Talbot v NRMA Holdings Ltd

[1996] FCA 707

CATCHWORDS

CORPORATIONS - Delivery of proxy forms - whether registered office includes basement car park - procedural irregularity - whether the passing of a special resolution is a "proceeding under this law" within the meaning of s.1322 Corporations Law.

Corporations Law s.1322

Invention Finance Pty Ltd v Flavel (1988) 13 ACLR 99
The Queen v The Mariquita and New Granada Mining Company (1858) 28 LJQB 67
Broadway Motors Holdings Pty Ltd (In Liq) and the Companies (New South Wales) Code (1986) 6 NSWLR 45
Scullion v Family Planning Association of Queensland (1986) 4 ACLC 78
Re Caysand No 64 Pty Ltd (1993) 11 ACLC 1197

NG 3074 OF 1995

RICHARD JAMES TALBOT -V- NRMA HOLDINGS LIMITED & ORS
NRMA LIMITED -V- RICHARD JAMES TALBOT

Burchett J.
Sydney
14 August 1996

IN THE FEDERAL COURT OF AUSTRALIA ) 
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 3074 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:RICHARD JAMES TALBOT

Applicant

AND:NRMA HOLDINGS LIMITED

First Respondent

AND:     DONALD GORDON MACKAY

Second Respondent

AND:     RAYMOND BRUCE WILLING

Third Respondent

AND:     RAYMOND JOHN KIRBY

Fourth Respondent

AND:     MAREE CATHERINE CALLAGHAN

Fifth Respondent

AND:     GEORGE PETER WILLIAM JACK

Sixth Respondent

AND:     NRMA LIMITED

Seventh Respondent

AND:     NRMA INSURANCE LIMITED

Eighth Respondent

AND BETWEEN:     NRMA LIMITED

Cross-claimant

AND:     RICHARD JAMES TALBOT

Cross-respondent

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     14 August 1996

MINUTE OF ORDER OF THE COURT

THE COURT DECLARES THAT the Special Resolution to amend the Articles of Association of the Cross-claimant considered at the Cross-claimant's Annual General Meeting on 3 November 1993 being set forth in the Schedule to the Cross-Claim herein was passed by a majority of at least three quarters of the members of the Cross-claimant who, being entitled to do so, voted in person or by proxy at that meeting.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) 
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 3074 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:RICHARD JAMES TALBOT

Applicant

AND:NRMA HOLDINGS LIMITED

First Respondent

AND:     DONALD GORDON MACKAY

Second Respondent

AND:     RAYMOND BRUCE WILLING

Third Respondent

AND:     RAYMOND JOHN KIRBY

Fourth Respondent

AND:     MAREE CATHERINE CALLAGHAN

Fifth Respondent

AND:     GEORGE PETER WILLIAM JACK

Sixth Respondent

AND:     NRMA LIMITED

Seventh Respondent

AND:     NRMA INSURANCE LIMITED

Eighth Respondent

AND BETWEEN:     NRMA LIMITED

Cross-claimant

AND:     RICHARD JAMES TALBOT

Cross-respondent

CORAM:    Burchett J.
PLACE:    Sydney
DATE:     14 August 1996

REASONS FOR JUDGMENT

BURCHETT J.:

In this action, two quite separate questions were debated before me.  I made an order, reserving my reasons, in the one; and I reserved my decision in the other.  Subsequently, there were applications to reopen the second question, and negotiations between the parties.  In the circumstances, it has become unnecessary for me to complete the hearing.  However, it is desirable that I should now hand down my reasons for the order which I did make. 

In paragraphs 42 to 48 inclusive of the amended Statement of Claim, the applicant pleaded that, prior to the Annual General Meeting of NRMA Limited held on 3 November 1993, forms of proxy were circulated in relation to an item of special business to be put before the meeting in respect of certain proposed amendments to the Articles of Association by which biennial elections for directors were to be introduced.  When the special business was reached, the Chairman ruled that a large number of proxies were valid, which the applicant claims to have been invalid.  On this basis, it was pleaded that the amendments to the Articles of Association, declared at the meeting to have been carried by special resolution, had not been validly passed; that certain directors had not validly continued in office; and that decisions of the board of NRMA Limited made thereafter had not been valid and effective.

