Quinn v FBG Superannuation Ltd
[1998] VSC 173
•10 December 1998
SUPREME COURT OF VICTORIA
CAUSES JURISDICTION
Not Restricted
No. 6876 of 1998
ANTHONY CHARLES QUINN Plaintiff v FBG SUPERANNUATION LIMITED Defendant (ACN 005 027 707)
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JUDGE: Gillard J WHERE HELD: Melbourne DATE OF HEARING: 8 December 1998 DATE OF JUDGMENT: 10 December 1998 CASE MAY BE CITED AS: Quinn v. FBG Superannuation Limited MEDIA NEUTRAL CITATION: [1998] VSC 173
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Directors - Trustee of Superannuation Fund - Ceasing employment - Whether ineligible to be a Director - Removal as result - Section 107(2) of Superannuation Industry (Supervision) Act 1993 - Possible conflict with s.227(12) of Corporations Law - Validity of Articles and Rules made.
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APPEARANCES: Counsel Solicitors For the Plaintiff Ms J.A. Dodds-Streeton Nunan & Bloom For the Defendant Mr K.W.S. Hargrave, Q.C. Andersen Legal with Mr M.D. Wyles
HIS HONOUR:
A proceeding instituted by writ in which the plaintiff seeks a declaration that he is a director of the defendant company which is a trustee of a superannuation fund, and an injunction restraining the defendant from preventing him acting as such.
Parties
The plaintiff, Anthony Charles Quinn, is aged 42 years, and was employed for some 14 years with Carlton United Breweries Ltd.
The defendant, FBG Superannuation Ltd, is the trustee of the Foster's Brewing Group Superannuation Fund ("the fund") which is an employer sponsored fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (C'th) ("the Act").
Facts
It was ordered by consent that the parties provide an agreed statement of facts. The statement is a chronology and in a form which I found unhelpful due to its lack of detail, use of terminology which is not defined and proceeds on an assumption that the reader will have an understanding of the circumstances. The parties later filed an additional statement of facts which recorded an agreement that all the documents in the court book are tendered in evidence. Using the two statements as a starting point I find the following facts.
The defendant is and was the trustee of the fund. The fund is an employer sponsored fund within the meaning of the Act.
On 24 November 1995, the Annual General Meeting of members of the defendant resolved to adopt a new set of Articles of Association. They remained in their new form at all relevant times thereafter.
On 31 May 1996 the defendant resolved that election for member directors were to be held once every three years with appointment from 1 December and that elections should take place some months before the appointment to enable the new directors to observe a November meeting. During the middle of 1996 Mr Sloss was appointed by the defendant to conduct an election for the appointment of three persons to be directors of the defendant. The three directors to be appointed were known as "Member Directors" who represented the members of the fund. The period of the incumbent Member Directors expired on 1 December 1996.
On 6 July 1996 Mr Sloss invited nominations and on 10 September 1996 the plaintiff lodged his nomination to be a director.
As at that date he was employed by the Carlton United Breweries Limited. He had been an employee for some 14 years.
His employer was a participating employer in the fund and the plaintiff was a member of the fund.
On 22 August 1996 the Board of Directors of the defendant resolved to amend the Member Election Rules and in so doing adopted the rules as amended.
Although the regulations are described "REGULATIONS GOVERNING THE ELECTION OF MEMBER DIRECTORS" they also dealt with removal of a Member Director.
During 1996 the Board comprised six members, three representing the fund members and three representing the principal employer. The equal representation was required by the articles.
The three representing the principal employer were appointed by it and the three representing the members of the fund were to be "nominated as member representatives in accordance with the Superannuation Law" - Article 6.4
It was common ground between the parties that the word "nominated" covered actual nomination to fill three vacancies and the result of a ballot when nominations exceeded vacancies.
Eight persons nominated for the three vacancies.
The election was to be held in time to enable the new directors to take up their appointment on 1 December 1996.
Between 9 October 1996 and 31 October 1996 Mr Sloss conducted a ballot.
