FEDERAL COURT OF AUSTRALIA Aveo Group Limited v State Street Australia Ltd in its capacity as custodian for the Retail Employees Superannuation Pty Limited as trustee of the Retail Employees Superannuation Trust [2015] FCA 1019 Citation: Aveo Group Limited v State Street Australia Ltd in its capacity as custodian for the Retail Employees Superannuation Pty Limited as trustee of the Retail Employees Superannuation Trust [2015] FCA 1019 Parties: AVEO GROUP LIMITED (ACN 010 729 950) and RETIREMENT VILLAGES GROUP MANAGEMENT PTY LTD (ACN 119 974 819) v STATE STREET AUSTRALIA LTD (ACN 002 965 200) IN ITS CAPACITY AS CUSTODIAN FOR THE RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST, RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST, RETIREMENT VILLAGES GROUP RE LIMITED (ACN 119 974 597) IN ITS CAPACITY AS RESPONSIBLE ENTITY FOR THE RETIREMENT VILLAGES TRUST (ARSN 127 682 811), RETIREMENT VILLAGES AUSTRALIA LIMITED (ACN 119 264 872) and RVNZ INVESTMENTS LIMITED (ACN 604 453 545) File number: VID 500 of 2015 Judge: BEACH J Date of judgment: 9 September 2015 Catchwords: CORPORATIONS – stapled securities – convening of shareholders meetings – validity of notices convening meetings – validity of special resolutions – ss 249F and 252D of Corporations Act 2001 (Cth) – Constitutions – construction of constituent documents – construction of Securityholders Deed – termination of Advisory Services Deed – application dismissed Legislation: Corporations Act 2001 (Cth) ss 9, 136(2), 140(1), 162, 203D, 246B(2), 249F, 249N, 252D, 254H(1), 256B, 256C, 257D, 601GC(1)(a), 1322 Cases cited: Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia [2015] FCA 785 Australian Hydrocarbons NL v Green (1985) 10 ACLR 72 Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 55 ACSR 185 Donaldson v Natural Springs Australia Limited [2015] FCA 498 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 Gramophone & Typewriter Ltd v Stanley [1908] 2 KB 89 HNA Irish Nominee Ltd v Kinghorn (2010) 78 ACSR 553; [2010] FCAFC 57 Hopkins Professional Services Pty Ltd v Foyster Holdings Pty Ltd (2001) 39 ACSR 519 Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1 Molopo Energy Ltd v Keybridge Capital Ltd (2014) 104 ACSR 46 National Roads & Motorists' Association v Parker (1986) 6 NSWLR 517 Oil Basins Ltd v Bass Strait Oil Company (2012) 297 ALR 261; [2012] FCA 1122 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Taiqi Investments (Aust) Pty Ltd v Winlyn Developments Pty Ltd (2011) 86 ACSR 197; [2011] NSWSC 1218 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Date of hearing: 9 September 2015 Date of publication of reasons: 11 September 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 95 Counsel for the Applicants: Mr P D Crutchfield QC with Dr C G Button Solicitors for the Applicants: Minter Ellison Counsel for the First and Second Respondents: Mr C M Scerri QC with Mr C M Archibald Solicitors for the First and Second Respondents: Allens Counsel for the Third and Fourth Respondents: The Third and Fourth Respondents did not appear Counsel for the Fifth Respondent: Mr S Prendergast Solicitors for the Fifth Respondent: Norton Rose Fulbright Australia IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 500 of 2015 BETWEEN: AVEO GROUP LIMITED (ACN 010 729 950) First Applicant RETIREMENT VILLAGES GROUP MANAGEMENT PTY LTD (ACN 119 974 819) Second Applicant AND: STATE STREET AUSTRALIA LTD (ACN 002 965 200) IN ITS CAPACITY AS CUSTODIAN FOR THE RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST First Respondent RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST Second Respondent RETIREMENT VILLAGES GROUP RE LIMITED (ACN 119 974 597) IN ITS CAPACITY AS RESPONSIBLE ENTITY FOR THE RETIREMENT VILLAGES TRUST (ARSN 127 682 811) Third Respondent RETIREMENT VILLAGES AUSTRALIA LIMITED (ACN 119 264 872) Fourth Respondent RVNZ INVESTMENTS LIMITED (ACN 604 453 545) Fifth Respondent JUDGE: BEACH J DATE OF ORDER: 9 September 2015 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicants' originating application be dismissed. 2. The applicants pay the respondents' costs of and incidental to this proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 500 of 2015 BETWEEN: AVEO GROUP LIMITED (ACN 010 729 950) First Applicant RETIREMENT VILLAGES GROUP MANAGEMENT PTY LTD (ACN 119 974 819) Second Applicant AND: STATE STREET AUSTRALIA LTD (ACN 002 965 200) IN ITS CAPACITY AS CUSTODIAN FOR THE RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST First Respondent RETAIL EMPLOYEES SUPERANNUATION PTY LIMITED (ACN 001 987 739) AS TRUSTEE OF RETAIL EMPLOYEES SUPERANNUATION TRUST Second Respondent RETIREMENT VILLAGES GROUP RE LIMITED (ACN 119 974 597) IN ITS CAPACITY AS RESPONSIBLE ENTITY FOR THE RETIREMENT VILLAGES TRUST (ARSN 127 682 811) Third Respondent RETIREMENT VILLAGES AUSTRALIA LIMITED (ACN 119 264 872) Fourth Respondent RVNZ INVESTMENTS LIMITED (ACN 604 453 545) Fifth Respondent JUDGE: BEACH J DATE: 11 september 2015 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 By their originating application, the applicants sought declaratory relief in respect of a resolution which the first and second respondents (REST) proposed to put at company and trust meetings scheduled to commence at 12.00 noon on Thursday, 10 September 2015. 2 Those meetings were called by REST by notices purportedly issued under ss 249F and 252D of the Corporations Act 2001 (Cth) (the Act) to consider as a "special resolution" under s 9 of the Act a resolution in the following terms (the proposed resolution): That Retirement Villages Group Management Pty Limited (ACN 119 974 819) (the Advisor) be removed, and the Advisor's appointment be terminated in accordance with clause 13.3(a)(vii) of the Advisory Services Deed between the Company, Retirement Villages Group R.E. Limited (ACN 119 974 597) in its capacity as responsible entity of Retirement Villages Trust (ARSN 127 682 811), RVNZ Investment Limited (ACN 604 453 545) and the Advisor dated 28 September 2007, as amended from time to time (the Advisory Services Deed). 3 I have set out the detail of the parties, the relevant investment structures and how the present dispute has arisen between the parties from [8] of these reasons. 