Shuren & Fang
[2023] FedCFamC1F 712
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Shuren & Fang [2023] FedCFamC1F 712
File number MLC 3815 of 2023 Judgment of WILSON J Date of judgment 24 August 2023 Catchwords FAMILY LAW – COMPANY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – shareholders’ meeting of a company in which the husband’s company and the wife’s company are shareholders along with other shareholders – husband and wife were directors – husband purportedly calling a shareholders’ meeting to remove the wife as a director – requisite notice not given – requisite notice defective in several respects – no actual meeting held – wife challenging validity of meeting and the upshot of it, namely her purported removal as a director – husband asserting defects alleged by the wife were procedural only resulting in no substantial injustice to the wife – s 1322 of the Corporations Act considered – held, substantive irregularities occurred – relief granted as sought by wife. Legislation Corporations Act 2001 (Cth) Part 2G.2, ss 45A(1), 135, 203C, 249A, 249A(2), 249C, 249D, 249H , 249H(1), 249J, 249J(4), 249L, 249R, 249S, 249T, 250J, 251A, 1304, 1322, 1322(2), 1322(3A), 1322(3AA), 1322(4) and 1322(6)
Family Law Act 1975 (Cth) s 79A
Cases cited American Delicacy Co Ltd v Heath (1939) 61 CLR 45
Australia Hydrocarbons NL v Green (1985) 10 ACLR 72
Baillie v Oriental Telephone and Electric Company Ltd [1915] 1 Ch 503
BI Construction Pty Ltd v Shad [2010] NSWSC 484
Bulfin v Bebarfalds Ltd (1938) 38 SR (NSW) 423
Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd (2005) 194 FLR 322
Deputy Commissioner of Taxation v Shi (2020) 273 CLR 235
Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956
Eaby & Speelman [2015] FamCAFC 104
Elderslie Finance Corporation Ltd v Australian Securities Commission (1993) 11 ACSR 157
ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626
ERS Engines Pty Ltd v Wilson (1994) 35 NSWLR 193
Fraser v NRMA Holdings Ltd (1994) 52 FCR 1
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
Gambotto v WCP Ltd (1995) 182 CLR 432
Goldex Mines Ltd v Revill (1974) 54 DLR (3d) 672
In the matter of Boart Longyear Ltd [2017] NSWSC 756.
Jackson v The Munster Bank Ltd (1884) 13 LR Ir 118
Jones v Dunkel (1959) 101 CLR 298
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2005) 55 ACSR 583
Marvel v Marvel (2010) 43 Fam LR 348
Nenna v Australian Securities and Investments Commission (2011) 198 FCR 32
Pacific Coast Coal Mines Ltd v Arbuthnot [1917] AC 607
Peel v London and North Western Railway [1907] 1 Ch 5
Peters’ American Delicacy Co Ltd v Heath (1939) 61 CLR 457
Primary Securities Ltd v Aurora Funds Management Ltd [2020] NSWCA 230
Primelife Corporation Ltd v Aevum Ltd (2005) 53 ACSR 283
Re Chevron Furnishers Pty Ltd (in liq) (1992) 8 ACSR 726
Re NRMA Ltd [2003] FCAFC 206
Re PW Saddington & Sons Pty Ltd (1990) 1 ACSR 158
Redmond & Redmond [2014] FamCAFC 155
SS & AH [2010] FamCAFC 13
Stratford Sun Ltd v OM Holdings Ltd (No 5) (2011) 198 FCR 372.
Super John Pty Ltd v Futuris Rural Pty Ltd (1999) 32 ACSR 398
Tiessen v Henderson [1899] 1 Ch 861869
Vaspip 2 Pty Ltd v Thorn Group Ltd [2020] VSC 700
Weinstock v Beck (2013) 251 CLR 396
Whitehouse v Capital Radio Network Pty Ltd [2002] TASSC 78
Division Division 1 First Instance Number of paragraphs 120 Date of last submission 27 June 2023 Date of hearing 27 June 2023 Place Melbourne Counsel for the applicant Mr L. Glick KC Solicitor for the applicant Australian Legal Advisory Centre Counsel for the respondent Mr M. Bartfeld KC with Mr A. Baker and Ms H. Renwick Solicitor for the respondent Aston Legal Group ORDERS
MLC 3815 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS SHUREN
Applicant
AND MR FANG
First Respondent
ORDER MADE BY
WILSON J
DATE OF ORDER
24 AUGUST 2023
THE COURT ORDERS THAT –
1.B Pty Ltd is joined as the second respondent in this proceeding.
2.C Pty Ltd is joined as the third respondent in this proceeding.
3.I declare that the purported removal of the applicant as director and secretary of B Pty Ltd, which the husband registered with the Australian Securities and Investments Commission in 2023, is void and of no effect.
4.Forthwith the husband must do all things and execute all notices to notify Australian Securities and Investments Commission that the applicant is a director and secretary of B Pty Ltd.
5.Pending further order of this court the first respondent and B Pty Ltd must –
(a)take no further steps to remove the applicant as director and secretary of B Pty Ltd; and
(b)not obstruct or in any other way impede the access that the applicant has to the books and records of B Pty Ltd.
6.The further hearing of this proceeding is adjourned to 10:00am on 18 September 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
By application in a proceeding filed 22 May 2023, the wife sought a declaration that her purported removal as a director and secretary of B Pty Ltd was of no effect. She also sought orders requiring the husband to do all things and execute all documents to notify the Australian Securities and Investments Commission (“ASIC”) that she is currently a director and secretary of B Pty Ltd.
The husband opposed the orders sought by the wife contending that the irregularities under the Corporations Act about which the wife complained were procedural only and, for the purposes of s 1322(4) of the Corporations Act, that she was and remains validly removed from office as a director and the secretary of B Pty Ltd.
As these reasons disclose, in my view at no stage was a valid meeting held to remove the wife as a director and the secretary of B Pty Ltd. Her purported removal as a director and the secretary of B Pty Ltd was a nullity. In my judgment, s 1322(4) of the Corporations Act is not available in the circumstances of this case.
RELEVANT BACKGROUND
In support of this contested interlocutory application, the wife indicated in her outline of case dated 27 June 2023 that she relied on nine affidavits. The wife made affidavits dated 12 April 2023, 10 May 2023, 22 May 2023, 14 June 2023 and 26 June 2023.
It was common ground that B Pty Ltd at all relevant times carried on business.
The husband and wife were each born in Country D, they married in Country D in 1986, they have two adult children (one born in Country D, the other born in Australia), they divorced in early 2021, thereafter continuing to live together until an episode of family violence in February 2023 on which date they finally separated. In this litigation the wife seeks orders under s 79A of the Family Law Act setting aside property alteration orders made by a registrar on 1 October 2020 and 9 February 2016.
Relevant to this interlocutory application, the wife’s 12 April 2023 affidavit recorded the information of certain facts. Those included –
(a)B Pty Ltd owns and operates developments at E Street, Suburb F and at G Street, Suburb H;
(b)the wife was a director of B Pty Ltd and she is currently a shareholder in it;
(c)on 7 March 2023 the husband purported to call a meeting of shareholders in B Pty Ltd without notifying the wife and on 9 March 2023 the wife learned that she had been allegedly removed as a director of B Pty Ltd;
(d)two shareholder in B Pty Ltd told the wife that the husband told those two shareholders that their physical wellbeing could be at risk unless they agreed to remove the wife as a director; and
(e)the sole purpose of the husband removing the wife as a director of B Pty Ltd is so that he can manage the affairs of B Pty Ltd in such fashion as to direct funds belonging to B Pty Ltd into his personal accounts or entities that will be difficult to trace.[1]
[1] Paragraph 99 of the wife’s 12 April 2023 affidavit.
In paragraph 95 of her 12 April 2023 affidavit the wife deposed to the events of 7 March 2023. She stated that on 7 March 2023 the husband called a shareholders’ meeting of B Pty Ltd without notifying the wife. She deposed to receiving notice of the meeting on 9 March 2023, after the meeting had allegedly been conducted at which shareholders had agreed to remove her as a director. The wife exhibited a translated version of the notice of meeting. The certified translation of the notice was as follows –
Notice of meeting of Shareholders of [B Pty Ltd]
Regarding a resolution to remove [Ms Shuren] from her director position in [B Pty Ltd], [Mr Fang], a shareholder and the executive director of the company, hereby give notice to all shareholders of [B Pty Ltd] for holding a general meeting of shareholders in the form of a meeting or teleconference with the agenda of removing [Ms Shuren] from her director position in [B Pty Ltd]. The reasons will be clearly expressed to all shareholders at the meeting and the shareholders will vote in person to decide. [Ms Shuren], shareholder and director of the company, and [Mr Fang], the meeting convener and executive director, will not attend the meeting or be contacted in any form due to special reasons, so the company will send the meeting notice and the voting form for shareholder resolution to [Ms Shuren].
Date 9 March 2023
The wife also exhibited to her 12 April 2023 affidavit a letter from her solicitors dated 14 March 2023 addressed to the husband’s solicitors. In that letter, the wife’s solicitors put the husband’s solicitors on notice –
(a)that the wife maintained that the husband’s attempts to remove the wife as a director of B Pty Ltd was ineffective and a nullity by reason of the absence of proper notice having been given; and
(b)that no attempt should be made to register any documents with ASIC which purported to record that the wife was removed as a director of B Pty Ltd.