By its cross-claim, NRMA Limited sought a declaration that the special resolution was validly passed.  It was accepted that forms of proxy, under the Articles, had to be "deposited at the registered office" of NRMA Limited not less than 47 hours before the time for the holding of the meeting.  That office is No. 151 Clarence Street, Sydney.  A particular parcel of proxies, which had been forwarded to the Parramatta office of NRMA Limited, was brought by an employee of the company to 151 Clarence Street Sydney by motor car, locked in the boot, and the motor car was parked in the basement car park of that building prior to the expiry of the time for the deposit of the forms.  However, this parcel was not brought up from the car park until shortly after the time had expired.  Exhaustive calculations, which counsel for the applicant cross-respondent did not dispute before me, have shown that on no possible basis could this parcel of proxies have affected the result of the vote.

The first question, one apparently devoid of direct authority, is whether, as the building which was the registered office included the basement car park, the documents had in fact arrived in time.  For NRMA Limited, counsel submitted that the registered office was the building; it was not any particular room or floor in that building.  Reliance was placed on the decision of O'Loughlin J. in Invention Finance Pty Ltd v. Flavel (1988) 13 ACLR 99 at 102 for the proposition that a registered office does not have to constitute what would normally be described as an office; it may, for example, be a residence. As an ordinary English word, "office" is relevantly defined in The New Shorter Oxford English Dictionary (1993) as "A room or building or other place for business".  Funk & Wagnalls Standard Dictionary, international edition (1961), gives the meaning:  "A room or building in which a person transacts his business or carries on his stated occupation". 

What the article plainly was designed to secure is that proxies should be received at the registered office, which is in fact a particular building, a sufficient time before the meeting to enable appropriate checking and computation to be done.  Its purposes were fulfilled when the documents were brought to the building in the charge of an officer of the company.  From a practical point of view, he did not need to remove them from the boot of the vehicle as the information had already been transferred from the forms to the company's computer; that had been done before the documents left Parramatta.  The problem remains whether, within the meaning of the article, the registered office included the basement car park.  In my opinion it did.  I reach this opinion, not merely because the dictionaries to which I have referred suggest that an office may extend to the entire building so designated, but rather upon the true construction of the relevant article.  In such a provision, there would be little sense in excluding from the building designated as the office a part of it to which documents received in substantial bundles would be likely to be brought.  And if a meaning were to be adopted that excluded the car park, the question would have to be asked whether a reception area on the ground floor should also be excluded if all business were transacted at some higher level, or just where a line should be drawn.

Counsel for the applicant cross-respondent argued that the mere fact that members of NRMA Limited had forwarded their proxy forms to the Parramatta office, rather than to the registered office, should be held to have invalidated the proxies.  As I understood his argument, it was that I should infer a deliberate choice to submit the documents only to the wrong address.  I do not draw any such inference.  I think the natural inference is that persons who forwarded such forms to an address likely to find officers of the company intended that their proxies should be made available to the meeting.  That was done by delivering them to the registered office, and those who delivered them were doing so on behalf of the members concerned.  What the relevant article (article 47) required was simply that the "instrument appointing a proxy ... shall be deposited at the registered office ... not less than 47 hours before the time for the holding of the meeting".

However, it is not necessary to rest the decision only on the matters I have been discussing. Section 1322 of the Corporations Law relevantly provides:

"(1)In this section, unless the contrary intention appears:

(a)a reference to a proceeding under this Law is a reference to any proceeding whether a legal proceeding or not; and

(b)a reference to a procedural irregularity includes a reference to:

(i)the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation or at a joint meeting of creditors and members of a corporation;  and

(ii)a defect, irregularity or deficiency of notice or time.