4 In summary, the applicants' case was the following: (a) First, except where securityholders used their power under cl 5.4 of the Securityholders Deed (SHD) to requisition meetings of members to consider termination of the Advisory Services Deed (ASD) pursuant to cl 13.3(vi), termination of the ASD was a matter for those vested with the power to manage the Stapled Entities (a term that I elaborate on at [8] below), being the relevant Boards (and responsible entity) of the Stapled Entities; (b) Second, although the approval of securityholders was required before the Stapled Entities could terminate the ASD pursuant to cl 13.3(a)(vii), securityholders had no power to interfere in the business of the Stapled Entities by seeking to initiate termination of the ASD under cl 13.3(a)(vii); (c) Third, in any event: (i) the proposed resolution purported to effect a result (termination of the ASD) which was outside the power of the securityholders to effect; (ii) a resolution of the kind contemplated by cl 13.3(a)(vii) of the ASD (which was a "super majority resolution" requiring 75% of the votes of those eligible to vote, not just 75% of votes cast) was not a "special resolution" within the terms of s 9 of the Act; (iii) the members of the Retirement Villages Trust (RVT) had no power under s 252D of the Act to convene a meeting to consider a resolution which was not a special (or extraordinary) resolution under the Act; and (iv) by purporting to call meetings to consider a special resolution within the terms of the Act, the notices issued by REST were ineffective to call meetings to consider resolutions which were not special resolutions; and (d) Fourth, because Aveo Group Limited (Aveo) could not vote its interest on a resolution to terminate the ASD under cl 13.3(a)(vii), but could vote on a resolution to terminate under cl 13.3(a)(vi) of the ASD, REST's attempt to call meetings to terminate the ASD through cl 13.3(a)(vii) of the ASD was a "transparent attempt to invoke a process that excludes Aveo's vote"; and (e) Fifth, unless the meetings of all three Stapled Entities had been validly convened and could validly pass the proposed resolution, the conduct of the meeting of any one alone would be futile because, pursuant to cl 13.3 of the ASD, all three had to validly pass the proposed resolution in order for the ASD to be terminated. 5 Contrastingly, REST submitted that the applicants' submissions addressed the wrong questions. It was said that the determinative question was whether a special resolution that was passed with the requisite majority for the purposes of cl 13.3(a)(vii) of the ASD would be an effective resolution. REST submitted that such a resolution would be effective and that securityholders were entitled to convene meetings to vote on the proposed resolution. 6 In elaboration, REST submitted that: (a) First, cl 4.2 of the SHD expressly provided that securityholders in a Stapled Entity could request or call and arrange to hold general meetings in accordance with the requirements and procedures under any applicable law. Accordingly, there was no restriction on REST's ability to convene a meeting under ss 249F and 252D of the Act; (b) Second, REST had called a meeting of the members of each of the fourth and fifth respondents pursuant to s 249F of the Act, there being no restriction on the type of resolution that could be put to members under that provision; (c) Third, REST had called a meeting of the members of RVT pursuant to s 252D of the Act to consider and vote on a special resolution (within the contemplation of the Act) in the terms of the proposed resolution; (d) Fourth, if the proposed resolution was passed as a special resolution (i.e., passed by at least 75% of the votes cast by members entitled to vote on the resolution) it would be effective for the purposes of cl 13.3(a)(vii) if it was passed to the extent of 75% of all votes eligible to be cast; and (e) Fifth, the proposed resolution was consistent with the proper construction of the constituent documents of the Stapled Entities as: (i) the constituent documents contemplated that securityholders were able (and, indeed, were required to as a prerequisite to the termination right arising) to pass a resolution for the purposes of cl 13.3(a)(vii) of the ASD; (ii) cl 13.3(a)(vii) was intended to protect the interests of non-Aveo securityholders; the applicants' construction would deny them that protection; and (iii) there was nothing in the terms of cl 5.1 or 5.4 of the SHD which entailed a contrary conclusion. 7 This matter was listed before me on 7 September 2015 for directions and to deal with the applicants' interlocutory injunction application given that the various securityholders' meetings were to be held on 10 September 2015. I formed the view that the matter should proceed expeditiously to a final hearing, which I fixed for 9 September 2015. On 9 September 2015 the final hearing took place. The applicants and the first and second respondents were represented before me and took an active role in the proceeding. The third, fourth and fifth respondents filed submitting appearances indicating that they would abide any order of the Court; nevertheless the fifth respondent was represented before me. Several hours after the conclusion of the hearing, I announced my determination to the parties. I dismissed the applicants' originating application with costs. These are my reasons for that dismissal. Factual Background 8 Aveo is a securityholder in a stapled investment known as the Retirement Villages Group (RVG). RVG comprises three stapled entities: (a) Retirement Villages Australia Limited (RVAL), an Australian public company; (b) RVT, an Australian managed investment scheme registered under Chapter 5C of the Act whose responsible entity is Retirement Villages Group R.E. Limited (RVGRE), a wholly owned subsidiary of Aveo; and (c) RVNZ Investments Limited (RVNZI), another Australian public company, (collectively, the Stapled Entities). Aveo and its related entities hold 38.79% of the securities in RVG. 9 The second applicant (RVGM) is a securityholder in RVG, and is also the manager of RVG pursuant to the terms of the ASD dated 28 September 2007 between it and the Stapled Entities. In January 2012, Aveo acquired 100% of the shares in RVGM. 10 The first respondent is State Street Australia Ltd in its capacity as custodian for the second respondent, Retail Employees Superannuation Pty Limited, as trustee of the Retail Employees Superannuation Trust; I have earlier referred to this collectively as REST. REST is a securityholder in RVG. It has issued the notices calling meetings of the Stapled Entities which are the subject of the present proceeding. 11 The third respondent is the responsible entity of RVT, one of the Stapled Entities. The fourth and fifth respondents are the other two Stapled Entities (RVAL and RVNZI). 12 As I have said, RVG is managed by RVGM under the ASD. Clause 13 of the ASD (as amended) provides that the term of the appointment of RVGM as the advisor to RVG continues until RVGM is removed as the advisor, RVGM resigns as the advisor or RVG is wound up. 13 Clause 13.3 sets out the circumstances in which the appointment of RVGM as the advisor may be terminated. 