The wife exhibited a form 484 (change to company details) dated March 2023 which purported to record that the wife ceased to be a director of B Pty Ltd in March 2023. She deposed to receiving that form 484 on 8 April 2023 after her solicitors conducted an ASIC search of B Pty Ltd.
Further, the wife exhibited to her 12 April 2023 affidavit a document from J Bank. The borrower on that J Bank document was recorded as B Pty Ltd and the guarantors were recorded as being the husband and the wife. The wife deposed to the husband having arranged the valuation of B Pty Ltd’s financial accommodation with J Bank. She deposed to declining to execute the variation of loan facilities documentation that J Bank had provided. Under the solvency declaration component of the documentation provided by J Bank, the client (B Pty Ltd) declared that no proceeding was pending in any court against B Pty Ltd or against either guarantor, namely the husband and wife. This litigation may indicate that the solvency declaration cannot validly be given, although it is unnecessary to say more of that at present.
The wife’s 10 May 2023 affidavit addressed issues relating to her purported removal as a director of B Pty Ltd. She deposed to demanding the husband to reinstate her as a director of B Pty Ltd and that the husband did not respond to that demand. She further deposed –
(a)in paragraph 24 of that affidavit that the sole reason the respondent sought to remove her is to conceal what he is doing with the proceeds of sale of properties owned by B Pty Ltd;
(b)in paragraph 24 of that affidavit that the purported shareholders’ meeting and its resolution to remove the wife as a director of B Pty Ltd were not proper or valid and should be set aside;
(c)in paragraph 26 of her affidavit that the resolution purporting to remove her as a director of B Pty Ltd was made with the improper purpose of undermining her legitimate interests in the company; and
(d)in paragraph 28 of that affidavit that she seeks an order reinstating her as a director of B Pty Ltd so that she can monitor sales and in the process protecting her legitimate interests in B Pty Ltd’s assets.
The wife’s 22 May 2023 affidavit also incorporated issues relevant to her purported removal from the board of B Pty Ltd. Of significance were the following matters to which she deposed –
(a)B Pty Ltd was incorporated in 2007 and has no constitution;[2]
(b)she had been a director of B Pty Ltd and its secretary since its incorporation;
(c)when B Pty Ltd was incorporated, the wife held all of the 100 issued shares in the capital of B Pty Ltd, although B Pty Ltd’s issued shareholding was later increased to 200 and the wife’s company C Pty Ltd acquired 45 of the 200 issued shares in B Pty Ltd;
(d)another holder of 45 of the issued shares in B Pty Ltd is K Pty Ltd of which the husband is the sole director and shareholder;
(e)B Pty Ltd is the trustee of the B Unit Trust, settled by deed dated 2007 in which the wife is the sole unit holder; and
(f)other shareholders in B Pty Ltd include L Pty Ltd and M Pty Ltd.[3]
[2] B Pty Ltd does in fact have a constitution.
[3] While the wife did not depose to this, two other shareholders in B Pty Ltd exist, namely R Pty Ltd and Q Pty Ltd.
It will be recalled that the wife deposed to receiving no notice from the husband about any meeting of shareholders of B Pty Ltd on or about 7 March 2023. However, the wife deposed in paragraph 12 of her 22 May 2023 affidavit that Ms N of L Pty Ltd and Ms P of M Pty Ltd were contacted by the husband on 7 March 2023 and that the husband requested each to sign documentation in Country D language for the wife’s removal as a director of B Pty Ltd. The wife deposed to receiving on her mobile telephone text messages on 9 March 2023 about her removal from the board of B Pty Ltd, although she deposed that none of the messages she received on 9 March 2023 emanated from the husband or from B Pty Ltd. The text messages the wife received on 9 March 2023 were written in Country D language. The document transmitted on 9 March to the wife was in the form of exhibit MS11 to her 12 April 2023 affidavit, the translated version of which has already been set out at paragraph 8 above. In the version sent to M Pty Ltd of the text message with the notice concerning the removal of the wife as a director of B Pty Ltd, no date was incorporated whereas the version exhibited as MS11 and the version provided to Ms N of L Pty Ltd bore the date 9 March 2023.
In paragraph 13 of her 22 May 2023 affidavit the wife deposed (in reality she made a submission on point rather than deposing to a fact on point) that the notice (exhibit MS11) did not state when the meeting would be held and she understood (although she did not give the basis of her understanding) that 21 days notice was required.
She deposed in paragraph 14 of her 22 May 2023 affidavit that no actual meeting of shareholders in B Pty Ltd was convened. She said in paragraph 15 of her affidavit that no resolution was circulated for the wife’s removal as a director signed by all members and that in particular neither C Pty Ltd nor she signed any such resolution.
The wife deposed to being wholly excluded from participating in the management of B Pty Ltd.
She deposed in her 26 June 2023 affidavit to being a guarantor in respect of all commercial loans advanced to B Pty Ltd from 2007 and that, under B Pty Ltd’s existing finance facility with J Bank, she remains a guarantor until 2025.
In support of the wife’s application Ms P made an affidavit on 7 June 2023. At all relevant times she was the director of M Pty Ltd, the holder of 20 ordinary shares of the 200 issued shares in the capital of B Pty Ltd. She deposed to receiving a telephone call on 7 March 2023 from the husband whose mobile telephone number she recorded. Slightly earlier on the same day she deposed to having received a text message from the husband, a copy of which she exhibited. It was in Country D language yet she deposed that the text stated that notice was given of a shareholders’ meeting for the removal of the wife. Ms P stated in paragraph 3 of her affidavit that the husband told her that the wife had a boyfriend and that all B Pty Ltd properties could be moved into her name, which was a risk. Ms P stated that the husband told her that he and Ms P should remove the wife as a director of B Pty Ltd. Ms P deposed to the husband then telling Ms P that he wanted Ms P to sign a consent, although Ms P did not say to what the consent related. She deposed that she agreed. In the mid-afternoon on 7 March 2023, Ms P said a person called Ms S attended at the place where Ms P was then staying, she produced a consent form which Ms P then signed but that Ms S refused to provide to Ms P a copy of the signed consent form. The husband produced a signed copy of the consent form to Ms P on 10 March 2023.
Ms P deposed to there being no teleconference on 7 March 2023, contrary to the husband’s assertions that such a teleconference was in fact held, allegedly involving all shareholders of B Pty Ltd. Ms P deposed in paragraph 8 of her affidavit as follows –
If another resolution for removal of [Ms Shuren] as director and secretary was put forward by [Mr Fang] and a properly convened meeting of shareholders was held to remove her, [M Pty Ltd] would vote against it.
Ms P deposed to never being informed of the result of her giving consent.
Ms N made an affidavit on 7 June 2023. She deposed to being the director of L Pty Ltd, the holder of 50 of the 200 issued shares in the capital of B Pty Ltd. She deposed to her receiving a telephone call from the husband in early March 2023 calling Ms N to a meeting at B Pty Ltd’s offices because, so Ms N said the husband stated, the wife had a boyfriend and that the husband wanted Ms N to stand on the husband’s side. Ms N said she was shocked and left without agreeing to anything. Ms N stated that at 12:52pm on 7 March 2023 she received a text message from Ms S concerning the removal of the wife as a director of B Pty Ltd. Ms N exhibited the message she received although it was in Country D language and meaningless unless the reader was literate in Country D language.
Ms N deposed to receiving a telephone call from Ms S on 8 March 2023 who told Ms N that all other shareholders of B Pty Ltd had signed consent documents to remove the wife as a director of B Pty Ltd with the consequence that a majority had consented to the wife’s removal as a director of B Pty Ltd. Ms N said that Ms S told Ms N that Ms S wanted to see Ms N. The meeting was arranged at a carpark nearby. Ms N said she duly met Ms S there at which Ms S gave Ms N a voting form. Ms N said she signed it because she feared what may happen unless she stood with the husband.
Ms N deposed to the husband telephoning her on 13 March 2023. Ms N stated that the husband told her he was angry with Ms N, saying that unless Ms N stood with the husband he would only pay half the debts the husband and wife owed Ms N and that Ms N could pursue the wife for the balance. Ms N said the husband also told her that he would also claim a 6% management fee, in circumstances where there never had been a 6% management fee.
Ms N told the wife she (Ms N) signed a consent form to remove the wife as a director because Ms N felt very threatened by the husband.
Ms N deposed to there never being a teleconference at which all shareholders present cast a vote in favour of the wife’s removal.
An accredited translator by the name of Dr T deposed to having undertaken various tasks on the instructions of the wife’s solicitors between 1 March 2023 and date. He translated various documents and exhibited the versions of those documents as translated into the English language. The document he exhibited as exhibit “C” was the notice of meeting of shareholders of B Pty Ltd. It was in the form set out above at paragraph 8. The document signed by Ms P was exhibited by Dr T (in an unsigned form) as exhibit D. The document exhibited by Ms P as exhibit “MP1” to her affidavit was translated by Dr T and became exhibit E to Dr T’s affidavit. The document was headed “Tuesday 12:52”. It read as follows –
Notice of Shareholders Meeting of [B Pty Ltd]
Regarding the resolution of removing [Ms Shuren] from the director position of [B Pty Ltd], due to special reasons, the meeting cannot be held in person or via video, instead, [Mr Fang], the executive director, will convey the reasons and significance of the resolution to the shareholders of [B Pty Ltd] in the form of telephone or face-to-face meeting. After you know all the reasons for this resolution, please sign on the voting form for your decisions in the next step.