(2)  A proceeding under this Law is not invalidated because of any procedural irregularity unless the Court   is of the opinion that the irregularity has caused or may    cause substantial injustice that cannot be remedied by     any order of the Court and by order declares the      proceeding to be invalid."

By subsection (4), power is conferred on the Court to grant a declaration that any act, matter or thing, or any proceeding, is not invalid in certain circumstances, a power which is qualified by subsection (6).

If what was here involved was a proceeding under the Corporations Law liable to be invalidated by a procedural irregularity, subsection (2) provides that it was not so invalidated in the absence of substantial injustice of the kind specified in the subsection. Plainly, what occurred was of a procedural nature; it concerned the procedures of the company in respect of proxies. Plainly also no substantial injustice was caused or could be caused, since it is accepted that the result of the vote was not affected. The only question is whether the passing of the special resolution was a "proceeding under this Law" within the meaning of the provision. In some contexts, the word "proceeding" refers to a legal proceeding, but in this context it cannot do so. That is because subsection (1)(a) expressly extends the meaning to "any proceeding whether a legal proceeding or not". In this broad sense, uninstructed by authority, I would have thought that the passing of a special resolution is an obvious example of a proceeding under the Corporations Law.

In fact, the authorities support the construction which the language of s.1322 suggests on its face. Well over one hundred years ago, in The Queen v. The Mariquita and New Granada Mining Company (1858) 28 LJQB 67 at 69, the Court of Queen's Bench, speaking through Lord Campbell C.J., held that the expression "the proceedings of the company", in companies legislation then current, referred to "the proceedings of any meeting of the shareholders". More recently, it was held in Broadway Motors Holdings Pty Ltd (In Liq) and the Companies (New South Wales) Code (1986) 6 NSWLR 45 at 56 that "the procedure for summoning an extraordinary general meeting ... was to be regarded as 'a proceeding under (the) Act'". And in Scullion v Family Planning Association of Queensland (1986) 4 ACLC 78 at 83, the Supreme Court of Queensland (Ryan J.) held that the election of councillors at an extraordinary general meeting of the defendant company was a "proceeding" within the meaning of a provision of the Companies (Queensland) Code corresponding to s.1322. Interestingly, that was a case of the wrongful rejection of proxy votes, which his Honour held was a procedural irregularity. I cannot distinguish the allegedly wrongful reception of such votes. See also Re Caysand No 64 Pty Ltd (1993) 11 ACLC 1197 at 1202, a decision of the Supreme Court of Queensland (Thomas J.), and the earlier decision Re Pembury Pty Ltd (1991) 4 ACSR 759.

Accordingly, even if I be wrong in my conclusion that the proxy forms were deposited within time at the registered office of NRMA Limited, s.1322(2) produced the result that the passing of the special resolution was not invalidated. To the extent that a question of discretion is involved, I consider that in the circumstances NRMA Limited is entitled to an exercise of my discretion in its favour. It was for all these reasons that I made the order which I did make upon the cross-claim, declaring the adoption by the company of the special resolution to have been valid.

I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 14 August 1996

Counsel for the Applicant and     Mr J J Garnsey QC and

Cross Respondent:                Mr B J Camilleri

Solicitors for the Applicant     

and Cross Respondent:            Gadens Ridgeway

Counsel for the 1st to 6th       Mr G A Palmer QC and

Respondents:  Mr W G Muddle

Solicitors for the 1st to 6th

Respondents:  Deacons Graham & James

Counsel for the 7th and 8th      Mr A R Emmett QC, 
     Respondents and the              Mr R B S Macfarlan QC
     Cross-Claimant:                  and Mr R J Weber  

Solicitors for the 7th and 8th
     Respondents and the
     Cross-Claimant:                  Minter Ellison

Dates of hearing:                2 June, 17 August and 6 October 1995,

12 August 1996.