14 Clause 13.3 provides: (a) The Advisor's appointment may only be terminated by the Stapled Entities if (provided that in the case of clause 13.3(a)(vi) the Stapled Entities must terminate the appointment of the Advisor if the relevant resolution has been passed by the required majority): (i) the Advisor ceases to carry on business; (ii) the Advisor ceases to hold any licence or authorisation necessary to lawfully perform its obligations under this Deed; (iii) the Advisor is placed in Liquidation; (iv) the Advisor commits a material breach of this Deed which is not rectified 60 days after a Stapled Entity provides the Advisor with written notice of that breach; (v) the Advisor acts with gross negligence or wilful misconduct in carrying out its obligations under this Deed or engages in fraudulent or dishonest acts, (vi) a resolution to remove the Advisor is passed in respect of all the Stapled Entities by at least 75% of the total votes that may be cast by all Securityholders entitled to vote on each of those resolutions, including Securityholders who are not present in person or by proxy and, subject to the Law, the Excluded Securityholders. (vii) The Stapled Entities are not Listed and: (A) as at a Performance Test Calculation Date: (I) the Performance Test Return for the 3 consecutive Performance Test Periods prior to and including the Performance Test Period ending on the Performance Test Calculation Date is less than the Performance Test Benchmark Return; and (II) the Cumulative Benchmark Index exceeds the Cumulative Property Index; and (B) within 3 months after that Performance Test Calculation Date, a resolution to remove the Advisor is passed in respect of all the Stapled Entities by at least 75% of the total votes that may be cast by all Securityholders entitled to vote on each of those resolutions, including Securityholders who are not present in person or by proxy but excluding the Excluded Securityholders. Each variable for the purposes of this clause 13.3(a)(vii) is to be calculated by the Advisor at the Performance Test Calculation Date and is conclusive, in the absence of manifest error. (b) If the Advisor's appointment is terminated pursuant to clause 13.3(a) or the Advisor resigns pursuant to clause 13.2, all directors, executives, employees, representatives, assignees and delegates of the Advisor, its Related Bodies Corporate and its Related Entities will cease work under this Deed at the date of the Advisor's termination, unless the Board of a Stapled Entity has given a direction in accordance with clause 13.5. (c) If, at a Liquidity Review Date, the target equity internal rate of return for the Stapled Entities determined by the Stapled Entities (after the deduction of Base Fees, Performance Fees and expenses under clause 11.1) differs to a material extent from 12% per annum: (i) the Advisor must serve a written notice on the Stapled Entities proposing an amendment to the definition of "Performance Test Benchmark Return" in clause 1.1 (the "Benchmark Return Amendment"); (ii) the Stapled Entities must, as soon as practicable following receipt of such notice, requisition a meeting of Securityholders to vote on a resolution to approve the Benchmark Return Amendment; (iii) the Advisor shall have the right to speak at any meeting at which such resolution is to be considered and to send a circular to Securityholders prior to such meeting; and (iv) the Stapled Entities must use best endeavours to assist the Advisor to speak and send a circular. If a resolution to approve the Benchmark Return Amendment is passed in respect of all the Stapled Entities by at least 50% of the total votes that may be cast by all Securityholders entitled to vote on the resolution, including Securityholders who are not present in person or by proxy, but excluding the Excluded Securityholders, the Parties must do all things (including executing all necessary documents) to give effect to the Benchmark Return Amendment. 15 If the ASD is terminated, cl 13.5 of the ASD provides that: ... the Board of each Stapled Entity may give directions to the Advisor, to undertake any actions reasonably necessary: (a) to deal with any aspect of the ownership or control of the Portfolio of the relevant Stapled Entity; and (b) to do all other things in each case as are reasonably necessary to bring the appointment of the Advisor to an end and, where appropriate, assist in the appointment of a replacement advisor for the relevant Stapled Entity, and the Advisor will comply with all such directions. The Constitutions and SHD 16 Each of the Stapled Entities is governed by a Constitution. 17 With the exception of RVGRE, these Constitutions incorporate by reference the terms of the SHD between the Stapled Entities, RVGM and each securityholder in RVG. The SHD sets out the arrangements for the operation of the business to be carried on by RVG, the control and management of RVG and the securityholders' rights and obligations as members of the Stapled Entities. 18 Clause 4.2 of the SHD provides as follows: The Board of a Stapled Entity may at any time call a meeting of holders of Securities in that Stapled Entity. Holders of Securities in a Stapled Entity may also request or call and arrange to hold general meetings in accordance with the requirements and procedures under any applicable law. Subject to applicable Law, the general conduct of each general meeting of a Stapled Entity and the procedures to be adopted at that general meeting will be governed by the relevant Constituent Documents. 19 Clause 5.1 of the SHD provides that: Except as otherwise provided by this deed, any proposal by the Stapled Entities in respect of a Securityholder Reserved Matter must be approved by a resolution having the requisite majority for that Securityholder Reserved Matter as specified in Schedule 1, in each case in accordance with the Constituent Documents. 20 Securityholder Reserved Matter is defined in cl 30.1 of the SHD to mean "those matters set out in Schedule 1". Schedule 1 includes termination of the ASD as a Securityholder Reserved Matter requiring a "Super Majority". 21 Clause 5.4 of the SHD provides that: Each Stapled Entity must call a meeting of holders of its Securities within 20 Business Days of the date of receipt of a request from holders with at least 5% of the votes that may be cast at a general meeting of the relevant Stapled Entity, to consider and, if thought fit, pass a resolution to terminate the Advisory Services Deed in accordance with clause 13.3(a)(vi) of the Advisory Services Deed, such meeting to be held no later than two months after it is called. 