O'Brien v Sporting Shooters Association of Australia (Victoria)
[1999] VSC 313
•20 August 1999
SUPREME COURT OF VICTORIA
CORPORATIONS Send for Reporting
Not Restricted
No. 6325 of 1999 No. 6501 of 1999
PETER O’BRIEN, IAN FARRER and Plaintiffs DAVID ALLAN PORTER V SPORTING SHOOTERS ASSOCIATION Defendant OF AUSTRALIA (VICTORIA)
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JUDGE: Byrne J WHERE HELD: Melbourne DATE OF HEARING: 18 August 1999 DATE OF JUDGMENT: 20 August 1999 CASE MAY BE CITED AS: O’Brien v Sporting Shooters Association of Australia
(Victoria)MEDIA NEUTRAL CITATION:
[1999] VSC 313 Revised paras [14] and [16]
12 October 1999
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COMPANIES - register of members – member's right of access to register – whether member of company limited by guarantee has such right – use of information obtained from the register – use by candidate for executive office canvassing members for votes – whether relevant to the exercise of right attaching to membership – "interests recorded in the register" – whether membership of company limited by guarantee is such an interest.
Corporations Law ss. 168, 173, 177(1)(c)
COMPANIES – refusal to permit inspection of books in Contravention of the Law – order compelling inspection of books of company – whether discretionary – order made. Corporations Law s. 1303
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APPEARANCES: Counsel Solicitors For the Plaintiffs Mr D. Batt A.J. Macken & Co For the Defendant Mr P. Pascoe Ebsworth & Ebsworth
HIS HONOUR:
The Sporting Shooters Association of Australia (Victoria) ("the Association"), is governed by an executive council which is, in the Articles of the Association, sometimes referred to as "the Executive" or "the Executive Committee". I shall refer to it as the Executive. The Executive consists of 14 members, each of whom is elected to hold office for one year with the right to stand for re-election. Election is by a simple majority ballot of financial and eligible members cast at an annual general meeting.
The Association was incorporated in 1973 pursuant to the Companies Act 1961 as a company limited by guarantee. Accordingly, it has no share capital. Applicants who satisfy certain requirements are admitted to membership by decision of the Executive. They presently number approximately 24,000, of whom about 22,000 are voting members.
By Article 20 the Association is required to keep a register of the names and addresses of its members as required by the Companies Act 1961. The current statutory requirements are those contained in Chapter 2C of the Corporations Law. The register of members must contain the following information about each member, namely their name and address and the date on which their name is entered on the register: s.169(1). The Association maintains this register on computer.
The date for the next annual general meeting of the Association is 28 August. Peter O'Brien, Ian Farrer and David Allan Porter are each candidates for election to the Executive, Mr Porter for the office of President. I shall refer to these three persons as the Plaintiffs. They have commenced proceeding No. 6325 of 1999 seeking to enforce their statutory right to obtain a copy of the Association's register of members. The right is contained in s.173(3) of the Law which is in these terms:
"173 (3)
The company or scheme must give a person a copy of the register (or a part of the register) within 7 days if the person:
(a) asks for the copy; and (b) pays any fee (up to the prescribed amount) required by the company or scheme. ASIC may allow a longer period to comply with the request. If the register is kept on a computer and the person asks for the data on floppy disk, the company or scheme must give the data to the person on floppy disk. The data must be readable but the floppy disk need not be formatted for the person's preferred operating system."
Under s. 1303 of the Law this right is enforceable by the court:
"1303 If any person in contravention of this Law refuses to permit the inspection of any book or to supply a copy of any book, the Court may by order compel an immediate inspection of the book or order the copy to be supplied."
It was accepted before me that the formal requirements of s.173(3) had been satisfied and that the Association had refused to provide the copy of the register sought. It was, however, put on behalf of the Association that this refusal was not a contravention of the Law, having regard to s.177(1) which provides:
"177(1) A person must not:
(a) use information about a person obtained from a register kept under this Chapter to contact or send material to the person; or (b) disclose information of that kind knowing that the information is likely to be used to contact or send material to the person; unless that use or disclosure of the information is:
(c) relevant to the holding of the interests recorded in the register or the exercise of the rights attaching to them; or (d) approved by the company or scheme." Note: An example of using information to send material to a person is putting a person's name and address on a mailing list for advertising material."
The purpose for which the Plaintiffs seek access to the register is to enable them to canvass members of the Association for their vote at the forthcoming annual meeting. Counsel for the Association submitted that this was a prohibited use under s.177(1) so that it would not be entitled to disclose the content of the register, knowing that the information was likely to be used in that way: s.177(1)(b). The Association therefore brought a cross application in proceeding No. 6501 of 1999 seeking declarations and injunctive orders to restrain the Plaintiffs, who are the respondents to that application, from using any information for that prohibited purpose.