On 1 November 1996 Mr Sloss declared the result of the ballot.
The declaration reveals that he sent out 1,467 ballot papers. Of that number 470 voted. The ranking order of candidates and the number of votes received by each candidate were as follows -
"Ranking Votes Order
1. CAIN, Vincent Thomas 310 2. BELL, John 231 3. QUINN, Anthony 222 4. BURLING, Brian 203"
And then followed the results in relation to the four other candidates.
At the base of the declaration he declared -
"I declare Vincent Thomas CAIN, John BELL and Anthony QUINN elected member directors of FBG Superannuation Limited to take up duty on 1 December 1996."
Then followed his signature.
On 12 November 1996 the plaintiff received from Kerrin Osborn of the Superannuation Department of Carlton and United a letter in which he was welcomed to the Board of FBG Superannuation Limited.
He was requested to sign a number of documents. He signed the short form of consent to act as a director, the long form of consent to act as a director and a statutory declaration.
He did this on or about 13 November 1996 and lodged them with the defendant.
There was nothing more for him to do to perfect his appointment which was to take effect from 1 December 1996.
A significant event occurred on 19 November 1996. On that day the plaintiff ceased his employment with Carlton and United Brewery Limited.
On 20 November 1996 a meeting of the Board of the defendant was held.
It was noted at the meeting under the heading of "DIRECTORS' MATTERS" the following -
"Noted:
(i) Advice from the returning officer that the member director elections have been completed and the results in ranking order are as follows:
1. Vincent Cain 2. John Bell 3. Anthony Quinn 4. Brian Burling"
Thereafter the minutes note the other four candidates' results.
The minutes then went on to note the following -
"(ii) Advice has been received from the employer that Mr Quinn has ceased employment with effect from 19 November and as such would not be eligible to take up a position as a Member-elected Trustee Director."
It was resolved that Mr John Bell be appointed as a Member-elect Director from 1 December 1996 and Mr Vincent Cain be re-appointed as a director. The resolution went on to record -
"(iii)
That a letter be obtained from the company confirming cessation of Mr Quinn as an employee and following confirmation Mr Burling be appointed as the next Member-elected Director according to the election ranking."
At the meeting of the board held on 25 February 1997 a letter from Carlton and United Breweries was tabled confirming the plaintiff's employment termination. The meeting resolved -
"That Mr Burling be appointed as a Member-elected Director with
immediate effect."The plaintiff sought and received legal advice from his present solicitors Messrs Nunan and Bloom who wrote a letter to the chairman of the defendant, Mr Geoffrey Cohen, and the defendant's solicitors, Messrs Arthur Robinson and Hedderwicks in letters dated 16 July 1997 and 28 August 1997 denied on behalf of the Board that he was a director of the Board. The denial was repeated by the chairman of the defendant Mr Cohen on 9 July 1998.
The proceeding
On 17 August 1998 the plaintiff instituted his proceeding in the court by writ.
On 11 September 1998 the defendant successfully entered the proceeding in the Commercial List.
The defendant's defence is hardly illuminating.
To the allegation by the plaintiff that he was declared elected a Member Director of the defendant to take up duty on 1 December 1996, the defendant pleaded that it admitted the plaintiff was elected a Member Director eligible to be appointed to the board of the defendant as representing members as and from 1 December 1996 but otherwise it denied the allegation. It goes on to assert that the plaintiff was at no time appointed a director of the defendant.
The defendant asserts in its defence that the plaintiff has not held the office of director, nor is he currently the holder of the office of director.
The defence does not say on what basis the plaintiff is not a director but puts the plaintiff to his proof.
At trial I gave leave to the defendant to amend its defence and leave to the plaintiff to deliver a reply.
The plaintiff seeks a declaration that he is a director of the defendant and an injunction restraining the defendant from interfering with his entitlement to act as a director.
Issues
The pleadings and the submissions of the parties establish the following general issues -
(i) Were the Articles and Regulations dealing with removal valid?