22 Clause 5.5 of the SHD provides: Subject to: (a) clause 11.4; (b) the Excluded Securityholders not being entitled to vote: (i) as provided for in clause 13.3(a)(vii) of the Advisory Services Deed; (ii) in respect of a resolution to change the Investment Restrictions; or (iii) in respect of a resolution to authorise RVG to incur borrowings in excess of the Gearing limits set out in the Investment Restrictions; (c) the Constituent Documents; and (d) the Law, (e) each holder of Securities in a Stapled Entity may vote on any resolution put at a meeting of Securityholders. 23 Neither the Constitutions of the Stapled Entities nor the SHD contain any similar express provision allowing securityholders in RVG to requisition meetings to consider resolutions relating to termination of the ASD under the "for cause" provision of cl 13.3(a)(vii). 24 Schedule 1 of the SHD provides: Schedule 1 — Securityholder Reserved matters 1 Super Majority Resolution A resolution in respect of the following matters must be passed by Securityholders as a Super Majority Resolution: (a) termination of the Advisory Services Deed; (b) appointment of a new advisor to provide management or advisory services to the Stapled Entities, following termination of the Advisory Services Deed; (c) conversion of RVG to a listed entity (other than on a Liquidity Review Date); (d) changes to the Investment Restrictions; (e) RVG incurring borrowings in excess of the Gearing limits set out in the Investment Restrictions; or (f) any changes to the number of Directors, and/or the proportion of independent directors to other directors, on the boards of the Stapled Entities. 2 Special Resolution A resolution in respect of the following matters must be passed by Securityholders as a Special Resolution: (a) any material changes to the terms and conditions of the Advisory Services Deed in respect of the following matters: (i) any changes which increase the fees payable by the Stapled Entities to the Advisor; (ii) any changes which alter the termination provisions; or (iii) any changes which the Stapled Entities reasonably consider will have a material adverse impact on the Stapled Entities' ability to comply with their obligations under this deed, the Constituent Documents or the Law; (b) subject to clause 1.1(b), any issues of New Stapled Securities which are proposed to be made before the earlier of: (i) the second anniversary of the Initial Closing Date; and (ii) the date on which the aggregate amount of all Commitments has been called; (c) any alteration to rights attaching to the Stapled Securities; (d) any proposal to wind up or dissolve RVG. 3 Extraordinary Resolution A resolution in respect of the following matters must be passed by Securityholders as an Extraordinary Resolution: (a) approval of a Liquidity Resolution at a Liquidity Strategy Meeting; (b) any changes to the Investment Guidelines. 25 A Super Majority Resolution is defined in cl 30.1 of the SHD to mean "a resolution that has been passed by at least 75% of the total votes that may be cast by securityholders entitled to vote on the resolution (including Securityholders who are not present in person or by proxy)". 26 Clause 3.7 of the SHD also provides for the formation of a securityholders committee (Committee). Aveo and its associates are not permitted to be members of the Committee. 27 Under cl 3.7(b) of the SHD, the Committee's role with respect to the affairs of RVG is limited to the Committee Matters, which are set out in cl 3.7(n) of the SHD. Relevantly these include: 3.7(n)(c) consultation with Nominated Representatives and opportunity for them to provide feedback on Securityholder Reserved Matters prior to the relevant resolution being put to Securityholders in accordance with the Securityholders Deed. 28 Nominated Representative is defined in cl 30.1 of the SHD to mean "the representative of a Securityholder appointed to the Committee under clause 3.7(j)". 29 Under cl 12 of the SHD, RVG is required to have a liquidity review every ten years. The liquidity review is a process by which 50% of all securityholders can require that a strategy be implemented by the Stapled Entities to provide a liquidity opportunity for securityholders. If there is no agreement regarding such a strategy, the Stapled Entities must use reasonable endeavours to develop and implement strategies to provide liquidity for all securityholders who require liquidity within 12 months. The first liquidity review is due in 2017. 30 On or about 12 August 2015, Aveo and RVGM, in their capacity as an RVG securityholder, each received a notice dated 7 August 2015 from REST. As noted above, REST is also a securityholder in RVG. The notices purported to convene meetings of the holders of securities in RVAL, RVT and RVNZI to be held at 12.00 noon on 10 September 2015 (REST Notices). 31 The REST Notices state that the meetings of RVAL and RVNZI are being called under s 249F of the Act and that the meeting of the unitholders in RVT is being convened under s 252D. 32 Each of the REST Notices proposes what is described as a "special resolution" in the following terms: That Retirement Villages Group Management Pty Limited (ACN 119 974 819) (the Advisor) be removed, and the Advisor's appointment be terminated in accordance with clause 13.3(a)(vii) of the Advisory Services Deed between the Company, Retirement Villages Group R.E. Limited (ACN 119 974 597) in its capacity as responsible entity of Retirement Villages Trust (ARSN 127 682 811), RVNZ Investment Limited (ACN 604 453 545) and the Advisor dated 28 September 2007, as amended from time to time (the Advisory Services Deed). 33 Each of the REST Notices included an explanatory statement in the following terms: This Explanatory Statement accompanies and forms part of the Notice of Meeting convening the general meeting of shareholders of the Company (Shareholders), to be held at the offices of Allens at Level 37, 101 Collins Street, Melbourne, Victoria 3000, Australia on 10 September 2015 immediately following the general meeting of Retirement Villages Trust (ARSN 127 682 811), but not earlier than 12.30pm Australian Eastern Standard Time. This Explanatory Statement is intended to provide Shareholders with explanatory notes and information relevant to the Proposed Special Resolution, and should be read in conjunction with the accompanying Notice of Meeting. Special Business 1. State Street Australia Limited (ABN 21 002 965 200) in its capacity as custodian for Retail Employees Superannuation Pty Limited (ABN 39 001 987 739) as trustee of Retail Employees Superannuation Trust (ABN 62 653 671 394) (SSAL) has elected to exercise its right to call a meeting of the Company's members pursuant to section 249F(1) of the Corporations Act 2001 (Cth) (the Corporations Act) to consider the Proposed Special Resolution. 