In the alternative, it was put on behalf of the Association that I should, in the exercise of the discretion conferred by s.1303, refuse to order that it provide the information to the Plaintiffs because of the facts set out in the affidavit of its President, Sebastian Ziccone, sworn 13 August 1999.
I return to the first contention put on behalf of the Association. Counsel for the Plaintiffs argued that the proposed use of the material for electioneering purposes was not prohibited by s.177(1) because it fell within paragraph (c) which I have set out above. It was put that the rights attaching to membership of the Association include that of voting at the election of the Executive. The canvassing of members by a candidate was relevant to the exercise of that right by the member and therefore is a use permitted by s.177(1)(c).
The response of the Association to this submission was twofold. First counsel argued that the user would only be justified by paragraph (c) if it were an activity specifically authorised or contemplated by the Law or by the Articles. I do not agree. Paragraph (c) speaks of the use being, "relevant to the exercise of the rights attaching to" membership. While it may be correct to say that the rights attaching to membership must be those conferred by the Articles or the Law, a matter about which I express no view, the nexus between the user in question and those rights is one of relevance. To my mind, the delivery to electors of information as to candidates is an activity which is relevant to the exercise of the right of the electors to elect a candidate to office.
The second response of the Association fastened upon the word "interests" in the expression, "interests recorded in the register" in s.177(1)(c). Counsel argued that an interest referred to in this paragraph does not include membership of a corporation limited by guarantee. Put positively, it was submitted that "interests" means that of a shareholder, that of the holder of an option over unissued shares, that of a debenture holder, that of a member of a managed investment scheme registered under s.601EB and that of the holder of an option over unissued interests in such a registered managed investment scheme. It was put that this meaning of "interests" emerged from an examination of the history and function of s.177.
"Interest" in a managed investment scheme is defined in the Law, generally speaking, as a right to benefits produced by the scheme: s.9. This definition was inserted by the Managed Investments Act 1998 (Act No. 62 of 1998) Schedule 2. It was not submitted that I should give to the word "interests" in s.177(1)(c) this statutory definition. I agree that the context indicates that this was not the intent of Parliament.
The argument based on the history of s.177(1)(c) is in summary as follows. Companies legislation has long had a requirement that a company maintain a register of members and that it be open for inspection by members and that a member be entitled to a copy upon payment of a fee. See, for example, Companies Act 1961 ss.151-153, Companies Code ss.256, 257, Corporations Law ss.209-210. There was no restriction prior to 1995 upon the use which might be made of this information.
By the First Corporate Law Simplification Act 1995, ss.209 and 210 were repealed and Part 2.5 inserted which included s.216J(1) which is in terms similar to the present s.177(1). It prohibited the use of information about persons obtained from a register from being used to send information to that person, but exempted from that prohibition such use where it was:
"(c) relevant to the holding of the shares, options or debentures
concerned or the exercise of the rights attaching to them."
The use of the expression, "shares, options or debentures" was evidently intended to pick up the three types of register which a company was obliged to maintain under s.216A, namely a register of members, a register of option holders and a register of debenture holders. Section 216B dealt in more detail with the register of members. Specific provision is made in s.216B(3) for the additional content of the register where the company has a share capital. Section 216B(4) provides for the inclusion of certain information where the company converts shares to stock.
In 1998 these sections were affected by two statutes which came into force, the first immediately before the second: the Company Law Review Act 1998 (Act No. 61 of 1998) and the Managed Investments Act 1998 (Act No. 62 of 1998). By Act No. 61 of 1998 Part 2.5 became Chapter 2C and s. 216J became s. 177. Under the new paragraph s. 177(1)(c), exempted from the prohibition is a use of the information obtained from the register which is:
"(c) relevant to the holding of the interests recorded in the register or
the exercise of the rights attaching to them."
The second of the 1998 Acts which brought into the legislative requirements for registers, those relating to registered schemes, also amended paragraph (c) by inserting the word "interests" after the words "the shares". As things stood after the amendment to paragraph (c) made by Act No. 61 of 1998, this amendment was ineffective because the words "the shares" did not then appear.
Counsel for the Association drew from this history the following conclusions. First, that as things stood before the 1998 amendments, paragraph (c) did not extend to the interests of members of a company limited by guarantee for these are not shares. Second, that the amendment effected by Act No. 61 of 1998 was not intended to bring in those interests, but rather to restate the existing paragraph (c) in simpler terms. Third, that the amendment made by Act No. 62 of 1998 was ineffective.