(ii) Was the plaintiff elected a director of the defendant to take up appointment on 1 December 1996?
(iii) If yes to (ii), did he become ineligible upon termination of his employment on 19 November 1996 from taking office?
(iv) Was he removed from office by reason of regulation 15(b)?
The Articles and Regulations
At the Annual General Meeting of the defendant held on 24 November 1995 the relevant Articles of Association were adopted.
Article 6 relates to directors.
Article 6.7 provides -
"6.7 The Directors must arrange for Member Nominees to be
nominated and appointed in accordance with Superannuation Law.""Superannuation Law" includes the Act.
"Member Nominee" means a director appointed under Article 6.4(b). See Article 1.1.
Article 6.4(b) refers to directors comprising an equal number of people, half being nominated as member representatives in accordance with the Superannuation Law.
I now turn to the relevant law concerning superannuation and I refer to s.107(2) of the Act which provides -
"(2) The trustee must:
(a) establish (whether by inclusion in the governing rules or otherwise)
rules:
(i)
setting out a procedure for appointing the member representatives; and
(ii)
ensuring that member representatives so appointed can only be removed by the same procedure as that by which they were appointed, except in the event of:
(A) death; or (B) mental or physical incapacity; or (C) retirement; or (D) termination of employment; or (E) the member representative becoming a disqualified person within the meaning of Part 15; or (F) the suspension or removal of the trustee under
Part 17; or(G) other prescribed circumstances; and
(b) publish those rules in such a way as will make members of the fund aware of the procedure for appointment and removal of member representatives."
Section 107(3) makes it an offence to contravene sub-s.(2) and the maximum fine is substantial.
It is noted that the Act requires the trustee to make rules with respect to two subjects, namely, setting out the procedure for appointment of "member representatives" which term is defined by s.10 and includes directors nominated to a Board and secondly, rules stating that the member representative so appointed can only be removed by members of the fund.
This is made quite clear by the definition of "member representative" in s.10.
It follows that both appointment and prima facie the removal can only be carried out by the members of the fund.
In my opinion the obligation on the trustee to establish these rules containing those two subject matters is mandatory.
Whether or not it is mandatory to also provide for removal in the rules in the event of the matters set out in sub-paragraphs (A) - (G) (inclusive) is open to debate but it is unnecessary for me to decide that matter because the Board of the defendant did in fact provide in the regulations for removal on the happening of any one of those events.
In my opinion the rule making power entrusted to the trustee includes the power to make a rule removing a member representative from the Board of directors on the happening of any of the events set out in s.107(2)(a)(ii).
Returning to the articles, Article 6.8 deals with removal of a director.
Article 6.8 relevantly provides -
"6.8 A Director ceases to hold office if the Director:
(a) ...
(f) Being a Member Nominee, ceases to be a Member Nominee under rules determined by the Directors which comply with superannuation law."
In my opinion Article 6.8(f) refers to the rules made pursuant to s.107(2) of the Act.
The relevant regulations were amended and adopted on 22 August 1996. It is those regulations which were in force at the relevant time and are the only regulations which regulate the affairs of the trustee in respect of their subject matter at the relevant times.
The bulk of the regulations concern the procedures to be adopted to appoint a member director.
Regulation 15, however, deals with removal and it provides -
"Regulation 15 - Removal of a Member Director
A Member Director appointed under these Regulations shall not be
removed from office unless the Member Director is removed by:(a) the same procedure as that by which the Member Director was appointed under these Regulations; or
(b) the occurrence of an event specified in section 107(2)(a)(ii) of the Superannuation Industry (Supervision) Act."
Two submissions were put by Ms Dodds-Streeton of counsel on behalf of the plaintiff.
First, that a person could run for office even though he or she was not an employee member of the fund. It followed that the termination of the plaintiff's employment did not affect his eligibility to be a member's representative on the board of directors.
Secondly, that the provisions of the articles and regulations dealing with removal from office were contrary to s.227(12) of the Corporations Law.