2. Pursuant to section 249F(1) of the Corporations Act, SSAL, as a member of the Company holding more than 5% of the votes that may be cast at a general meeting of the Company, has the right to call and arrange to hold a general meeting of the Company. Under section 249F(2) of the Corporations Act, a meeting under section 249F(1) of the Corporations Act must be called in the same way — so far as is possible — in which meetings of the Company's members may be called by the Company. 3. The Proposed Special Resolution to be put to members is a special resolution of the Company that Retirement Villages Group Management Pty Limited (ACN 119 974 819) (the Advisor) be removed, and the Advisor's appointment be terminated in accordance with clause 13.3(a)(vii) of the Advisory Services Deed between the Company, Retirement Villages Group R.E. Limited (ACN 119 974 597) in its capacity as responsible entity of Retirement Villages Trust (ARSN 127 682 811), RVNZ Investments Limited (ACN 604 453 545) and the Advisor dated 28 September 2007, as amended from time to time (the Advisory Services Deed). 4. Capitalised terms in this Explanatory Statement which are not defined have the meaning given to them in the Advisory Services Deed, unless the context requires otherwise. 5. The removal of the Advisor has been proposed by SSAL due to the Advisor's failure to meet certain performance criteria in accordance with clause 13.3(a)(vii) of the Advisory Services Deed. In particular, as at 30 June 2015 (a Performance Test Calculation Date for the purposes of clause 13.3(a)(vii) of the Advisory Services Deed): (a) the Performance Test Return for the three consecutive Performance Test Periods prior to and including the Performance Test Period ending on 30 June 2015 was less than the Performance Test Benchmark Return; and (b) the Cumulative Property Index was less than the Cumulative Benchmark Index. 6. The following letters in respect of the relevant performance tests from the Company, Retirement Villages Group R.E. Limited (ACN 119 974 597) in its capacity as responsible entity of Retirement Villages Trust (ARSN 127 682 811) and RVNZ Investments Limited (ACN 604 453 545) are annexed to this Explanatory Statement: (a) a letter to Securityholders dated 30 July 2015 confirming that, as at 30 June 2015, the Performance Test Return for the Performance Test Period ending on 30 June 2015 was less than the Performance Test Benchmark Return, and that the Cumulative Property Index was less than the Cumulative Benchmark Index (see Annexure A); and (b) a letter to Securityholders dated 1 May 2015 confirming that the Performance Test Return for each of the Performance Test Period ending on 30 June 2014 and the Performance Test Period ending on 30 June 2013 was less than the Performance Test Benchmark Return (see Annexure B). 7. Clause 13.3(a)(vii)(B) of the Advisory Services Deed provides that, within three months after that Performance Test Calculation Date, the Advisor may be removed if a resolution is passed (in respect of the Company, Retirement Villages Trust (ARSN 127 682 811) and RVNZ Investments Limited (ACN 604 453 545)) by at least 75% of the total votes that may be cast by all securityholders entitled to vote on each of those resolutions. 8. Pursuant to section 9 of the Corporations Act, a special resolution means a resolution: (a) of which notice as set out in section 249L(1)(c) has been given; and (b) that has been passed by at least 75% of the votes cast by members entitled to vote on the resolution (including members who are present in person or by proxy). 9. It is noted that under clause 5.5(b)(i) of the Securityholders Deed, the Excluded Securityholders (as defined in the Securityholders Deed) are not entitled to vote on a resolution under clause 13.3(a)(vii) of the Advisory Services Deed. This is also reflected in clause 13.3(a)(vii)(B) of the Advisory Services Deed. What should you do? 10. You should carefully consider the Notice of Meeting and this Explanatory Statement and consult with your investment, financial, taxation or other professional advisor and consider all of this information having regard to your specific objectives, situation, position and needs and decide whether and how to vote on the Proposed Special Resolution. 34 While the ASD is on foot, Aveo enjoys certain director appointment rights under the constituent documents of the Stapled Entities. As a result of those rights, Aveo nominee directors represent two of the five board members for each of RVAL and RVGRE. All three RVNZI directors are Aveo appointees. Accordingly, while the ASD is on foot, Aveo enjoys a special ability (compared with other individual securityholders) to influence the decision-making of the boards of the Stapled Entities. CONSTITUENT insTRUMENTS AND ASD — TERMINATION 35 The ASD permits the Stapled Entities to terminate the ASD in specified circumstances. As is apparent from the terms of cl 13.3: (a) termination pursuant to cl 13.3(a)(vi) does not require any cause be shown, but requires 75% of all votes (including those of the excluded securityholders) that may be cast; (b) termination pursuant to cl 13.3(a)(vii) is a performance-related termination right, which also requires 75% of all votes that may be cast, however Aveo is excluded from voting its securities; (c) other than where there is a cl 13.3(a)(vi) resolution for termination, the Stapled Entities are not required to terminate the ASD where a circumstance described in cl 13.3(a) exists, but "may" do so (see the introductory words in cl 13.3(a)); and (d) all three Stapled Entities would need to pass a resolution to terminate the ASD in order for the preconditions for termination to be satisfied. For the purposes of the voting procedure specified for cl 13.3(a)(vii), Aveo is an "Excluded Securityholder". Excluded Securityholder is defined in cl 1.1 of the ASD. FKP is defined as FKP Limited, which is the former name of Aveo. 36 REST has contended that cl 13.3(a)(vii) was included in the ASD to provide comfort to non-Aveo securityholders who may not have otherwise agreed to invest in RVG. As a result, cl 13.3(a)(vii) was intended to provide express rights to securityholders to pursue the removal of RVGM as Advisor, rather than (as contended by the applicants) acting as a check or fetter on the ability of the Boards of the Stapled Entities to remove the Advisor. 