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NEW SOUTH WALES SUPREME COURT

 

CITATION:     NRMA Limited v Scandrett & Anor [2002]  NSWSC 1123

 

 

 

CURRENT JURISDICTION:      Equity

 

FILE NUMBER(S):      5261/02

 

HEARING DATE{S):    18 November, 2002

 

JUDGMENT DATE:      25/11/2002

 

 PARTIES:

National Roads and Motorists' Association Limited - Plaintiff

Ian Morris Scandrett - First Defendant

William Snodgrass - Second Defendant

 

JUDGMENT OF:         Palmer J     

 

LOWER COURT JURISDICTION:        Not Applicable

 

 LOWER COURT FILE NUMBER(S):    Not Applicable

 

LOWER COURT JUDICIAL OFFICER:   Not Applicable

 

COUNSEL:

M.L.D. Einfeld QC, R.G. McHugh - Plaintiff

No appearance for Defendants

 

SOLICITORS:

Corrs Chambers Westgarth - Plaintiff

No appearance for Defendants

 

 

CATCHWORDS:

CORPORATIONS - MEETINGS - REQUISITION - DIRECTORS - RESOLUTION FOR REMOVAL - Defendants requisitioned general meeting for the purpose of considering single resolution for the removal of five named directors as a group (Resolution A) - whether more than one director can validly be removed by a single resolution - general policy of Corporations Act - construction of s.203D.  HELD: Resolution A is valid.

RESOLUTION FOR REMOVAL - FUTURE DIRECTORS - Defendants requisitioned general meeting for purpose of considering resolution to remove any director who might be appointed during a specified future period to fill casual vacancies (Resolution B) - construction of s.203D.  HELD: Section 203D applies only to a resolution to remove a director who is in office at the time that notice of intention to remove the resolution is given to the company; Resolution B is invalid.

REQUISITION - IMPROPER PURPOSE - VALIDITY - Whether Defendants had improper purpose in exercising right to requisition a general meeting under s.249D - whether exercise of right was invalid - distinction draw between the purpose for which a right is exercised and the motive for the exercise of that right - principles discussed. HELD: No evidence to justify conclusion that the Defendants' purpose in exercising the requisition right was other than to procure a general meeting to consider and, if thought fit, to pass Resolutions A and B; hostility, ill-will or self interest does not invalidate the exercise of the requisition right if the purpose of the requisition is to have a resolution considered at a general meeting.

 

ACTS CITED:

Acts Interpretation Act, 1901 (Cth) - s.23(b)

Companies Act 1961 - s.118

Interpretation Act 1897 (NSW) - s.21(b)

Report of the Committee on Company Law Amendment (UK Cmd 6659, 1945) ("the Cohen Report")

Corporations Act, 2001 (Cth) - s.201E, s.203D, s.249D, s.249Q, s.1322

 

DECISION:

Requisition for meeting of NRMA to consider Resolution A valid; requisition for meeting to consider Resolution B invalid; general meeting of NRMA required to be held; temporary extension of time granted.

 

 

JUDGMENT:

 

Introduction

 

1                  This application represents yet another skirmish in the internecine war which has engulfed the Plaintiff (“NRMA”).  The Defendants, Messrs Scandrett and Snodgrass, who are members of the NRMA, have requisitioned an Extraordinary General Meeting for the purpose of considering and, if thought fit, passing two resolutions.  There is no dispute that sufficient members of NRMA have joined together with Messrs Scandrett and Snodgrass to requisition a meeting in accordance with s.249D(1)(b) of the Corporations Act, 2001 (Cth) (“CA”).

 

2                  NRMA, however, seeks declarations to the effect that it is not obliged to call and hold the meeting, on the following grounds:

 

–       neither of the two resolutions could validly be passed at any meeting of the company;

 

–       the holding of a meeting for the purpose of considering the resolutions would not be for a proper purpose within the meaning of CA s.249Q;

 

–       the power to requisition a meeting under CA s.249D was exercised by Messrs Scandrett and Snodgrass for an improper purpose and was therefore invalidly exercised.