Dealing with eligibility, counsel referred to the definition of "member representative" which is in s.10.
It relevantly provided -
"'Member representative' in relation to a group of trustees of a fund, ... or the board of directors of a corporate trustee of a fund, means a member of the group ... board, as the case may be, nominated by:
(a) the members of the fund; or
(b) a trade union, or other organisation representing the interests of those members."
She submitted that there was nothing in the definition which confine the qualification of the representative to being a member of the fund and an employee.
That may be so, but it did not preclude the trustee company from making a rule which required the member representative on the board to be a member of the fund and an employee. This must be so because of the provisions of s.107(2) which clearly empowers the trustee to make rules which have the effect of removing a director when his employment is terminated.
Going to Regulation 1, which is concerned with the interpretation of the regulations, one finds a definition of "member director" and "member" in Regulation 1.
It relevantly provides -
"In these regulations, unless the context otherwise requires:
...
"Member" means an Eligible Employee who has been accepted by the Trustee as a Member of the Fund and in respect of whom his or her Employer makes contributions.
"Member Directors" means in relation to the Board of Directors of the Trustee, members nominated by the Members of the Fund."
If one follows through the definition of "Member Directors" it comes back to the definition of "Member" and clearly such a person has to be a member of the fund and at the relevant time an employee because his employer is to make contributions.
Ms Dodds-Streeton, however, submitted that the use of the small "m" in the definition of "Member Directors" meant that the definition of "Member" did not apply. She submitted that the intention of those responsible for the regulations was clear and that the use of the "m" indicated a wider definition than in the interpretation regulation itself. In this regard I note that the definition provision is to be used "unless the context otherwise requires".
I am not prepared to accept that argument. There is a strong inference that the use of the "m" is a typographical error but in any event I am not persuaded that the interpretation provision should not be applied to give full effect to it. In other words, I am not prepared to accept that the context otherwise points to a different interpretation.
In my opinion in order to be eligible to take office as a member of the board of directors of the defendant trustee, that person has to be a member of the fund and an employee at the relevant time.
I now turn to the second submission.
The Corporations Law does prevent directors of a public company removing another director.
Section 227(12) applies and the sub-section provides -
"227(12) A director of a public company shall not be removed by, or be required to vacate his or her office because of, any resolution, request or notice of the directors or any of them notwithstanding anything in the articles or any agreement."
There was no contest that the defendant is a public company.
The Act deals with any conflict with other legislation.
Section 350 of the Act provides -
"350. It is the intention of the Parliament that this Act is not to apply to the exclusion of a law of a State or Territory to the extent that that law is capable of operating concurrently with this Act."
One could also add reference to s.109 of the Constitution which deals with inconsistency between Commonwealth and State legislation.
Ms Dodds-Streeton submits that s.227(12) can be applied concurrently with the Act so that it would not be open to make any regulations or provide in the articles for the removal of a director by the other directors.
In my opinion s.227(12) of the law and s.107(2)(a) in some circumstances cannot operate concurrently.
The second mandatory provision in the rules is a provision that member representatives can only be removed by the same procedure concerning their appointment. Their appointment must be by nomination by the members of the fund which of course includes where candidates exceed vacancies, a ballot.
So the primary position is that that is the only way they can be removed. However, the rules making power authorises the making of rules providing for removal on the happening of an event.
The rule could be couched in terms where removal occurs on the happening of an event which must be established to the satisfaction of the board. This would mean that the board would be responsible.
I do accept, however, that the rules could be framed so that it is not a decision of the board. For example, the rule could be self-executing. But this would be as a result of rules established by the board.
In my opinion neither the articles nor the regulations concerning cessation of office or removal from office contravene s.227(12) of the law and the regulations in my opinion were validly made pursuant to s.107(2) of the Act.
Regulation 15 is clear and unequivocal. A member director may be removed by the vote of members of the fund or on the occurrence of an event specified in s.107(2)(a)(ii) of the Act.