37 The Performance Tests have not been met by RVGM in each of the years 2012 to 2015. On 30 July 2015, the Stapled Entities notified securityholders that the 2015 Performance Tests had not been met. (a) Corporate and trust constitutions 38 The powers of the Stapled Entities to terminate the ASD and the rights of securityholders to involve themselves in that decision fall to be determined by reference to the distribution of rights and powers between the Boards (and RE) of the Stapled Entities and the securityholders which is effected by: (a) the Stapled Entities' Constitutions (and in this case the SHD and in some respects the ASD); and (b) the Act. 39 The termination of the ASD is not a matter in respect of which the Act requires a resolution of any kind be passed by the securityholders (cf the specific matters in respect of which the Act does require that members pass resolutions e.g. s 136(2) provides that a company may modify or repeal its constitution, or a provision of its constitution, by special resolution; s 254H(1) provides that a company may convert all or any of its shares into a larger or smaller number of shares by resolution passed at a general meeting; ss 256B and 256C require shareholder approval to effect a reduction in share capital; s 246B(2) requires a special resolution to vary or cancel class rights (where the company's constitution does not set out a procedure); s 162 requires a special resolution to change the company type; s 257D requires shareholder resolutions to approve share buy-backs; s 203D permits the shareholders by resolution to remove a director of a public company, despite anything in the company's constitution and s 601GC(1)(a) provides that the constitution of a registered scheme may be modified or repealed and replaced by special resolution of the members of the scheme). (b) Powers vested in RVAL and RVNZI Boards and the RE 40 Save as required by the Act and the Constitutions, responsibility for the business of RVAL and RVNZI is vested in the Boards (RVAL Constitution cl 12.1; RVNZI Constitution cl 13.1), and responsibility for the business of RVT is vested in RVGRE as RE (RVT Constitution cl 12.1). The Constitution of RVGRE then vests control of management of that Company in its Directors in the same terms as the Constitutions of RVAL and RVNZI (RVGRE Constitution cl 60.1). 41 The Boards of RVAL and RVNZI and RVGRE (as RE of RVT) in some sense have plenary powers in respect of the business of those entities, save to the extent that the Constitutions or the Act vest control in the member in a meeting. 42 The Constitutions of RVT, RVAL and RVNZI (i.e. the Stapled Entities) incorporate the terms of the SHD. The SHD prevails in the event of inconsistency with the general provisions of the Constitutions. 43 The SHD confers specific, but limited, rights and powers on securityholders which modify the otherwise plenary grant of power to the RE of RVT and the Boards of RVAL and RVNZI. Specifically, the SHD provides for the Security Holders Committee to be consulted in relation to Securityholder Reserved Matters including termination of the ASD (termination of the ASD and the appointment of a new advisor are both Securityholder Reserved Matters requiring approval as a "Super Majority Resolution", which is a resolution defined in cl 30 of the SHD as a resolution "that has been passed by at least 75% of the total votes that may be cast by Securityholders entitled to vote on the resolution (including Securityholders who are not present in person or by proxy")). (c) Powers to call meetings 44 The Directors of RVAL and RVNZI and the RE of RVT have a general power under each relevant Constitution to call meetings of the members (RVAL Constitution cl 9.2; RVNZI Constitution cl 10.2(a); RVT Constitution cl 16.1). In the case of RVAL, the power to convene meetings is conferred on directors (cl 9.2). The Constitution of RVT (cl 16.5) expressly limits the rights of securityholders to requisition meetings to the circumstances provided for in the Act. In contrast, the Constitution of RVNZI (cl 10.2(b)) permits members with 5% of the vote to convene a meeting. 45 As well as their rights to call or requisition meetings pursuant to the Act, the SHD (cl 4.2) confers a general requisition power on securityholders. Further, there is a specific requisition power. Clause 5.4 of the SHD requires each Stapled Entity to call a meeting of securityholders upon the request of the holders of at least 5% of the votes that may be cast at a general meeting of the relevant Stapled Entity to consider a resolution to "terminate the Advisory Services Deed in accordance with clause 13.3(a)(vi) of the Advisory Services Deed". 46 Pursuant to the Act, members of a company with 5% of the votes may convene a "general meeting" (s 249F) and members of a registered scheme with 5% of the votes may call a meeting of scheme members to consider and vote on a proposed "special resolution" or a proposed "extraordinary resolution" (s 252D). 47 Under the Act (s 9), a "special resolution" is a resolution passed by at least 75% of the "votes cast". There is a distinction between "votes cast" (s 9) and votes that "may be cast" (ASD cl 13.3 and SHD "Super Majority Resolution"). (d) The REST Notices 48 On 12 August 2015, Aveo and RVGM received notices dated 7 August 2015 from REST purporting to convene meetings of the holders of securities in RVAL, RVT and RVNZI to be held at 12.00 noon on 10 September 2015 (REST Notices). The meetings were proposed to be held at the offices of Allens, at 101 Collins St in Melbourne. 49 The REST Notices purported to convene the meetings of RVAL and RVNZI under s 249F of the Act and the meeting of the unitholders in RVT under s 252D. 50 Each of the REST Notices proposed a "special resolution" in the terms set out in paragraph 2 above. Relevant legal principles 51 The applicants have asserted that the relevant legal principles can be summarised in the following terms: (a) First, in determining what powers are vested in a Board vis-à-vis those vested in the members, corporate constitutions are contracts which are to be construed to give them businesslike effect; (b) Second, where a company's constitution vests power over a matter in the Board, shareholders cannot pass resolutions in respect of that matter; (c) Third, meetings which are futile should not be allowed to proceed; and (d) Fourth, a notice of meeting which is defective because it proposes a resolution which is outside the power of members to propose or pass is not merely procedurally defective for the purposes of s 1322 of the Act. 52 I agree with propositions (a), (c) (subject to closely considering what is meant by futile) and (d). Proposition (b) is overstated. It could only be correct where the power was exclusively vested in the Board. Moreover, even as to such a matter, the shareholders may still pass a resolution but it would not bind the Board; the utility of such a resolution would depend upon the precise circumstances. Here, it is one of the contractual conditions to the cl 13.3(a)(vii) trigger. (a) Division of powers between members and a Board 53 The question of which organ of a company holds a particular power is determined in accordance with the distribution of powers effected by the combination of the company's constitution, any documents incorporated by reference therein, the Act and, if applicable, the Listing Rules. 