[B Pty Ltd]
Exhibit G to Dr T’s affidavit was a photograph in the nature of a snapshot, translated, of the mobile telephone version of that message. It was dated 7 March at 12:52.
THE HUSBAND’S EVIDENCE
The husband filed two affidavits on which he relied, the first made on 11 May 2023 and the second on 5 June 2023. The husband also relied on the affidavit of Ms U made 26 June 2023 as well as the affidavit of Mr V made on 8 June 2023.
In his affidavit made 11 May 2023, the husband addressed evidentiary particulars beyond B Pty Ltd. Those included the following –
(a)he has been in a relationship with his current partner since 2018 with whom the husband has a daughter (born in 2021) and a step daughter (born in 2012); and
(b)he, his partner and his partner’s parents live together.
The husband’s affidavit made 5 June 2023 provided other information in respect of this application. He deposed to the following –
(a)B Pty Ltd’s shareholding is owned as to 45 shares by K Pty Ltd, C Pty Ltd as to 45 shares, Q Pty Ltd as to 20 shares, R Pty Ltd as to 20 shares, M Pty Ltd as to 20 shares and L Pty Ltd as to 50 shares;
(b)B Pty Ltd owns 35 properties across two sites;
(c)after the wife obtained an intervention order against the husband, the husband became concerned about how B Pty Ltd would continue to conduct business;
(d)the other shareholders in B Pty Ltd were aware of the existence of the intervention order so after a discussion with the shareholders an urgent general meeting of shareholders was convened to vote on the issue of whether the wife was a fit and proper person to maintain her position as a director and the secretary of B Pty Ltd;
(e)on 7 March 2023 notices were sent to all shareholders including C Pty Ltd and a general meeting of shareholders of B Pty Ltd was convened in accordance with B Pty Ltd’s constitution;
(f)as the shareholders do not understand English, a Country D language voting form was specifically drafted to enable voters to clearly express their decisions;
(g)a hard copy of the notice to shareholders of the meeting and of the voting form was addressed to C Pty Ltd and sent;
(h)all shareholders attended the meeting by teleconference save for the wife’s company C Pty Ltd;
(i)the shareholders present at the meeting, making up 77.5% of the shareholding in B Pty Ltd, voted at the meeting, unanimously agreed to removing the wife as a director;
(j)the husband disputed the assertion that he pressured, threatened or coerced the shareholders in their voting;
(k)the shareholders’ meeting of B Pty Ltd was held on 7 March 2023 but the husband called on shareholders to return their votes by 10 March 2023;
(l)he denied he and the wife were jointly involved in the day-to-day management of B Pty Ltd and he asserted that only he managed B Pty Ltd; and
(m)he sought orders for the dismissal of the wife’s application in a proceeding.
B Pty Ltd’s constitution was exhibited by the husband as exhibit MF1 to the husband’s 5 June 2023 affidavit. Pursuant to s 135 of the Corporations Act, various replaceable rules were adopted by B Pty Ltd including s 249C which provides that a director may call a meeting of the company’s members, s 249J(4) which provides that a notice of meeting sent electronically is taken to be given on the business day after it is sent, s 249T which provides for the quorum for a meeting of members and s 250J which makes provision for how voting is carried out.
The representatives of R Pty Ltd and Q Pty Ltd did not give evidence on this application. Their shareholding aggregated 40 of the 200 issued shares in the capital of B Pty Ltd, that is to say 20%.
THE CONFLICTING NATURE OF THE EVIDENCE
On many matters the evidence adduced on behalf of the wife conflicted with the evidence adduced on the same issue by the husband. This was a contested interlocutory application. Affidavit evidence has been put forward yet none of it has been challenged upon any witness being cross-examined. Authority binding on me[4] has held that a trial judge in my shoes should exercise considerable restraint before determining contested factual issues on the hearing of a contested interlocutory application where the evidence has not been tested. That said, Mr Glick KC for the wife submitted that even on the state of the evidence as it presently stands, the conclusion may be properly reached that no meeting occurred, whether on 7 March 2023 or at all, as was required by the Corporations Act, in order for the wife to be removed as a director of B Pty Ltd.
[4] Eaby & Speelman [2015] FamCAFC 104, Marvel v Marvel (2010) 43 Fam LR 348, SS & AH [2010] FamCAFC 13 and Redmond & Redmond [2014] FamCAFC 155, to name but a few.
On behalf of the wife, counsel contended that s 203C(a) of the Corporations Act provided that a proprietary company[5] may by resolution remove a director from office. A fact in issue on this application was whether at any stage a valid resolution was put for the removal of the wife as a director of B Pty Ltd. Another fact in issue was whether any proper resolution, if validly put, was the subject of proper voting.
[5] B Pty Ltd is a proprietary company – s 45A(1) of the Corporations Act and exhibit MF01 to the affidavit of the husband made 5 June 2023.
Counsel for the wife contended that Part 2G.2 of the Corporations Act governed meetings of members of companies, of which s 249A formed part. Section 249A(2) was relevant because the husband, Ms N and Ms P each deposed to the husband sending a message electronically that relevantly provided that “due to special reasons, the meeting cannot be held in person or via video …”. The message went on to state that “instead” (I infer instead of an in person meeting) the husband would convey the reasons and the significance of the resolution to shareholders by telephone or face-to-face meeting.
Other than the husband, no deponent disputed that a meeting was not in fact held on 7 March 2023.
Returning to s 249A(2) of the Corporations Act, it is competent for a company to pass a resolution without a general meeting of members being held if all (repeat, “all”) members entitled to vote on the resolution sign a document containing a statement that they (that is to say, all members entitled to vote on the resolution) are in favour of the resolution set out in the document. Here, there was no evidence that such a document containing the resolution was signed by the wife, as representative of C Pty Ltd, Ms N, as representative of L Pty Ltd, the representative of Q Pty Ltd or the representative of R Pty Ltd.
A point not specifically argued was whether the notice to members contained a “resolution”. The document described as notice of meeting of shareholders of B Pty Ltd was not expressed in conventional terms where a resolution is put forward, usually involving wording to the effect that members will be invited to consider and if thought fit, to pass a resolution in a particular form. Instead, the notice of meeting of shareholders was discursive, not stating when the general meeting would be held. It stated that the “agenda” of the meeting was removing the wife from “her director position.” The members were told by the notice that “all shareholders will vote in person to decide”.
Counsel for the wife submitted that s 249H(1) of the Corporations Act provided that at least 21 days notice must be given of a meeting of a company’s members unless a lesser period is prescribed by the relevant company’s constitution. B Pty Ltd’s constitution does not contain any provision for a period less than 21 days notice to be given to members.
Counsel for the wife submitted that s 249J of the Corporations Act contained express stipulations of the way notice of the meeting of members was to be given to members. Counsel for the wife further submitted that s 249L of the Corporations Act made other provision for the contents of the notice, expressed in mandatory terms by the use of the word “must” in s 249L(1). The notice was required to state the date and time for the meeting, the location or if electronic, sufficient information to allow members to participate electronically. The notice was required to state the general nature of the business to be considered and the notice was required to make provision for proxy appointments. The notice dated 9 March 2023 contained very little by way of content that satisfied the requirements of s 249L of the Corporations Act, despite the mandatory nature of the terms of s 249L.
Counsel for the wife relied on ss 249S and 249T. Section 249S requires the company (B Pty Ltd) to give its members a reasonable opportunity to participate in the meeting. That means that the meeting must be at a time that is reasonable, having regard to whether the meeting is to be held at one venue, at more than one venue or electronically. Section 249T made provisions about the meeting’s quorum. Counsel for the wife emphasised the requirement of s 249S that a company holding a meeting of its members must give the members entitled to attend the meeting as a whole[6] a reasonable opportunity to participate in the meeting.
[6] My emphasis.
Counsel for the wife relied on s 251A of the Corporations Act which required B Pty Ltd to keep signed minutes of resolutions. Mr Glick KC contended that no minutes of the events of 9 March 2023 were disclosed by the husband and so it must be inferred that no minutes were kept with the consequence that the absence of minutes enables this court to be more confident that no such meeting was in fact held.
Counsel for the wife addressed the suggestion advanced by the husband that he separately telephoned other directors of B Pty Ltd’s members by way of ring-around. He submitted that a meeting required a quorum and the ability of members as a whole to participate, as ss 249S and 249T provide. So far as a virtual meeting was concerned, Mr Glick KC argued that a virtual meeting is not permitted unless the constitution of the relevant company expressly requires or permits it, as s 249R(c) states, and nothing in B Pty Ltd’s constitution bears on the issue.
Counsel for the wife relied on the stipulation of s 249H, namely that at least 21 days notice of the meeting must be given. He said the purported meeting notice allegedly given on 7 March contravened that requirement. Mr Glick said the meeting allegedly held the next day by teleconference was irregular. He contended that the husband recognised the irregularity because the husband sought relief pursuant to s 1322 of the Corporations Act by “reason of the contravention of s 249H” of the Corporations Act.