 

3                  Further, NRMA seeks orders restraining Messrs Scandrett and Snodgrass from presenting any further requisitions to NRMA for the convening of meetings to consider resolutions in terms similar to the subject resolutions.  If the relief sought by NRMA is not granted, it seeks an order under CA s.1322 extending time for the holding of a meeting to consider the resolutions.

 

4                  Mr Einfeld QC has appeared with Mr R.G. McHugh of Counsel to argue the case for NRMA.  Shortly before the matter came on for hearing, the Defendants’ solicitors informed the Court that, due to lack of funds, the Defendants would not be legally represented at the hearing.  The case for NRMA has, therefore, been argued without a contradictor.  This is unfortunate as several questions of importance arise, consideration of which would have benefited from well-balanced debate.  However, I must gratefully acknowledge that Messrs Einfeld and McHugh have, in conformity with the paramount duty of Counsel to assist the Court, brought to my attention not only those authorities which assist their argument but also those which are contrary to it.

 

The subject resolutions

 

5                  The subject resolutions have been called by the parties “Resolution A” and “Resolution B” and are in the following terms:

Resolution A:  “That the following Directors be removed as Directors [of NRMA]:

Ms Kathleen Evans

Mr Bruce Fisher

Mr Brian Johnston

Mr Ken Rennie

Mr Ross Turnbull.”

 

Resolution B: “That each and every member appointed by the Board as a Director to fill a casual vacancy on the Board, if any, between the period:

 

1.      commencing on the day that the polls for resolution 1 and 2 considered at the Special General Meeting of the Company on 17 October 2002 are declared by the Chair, and if they are declared on different days, then the day which is the latter of the two; and

 

2.      concluding on the day after all polls for all resolutions considered at the 2002 Annual General Meeting of the Company are declared by the Chair,

 

be removed as Directors of National Roads and Motorists’ Association Limited.”

 

The relevant background facts

 

6                  Each of the five directors referred to in Resolution A was appointed to fill a casual vacancy arising from the resignation of another director.  Each resigning director was identified as a member of that group or faction within NRMA which is associated with Mr N.R. Whitlam and which is known as “Members First” or “The President’s Team”.

 

7                  The two resolutions were contained in separate requisitions under CA s.249D, both of which were served on NRMA on 18 October 2002.  Shortly thereafter, one of the directors who had been appointed to fill a vacancy, Mr Rennie, resigned.

 

8                  The Extraordinary General Meeting of members referred to in Resolution B was, on 17 October 2002, adjourned to a date to be fixed, without having transacted any business.  Accordingly, the period referred to Resolution B has not yet commenced to run.  The 2002 Annual General Meeting of NRMA has been postponed to 14 January 2003, but it is not yet clear whether the meeting will actually take place on that day.

 

Whether group removal of directors valid

 

9                  Mr Einfeld QC submits that Resolution A cannot validly be passed by a meeting of NRMA because it seeks to remove more than one director.  He says that, both as a matter of general legal principle and as a matter of the proper construction of CA s.203D a director can be removed only by a resolution confined in terms to the removal of that particular director.  Since Resolution A could not validly be passed at any meeting, says Mr Einfeld, the law does not require that a meeting be convened to consider it.  He relies upon NRMA v Bradley (2002) 42 ACSR 616 and on the authorities therein cited.

 

10                CA s.203D relevantly provides:

“Removal by members – public companies

 

(1)  Resolution for removal of director

 

A public company may by resolution remove a director from office despite anything in:

 

(a)  the company's constitution (if any); or

(b)  an agreement between the company and the director; or

(c)  an agreement between any or all members of the company and the director.

 

If the director was appointed to represent the interests of particular shareholders or debenture holders, the resolution to remove the director does not take effect until a replacement to represent their interests has been appointed.

 

(2)  Notice of intention to move resolution for removal of director

 

Notice of intention to move the resolution must be given to the company at least 2 months before the meeting is to be held. However, if the company calls a meeting after the notice of intention is given under this subsection, the meeting may pass the resolution even though the meeting is held less than 2 months after the notice of intention is given.