54 In Taiqi Investments (Aust) Pty Ltd v Winlyn Developments Pty Ltd (2011) 86 ACSR 197; [2011] NSWSC 1218 at [19], Barrett J expressed the matter in terms: unless a clear contrary intention is shown, functions assigned to the company in general meeting are not exercisable by the board of directors and likewise those given to the board of directors are not exercisable by the company in general meeting. (b) Powers of management 55 A resolution is "a formal act of the company" (see National Roads & Motorists' Association v Parker (1986) 6 NSWLR 517 at 522 per McLelland J). Where the subject matter of a proposed shareholder resolution concerns a power exclusively vested in the Board, it cannot validly be put in terms which purport to bind the Board. If it was so put in terms, the Board would be entitled to ignore it. 56 In NRMA v Parker at 522, McLelland J observed: In my view it is no part of the function of the members of a company in general meeting by resolution, ie as a formal act of the company, to express an opinion as to how a power vested by the constitution of the company in some other body or person ought to be exercised by that other body or person. In my view, this may be too broad a statement (see [65] below). 57 More recently, in Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia [2015] FCA 785, Davies J at [16] reiterated the principle "that the shareholders in general meeting cannot interfere in the board's exercise of powers which are exclusively vested in the board". In Gramophone & Typewriter Ltd v Stanley [1908] 2 KB 89 it was held that: ... a general meeting of the company cannot impose its will upon the directors when the articles have confided to them the control of the company's affairs. The directors are not servants to obey directions given by the shareholders as individuals; they are not agents appointed by and bound to serve the shareholder as their principals. They are persons who may by the regulations be entrusted with the control of the business, and if so entrusted they can be dispossessed from that control only by the statutory majority which can alter the articles. (c) Construction of corporate constitutions 58 The constitution of a company constitutes a contract between the members of the company inter se, between the company and its members and between the company and its officers (s 140(1) of the Act). 59 As I said in Donaldson v Natural Springs Australia Limited [2015] FCA 498 at [148], there is little doubt (Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1 (Lion Nathan) at [28], [29], [46] to [59], [97] to [102], [122] to [124], [232], [233], [238], [244], [251] to [257] and Oil Basins Ltd v Bass Strait Oil Company (2012) 297 ALR 261; [2012] FCA 1122 at [32]) that: a constitution should be read and construed as a whole; general principles of construction of commercial contracts (see generally Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]) are applicable to a constitution; more particularly, the commerciality of a particular construction may tip the balance in its favour where it is implausible that the parties could be taken to have intended otherwise; a constitution should not be construed narrowly or pedantically; words used should usually be given their natural and ordinary meaning; a construction of a provision which gives a congruent operation of the various applicable provisions of a constitution should be preferred to another construction which does not; and extrinsic evidence may be adduced as an aid to construction, subject to a qualification that I will address in a moment, but only in the limited manner envisaged in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [35] to [41]. 60 Moreover, a purposive interpretation, rather than a creative interpretation, of a constitution should be given, so long as it is understood that this is an objective exercise bounded by such principles. 61 Notwithstanding the generality of the principles just expressed, in construing a constitution "ordinarily primacy must be given to the objective intention discernible from the language in which the constitution is expressed rather than to other features of the surrounding matrix of fact in which its provisions may have been made" (HNA Irish Nominee Ltd v Kinghorn (2010) 78 ACSR 553; [2010] FCAFC 57 at [42]). This is because the range of surrounding circumstances available as aids to construction is a more unstable (or at least changeable) foundation than that available for construing contracts generally. Constitutions and replaceable rules can be amended at different times and in different circumstances. Further, the members are likely to change. Further, and more generally, a constitution serves a public purpose; it is not merely an embodiment of a private bargain. Surrounding circumstances can be taken into account in construing the provisions of a constitution, but restraint needs to be exercised (Lion Nathan at [55], [56], [59], [63], [102], [124], [226], [236], [254], [255] and [259]). 62 In my view, these principles also apply to documents incorporated by reference into a constitution or to which it is subject such as the SHD. In the present case, the relevant Constitutions and the SHD must be read and construed together. Moreover, it seems to me that the ASD is a necessary part of the relevant matrix, particularly as it is referred to in the SHD, within which to construe the SHD and the composite SHD and Constitutions. (d) Futile meetings 63 In Taiqi Investments (Aus) Pty Ltd v Winlyn Developments Pty Ltd, having concluded that the proposed resolutions, if passed, would have no valid or effective operation, Barrett J considered whether the meeting should nevertheless be allowed to proceed. In concluding that the meeting should not proceed, Barrett J reasoned that: [30] A more powerful consideration, to my mind, is the undesirability of allowing legally meaningless resolutions to go forward lest those who have proposed them rely on them, once passed, as if they were legally meaningful. If this were a case in which members had requisitioned a meeting rather than actually called it, the court would say that the directors were under no obligation to create the desired forum by acting in accordance with the requisition: see, for example, Turner v Berner [1978] 1 NSWLR 66; (1978) 3 ACLR 272; National Roads and Motorists Association v Parker (1986) 6 NSWLR 517; 11 ACLR 1. Here too, in my view, the court should prevent the creation of the desired forum. 