The wording makes it clear that on the occurrence of the event, removal follows without any other act being required.
Mr Hargrave, Q.C. who appeared with Mr M. Wyles for the defendant submitted that if s.227(12) had to be complied with and hence a regulation concerning removal could only operate by the authority of the members of the fund, the regulations having been adopted by the board of the defendant satisfied that requirement because the Member Directors in fact represented and were in fact, all the members of the fund.
There was no dispute between the parties that the effect of the articles, regulations and the Act was that the Member Directors were treated as the members.
The only problem with the submission is that at the meeting of directors held on 22 August 1996 at which the regulations were adopted, only two of the Member Directors were present owing to the fact that one had resigned in the previous May and not been replaced.
In fact at that meeting, before the adoption of the new regulations, Mr Brian Burling was appointed to fill the vacancy. However, he was not present at the meeting and indeed had not been given notice of the meeting.
Praying in aid the Duomatic principle, Mr Hargraves submitted that Mr Burling consented to the regulations at a later meeting held on 20 November 1996 when performing his role as a director he voted in favour of a resolution which clearly recognised the validity of the regulations.
The resolution which I set out above refers to his appointment after a letter was received indicating that the plaintiff's employment had been terminated.
Mr Hargraves, Q.C. submitted this clearly showed Mr Burling's adoption of the regulations so that by 20 November 1996 all Member Directors had agreed to them and it followed, all the members.
There is some degree of controversy as to the application of the Duomatic principle.
In Brick and Pipe Industries v. Occidental Life (1992) 2 VR 279, Ormiston J exhaustively considered all the authorities concerning the principle.
At p.318 he expressed his opinion as to the application of the principle when he said -
"In short there is no reason in principle why the assent of the
membership of the company cannot be expressed in whatever way
is appropriate to establish the fact. The principle derives
from the simple statement of Lord Davey in Solomon v.
A. Solomon and Co Ltd (1897) A.C. at p.57 where he said:
'The company is bound in a matter intra vires by the unanimous
agreement of its members.' The plaintiff's contention that the
members must express their agreement in general meeting is therefore
rejected."I agree with this approach which in my view adopts a common sense practical approach to a situation where all the facts lead to the conclusion that the total membership of the company has expressed its assent to the resolution.
The evidence here leads to that conclusion.
If I am wrong in my conclusion as to the application of s.227(12) of the Law to the present matter, in my opinion the regulations made were made with the assent of the members of the fund and accordingly do not contravene s.227(12).
Election Result and Effect
It is clear that as a result of the election which was properly conducted, that the plaintiff was elected a member director of the defendant to take up duty on 1 December 1996.
It is common ground that the ballot was properly conducted, that the plaintiff was declared elected and that he did all that was required of him to take office on 1 December 1996.
The defendant contends that he was not appointed to the office of director prior to termination of his employment.
Was the plaintiff appointed a director?
The defendant whilst admitting the election results submits that the success of the plaintiff in the election made him eligible for appointment but did not constitute him a director of the defendant.
The defendant submits that the declaration of the result of the ballot was no more than a declaration that the plaintiff "was to be appointed a director on 1 December 1996" after the expiration of the term of office of the incumbent directors on 30 November 1996.
In the alternative, the defendant submits that if the result of the ballot not only made the plaintiff eligible but in fact appointed him, then his right to remain a director ceased upon the termination of his employment on 19 November 1996.
The resolution of the first issue depends upon the construction of the articles of association of the defendant and the regulations concerning nomination, appointment and removal of directors of the defendant which are incorporated in the said articles. It is clear from the articles and regulations that they are intended to comply with the provisions of the superannuation law which includes the Act.
The first issue comes down to whether the plaintiff's success in the ballot followed by the declaration resulted in him being appointed a director effective from 1 December or whether some other step had to be taken to validly effect his appointment?
Ms Dodds-Streeton submitted that all that had to be done was for the plaintiff to sign the various written consents which he did by 12 November 1996. There is no suggestion he was a disqualified person.