So far as the notice of meeting given on 9 March 2023 was concerned, counsel for the wife submitted that no admissible evidence existed about how the 9 March 2023 notice was given. Referring to exhibit MF2 to the husband’s affidavit, Mr Glick contended that the husband simply exhibited text messages in Country D language yet no translations were adduced in evidence by him. So far as exhibit MF2 was concerned, counsel for the wife submitted that the screenshot thereby captured was no more than a partial version of the screenshot captured by the wife in her exhibit MS29 to her 22 May 2023 affidavit. Her counsel submitted that in paragraph 12 of her 22 May 2023 affidavit, the wife deposed that she received the message depicted in exhibit MS29 on 9 March 2023 yet no such message emanated from the husband. Counsel for the wife said that having regard to the husband’s exhibit MF2 being dated 9 March 2023 (but without translation), exhibit MS11 to the wife’s affidavit made 12 April 2023 is in fact in a translated form and it revealed that the notice was dated 9 March 2023 whereas the husband asserted that the meeting was held on 7 March 2023.
Counsel for the wife argued that the notice dated 9 March 2023 suffered from defects of non‑compliance with s 249L of the Corporation Act. Specifically, Mr Glick contended that the 9 March 2023 notice did not –
(a)set out where the B Pty Ltd meeting was to be held;
(b)set out when the B Pty Ltd meeting was to be held;
(c)set out whether virtual meeting technology was to be used nor was information given about any such link; and
(d)contain a statement as to appointment of proxies.
Further, Mr Glick KC argued that if notice of meeting was given on 9 March 2023, pursuant to s 249J(4) of the Corporations Act, such notice was to be taken to having been given one business day after the notice was sent, namely, 10 March 2023.
The fact that translated documents were not put in evidence by the husband invited counsel for the wife to submit that s 1304 of the Corporations Act was contravened by the husband. That section provides, in effect, that where under the Corporations Act a person is required to lodge an instrument and the instrument is not written in the English language, the person must lodge at the same time a certified translation of the instrument in the English language. Counsel for the wife called in aid the decision of the Court of Appeal of the Supreme Court of New South Wales in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd,[7] submitting that the husband’s failure to provide the translation of the notice of meeting dated 9 March 2023 further strengthened the inference that no meeting in fact occurred.
[7] (1991) 22 NSWLR 389.
Additionally, the wife’s counsel submitted that if the meeting of shareholders of B Pty Ltd had been properly convened, and if notice of it had been regularly and properly given to all shareholders, a substantial block of the shareholders of B Pty Ltd would not have voted in favour of the resolution to remove the wife as a director of B Pty Ltd. They argued that if Ms N (whose company held 50 of the 200 issued shares in the capital of B Pty Ltd) and if Ms P (whose company held 20 of the 200 shares in the issued capital of B Pty Ltd) along with the wife (whose company owned 45 of the issued shares in the capital of B Pty Ltd) had been properly informed of a properly convened meeting of shareholders of B Pty Ltd, then those interests whose holdings aggregated 115 of the 200 issued shares in the capital of B Pty Ltd would have voted against the resolution and the resolution would have failed.
Counsel for the wife addressed the relief sought by the husband under s 1322(4)(a) of the Corporations Act in respect of B Pty Ltd’s failure to give 21 days notice of the alleged meeting. They argued that the irregularities went significantly beyond the failure to give 21 days notice of the meeting. Counsel for the wife argued that the irregularities included the failure to convene a meeting at all, that the alleged meeting on 7 March was held before the notice and that the 9 March 2023 notice was wholly deficient. Counsel for the wife recognised, as they had to, that s 1322 is a remedial provision, as was held by the High Court in Weinstock v Beck.[8] There, French CJ held as follows –
Section 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance and that it is not in the public interest that the validity of decisions made in relation to corporations be unduly vulnerable to innocent errors which may be corrected without substantial injustice to third parties. In accordance with its evident purpose, s 1322(4)(a) is to be construed broadly and applied pragmatically, principally by reference to considerations of substance rather than those of form.
[8] (2013) 251 CLR 396, 421 (at [60]).
Mr Glick argued that unless the elements of s 1322(6) were satisfied, relief may not be granted. In s 1322(6) is reposed, so he said, the provision that the court must not make an order unless it is satisfied that “no substantial injustice has been or is likely to be caused to any person”. Counsel for the wife argued that the wife has and will continue to suffer substantial injustice by reason of there being no meeting because she was shut out of the opportunity of speaking against the proposed motion for her removal. She argued that she is one of two directors who have guaranteed very considerable operating amounts for the ongoing conduct of B Pty Ltd. She argued further that the rationale of having a meeting is to enable persons to interact and to speak candidly in support of or in opposition to the resolution proposed. She said the absence of a meeting denied her the opportunity to put her case against being removed from the board of B Pty Ltd. She contended that having regard to the observations of Slattery J in BI Construction Pty Ltd v Shad[9] relief under s 1322 should be refused.
[9] [2010] NSWSC 484.
Counsel for the wife agued that the husband’s 5 June 2023 affidavit was misleading. Mr Glick submitted –
(a)the husband’s assertions that on 7 March 2023 notices of the general meeting of members of B Pty Ltd were sent to all shareholders including C Pty Ltd was false;
(b)the husband exhibited a document concerning the alleged 7 March 2023 meeting in Country D language without the document having been first translated; and
(c)a translation of exhibit MF2 contradicted the husband’s assertion and undermined the foundation of his case.
In reliance upon statements of principle in ERS Engines Pty Ltd v Wilson[10] and in Primary Securities Ltd v Aurora Funds Management Ltd,[11] the wife’s counsel argued that an affidavit must not tell a half-truth in such manner as to render it misleading by omission. They argued that a deponent’s obligation is to tell the truth and the whole truth. They submitted the husband fell short in his obligations as a deponent to tell the whole truth.
[10] (1994) 35 NSWLR 193, 197.
[11] [2020] NSWCA 230 (Bell P, Leeming & White JJA).
THE HUSBAND’S CONTENTIONS
The husband’s counsel relied on an outline of case filed 26 June 2023. In that document it was put on behalf of the husband that the wife’s application in a proceeding dated 22 May 2023 should be dismissed and that a declaration under s 1322(4)(a) of the Corporations Act should be made to the effect that the resolution removing the wife as a director of B Pty Ltd is not invalid by reason of a contravention of s 249H of the Corporations Act. The husband sought orders for the wife to give an undertaking about confidentiality in respect of certain disclosure. He also sought an order that the wife pay his costs of and incidental to the proceeding on an indemnity costs basis. He also resisted any order being made for the joinder of B Pty Ltd to this litigation.
Counsel for the husband did not subject the events of 7 and 9 March 2023 to the same forensic examination as did counsel for the wife. Instead, counsel for the husband asserted in paragraphs 9, 10 and 11 of their written submissions as follows –
(a)on 7 March 2023 the husband gave notice to members of B Pty Ltd that he was calling a meeting to remove the wife as a director of B Pty Ltd;
(b)he based his reason for so doing on the wife’s conduct including her alleged misappropriation of funds from B Pty Ltd’s and the husband’s bank accounts;
(c)on 7 March 2023 the husband enclosed with the notice of meeting a voting form in relation to the resolution to remove the wife as a director of B Pty Ltd;
(d)the meeting was held on 7 March 2023 by teleconference and representatives of all B Pty Ltd shareholders attended except for C Pty Ltd, making 77.5% of the membership of B Pty Ltd who resolved to remove the wife as a director of B Pty Ltd; and
(e)a form 484 was filed with ASIC in March 2023 concerning the wife’s removal as a director of B Pty Ltd.
Counsel for the husband did not join issue in their written contentions with the propositions advanced by counsel for the wife concerning the defects in the notice of meeting allegedly given on 7 March 2023 and with the events of 9 March 2023. Nor did counsel for the husband join issue with the contentions advanced by the wife in relation to there being no actual meeting held on 7 March 2023 nor in relation to the formal requirements recorded above derived from various provisions of the Corporations Act including ss 203C, 249A, 249H, 249J, 249L, 249S, 249T or in relation to the absence of minutes required by s 251A.
Instead, counsel for the husband postulated, seemingly by way of acceptance, a collection of propositions about the statutory regime reposed in the Corporations Act for the proper conduct of a meeting called in relation to the removal of a director. Counsel for the husband submitted as follows –
(a)pursuant to s 203C of the Corporations Act a proprietary company may remove a director by resolution;
(b)pursuant to s 249A of the Corporations Act, unless the resolution for the removal of a director of a proprietary company can be passed unanimously, a meeting of members is required;
(c)pursuant to s 249C of the Corporations Act, a director of a proprietary company can call a meeting of members for the removal of a director;
(d)alternatively, pursuant to s 249D of the Corporations Act, a member holding at least 5% of the issued shares in the capital of the proprietary company can request a director to call a meeting for the removal of a director;
(e)pursuant to s 249H of the Corporations Act, 21 days notice of the meeting is generally required;
(f)pursuant to s 249J of the Corporations Act, the notice must be provided to each member entitled to vote;
(g)pursuant to s 249J, service by electronic means is permitted; and
(h)pursuant to s 249L of the Corporations Act, the notice of meeting must contain particulars of the time and location of the meeting and of the business to be transacted.
Counsel for the husband addressed submissions in relation to the consequences of non‑compliance with the performance of an act under the Corporations Act, contending that pursuant to s 1322 of the Corporations Act, the court is vested with significant discretion to declare that notwithstanding the contravention, the impugned act is not invalid. Counsel for the husband argued that s 1322 operates in circumstances where –
(a)procedural irregularities exist, as s 1322(2) provides;
(b)a member has not received or does not have access to a notice of meeting, as s 1322(3) provides; and
(c)a member does not have a reasonable opportunity to participate in a meeting held at multiple locations, as s 1322(3A) provides.