 

 (3)  Director to be informed

 

The company must give the director a copy of the notice as soon as practicable after it is received.

 

(4)  Director's right to put case to members

 

The director is entitled to put their case to members by:

 

(a)  giving the company a written statement for circulation to members (see subsections (5) and (6)); and

(b)  speaking to the motion at the meeting (whether or not the director is a member of the company).

 

(5)  The written statement is to be circulated by the company to members by:

 

(a)  sending a copy to everyone to whom notice of the meeting is sent if there is time to do so; or

(b)  if there is not time to comply with paragraph (a) – having the statement distributed to members attending the meeting and read out at the meeting before the resolution is voted on.

 

(6)  The director's statement does not have to be circulated to members if it is more than 1,000 words long or defamatory.

 

(7)  Time of retirement

 

If a person is appointed to replace a director removed under this section, the time at which:

 

(a)  the replacement director; or

(b)  any other director;

is to retire is to be worked out as if the replacement director had become director on the day on which the replaced director was last appointed a director.

 

…”

 

11                Mr Einfeld’s first submission is that to treat directors in groups for the purpose of a resolution to remove is to disregard the fundamental principle which guides directors in their office and by which their conduct is to be evaluated.  That principle is that a director must act independently in the best interests of the company as a whole.  As directors are required to act independently, he says, they must be judged independently – they cannot be judged in a “block”.

 

12                The duty of a director to act independently in the discharge of the duties of his or her office does not have any necessary link to the reasons for which that director may properly be removed by members or to the procedure by which he or she may be removed.  A director may be removed from office for any number of reasons which may have nothing to do with the director’s independence or lack of it.  For example, the members may form the view that two or more directors, independent though they are, are incompetent and for that reason they should be removed.  Or again, two or more directors may have participated in some dishonest or improvident transaction in which the company engaged so that members wish to remove at one stroke all directors who were involved.  To take another example, a director may be acting with perfect probity and in a way which he or she genuinely believes is in the interests of the company as a whole, yet the members may form the view that the director’s “vision” for the company, independently formed but shared with other directors of like mind, is not what the majority wants and that that director, as well as the others of like mind, should all be removed forthwith.

 

13                In other words the members may take the view that a group of directors, although comprising different individuals, should all be removed for the same reason and that it is, therefore, appropriate and expedient to remove them by the same resolution.  CA s.203D(3), (4) and (5) afford to each director in the group the separate and independent right and opportunity to persuade the members that they are wrong about his or her relationship with other directors under threat of removal, that he or she is not affected by the same considerations as may apply to the other directors, or that if he or she is affected by the same considerations, nevertheless those considerations do not justify removal.  But that is the only right which the subsections afford;  they do not expressly or implicitly require that that case be in response to a separate resolution directed to each director under threat of removal.

 

14                In my opinion, as a matter of general principle the duty of a director to act independently does not impose a corresponding obligation on the company’s members to consider that director’s proposed removal separately and independently from the proposed removal of other directors.  For these reasons, I am unable to accept Mr Einfeld’s first submission.

 

15                Mr Einfeld’s second submission relies upon CA s.201E, which prohibits the passing of a resolution for the appointment of two or more directors unless a general meeting of members has first unanimously resolved that the appointments may be voted on together.  A similar provision was to be found in s.118 of the Companies Act 1961 and in the successor corporations legislation.  It derives from a recommendation in paragraph 130 of the Report of the Committee on Company Law Amendment (UK Cmd 6659, 1945) (“the Cohen Report”).  The recommendation was expressly adopted by the NSW Parliament in the 1961 Companies Act:  see Second Reading Speech, Hansard, NSW Legislative Council, 16 November 1961 at pp.2598-99.

 

16                The policy behind s.201E and its predecessors has been explained thus by Austin J in Howard v Mechtler (1999) 30 ACSR 434 at 443:

“That provision exists for an important policy purpose. … ‘the purpose of saving members the embarrassment of having to elect X whom they may not want when they elect Y whom they do want.’