She submitted that all that had to be done was done by 10 November and from that date he was appointed a director effective as from 1 December 1996.
In particular it was submitted that the then existing Board had no say in his appointment. On the expiration of time the plaintiff automatically became a director, that is, on 1 December 1996.
Clearly the articles do not confer upon the directors a power to appoint member directors.
I have carefully considered the articles of association and the regulations and there is nothing in either document which gives any power to any entity or body and in particular the other directors of the defendant, to take any further step to appoint a member director of the trustee.
In my opinion it is clear from the articles and regulations that once the declaration of the poll takes place, followed by the various consents being signed by the successful candidates, those candidates become directors of the trustee effective from 1 December 1996.
By reason of the changes to the regulations and the procedure adopted by the directors of the defendant, the appointment was to date from 1 December 1996. But in my opinion there was nothing else to be done to perfect the appointment of the plaintiff.
The defendant submitted that the plaintiff was not appointed a director of the defendant.
Mr Hargrave, Q.C. submitted that until 1 December 1996 arrived, the plaintiff had not been appointed a director of the defendant. It was submitted that newly elected directors do not assume office until the term of office of current directors had expired or unless there was a casual vacancy being filled which is not the case here. It was submitted that this had to be so because otherwise you would have two sets of member directors at the one time and this was not possible under the terms of the articles and regulations.
It followed that the election and signing of the various consents merely placed the plaintiff in a ranking list entitling him to be appointed a director and to take up duty when the terms of office of the current directors expired.
In my opinion this argument lacks reality. The articles and the regulations contemplated that directors would be appointed before the expiration of the terms of office of the incumbent directors and that all that had to occur to perfect their appointment was the expiration of time. There is no question of any other act being performed to perfect their appointment.
It was clearly the common intention of all relevant parties to the articles and regulations that that be so. It is artificial in the extreme to say that it was a condition precedent to the plaintiff's appointment as director, the vacancy of the office which was to occur on 1 December 1996. The correct position is that it was the intention of the articles and regulations that the plaintiff was appointed as a director effective from 1 December 1996 and no other act had to occur to make his appointment valid. He could not act as a director until 1 December 1996.
The defendant further submits that by reason of s.222A of the Corporations Law and s.118 of the Act it is clear that there is a difference between election and appointment.
Section 222A of the Corporations Law is procedural only. It requires a signed consent to act as director which must be kept by the company. This was done by the plaintiff by 12 November 1996.
The same may be said of s.118 of the Act which requires consent in writing to the appointment of a director.
In my opinion it is clear that it was the common intention of the relevant parties to the articles and regulations that appointment should be made by election followed by the various consents being signed and upon those steps being taken the person was appointed a director. In my opinion the only act that had to occur to perfect his appointment was the expiration of time to 1 December when the incumbents ceased to hold office and the elected candidates assumed office.
I reject the arguments put forward by the defendant on the basis that the plaintiff was never validly appointed a director of the defendant.
I note that at the meeting of 20 November 1996 the directors resolved that certain people be appointed member directors. In my opinion that was an unnecessary step. They were already directors effective from 1 December 1996. The actions of the Board are of no consequence to the proper application of the articles, regulations and the Act.
No other steps were taken until 25 February 1997. On that occasion the defendant resolved to appoint Mr Burling as a director effective immediately.
In my opinion as at 1 December, subject to questions of eligibility and removal all that had to be done had been done and the plaintiff was entitled to assume office on 1 December 1996.
Eligibility of Plaintiff
On 19 November the plaintiff's employment was terminated by his employer.
It follows that as at that moment in time he ceased to be an eligible employee and even though he may have been a member of the fund nevertheless from that moment in time his employer made no further contributions to the fund. It followed that he could not be eligible to be appointed a director from that moment in time.
What effect that had upon his appointment in the absence of any removal provision in the articles or regulations is a moot point.
