred to above) for the making of an order in relation to the meeting presently called by the directors for 27 May 2009. I will allow the parties an opportunity to consider these reasons and the question whether an order against the defendants is required. The application should be dismissed. [On 22 May 2009 when the order of dismissal was made, counsel for NSX sought an opportunity to make submissions on costs, and directions were made to that end. Subsequently by consent the Court ordered that the plaintiff pay the defendants’ costs.]

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 413 of 2009

BETWEEN:	NSX LIMITED (ACN 089 447 058) Plaintiff
AND:	STEVEN SHANE PRITCHARD First Defendant PAUL ERNEST SEYMOUR Second Defendant WINPAR HOLDINGS LIMITED (ACN 003 035 523) Third Defendant FINANCIAL & ENERGY EXCHANGE LIMITED Fourth Defendant GORDON BRADLEY ELKINGTON Fifth Defendant THE NEWCASTLE EXCHANGE PTY LIMITED (ACN 129 342 409) Sixth Defendant
JUDGE:	LINDGREN J
DATE OF ORDER:	22 MAY 2009
WHERE MADE:	SYDNEY