Counsel for the husband submitted that where procedural irregularities exist or a member has not had a reasonable opportunity to participate in a meeting, s 1322(2) and s 1322(3A) of the Corporations Act provide that the court will only declare the proceeding or meeting invalid if –
(a)a substantial injustice has been caused or may be caused; and
(b)the injustice cannot be remedied by order of the court.
Under s 1322(3) and (3AA), the meeting will only be invalid where the court declares the proceeding or the meeting void.
Counsel for the husband focused on the application of s 1322(6) of the Corporations Act. They argued that an order under s 1322 must not be made unless the court is satisfied that –
(a)the act, matter or thing purporting to have been done is essentially of a procedural nature;
(b)the person concerned in or party to the contravention acted honestly or it is just and equitable that the order under s 1322(4)(a) should be made; and
(c)no substantial injustice has been caused to any person.
In reliance upon the observations of Owen J in the Supreme Court of Western Australia in Elderslie Finance Corporation Ltd v Australian Securities Commission,[12] counsel for the husband contended that s 1322(4) is remedial in nature and should be construed liberally. They argued that s 1322(4) conferred an unfettered discretion upon the court, subject to the requirements of s 1322(6), citing Re NRMA Ltd.[13] They argued that the power given to the court by s 1322(4)(a) is not to be hedged about by any implied limitation, relying on the observations of Hayne, Crennan and Kiefel JJ in the Weinstock v Beck.[14] They relied on the observations of Hamilton J in the Supreme Court of New South Wales in Primelife Corporation Ltd v Aevum Ltd[15] where it was held that satisfaction of any one of the elements of s 1332(6)(a)‑(c) is sufficient to satisfy the requirements of s 1322(6) having the effect of enlivening s 1322(4) of the Corporations Act.
[12] (1993) 11 ACSR 157.
[13] [2003] FCAFC 206 (at [22]).
[14] (2013) 251 CLR 396, 419 (at [55]).
[15] (2005) 53 ACSR 283 (at [8]).
The authorities distinguish between procedural irregularities and substantive irregularities.
Counsel for the husband citied the decision of Palmer J in Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd[16] to illustrate the distinction between procedural and substantive irregularities. They argued that –
(a)a procedural irregularity will be ascertained by first determining what is “the thing to be done” which the procedure is to regulate;
(b)an irregularity will be substantive if there is an irregularity which changes the substance of the thing to be done; and
(c)the irregularity will be procedural if the irregularity merely departs from the prescribed manner in which the thing is to be done without changing the substance of the thing.
[16] (2005) 194 FLR 322.
Counsel for the husband focused on the phrase “substantial injustice”, contending that the phrase related to the effect of procedural irregularities rather than the business transacted at the meeting said to be irregular. In support of that proposition, they called in aid the decision of Underwood J of the Supreme Court of Tasmanian in Whitehouse v Capital Radio Network Pty Ltd.[17] The husband’s counsel also argued that in any consideration of “injustice”, the court was required to consider prejudice that was real as opposed to the court considering prejudice that was insubstantial or theoretical, citing the decision of Santow J in Super John Pty Ltd v Futuris Rural Pty Ltd.[18] In assessing prejudice, the husband’s counsel submitted that the court will not take into account the commercial best interests of the relevant company because issues relating to the commercial best interests of the company are the province of shareholders and directors, according to Palmer J in Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd.[19]
[17] [2002] TASSC 78 (at [75]).
[18] (1999) 32 ACSR 398 (at [14]).
[19] (2005) 197 FLR 322.
So far as the burden of proof was concerned, counsel for the husband submitted that the party applying for a declaration under s 1322(4) (relevantly here, the husband) bears the burden, as Hodgson J of the Supreme Court of New South Wales held in Australia Hydrocarbons NL v Green.[20]
[20] (1985) 10 ACLR 72, 83.
The husband characterised his failure to give the 21 day notice period prescribed by s 249H as a procedural irregularity. The husband submitted that having regard to the contravention of s 249H being a procedural irregularity, the wife bore the onus of proving that she had suffered a substantial injustice that cannot be remedied by the court. The husband asserted that the wife had failed to discharge that evidentiary burden. The husband asserted that even if the wife could demonstrate that she suffered substantial injustice (which the husband denied), the court could make orders ameliorating the effect of any such prejudice. The husband submitted that it was just and equitable to make a declaration pursuant to s 1322(4) of the Corporations Act.
So far as factual matters were concerned, the husband submitted that the resolution removing the wife carried upon it attaining 77.5% of the votes because, so he said, all shareholders voted in favour of the resolution.
No evidence was adduced in relation to the voting by Q Pty Ltd and by R Pty Ltd. The wife’s company did not vote, as was common ground.
VIVA VOCE SUBMISSIONS ON 27 JUNE 2023
Very full debate was heard on 27 June from Mr Glick KC on behalf of the wife and Mr Baker, one of the husband’s junior counsel. Mr Bartfeld KC, the husband’s senior counsel, did not participate in the substance of that debate. In the course of preliminary exchanges, I brought to counsels’ attention the High Court’s decision in Deputy Commissioner of Taxation v Shi,[21] although the point went no further.
[21] (2020) 273 CLR 235.
As an opening submission, Mr Glick KC contended that the husband has misled the court in a gross manner such that any exercise of discretion in his favour should be refused.[22]
[22] Transcript 27 June 2023, T6 L16.
Mr Glick submitted that the husband at paragraph 15 of his 5 June 2023 affidavit deposed to the wife obtaining an intervention order against the husband following which the husband became concerned about how B Pty Ltd’s business would be conducted. Mr Glick KC submitted that the husband deposed to having a discussion with other unnamed shareholders and that the husband stated that “an urgent general meeting of shareholders was convened”. Mr Glick KC pointed out that in respect of an extraordinary general meeting, notice requirements prescribed that 21 days were required to have been be given prior to the convening of any such extraordinary general meeting. Mr Glick submitted that the husband falsely asserted in his affidavit that on 7 March notices (of the meeting of members) were sent to all shareholders in B Pty Ltd including C Pty Ltd and that (so the husband asserted) “a general meeting of shareholders was convened in accordance with the company’s constitution”. Mr Glick submitted that the proper construction of that much of the husband’s affidavit was a follows[23] –
The natural meaning of that sentence is: on 7 March, [after] the intervention order was made, notices were sent to every single shareholder, including [Ms Shuren] – it says that expressly – her company, [C Pty Ltd], the member, and a general meeting was convened. Now, as the shareholders do not understand English – not one person spoke English or did not understand English – a [Country D language] voting form is specially drafted so that the shareholders can understand and express their decisions clearly.
[23] Transcript 27 June 2023, T8 L37-44.
Mr Glick submitted that the notices of the general meeting were not in the English language, as was apparent from the document exhibited by the husband as exhibit MF2, despite the requirement of s 1304 of the Corporations Act. But the important point, so Mr Glick contended, was that the document exhibited as exhibit MF2 revealed the date of notices being 9 March 2023, not 7 March 2023, as asserted by the husband. The translated version of exhibit MF2 was reposed in the wife’s exhibit MS11 to her 12 April 2023 affidavit. Mr Glick also submitted that whereas the husband deposed to sending the notice of meeting (which the husband asserted was sent on 7 March 2023) to all shareholders in B Pty Ltd, the husband did not adduce evidence of the documents that the husband asserted were actually sent to the other shareholders in B Pty Ltd.[24]
[24] Transcript 27 June 2023, T12 L19.
Mr Glick then submitted that the husband falsely deposed to all members of B Pty Ltd attending the meeting via teleconference. Of that Mr Glick said the following[25] –
Except for [Ms Shuren] – her entity. False. False. We have got two witnesses, who are not contradicted, to say they were never asked to attend a meeting. They were given documents to sign, one on the 8th and one on the 7th. But there was no meeting. And it’s not denied.
[25] Transcript 27 June 2023, T12 L27-30.
Mr Glick submitted that Brereton J had provided observations about the form of notice required in a notice of meeting in In the matter of Boart Longyear Ltd.[26] There, Brereton J held that while s 249L(1)(b) of the Corporations Act required only that a notice of meeting of a company’s members state the general nature of the meeting’s business, that is not an exhaustive statement of the obligations on directors to provide information to members relevant to proposals to be considered in general meetings. His Honour held as follows –
[26] [2017] NSWSC 756.
Duty of disclosure
14.While Corporations Act, s 249L(1)(b), requires only that a notice of a meeting of a company’s members state the general nature of the meeting’s business, that is not an exhaustive statement of the obligations of directors to provide information to members relevant to proposals to be considered in general meeting. The following summary of the relevant principles is distilled from the judgments of the Full Federal Court in Fraser v NRNA Holdings Limited,[27] and of Austin J in ENT Pty Ltd v Sunraysia Television Ltd,[28] which was cited with approval by Foster J in Stratford Sun Ltd v OM Holdings Ltd (No 5).[29]
15.When directors are advising or urging a particular action or course of conduct upon members of the company, they are under a fiduciary duty to provide the members with such material information as will fully and fairly inform members of what is to be considered at the meeting (and for which their proxy may be sought), such as will enable members to judge for themselves whether to attend the meeting and vote for or against the proposal, or whether to leave the matter to be determined by the majority attending and voting at the meeting. This principle has been applied, inter alia, in the context of enabling a member to make an informed decision as to the worth or otherwise of a proposed reconstruction or amalgamation.