 

Therefore, disregard of that provision is likely to produce substantial injustice.”

 

17                Mr Einfeld submits that if a resolution is proposed for the removal of two or more directors it would be an embarrassment to members to have to remove X, whom they wish to retain, when they remove Y and Z, whom they do not wish to retain.  Accordingly, he says, the general policy of the Corporations Act must be to permit members to vote in respect of directors individually, whether the vote relates to the director’s appointment or to the director’s removal.

 

18                In my opinion, the policy which underlies the provisions of CA s.201E regulating the appointment of directors cannot be read into the provisions of s.203D so as to regulate the removal of directors.  I have reached this conclusion for the following reasons.

 

19                First, the two sections deal with acts of a company which are quite different in nature and which have quite different consequences.  Accordingly, considerations applying to the appointment of directors do not necessarily apply to their removal.  For example, a candidate for appointment may not be known to members;  if that candidate’s appointment is linked in the same resolution to the appointment of a well known, existing director, members may be willing to take the risk of appointing an unknown and unsuitable director for the sake of appointing one who is known and regarded as highly suitable.  The appointment of the unsuitable director may later prove to be disastrous for the company but the company may suffer damage before that director can be removed.

 

20                On the other hand, the performance in office of directors under threat of removal is likely to be known to members, enabling them to form a judgment as to which they wish to retain and which they wish to remove.  If the majority comes to the view that one or more of a group of directors the subject of a single removal resolution should be retained and the rest removed, it can achieve that end by simply voting against the resolution in its original terms and procuring a fresh resolution or else voting to amend the resolution by deleting the name of the director to be retained:  see the discussion at paragraphs 31 and 32 infra.

 

21                Second, the omission from CA s.203D of provisions similar to those in s.201E so as to ensure that two or more directors cannot be removed by a single resolution tells strongly against the proposition that the same policy considerations underlie both sections.  It would have been very easy to incorporate into s.203D provisions similar to those in s.201E if that had been Parliament’s intention.  The issue of “block voting” had been under discussion in the United Kingdom and in Australia since the 1945 Cohen Report but only in relation to the appointment of directors, not to their removal.  It would be presumptuous to think that, in enacting s.118 of the 1961 Companies Act and its successor sections in later corporations legislation, the legislature has simply overlooked the obvious questions whether the removal of directors should be subject to the same provisions as their appointment and, if so, whether there should be an express provision to that effect in the legislation.  On the contrary, it is safe to conclude that the legislature’s omission to regulate the removal of directors in the same way as their appointment is deliberate because the same policy considerations are not seen to underlie both appointment and removal.

 

22                Third, Mr Einfeld focuses on the fact that CA s.203D refers throughout only to “a director” or “the director”.  This use of the singular indicates, he says, that a resolution for the removal of a director means a resolution for the removal of only one director.  Mr Einfeld frankly concedes that there are two authorities contrary to this submission but he says that those authorities, while they have persuasive weight, do not bind this Court and should not be followed.  The authorities are Taylor v McNamara [1974] 1 NSWLR 164, a decision of Mahoney J (as he then was), and Claremont Petroleum NL v Indosuez Nominees Pty Ltd (1986) 10 ACLR 520, a decision of the Queensland Court of Appeal which followed and applied Taylor v McNamara.

 

23                In Taylor v McNamara the plaintiff was one of the directors of a company all of whom had been removed by a single resolution of the members purportedly passed under s.120(1) of the Companies Act 1961.  That section, a predecessor of CA s.203D(1), provided:

“A public company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between it and him but where any director so removed was appointed to represent the interests of any particular class of shareholders or debenture holders the resolution to remove him shall not take effect until his successor has been appointed.”

 

24                The plaintiff sought a declaration that the resolution removing him was invalid because s.120(1) authorised the removal of only one director by any resolution.  The plaintiff conceded that s.21(b) of the NSW Interpretation Act 1897 prima facie operated to require that reference in s.120(1) to “a director” in the singular be read as including the plural.  That section has effect “unless the contrary intention appears”.  The plaintiff submitted that the general policy of the Companies Act demonstrated a contrary intention.

