Re Carlton Football Club Ltd; Gratton v Carlton Football Club Ltd

[2004] VSC 379

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

No. 8121 of 2004

IN THE MATTER OF CARLTON FOOTBALL CLUB LTD

MAXWELL GRATTON	Plaintiff
V
CARLTON FOOTBALL CLUB LTD & ORS	Defendants

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 September 2004
DATE OF JUDGMENT:	6 October 2004
CASE MAY BE CITED AS:	Gratton v Carlton Football Club Ltd
MEDIUM NEUTRAL CITATION:	[2004] VSC 379

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CORPORATIONS – application pursuant to s.249G or s.1324 of the Corporations Act 2001 (Cth) for an order that directors call a meeting of members – purported request by members that directors call meeting – whether documents given to company constituted a request in writing signed by the requisite number of members pursuant to s.249D of the Corporations Act.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Gronow	Kenyons
For the Defendants	Mr L Glick SC with Mr M Clarke	Middletons

HIS HONOUR:

1. The plaintiff is a registered voting member of the first defendant, Carlton Football Club Ltd (“Carlton”), a company limited by guarantee.  The plaintiff seeks an order that the second to thirteenth defendants, who are directors of Carlton (“the Directors”), convene a general meeting of the members of Carlton.

1. The order requiring the Directors to convene a meeting of the members of Carlton is sought pursuant to s.249G of the Corporations Act 2001 (Cth) (“the Act”), alternatively s.1324 of the Act.

1. Section 249G(1) of the Act provides that the Court may order the meeting of a company’s members to be called if it is impracticable to call the meeting in any other way. An application for such an order may be made by any director, or by any member who would be entitled to vote at the meeting.[1] The basis for contending that it is impracticable to call the meeting in any other way is that, as the plaintiff alleges, at least 100 registered voting members of Carlton have requested the Directors to call a general meeting but the Directors have refused to do so. The request is said to have been made pursuant to s.249D of the Act and that is no doubt the reason why s.249D of the Act is referred to in para. 1 of the originating process. Paragraph 2 of the originating process relies upon s.1319 of the Act but that section empowers the Court to give directions where the Court has ordered a meeting and it was explained that the plaintiff in fact relied upon the Court’s injunctive power under s.1324 of the Act, on the basis that the Directors had contravened the Act by refusing to call a meeting requested by at least 100 registered voting members.

   [1]Section 249G(2) of the Act.

1. The foundation of the plaintiff’s application is therefore s.249D of the Act which provides, so far as relevant:

“(1) The directors of a company must call and arrange to hold a general meeting on the request of:

…

(b) at least 100 members who are entitled to vote at the general  meeting.

…

(2) The request must:

(a) be in writing; and

(b) state any resolution to be proposed at the meeting; and

(c) be signed by the members making the request; and

(d) be given to the company.

(3)Separate copies of a document setting out the request may be used for signing by members if the wording of the request is identical in each copy.

…

(5) The directors must call the meeting within 21 days after the request is given to the company.  The meeting is to be held not later than 2 months after the request is given to the company.”

1. On 16 August 2004, the plaintiff delivered to Carlton a letter of that date which stated that there was appended to the letter “a petition, signed by the required number of registered members of [Carlton], calling for a general meeting of the Club to vote on the (3) three resolutions which are included in the petition.”  With the letter were delivered 33 separate sheets of paper, according to the evidence, “in a bundle held together only by a bulldog clip.”  Twenty-three of those sheets each bore identical printed text and a table of handwritten names, addresses, corresponding signatures and membership numbers under the text.  Each of the remaining 10 sheets bore no printed text but only a table of handwritten names, addresses, signatures and membership numbers.

1. The printed text, on those sheets bearing it, was headed in large and bold capitals “KEEP THE BLUES AT CARLTON” under which there was a heading “Notice for request for general meeting and notice of resolutions”.  The printed text then read, so far as relevant, as follows:

“We the undersigned members of the CARLTON FOOTBALL CLUB LTD who are entitled to vote at a general meeting of the company hereby request the directors of the company (pursuant to the Constitution of the company and the Corporations Act) to call and arrange a general meeting of the company.