[27] (1995) 55 FCR 452.
[28] (2007) 61 ACSR 626.
[29] (2011) 198 FCR 372.
A large number of authorities support that statement of principle.[30]
[30] Fraser v NRMA Holdings Limited (1995) 55 FCR 452, 465-6, citing Jackson v The Munster Bank Ltd (1884) 13 LR Ir 118, 136-7, Tiessen v Henderson [1899] 1 Ch 861, 866-7, 869-71, Peel v London and North Western Railway [1907] 1 Ch 5, 12-14, 16-17, 31, Baillie v Oriental Telephone and Electric Company Ltd [1915] 1 Ch 503, 514-15, 518, Pacific Coast Coal Mines Ltd v Arbuthnot [1917] AC 607, 618, Goldex Mines Ltd v Revill (1974) 54 DLR (3d) 672, 679, Bulfin v Bebarfalds Ltd (1938) 38 SR NSW 423, 440 (Long Innes CJ in Eq), Peters’ American Delicacy Co Ltd v Heath (1939) 61 CLR 457, 486 Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94, 96-7 (McLelland J), Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956 (Young J) and ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626, 630-1 [15] (Austin J).
Mr Glick contended that there was no meeting. Mr Glick submitted[31] that a meeting necessarily involves people being present, whether personally or electronically or in the one room. He submitted that people must vote together, on a show of hands or by proxy and that the vote must be on a properly formulated proposal that is seconded. Mr Glick submitted that the evidence revealed that two witnesses deposed to there being no meeting, namely Ms N and Ms P. Mr Glick submitted that Ms S arranged for a document to be exchanged in some carpark in Suburb W and that no meeting of members was thereby constituted.
[31] Transcript 27 June 2023, T13 L45.
Mr Glick then addressed the document exhibited by Ms N as MN1, translated as exhibit E to Dr T’s affidavit made 25 June 2023 which document in unmistakable terms stated that “due to special reasons the meeting cannot be held in person or via video”. Mr Glick submitted that further evidence was thereby given that no meeting was held and that instead, a person named Mr X would contact shareholders by telephone, undertaking what Mr Glick called a “ring‑around”.
Mr Glick argued that the husband’s assertion in paragraph 15 of his principle affidavit where the husband stated that “all shareholders present at the meeting cast a vote” was wrong as the shareholders did not do that.
Mr Glick emphasised that no minutes of the alleged meeting existed.
So far as the husband’s contentions were concerned, that he called on shareholders to return their voting by 10 March 2023, Mr Glick KC submitted that the vote was required to be decided on a show of hands on the spot and here, there was no show of hands.
Mr Glick submitted that the form 484 lodged with ASIC that referred to the wife’s removal date as being in March 2023 was yet another erroneous date.
Mr Glick highlighted how Ms P deposed to there never being a meeting on 7 March 2023 yet the husband deposed to precisely the opposite.
On behalf of the wife Mr Glick submitted that despite the deficiencies in the process by which the wife’s removal as a director was procured, she is no longer a director.[32]
[32] Transcript 27 June 2023, T25 L39.
Mr Glick submitted that it is open for me to determine, on the documents themselves, that no meeting was conducted on 7 March 2023, contrary to the husband’s assertions. Mr Glick said that such a determination did not require me to make factual findings on contested issues involving an assessment of contradictory viva voce evidence.
THE WIFE’S CONTENTION ON S 1322 OF THE CORPORATIONS ACT
Mr Glick submitted that the irregularity identified has caused substantial injustice that cannot be remedied otherwise than by an order reinstating the wife to the office of director of B Pty Ltd.[33]
[33] Transcript 27 June 2023, T30 L13.
The husband conceded irregularity as to the 21 days notice period.
The substantial injustice on which the wife relied took many forms, so Mr Glick submitted. First, despite being removed from the day-to-day operations of B Pty Ltd, the wife remained liable to J Bank for very considerable indebtedness. Second, the wife said substantial injustice was occasioned by the failure to give her notice of the meeting and therefore she was denied the opportunity to put her version of events about why the husband was purporting to remove her as a director. The wife relied on the observations of Slattery J in the Supreme Court of New South Wales in BI Construction Pty Ltd v Shad[34] where his Honour declined to excuse the irregularities under s 1322 of the Corporations Act. In that case, as here, the 21 days notice period for convening the meeting was not given. In that case it was argued that the want of notice of the meeting was a procedural irregularity only capable of being cured under s 1322 of the Corporations Act unless substantial injustice were shown. Slattery J held that where the irregularity results in an adverse decision to the interests of those complaining of the irregularity and the irregularity constitutes a denial of the opportunity to speak against the decision, the court is likely to make a declaration of invalidity no matter how unlikely it is that the complainant will be able to persuade a future meeting to vote against the same decision, citing Re Chevron Furnishers Pty Ltd (in liq).[35] Slattery J also held that where the irregularity arises from a deliberate informed decision to create an irregularity then s 1322 will not be able to be used to excuse the irregularity, as was held in Re PW Saddington & Sons Pty Ltd.[36] Of Slattery J’s decision in BI Construction Pty Ltd v Shad, Mr Glick advanced the following submission[37] –
It’s almost identical to this case. Does your Honour recall the evidence, uncontradicted? The husband rang up these people and said, “The wife has got a boyfriend.” Wow. Dangerous. “And I’ve got to talk to you privately about it, and I want you to sign it.” The wife had no opportunity to defend herself. And she’s going to move assets away. No opportunity. And he didn’t tell her of the meeting until after it was – there was no meeting, but he never told her about the resolutions and got – and how were the resolution obtained? By people going to their homes – [Ms S], an employee, goes to the home and says, “Sign.” Well, we say, your Honour, that we have suffered because we are not able to defend ourselves, and we would have defended ourselves. Already two of the shareholders have backtracked and said, “No, we don’t want to. We support the wife.” And they are 45 per cent out of the 100. Just two. And many will come across when they learn the truth of what happened. So, yes, I do for purposes of this hearing accept 1322, subsection (2), but on this basis. Even if it be assumed that it is procedural, your Honour will be persuaded, in my respectful submission, that there has been a gross injustice caused to the wife.
[34] [2010] NSWSC 484.
[35] (1992) 8 ACSR 726.
[36] (1990) 1 ACSR 158.
[37] Transcript 27 June 2023, T32 L20-35.
Mr Glick KC addressed verbally the legislative requirements of Part 2G of the Corporations Act, especially s 249A and following. The 21 day notice of meeting period applied. Here, the husband sent the wife a notice of some form on 9 March which Mr Glick submitted was a deliberate decision. He put it thus[38] –
You must give a meeting a notice. Now, the husband decided to send the wife the notice of a meeting on 9 March. We’ve seen that, your Honour, after the meeting. But he did that deliberately. It’s not like an error. Can I just say this, your Honour: the whole of the husband’s case is in paragraph 15 and 16. It’s astonishing. When you look at the cases on procedural irregularities, you find pages about the efforts they took to check the register, to find out the shareholders, to send them details. Here he says, “I sent the messages out. There was a meeting”; there wasn’t. “All the shareholders attended but for the wife”; they didn’t. “They all signed on the day”; they didn’t. Very blasé. 249H, 21 days.
[38] Transcript 27 June 2023, T36 L11-19.
Section 249L was not complied with in relation to proxies nor about the nature of the business to be transacted.
Mr Glick advanced a Jones v Dunkel[39] submission in respect of the husband’s failure to produce the notice of meeting sent to all shareholders, contending that the husband’s failure to produce those notices disclosed the husband’s fear that he would disclose the weaknesses of his case.[40]
[39] (1959) 101 CLR 298.
[40] Transcript 27 June 2023, T37 L15.
Mr Glick submitted that I should do as Slattery J did in BI Construction Pty Ltd v Shad by holding that there has been a substantial injustice and so there should be no order excusing the husband from the irregularities identified by the wife. Mr Glick said the wife owns 22.5% of B Pty Ltd, she was one of two directors so if she is to be properly removed, she should have been told why and she should have been given the opportunity of responding. Further, according to Boart, the husband was under a fiduciary duty to explain in the notice the business to be transacted. The nature of the information required to be given to shareholders was explained by Goldberg J in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd.[41] There, his Honour examined the key authorities on point, holding as follows –
[41] (2005) 55 ACSR 583.
[36] There was little debate about the relevant principles to be applied. Rather the issue joined between the parties was the extent of the information which needed to be provided.
[37] In general terms it may be said that where a general meeting of the shareholders of a company has been called to consider, and if thought fit, pass a resolution which affects the company and its shareholders the directors are bound to make a full and fair disclosure of all matters which are within their knowledge and which would enable the shareholders to make a properly informed judgment on the issue in question: Peters’ American Delicacy Co Ltd v Heath (1939) 61 CLR 457 at 486; [1939] ALR 124 at 129 per Latham CJ; Bulfin v Bebarfalds Ltd (1938) 38 SR (NSW) 423 at 432–8. The obligation upon directors in this respect is even more significant where they have either made a recommendation to shareholders as to what they should do or have advised shareholders as to how they (the directors) propose to vote.