 

25                At pp.170-171, Mahoney J said:

“In the application of s 21 (b) and the determination of whether there is a contrary intention within the meaning of that section, it is of course necessary to determine what is the relevant legislative intention. This intention is to be derived from the terms of the statute. The intention or the existence of a contrary intention may be inferred from an actual inconsistency between the text of the statute as it is and the text of the statute as it would be if it were expanded by the application of the Interpretation Act. The inference of a contrary intention is not, of course, limited to such a case. Such a contrary intention may be inferred from, for example, the assumptions which are found to be made by the statute or from the general structure of the remedy or the procedure provided by the statute. However, the basic question remains the determination of the intention of the statute and the references in general terms to ‘the policy of the legislation’ sometimes tend to mask rather than to elucidate the nature of the problem in question.

 

I can see a number of reasons of policy (if that term be appropriate to be used) why the legislature, had it chosen to adopt that particular policy in relation to removal of directors, might well have required that the removal of a director or directors before the expiration of his or their term of office should take place only in relation to individual directors or directors one at a time and not in relation to all or several of the directors at one time or by one resolution. However, Mr. Tolhurst in his argument has not been able to point to anything in the statute which indicates that the legislature has adopted such a policy, and, in the absence of some such indication of intention, I do not think that I should limit the effect which, prima facie, s. 120 (1) as supplemented by s. 21 (b) of the Interpretation Act would normally have.”

 

26                His Honour concluded that there was no reason why it should be inferred that the intention of the legislature was inconsistent with the reading of “a director” in s.120(1) as “directors” as required by the Interpretation Act, so that a resolution under that section for the removal of all directors of a company was valid.

 

27               Taylor v McNamara is directly in point in the present case because the words of s.120(1) of the 1961 Companies Act are, in essential respects, the same as the words of CA s.203D(1), and s.21(b) of the NSW Interpretation Act is to exactly the same effect as s.23(b) of the Commonwealth Acts Interpretation Act, 1901, which applies to the Corporations Act.

 

28                Mr Einfeld says, however, that Taylor v McNamara should not be followed because the Court did not give any attention to the policy which was evident in s.118 of the Companies Act.  Section 118 was, of course the predecessor to CA s.201E.  Mr Einfeld’s submission that Taylor v McNamara was wrongly decided is, therefore, essentially the same submission as he has made in regard to the policy of the Corporations Act as that policy is said to emerge from s.201E.

 

29                It is inconceivable, in my opinion, in construing s.120(1) of Companies Act, Mahoney J overlooked s.118 when coming to the conclusion that nothing in that Act evinced the legislative policy for which the plaintiff contended.  For the reasons which I have given above, I do not think that either s.118 of the Companies Act or CA s.201E evinces a general legislative policy that the removal of directors should be effected by separate resolutions.  In my view, Taylor v McNamara was rightly decided and should be followed.

 

30                Fourth, Mr Einfeld submits that Resolution A cannot validly be put to a meeting because it cannot be passed in the terms proposed.  That is so because the resolution proposes the removal of five directors, including Mr Rennie, and Mr Rennie resigned as a director shortly after the requisition containing Resolution A was delivered to NRMA.

 

31                I do not think that this submission has any substance because Resolution A could validly be amended at a general meeting so as to delete Mr Rennie’s name.  The applicable principle is stated by Young J (as he then was) in Totally & Permanently Incapacitated Veterans’ Association of NSW Ltd v Gadd (1998) 28 ACSR 549.  At 553, his Honour, after reviewing the authorities, says:

“…an amendment cannot go beyond the matters to which the shareholders’ attention has been drawn in the notice of meeting, but if the general substance of what is in the notice of meeting is not affected by the resolution as passed, or something lesser is proposed by way of amendment, then that is quite in order.”

