Re Donkey Wheel Ltd - [2017] VSC 634

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2016 01759

IN THE MATTER OF DONKEY WHEEL LTD (ACN 109 045 650)
BETWEEN:
MARK JONATHAN IRVING BRUNNER	Appellant
AND
DONKEY WHEEL LTD (ACN 109 045 650)	Respondent

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JUDGE:	Kennedy J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 October 2017
DATE OF JUDGMENT:	8 November 2017
CASE MAY BE CITED AS:	Re Donkey Wheel Ltd
MEDIUM NEUTRAL CITATION:	[2017] VSC 634
JUDGMENT APPEALED FROM:	[2017] VSC 462 (Randall AsJ)

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APPEAL – Appeal from Associate Judge under Supreme Court (General Civil Procedure) Rules 2015 r 77.06 – Directors resolving to admit a person to membership based upon the nomination and/or wishes of a deceased member – Constitution required that applicant for membership must be proposed by another member and signed by the proposer – Validating Order made under s 1322(4)(a) that admission as a member not invalid – Whether error made in making validating order on basis that no substantial injustice for purposes of Corporations Act 2001 (Cth) s 1322(6)(c) – No error – No substantial injustice if discretion re-exercised – appeal dismissed

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr M C O’Connor	Hicks Oakley Chessell Williams
For the Respondent	Mr S M Anderson QC with Mr E J Batrouney	Lewis Holdway Lawyers

HER HONOUR:

This is an appeal against a decision of Associate Justice Randall of this Court delivered on 11 August 2017 (Reasons),[1] brought pursuant to r 77.06 of the Supreme Court (General Civil Procedure) Rules 2015.
[1]IMO Donkey Wheel Limited [2017] VSC 462.

The appeal is brought by a member of the respondent company Donkey Wheel Ltd (Donkey Wheel), Mark Jonathon Irving Brunner (Jon Brunner).

The proceeding below concerned two aspects of the governance arrangements of Donkey Wheel:

(a) whether a Ms Jane Tewson should be admitted as a member of Donkey Wheel; and

(b) whether the appellant, Jon Brunner, was a director of Donkey Wheel.

On 11 August 2017, his Honour declared, pursuant to s 1322(4)(a), that the admission of Ms Tewson as a member of Donkey Wheel was not invalid by reason of any contravention of a provision of the Corporations Act 2001 (Cth) (Corporations Act) or a provision of Donkey Wheel’s constitution (the Constitution) (Order 1). He also declared that Jon Brunner ceased to be a director of Donkey Wheel with effect from 30 June 2010 (Order 2).

The appellant originally appealed Order 1 on eight grounds and Order 2 on one ground.

However, during the course of the hearing, the case was reframed such that grounds 4, 5 and 9 were formally abandoned.[2] It followed that Order 2 was no longer the subject of any challenge such that it was accepted that Jon Brunner ceased to be a director from 30 June 2010.
[2]Transcript of Proceedings (12 October 2017) 46.

In relation to Order 1, Ms Tewson made application for membership on 21…

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.

Continue reading Re Donkey Wheel Ltd

Details

AGLC: Re Donkey Wheel Ltd [2017] VSC 634
Case: [2017] VSC 634
Decision Date: 8 November 2017

CaseChat Overview and Summary

The appeal before the court concerned the decision of an Associate Judge regarding the admission of a member into Donkey Wheel Ltd. The company's constitution mandated that any applicant for membership must be proposed by another member and the proposer must sign the application. The deceased member, who had previously held shares in the company, had nominated an individual for membership. The directors resolved to admit this person based on the deceased's wishes. However, there was a procedural error as the deceased member was no longer a member at the time of the nomination. Despite this, the directors applied for a validating order under section 1322(4)(a) of the Corporations Act 2001 (Cth), which was granted by the Associate Judge. The original members appealed this decision.

The primary legal issue the court needed to address was whether the Associate Judge erred in making the validating order by not considering that there was no substantial injustice for the purposes of section 1322(6)(c) of the Corporations Act. The court had to determine if the decision to grant the validating order was made in error and whether there was indeed no substantial injustice in re-exercising the discretion under the Corporations Act. The court also examined the principles of procedural fairness and the objective of ensuring justice and fairness in corporate governance.

The court found no error in the Associate Judge's decision. It held that the validation of the admission of the new member did not result in any substantial injustice. The court reasoned that the objective of the Corporations Act, which is to ensure justice and fairness, was achieved by the validating order. The admission of the new member aligned with the deceased member's wishes and the spirit of the company's constitution. The court further concluded that even if the discretion were to be re-exercised, it would not result in substantial injustice to the existing members. Consequently, the appeal was dismissed.

No further orders were made by the court as the appeal was dismissed.

Orders