[38] In Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR
94, McLelland J said at 96:
Where directors take it upon themselves to urge or recommend or advise members to exercise their powers in general meeting in a particular way, they are in general required to make a full and fair disclosure of all matters within their knowledge which would enable the members to make a properly informed judgment on the matters in question
...
(See also Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956.)
[39] There are two aspects to the information which directors are bound to disclose to shareholders in order to enable the shareholders to make a fully informed decision on the matter and issue being put before them. The material must not be materially misleading and at the same time there should not be omitted any material which is important and relevant to the decision which the shareholders are asked to make. In Fraser v NRMA Holdings Ltd (1994) 52 FCR 1; 124 ALR 548; 14 ACSR 656, Gummow J said (at FCR 20; ALR 565; ACSR 673), in relation to the issues before him, that the members were entitled:
... reasonably to expect that what was put before them involved no “half truths” and contained a full and fair disclosure of matters to enable them to make a properly informed judgment on the proposal.
[40] In substance, Gummow J’s decision and reasons were upheld by the Full Court in Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; 127 ALR 543; 15 ACSR 590. At FCR 466; ALR 554; ACSR 601–2 the Full Court said:
A duty to make disclosure of relevant information arises as part of the fiduciary duties of the directors to the company and its members in relation to proposals to be considered in general meeting and under s 1022 of the Law in respect of the contents of a prospectus. The fiduciary duty is a duty to provide such material information as will fully and fairly inform members of what is to be considered at the meeting and for which their proxy may be sought. The information is to be such as will enable members to judge for themselves whether to attend the meeting and vote for or against the proposal or whether to leave the matter to be determined by the majority attending and voting at the meeting ... A proper discharge of the duty may require that the directors take reasonable steps to ascertain relevant information for communication to members if that information is not known to the board. Directors must not consciously refrain from seeking relevant information or turn a blind eye to relevant material in order to avoid placing before members information which may contradict or qualify any particular position taken or advocated by the directors or a majority of them.
[41] Gambotto v WCP Ltd (1995) 182 CLR 432; 127 ALR 417; 16 ACSR 1 was concerned with a company passing a resolution to amend its articles, so as to enable the shareholder holding at least 90% of the issued capital to acquire compulsorily shares held by minority shareholders for a particular price. However, the principles explained by the High Court are relevant to the situation such as the present where the proposed amendment of the constitution and articles of Coopers is arguably to limit the opportunity of the shareholders of the company to sell their shares. At CLR 446; ALR 426; ACSR 10 the majority of the High Court (Mason CJ, Brennan, Deane and Dawson JJ) said:
... an alteration to the company’s articles permitting the expropriation of shares will not be valid simply because it was made for a proper purpose; it must also be fair in the circumstances. Fairness in this context has both procedural and substantive elements. The first element, that the process used to expropriate must be fair, requires the majority shareholders to disclose all relevant information leading up to the alteration ...
Mr Glick submitted that a gross breach of s 249L had been committed which should not be excused.
The orders sought by the wife included an order declaring invalid her removal as a director and an order requiring the husband to file documentation with ASIC to amend B Pty Ltd’s directors’ details on the register. Mr Glick submitted that such orders can be made on an interlocutory basis under the Corporations Act.
Mr Glick submitted other contraventions had been committed including contraventions of ss 249R, 249S, 249T and s 251A.
After posing his own rhetorical question about the problems allegedly visited upon the wife through procedural irregularities,[42] it was put on behalf of the wife as follows –
So our friends will tell you, “Yes. Yes. Yes. What’s your problem? These are all procedural. You’ve got the problem. Doesn’t matter if there was no meeting. Doesn’t matter if the wife was excluded. It doesn’t matter if everything was late and it doesn’t matter if he lied to the court, misled the court. It’s all procedural. What’s the injustice? Because 75 per cent voted against the wife.” We never had a chance to dissuade them.
[42] Transcript 27 June 2023, T48 L16-22.
The wife’s primary position was that the irregularities were substantive not procedural.[43] However, she contended that if all of the irregularities were procedural then the irregularities have caused substantial injustice which cannot be remedied under s 1322(6). The wife disputed that the husband acted honestly.
[43] Transcript 27 June 2023, T51 L44.
THE HUSBAND’S VIVA VOCE SUBMISSIONS ON THE MEETING ISSUES
Mr Baker of counsel for the husband addressed viva voce on the husband’s contentions concerning the meeting of members of B Pty Ltd. In essence, Mr Baker submitted as follows –
(a)it is inconceivable that the husband and wife could jointly act as B Pty Ltd’s directors in view of the intervention order taken out by the wife against the husband;
(b)the husband cannot deny that a notice of meeting was not sent to the wife on 7 March 2023;
(c)Ms N and Ms P received the notice of meeting on 7 March 2023;
(d)it ought to be inferred that the controllers of the other shareholders received the notice of meeting on 7 March 2023 in the way Ms N and Ms P received theirs;
(e)the court cannot resolve on this interlocutory application the husband’s assertion that a teleconference was held nor can this court determine whether other evidence to the effect that there was no such teleconference is to be preferred;
(f)no evidence was adduced that a show of hands was polled;
(g)however, Mr Baker submitted “there is very clear evidence that 77 and a half percent of the voting rights elected for [the wife] to be removed as a director”;
(h)the wife could have but failed to call a meeting being the holder of more than 5% of the voting rights attaching to shares, subsequent to mid-March 2023;
(i)her conduct in failing to call such a meeting is a significant discretionary factor;
(j)whether under s 1322(2) or under s 1322(4), a two-step test is involved the first element of which calls for the identification of some invalid act or some procedural irregularity (and Mr Baker submitted that it could not be said that there was no irregularity) and the second element is whether a substantial injustice has flown from that irregularity (described by Mr Baker as the killing ground of the case);[44]
[44] Transcript 27 June 2023, T81 L41.
(k)the wife’s criticisms of the deficiencies in 21 the day notice are valid;
(l)those criticisms are rightly conceded as having the character of being one or more procedural irregularities, the most relevant of which was the wife’s inability to participate in the meeting so as to argue her case;
(m)even if those matters amount to procedural irregularities, the court can comfortably acknowledge that no different outcome would have ensued;
(n)the wife failed to call a subsequent meeting when she could easily have done so as could Ms N and Ms P have done so;
(o)it is dangerous to make too much of the fact that the wife, even if no longer a director, is liable to J Bank pursuant to a guarantee given by her because a guarantor need not necessarily be a director of the company the debt of which company is guaranteed, and even if J Bank knew of the skirmish inter se between the husband and wife, the bank retains a discretion on whether to act upon events of default;
(p)even if intimidation of Ms N and Ms P by the husband were shown as a proven fact, any such intimidation would be no more than a single integer in respect of which the discretion under s 1322 might be called in aid;
(q)on the evidence of Mr Y and Mr V, both employees of B Pty Ltd, the wife has had no day-to-day involvement in the running of B Pty Ltd;
(r)as a unit holder in the trust of which B Pty Ltd is trustee the wife retains an entitlement to see the books and accounts of the trust;
(s)since the wife was removed as a director the husband has been continuously managing the company;
(t)s 1322(1) defines procedural irregularities in an inclusive manner such that a defect in the 21 day notice period is a procedural irregularity, issues about a quorum being present are procedural irregularities and where a procedural irregularity is involved, the affected person (relevantly here, the wife) must show there has been substantial injustice;
(u)if the substantial injustice is not demonstrated, the court does not have a discretion to invalidate the removal of the wife under s 1322; and
(v)according to the decision of Middleton J in Nenna v Australian Securities and Investments Commission,[45] s 1322(4) may nevertheless be invoked in respect of acts done in deliberate contravention of the Corporations Act.
[45] (2011) 198 FCR 32.
THE WIFE’S REPLY
In reply submissions, Mr Glick KC submitted that counsel for the husband avoided any proposition concerning the question whether or not a meeting was held. Mr Glick submitted the point was of considerable moment because it highlighted the differentiation between substantive and procedural irregularity. Mr Glick pressed his contentions that no meeting was held in point of fact. Instead, the husband addressed making telephone calls to other shareholders without stating whether any of them were together or not. No resolutions were produced nor were translated documents of any such resolutions produced. Mr Glick submitted that the evidence revealed that there was no meeting and two shareholders said as much.
Mr Glick for the wife submitted that the removal of the wife as a director without a meeting was plainly a substantive irregularity. He submitted that at paragraph 97 of Cordiant, Palmer J held that a wrongful denial of shareholder’s statutory rights to vote at a meeting is a denial of a substantive right, not a procedural irregularity, within the contemplation of s 1322(2). Mr Glick submitted that Palmer J’s formulation just stated has been adopted by Riordan J in Vaspip 2 Pty Ltd v Thorn Group Ltd.[46]
[46] [2020] VSC 700.