 

32                The substance of Resolution A is the removal of five named directors.  If one of the named directors is no longer in office at the time of the meeting, an amendment to the resolution to remove the name of the ex-director is well within the substance of the original resolution because all it seeks to do is to achieve what was necessarily implicit in the resolution in the first place, namely, the removal of such of the named directors as are in office as at the date of the meeting.

 

33                For those reasons, NRMA fails in its submission that Resolution A is not a resolution which can validly be passed at a meeting of the company.

 

Whether resolution for removal of future directors valid

 

34                If resolution B were passed, a director appointed to fill a vacancy during the specified period would be removed from office immediately upon, and by virtue of, his or her appointment.  It would be impossible for such a director to exercise the right to put his or her case to members in accordance with CA s.203D(3), (4) and (5).

 

35                This is sufficient, in my view, to lead to the irresistible conclusion that CA s.203D(1) and (2) apply only to a resolution to remove a director who is in office at the time that the notice of intention to move the resolution is given to the company.  Resolution B seeks the removal of unnamed directors not yet appointed so that it may not validly be passed at a meeting of NRMA.

 

Whether requisition for Resolution A invalid

 

36                Because Resolution B may not validly be put to a meeting of NRMA, it is necessary to deal with NRMA’s remaining submissions only in so far as they relate to the question whether a meeting must be called to consider Resolution A.

 

37                Mr Einfeld’s submissions in this regard found upon the established principle that the right given to members of a company to requisition a general meeting, such as is afforded by CA s.249D(1), is a right which must be exercised for the purpose for which it is given.  If a member exercises the right to requisition a meeting for a purpose other than the passing of the resolution contained in the requisition then the requisition is invalid:  see Ngurli Ltd, Carinya Ltd, Fitzroy Ltd & Myall Ltd  v McCann (1953) 90 CLR 425, at 438;  Humes Ltd v Unity APA Ltd (No 1) [1987] VR 467, at 470-471.

 

38                Mr Einfeld says that the Defendants have exercised their right under CA s.249D(1) to requisition a meeting to consider Resolution A for a number of purposes which render the requisition invalid.  It is important to note at the outset, however, that Mr Einfeld concedes that the Defendants seek to have Resolution A considered and, if thought fit, passed a general meeting of NRMA.  Indeed, such scant evidence as there is suggests that the Defendants intend to keep exercising the right to requisition meetings until such resolutions are passed as will give them and other members of like mind control of the Board.  Mr Einfeld concedes that the recent history of NRMA meetings and the voting thereat cannot justify a submission that there is no prospect of Resolution A being passed.

 

39                Mr Einfeld submits, however, that in addition to the purpose of having Resolution A passed, the Defendants have other purposes in requisitioning a meeting which are improper.  The improper purposes, he says, invalidate the exercise of the requisition right.  Mr Einfeld formulates his proposition thus:  if a member has more than one purpose in requisitioning a general meeting, one purpose being to have the meeting consider and, if thought fit, pass the resolution the subject of the requisition, and another purpose being, for example, to harass the company or to cause trouble and expense to its directors, then the existence of the second purpose vitiates the requisition entirely.  Mr Einfeld acknowledges that this proposition is contrary to authority but he says that that authority is wrongly decided.

 

40                Before discussing this proposition as a matter of principle, I should deal with the submissions as to the particular alleged purposes of the Defendants said to be improper.

 

41                First, Mr Einfeld says that Resolution A must be seen together with Resolution B as “part of a package”, both resolutions representing an attempt by the Defendants to fetter the power of the Board to fill casual vacancies which is conferred by Article 87 of the NRMA Constitution

 

42                I am unable to accept this submission.  Resolutions A and B are not linked or otherwise made interdependent.  If only Resolution A goes to a meeting and is passed, what will have happened is that the Board will validly have exercised its right under Article 87 to fill casual vacancies by appointing certain directors and the Defendants will subsequently have validly and successfully exercised their rights under s.249D(1) and s.203D(1) to procure a general meeting whereby the will of the majority of members as to the continuance in office of those directors has been expressed.  Both the Board and the requisitionists will have availed themselves of co-existing legal rights, neither of which is paramount to the other.  The Board has no right under Article 87 or under the Corporations Act to entrench in office the directors which it appoints to fill casual vacancies, as CA s.203D(1) makes plain.