At the general meeting, we propose to move the following RESOLUTIONS:

1.  That a vote of no confidence be passed in the Board of Directors of the Club unless the Board agrees to ensure that the Club plays a minimum six of Carlton Football Club Australian Football League home games at Optus Oval in Princes Park in each Australian Football League season.

2.  The Directors of The Carlton Football Club will sign no binding   agreement to play games at Telstra Dome or the MCG until the above resolution is debated and resolved.

3.  [Unnecessary to set out].”

1. Mr Glick SC, who appeared with Mr M Clarke as counsel for the defendants, submitted that the plaintiff had failed to prove compliance with the requirements of s.249D of the Act, having regard to the format of the 33 sheets, which I have described above. Mr Glick submitted that the sheets of paper delivered to Carlton did not constitute a request in writing that satisfied the requirements of the Act as there were insufficient signatures. The reason advanced for this submission was that there were, as was not disputed, less than 100 signatures of registered voting members[2] on the sheets bearing the printed text, and that the signatures on the 10 sheets of paper not bearing the printed text could not be counted as part of a “request … in writing … signed by the members making the request.”  As a result, it was submitted that the “request” was not signed by a sufficient number of voting members.

   [2]A number of signatures were of members who were not registered voting members.

1. It seems to me that the defendants’ submissions are correct. In my opinion, s.249D of the Act requires either one document containing both the request and the requisite number of signatures, or a series of signed documents each containing the same request (and bearing, in total, the requisite number of signatures). The section sensibly makes provision for the use of more than one document[3] by permitting separate copies of a document to be used provided that the wording of the request is identical on each copy.  That was done in this case in respect of 23 of the sheets submitted but not in respect of the other 10 sheets which, as I have said, did not bear the text of the request at all.  Nor is it possible to treat each of the individual sheets as forming part of one document (or series of documents) because none of the offending sheets are securely fixed or fastened to any sheet bearing the printed text (assuming, without deciding, that this would have been sufficient to meet the requirements of the section).  The 23 sheets of paper contained insufficient signatures and the other 10 sheets cannot be taken into account.

   [3]Section 249D(3) of the Act.

1. I would add that the defendants’ point is no mere technicality because the Directors cannot objectively determine, solely from an inspection of the sheets of paper submitted to the company, whether the signatures on the 10 sheets bearing no printed text relate to, or were intended to relate to, any particular request.

1. The plaintiff attempted to remedy the foregoing deficiencies by providing evidence to the Court that the persons who signed the sheets not bearing the printed text saw or were acquainted with the text before signing. This evidence was vague and far from comprehensive. Reference was also made in the evidence to the fact that some of the sheets without printed text had been at the time of signature stapled or fastened to one of the sheets bearing printed text. Again, that evidence was vague and an examination discloses that, of the 10 sheets of paper bearing no printed text, only 2 sheets have staple holes in the top left hand corner. However, in my opinion, none of that evidence is to the point. The question whether a request satisfying the requirements of s.249D has been made must be answered by having regard to the nature of the physical document or documents given to the company and not with regard to extrinsic evidence or assertions as to the circumstances in which various sheets of paper, said to constitute the request, were signed.

1. In my opinion, for the foregoing reasons, the request in the form submitted was not signed, within the meaning of s.249D, by a sufficient number of voting members. The plaintiff has therefore failed to establish the basis for seeking any order requiring the Directors to call a meeting and the application must fail.