However there is a removal provision both in the articles and the regulations and the question as to his status is to be determined in accordance with those provisions.
Removal of plaintiff as director
Clause 6.8 is concerned with removal of a director. I have set out the relevant provisions above. It provides for the cessation of office, inter alia, when a member nominee, i.e. the Member Director, ceases to be a member by reason of the rules complying with, inter alia, the Act.
One then goes to Regulation 15 which I have also set out above and in my opinion the wording is clear and the occurrence of any event specified in the sub-section of the Act causes the removal of the director as a director without any more being necessary.
In my opinion once his employment was terminated Regulation 15 automatically came into operation and the plaintiff was thereby removed from office as at 19 November 1996. It followed that he was not eligible to take up his office as a member director on 1 December 1996.
In reply, plaintiff's counsel submitted that the articles and regulation relating to removal were inconsistent with the Corporations Law. I have already dealt with that argument and I reject it.
The next submission put on behalf of the plaintiff was that Regulation 15(b) does not of its own terms provide that the member director shall be ipso facto removed by the occurrence of an event specified in s.107(2)(a)(ii) of the Act.
In my view Regulation 15 is clear and results in the member director being removed from office upon the occurrence of an event. Upon his termination of employment his office automatically terminates. In my opinion that is clearly the intention of Regulation 15 and the clear intent of s.107(2)(a)(ii) of the Act.
The final argument which has all the hallmarks of desperation, points to the fact that the regulations which were passed on 22 August 1996 when sent out to all members shortly thereafter contained a typographical error in Regulation 15(b) in that it referred to s.102(2)(a)(ii) of the Act rather than s.107(2)(a)(ii) of the Act.
It was submitted that the trustee had not complied with s.107(2)(b) of the Act and therefore the regulation was invalid. A reference to s.102(2) of the Act quickly dispels any doubt whether an error has been made. Section 102(2)(a) refers to a trustee of an entity entering into an agreement before the commencement of the section with an investment manager and then if certain things happen the trustee is obliged to do certain things. On any view it could not have referred to the occurrence of an event, relating to removal of a member director.
It is a well accepted principle of construction that a court may insert, delete, alter and amend words in a contract in order to correct obvious mistakes and absurdity. This principle applies to an obvious typographical error.
One does not have to go to any modern case for the common sense principle that obvious mistakes will be corrected without the necessity of having the document rectified. This has been the law for many, many years.
"Both courts of law and of equity may correct an obvious mistake on the face of an instrument without the slightest difficulty." Per Lord St. Leonards in Wilson v. Wilson (1854) 5 HLC 40 at 66.
Even in legislation the court can in a proper case correct an obvious misprint and the authority for that proposition goes back even further. See R. v. Wilcock (1845) 7 QB 317.
A more modern exposition of the principle is stated by Dixon, CJ and Fullagar, J in Fitszgerald v. Masters (1956) 95 CLR 420 at 426-7.
The court should proceed on the basis that the error is obvious. Further, the rules as adopted by the Board are correct as were the previous rules and the error occurred in the copy sent out to members.
The question is whether the requirements of s.107(2)(b) have been satisfied, namely, publication of the rules to "make the members of the fund aware of the procedure for ... removal of member representatives." The reasonable representative who turned to the Act to fully understand Regulation 15(b) would be in no doubt an error had been made.
In my opinion the members could not be in any doubt as to the intent of the relevant rule and I am satisfied that s.107(2)(b) was complied with.
Conclusion
Whilst I am satisfied that by the time the plaintiff had signed his consents he was effectively appointed a director to take office from 1 December 1996 and that nothing further had to be done to perfect his appointment other than the expiration of the time to 1 December 1996, I am equally satisfied that upon him ceasing to be an employee of Carlton United Breweries Limited he ceased to be a director.
It follows that his proceeding should be dismissed.
Subject to submissions of counsel I propose to make the following orders -
(i) That the plaintiff's proceeding be dismissed.
(ii) That the plaintiff pay the defendant's costs including reserved costs.
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