 

43                Second, Mr Einfeld says that the requisitions for a meeting to consider Resolutions A and B should be seen as part of a campaign which is being waged for the benefit of one group of directors in order to enable that group to gain control of the Board, regardless of the cost to NRMA, financial or otherwise.

 

44                Let it be assumed that such is, indeed, the purpose of the requisitionists.  Even so, that purpose is not an improper one.  The right to requisition a meeting under CA s.249D(1) for the purpose of removing directors under s.203D exists so that something akin to the democratic process is allowed to work in the governance of public companies.

 

45                Just as in the body politic, so also in the body corporate, factions contend for power.  The faction in office usually regards as abhorrent the very possibility that the opposing faction may itself achieve office, firmly believing that the opposing faction does not have at heart the best interests of the body as a whole.  The opposing faction entertains the same charitable view of the motives held by the faction in power.  In the body politic the will of the majority is permitted to decide the contest as often as elections may lawfully be held.  In the case of a public company, the will of the majority is permitted to decide the contest as often as members can muster sufficient numbers to invoke the right to requisition a meeting under s.249D(1) for the purpose of a resolution under s.203D(1).

 

46                It so happens that convening a general meeting of NRMA is an extremely expensive process because the company has some two million members.  But that circumstance, peculiar to NRMA, does not extinguish or modify the right of its members, in common with members of all public companies, to requisition a meeting as often as they can obtain the requisite numbers under s.249D(1) so long as it can be seen that the purpose in requisitioning the meeting is a proper one.

 

47                Mr Einfeld says that the Defendants do not have a proper purpose because they have evinced an intention to requisition meetings as often as they can, regardless of the heavy costs of convening them, “in order to advance a private agenda”.  He points to what he says is intemperate, even defamatory, language in the draft Statement in support of Resolutions A and B provided by the Defendants to NRMA for circulation to members pursuant to CA s.249P.  He says also that the Defendants must have known that Resolution B was invalid.

 

48                NRMA bears the onus of proving that the Defendants actually intend to inflict on it unnecessary financial expense as a tactic in their battle for control of the Board.  I cannot find that it has discharged that onus, for the following reasons.

 

49                The Defendants’ requisitions are in response to a particular action of the Board, i.e. the filling of certain casual vacancies.  The draft s.249P Statement and many other public statements of the Defendants which have been adduced in evidence leave me in no doubt that the Defendants believe strongly that the directors presently in the majority on the Board of NRMA, the so-called “Members First” faction, have acted in a manner that is highly detrimental to the interests of the company as a whole and that the appointment of the directors named in Resolution A to fill casual vacancies was simply a manoeuvre by that faction to entrench themselves in office.  Whether the Defendants and those other members who support them are correct in that view is not for this Court to judge in the present application but there is nothing in the evidence to suggest that the Defendants and their supporters do not genuinely hold that view.

 

50                In arriving at these conclusions, I have not overlooked Mr Einfeld’s submission that the Defendants must have known that Resolution B was invalid.  I am unable to accept that submission.  There is no evidence that the Defendants are lawyers or that they received legal advice in the drafting of Resolution B.  While the Defendants may well have picked up a few legal point in their many battles with NRMA, I would say, without intending any disparagement, that they would probably be the first to describe themselves as no more than “bush lawyers”.  I am unable to conclude that the Defendants must have known that Resolution B was invalid.

 

51                In my opinion, therefore, nothing has been shown by NRMA which would lead to the conclusion that in requisitioning a meeting of members the Defendants had any purpose other than to procure the passing of Resolutions A and B.  It follows that the Defendants’ exercise of their right to requisition such a meeting under CA s.249D(1) was valid.

 

52                For the sake of completeness, I should deal with MrEinfeld’s submission that if a requisitionist has more than one purpose in exercising the requisition power under s.249D(1), one proper and the other improper, then the power is invalidly exercised.