His second conclusion is the critical one for my purposes. I reject it. The change effected by Act No.91 of 1998 was not simply to substitute the word "interests" for the words "shares, options or debentures". What is inserted in place of those words is the expression, "the interests recorded in the register". These are the interests referred to in s.168. The word "interests" is sufficiently wide to cover the rights of a member of a company limited by guarantee. It is clear that information as to such a member is required to be included in the register notwithstanding that they are not a shareholder, see s.169(3). The rights to inspect a register and to get a copy of it which are conferred by s.173 are not to be read down except in so far as s.177(1) so provides.
I conclude therefore that the refusal of the Association to provide the information sought was a contravention of s.173.
Next it was put on behalf of the Association that I should, in the exercise of my discretion under s.1303, refuse to order the Association to supply the copy of the register which the Plaintiffs seek. Counsel for the Plaintiffs submitted that no such discretion exists. The word "may" in the section is not permissive; it merely signifies that the jurisdiction of this court to make such an order does not arise unless there has been a refusal in contravention of the Law. I do not agree. The drafting of the Law is such that the word "may" means exactly that. It means that the court is empowered to make the order where a refusal in contravention of the Law has been established, as in the present case. Whether the power will be exercised must depend upon the proper discretionary considerations affecting the power in the light of the facts as are found by the court.
A number of matters were then relied upon as warranting a refusal to make the order. Essentially they concerned the concern of the Association to preserve confidentiality of the identity of its members who are, for the most part, people who possess guns which they keep at home. The material shows that it has taken steps to preserve this confidentiality. Further, the orders sought are not necessary for the professed purposes of the plaintiffs. Mr Ziccone deposed that the Association makes available its newsletter to enable candidates to advertise their claims for office. Furthermore, it has itself offered to mail the Plaintiffs' material to its members. This reasonable offer which was made on 27 July has received no response. It was said then that this shows that the plaintiffs lack bona fides.
I approach this question of discretion on the basis that it is for the Plaintiffs to satisfy me that the power under s.1303 should be exercised. A powerful factor in this regard is the attitude of the Law which makes it clear that a member has a right to obtain the information here in question: s.173. I look then to the factors which should cause me not to give effect to this right.
I have anxiously read the material filed on behalf of the Association and considered what counsel said on its behalf. It seems to me that its concerns regarding the security of firearms kept by its members at their homes depends upon an accumulation of a number of assumptions. First is that the information when put in the possession of the plaintiffs might fall into the hands of some person who might be minded to steal a member's firearm. Second is that a person who is minded to acquire a firearm by stealing it would be assisted in this purpose by knowing that a particular person was a member of the Association and therefore likely to have a firearm. This is to my mind an improbable scenario and I am not prepared to act upon it. It was next said that, if this application were granted, a member who is less reputable than the present plaintiffs might seek similar access and use the information obtained for purposes adverse to the interests of the Association or its members. I am confident that the Association would be able to handle such a request if it were made.
Nor have I overlooked the arguments based on analogy with the confidentiality attaching to the Register of Firearms under s.113 of the Firearms Act 1996 or that now attaching to the identity of persons under Part IIIA of the Freedom of Information Act 1982. The members of the Association became members at a time when their identity was liable to be disclosed to other members. I do not see any substance in the suggestion that they might now be concerned that their identity be disclosed to their fellow members.
The purpose for which the Plaintiffs seek the information is a legitimate one. It is important that the electors of the new Executive have the information which the candidates wish to place before them. I can well understand that a group of candidates would prefer to maintain control of the content, timing and distribution of their own material. I make no finding that the present Executive or its Secretary would in any way abuse their position to disadvantage the Plaintiffs. It is sufficient that I conclude, as I do, that the refusal of the Plaintiffs to accept the alternatives offered to them is not such as to cause me to doubt their present bona fides or to exercise my discretion adversely to them.
I will therefore make the orders sought in the Plaintiffs' application. I should add that the application seeks simply that the information be made available. If counsel wish to present an argument to the effect that the order should be tailored in some way to accommodate the legitimate interests of the Association for confidentiality I will hear them further on the matter. Absent such a submission, I would propose the following orders:
In proceeding Number 6325 of 1999 I order that:
1. Upon payment by the Plaintiffs of the sum of $20 the Defendant give to the Plaintiffs forthwith a copy of its register of members on floppy disk. 2. That the Defendant, that the Association, pay the costs of the Plaintiffs including reserved costs.
In proceeding Number 6501 of 1999 I would propose the following orders:
1. The application be dismissed. 2. That the Applicant pay the costs of the Respondents.
I will leave it now to counsel to agree the terms of these orders and to submit minutes to give effect to these conclusions.
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