1. There is a further reason why, in my opinion, an order should not be made even if the “request“ is valid. Section 249E(1) of the Act provides that members with more than 50% of the votes of all the members who make a request under s.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. This section has not been sought to be utilised and there is no evidence that there would be any particular difficulty or excessive cost involved in obtaining the support of more than 50% of the registered voting members who (according to the plaintiff) signed the “request”, for their calling of a meeting. In those circumstances it does not seem to me that it would have been “impracticable”[4] to call a meeting in any other way than by a Court order. I would therefore not have been satisfied that the requirements of s.249G had been made out, nor, in my discretion, that being so, would I have ordered a meeting by way of a mandatory injunction under s.1324 of the Act.

   [4]See Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACLC 768, 772; Beck v TuckeyPty Ltd [2004] NSWSC 357 and cases therein cited.

1. In addition, there was sufficient evidence before the Court that Carlton is already contractually bound by virtue of an agreement with the Australian Football League to conduct its home games at venues other than Optus Oval for the years 2005 to 2014.[5]  In my opinion, such a meeting would therefore probably be an exercise in futility.  For that reason also, in the Court’s discretion, I would not have made the order sought.

   [5]It is appropriate, although strictly irrelevant for  present purposes, to note that the Directors had informally consulted the membership by way of an information and recommendation brochure which asked for a written response and which attracted a large affirmative response from the wider membership for the policy of the Directors.

1. Finally, Mr Glick advanced a substantial argument, supported by considerable authority,[6] that a Court would not order a meeting where the only resolutions proposed could not be effectively or lawfully passed by the members.  Having regard to the provisions of Carlton’s constitution,[7] which exclusively vested the management of the business and affairs of Carlton in its Board of Directors, he submitted that the members had no power[8] to resolve to require the Directors not to sign a binding agreement or to require them to ensure that Carlton played a minimum of six home games at Optus Oval.  Mr Glick also referred to authority[9] which supported the proposition that the members, under a constitution of the kind possessed by Carlton, had no power to pass a vote of no confidence in the Directors. The voting members had power to alter the constitution of Carlton or to remove directors,[10] he said, but this power had not been sought to be exercised.  In my opinion, these were very strong arguments but in the circumstances of this case it is unnecessary to determine them.

   [6]National Roads & Motorists’ Association v Parker (1986) 6 NSWLR 517, 521-523; Queensland Press Ltd v Academy Investments No.3 Pty Ltd [1988] 2 Qd R 575, 578-579;  Windsor v The National Mutual Life Association of Australasia Ltd (1992) 7 ACSR 210, 220; NRMA Ltd v Snodgrass (2001) 37 ACSR 382; NRMA Ltd v Snodgrass (2001) 39 ACSR 260, 262; Hopkins Professional Services Pty Ltd v Foyster Holdings Pty Ltd (2001) 39 ACSR 519, 520-521.

   [7]See cl.53 of Carlton’s constitution.

   [8]See Automatic Filter Self-Cleansing Syndicate Co. Ltd v Cuninghame [1906] 2 Ch 34, 38-9; National Roads & Motorists’ Association v Parker (1986) 6 NSWLR 517, 518, 521; Stanham v National Trust of Australia (NSW) (1989) 15 ACLR 87, 91; Queensland Press Ltd v Academy Investments No.3 Pty Ltd [1988] 2 Qd R 575, 575, 577-579; Poliwka v Heven Holding Pty Ltd (1992) 8 ACSR 747, 787;

   [9]Stanham v National Trust of Australia (NSW) (1989) 15 ACLR 87, 91-92.

   [10]See Automatic Self-Cleansing Filter Syndicate Ltd v Cuninghame [1906] 2 Ch 34, 38-9; The Commissioner of Taxation of the Commonwealth of Australia v Commonwealth Aluminium Corporation Ltd (1980) 143 CLR 646, 661; Hopkins Professional Services Pty Ltd v Foyster Holdings Pty Ltd (2001) 39 ACSR 519, 519, 521; NRMA Ltd v Snodgrass (2001) 39 ACSR 260, 262; Ford’s Principles of Corporations Law p. 7135.

1. Accordingly, the originating process is dismissed with costs.