Mr Glick submitted in reply that having regard to Palmer J’s statement about a wrongful denial of a shareholder’s statutory right to vote at a meeting being a substantive irregularity for the purposes of s 1322(4) and not a procedural irregularity with which s 1322(2) is concerned, the husband must persuade the court that no substantial injustice is done to the wife. And, as Slattery J held that in circumstances where there is a denial of an opportunity to speak against a decision the court is likely to make a declaration of invalidity, Mr Glick put the point in the following terms[47] –
So it’s really a very simple case, your Honour, which is being, in a sense, spun out with these points about, “Well, we could have done this.” We did nothing wrong. The wife is entitled to say, “I am the victim.” This is victim blaming, “You’re the victim. You should have called another meeting. Give 21 days’ notice.” Well, why? There was never a meeting. We never had a vote. There was no vote. There was no notices. There was no resolution. There’s no minute. And we had to take the step. It cuts both ways. They can call a meeting again, a proper meeting. You can do that if you – and if he thinks there’s a proper basis, let him call it. We can challenge it if we wish to, in this court. Your Honour should not tolerate a circumstance where the victim is blamed, which so what they're doing, your Honour. I have the responsibility to take it. I can go along and get documents, as if that’s going to happen. The next point, your Honour, is this, my friend said both of the independent witnesses who said there was no meeting, one of them got a notice.
None of them got notices. That was just a slip of the tongue by my friend. Neither received a notice. So we make this submission, your Honour, at the end of the day, we submit to the court that you should not be satisfied first, you should be satisfied this is a substantive, not a procedural matter. It would make, your Honour, a mockery of the Corporations Act, for the husband to say, “the fact that I didn’t have a meeting, that I didn’t give out notices, that I deliberately sent the notice to the wife late, that I didn’t put any information in, I didn’t have a vote, I never had a show of hands”, don’t worry, it’s all procedural. Let them show you why it’s unjust. It is substantive. No meeting, it is substantive with not having a vote.
That being the case, 1324, does my friend say, and he does – he has to say, because they've sought that relief, that his contravention, there has been a contravention, should be excused and the decision upheld, because no substantial injustice has been cause to my client. I've dealt with that. So what we say, your Honour, is no need to buy into whether it has to be inadvertent or deliberate, whether it needs to be whatever. It doesn’t matter. The overwhelming, overriding requirement is subsection (c) in every case, said the Act, for you to get this relief, you, the husband, you the director to get this relief, you have to prove that no substantial injustice has been caused, and we say there has been. Thank you, your Honour. Sorry, the relief. The relief that we seek. We don’t – joining [B Pty Ltd], we’re seeking to have it bound by the result, because it is the corporation of which we are the directors.
[47] Transcript 27 June 2023, T105 L6-41.
CONSIDERATION
Lamentably, I do not share Mr Glick’s enthusiasm for the aphorism that this is “really a very simple case”.[48] That said, both parties requested me to address the making of orders under s 1322 of the Corporations Act in relation to the removal of the wife as a director of B Pty Ltd. The husband sought the dismissal of the wife’s application for a declaration of invalidity in relation to the removal of the wife as a director of B Pty Ltd. This was a contested interlocutory application. Authority binding upon me instructs me to eschew the making of findings of fact that are contested ahead of the trial. However, on behalf of the wife it was put that on the husband’s own case and on the basis of authorities applicable thereto, no meeting was held with the consequence that a substantive irregularity was thereby demonstrated in the wife’s removal from the board of B Pty Ltd and she was entitled to a declaration that her removal from the board was invalid. Alternatively, applying the concession advanced by Mr Glick KC that any number of procedural irregularities had occurred, substantial injustice had been occasioned to the wife by reason of that or those procedural irregularities such that a declaration of invalidity of removal of the wife as a director should be made.
[48] Transcript 27 June 2023, T105 L6.
The first issue is whether a meeting of shareholders for the removal of the wife from the board of B Pty Ltd was held.
It was conceded that 21 days notice was required before the shareholders’ meeting could be validly held. It was also conceded by the husband that the 21 days notice period was not observed. Notice of any shareholders’ meeting for the removal of the wife from the board had to be given to all B Pty Ltd shareholders. The B Pty Ltd shareholders to whom notice of any shareholders’ meeting had to be given included –
(a)C Pty Ltd;
(b)L Pty Ltd;
(c)M Pty Ltd;
(d)Q Pty Ltd;
(e)R Pty Ltd; and
(f)K Pty Ltd.
The husband’s company was required to give notice to all of those shareholders by force s 249J of the Corporations Act.
The evidence revealed that C Pty Ltd was not given notice of the meeting. The evidence was wholly silent on whether notice was given to Q Pty Ltd or R Pty Ltd.
Twenty one days notice was required to be given. On the basis that 7 March 2021 was the date that the husband conceived of the idea of convening the meeting, the 21 days notice period meant that the shareholders’ meeting could not be properly held earlier than late March 2023.
It fell to the husband to prove that all shareholders had been validly served with notice of the shareholders’ meeting to be convened not less than 21 days after notice of the meeting had been given to all shareholders. The evidence revealed that C Pty Ltd, Q Pty Ltd and R Pty Ltd were not given notice of any shareholders’ meeting. Proof of such notice should have been given of the service of a notice written in the English language. No such proof was adduced.
In accordance with the decision of Brereton J in Boart, the notice itself needed to contain certain details by way of particulars. The notice given in this case to certain shareholders did not contain such information. The notice needed to give the shareholders such information as enabled them each to form a view about attending the meeting. The notice here was bereft of that information. It must not be overlooked that K Pty Ltd, as the shareholder calling the meeting was under a fiduciary duty to fully inform other shareholders of the particulars surrounding the calling of the meeting. In respect of the notices given to Ms N, for example, particulars of the reasons for the calling of the meeting were extremely scant. In my view, the notice did not comply with the observation of Brereton J in Boart in respect of the details required to be given.
It was beyond debate that the wife, as the person affected by the shareholders meeting, was required to be given notice of the meeting. It was equally beyond debate that C Pty Ltd did not receive notice of the meeting (with proper particulars of the reason for the meeting) ahead of the meeting being convened for the self-evident reason that, being a person affected by the meeting, she needed to have the opportunity of speaking against the proposal to remove her from the board. She was denied that opportunity because she was given no notice of the meeting. That was a substantive irregularity.
The meeting needed to be convened electronically or in person. That did not occur. The husband gave evidence that the meeting was duly convened yet he gave no details of whether it was convened face-to-face, who attended, who moved the resolution for the removal of the wife, what form that resolution took, who seconded the resolution, who voted in support of the resolution, who voted against it, whether a minute was taken, and, most importantly, what any minute taken of the meeting actually recorded.
The date of the meeting on the husband’s version of events was curious. The husband deposed to the meeting being held on 7 March 2023. Yet electronic notices of meeting sent to Ms N and Ms P were dated 9 March 2023, that is to say, after the date on which (on the husband’s version of events) the meeting was held.
I entertain very real doubts that any valid meeting of shareholders was duly convened on 7 March 2023 (or 9 March for that matter) at which a proper resolution was passed by the requisite number of members for the removal of the wife as a director of B Pty Ltd. In saying I entertain very real doubts about the matter, for clarification, let me state that I am not persuaded on the balance of probabilities that any proper shareholders’ meeting for the removal of the wife from the board of B Pty Ltd was duly held. That was no mere procedural irregularity. Whether a quorum was present could not be ascertained from the husband’s evidence. Whether any shareholders abstained from voting in favour of the motion could not be ascertained from the husband’s evidence. Yet it is demonstrably evident that the wife, as the person most adversely affected by the shareholders’ meeting, was denied the opportunity of putting her case to her company’s fellow shareholders by reason of her not being provided with notice of the meeting, whether on 7 or 9 March. There is considerable substance, in my view, in Mr Glick’s submissions that a shareholders’ meeting involves shareholders coming together, whether in person or electronically, at which they can hear other shareholders voicing their views on the business then before the meeting. A ring-around as Mr Glick called it, is not a meeting in stricto sensu. Nor is an episode where a document is brought to a shareholder in a suburban carpark for that person’s signature a proper meeting nor is it a vote on the show of hands.
No minutes existed of the alleged meeting by which it was possible to ascertain who actually attended the meeting and who voted for or against the resolution put and who abstained.
To my mind, for the purposes of s 1322 of the Corporations Act a substantive irregularity occurred in the removal of the wife from the office of director of B Pty Ltd. She was removed from that office without her having notice of the meeting to be held for her removal, with particulars of the basis for her removal having been given and without an opportunity having been given to her to voice her opposition to the proposal for her removal.
If I am wrong in that construction of events and if, contrary to my view aforesaid, the various irregularities identified above amount in aggregate to no more than procedural irregularities, then in my view those so-called procedural irregularities have occasioned substantial injustice to the wife. She no longer participates in day-to-day management of B Pty Ltd. She has no say in the application of considerable amounts of money on several projects across the state of Victoria. She personally remains a guarantor for very large sums of money in favour of J Bank, yet she had no control over events that may precipitate her being called upon to make good her guarantee. In my view, if the various irregularities canvased above are to be taken to be no more than procedural irregularities – even in aggregate – then the wife had suffered substantial injustice for the purposes of s 1322 of the Corporations Act and it would be an erroneous exercise of my discretion to excuse those so-called procedural irregularities in the circumstances of this case.
In those circumstances, I make orders set out in the wife’s application in a proceeding.
DISCLOSURE ISSUES
Senior counsel for the parties resolved disclosure issues rendering it unnecessary to and undesirable for me to say more about the wife’s enforcement application in respect of consent orders made by thr SJR on 19 April 2023 and by me on 12 May 2023.
I wish to record my gratitude to Mr Glick KC and to Mr Baker of counsel for the very high quality of their written and verbal submissions on this factually and legally complicated application.
I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 24 August 2023
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