64 Similarly, in Hopkins Professional Services Pty Ltd v Foyster Holdings Pty Ltd (2001) 39 ACSR 519, Barrett J at [6] found that certain proposed shareholder resolutions were within the province of the board of directors and, on that basis, found that "it is, in a real sense, futile for the meeting of shareholders scheduled to be held tomorrow to attempt or purport to deal with the second, fourth, fifth and sixth items in the notice of meeting". 65 In my view, these observations should be read in context. In the case before me, even accepting that the proposed resolution cannot bind the Stapled Entities and the directors, nevertheless it does have utility. It is expressly referred to as one of the three conditions in cl 13.3(a)(vii) as a trigger for the Stapled Entities to then exercise their discretionary power. But it is obvious that it cannot bind the Boards of the Stapled Entities and nor does it in truth purport to do so. It is only expressed as it is to satisfy the condition expressed in cl 13.3(a)(vii). The applicants referred me to Molopo Energy Ltd v Keybridge Capital Ltd (2014) 104 ACSR 46, but the observations of White J at [68] and [78] to [81] were in a different context dealing with a reduction of capital and the interaction with statutory requirements. (e) Procedural and substantive defects 66 I accept the applicants' submission that where a "proceeding" (which in this context includes a company meeting, see Australian Hydrocarbons NL v Green (1985) 10 ACLR 72 at 81) is attended by merely procedural irregularity, its efficacy is preserved by s 1322(2) of the Act unless the Court considers that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court. I also accept that where a person has tried to so something which the Act does not authorise (as opposed to defectively trying to do something the person does have the power to do), that is not a procedural irregularity for the purposes of s 1322. 67 I also accept the contention that what constitutes a "substantial injustice" for the purposes of s 1322(2) will depend on the circumstances; a different result being obtained by reason of the irregularity is likely to mean that there is substantial injustice (e.g. Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 55 ACSR 185 at [98]). For the purposes of s 1322(2), an irregularity "may cause substantial injustice" where it "may" affect the outcome. 68 I also accept that the dividing line between procedural and substantive defects is also informed by consideration of the significance of the consequences of the resolutions. 69 But so to accept all of these propositions does not avail the applicants in the present case. There has been no substantive defect. Moreover, there has been no procedural irregularity that could cause substantial injustice in relation to the convening of the meetings or as to the proposed resolution. THE power to propose resolutions for the termination of the ASD under cl 13.3(a)(vii) 70 REST has the right under cl 5.4 of the SHD (as do other securityholders with a sufficient interest) to require the Stapled Entities to convene meetings so that the securityholders can consider resolutions to terminate the ASD pursuant to cl 13.3(a)(vi) of the ASD. No cause need be shown in order for the ASD to be terminated under that clause and, if a resolution for termination under cl 13.3(a)(vi) were to be passed (such a resolution would have to be passed by 75% of the total votes that may be cast by all securityholders entitled to vote, including the "Excluded Securityholders"), the Stapled Entities would be required to terminate RVGM's appointment; it would not be a matter for the discretionary judgment of their Boards. 71 As such, the SHD (to which RVGM is party), permits securityholders to initiate and move for the termination of RVGM's appointment by the general "spill" mechanism afforded by cl 5.4 of the SHD. Under the express terms of the Constitutions (which incorporate the SHD), such a spill can be initiated by securityholders and must be acted upon by the Boards. However, under both the ASD and the SHD, Aveo, the parent of RVGM, is permitted to vote its securities on such a vote. 72 Contrastingly, the applicants have contended that REST has no power or right to put the proposed resolution concerning cl 13.3(a)(vii). Their argument proceeds as follows. 73 The applicants have drawn attention to cl 5.1. Clause 5.1 of the SHD provides that "any proposal by the Stapled Entities in respect of a Securityholder Reserved Matter must be approved by a resolution having the requisite majority [specified in Schedule 1]" (emphasis added). It is said that in contradistinction to the situation in which securityholders may initiate a spill without cause, termination for cause under cl 13.3(a)(vii) is a matter that the Boards of the Stapled Entities will need to consider and, if they see fit, bring forward to the securityholders as a "proposal" for their "approval". 74 It is said that the distinction between the initiation and approval of a resolution to terminate the ASD is not a semantic one. It is said that the question of whether the Stapled Entities ought to terminate the appointment of RVGM for failing to meet the benchmarks specified in the ASD is a matter of commercial judgment that will require the Boards to consider, inter alia: (a) the reasons (including macro-economic reasons and reasons specific to the investments and assets under management) why those benchmarks were not met; (b) who might act as replacement advisor or whether other arrangements can be put in place for management of RVG without appointment of a replacement advisor; (c) the terms on which a replacement advisor would act; (d) whether it is likely that the replacement advisor would deliver superior results (or sufficiently superior results) so as to justify the cost and disruption of switching advisors; (e) whether other factors (such as the forthcoming liquidity review) mean that it is not desirable or feasible to consider changing advisors; and (f) whether they would be able to secure the necessary support for a Super Majority Resolution. 75 As such it is said that it is commercially logical that the question of whether RVGM's appointment under the ASD should be terminated for performance-based reasons is a matter for the Boards to initiate, notwithstanding that, if the directors conclude that RVGM's appointment should be terminated, they need to get the securityholders' approval to take that course. It is asserted that it also makes commercial sense in that situation, for RVGM's parent company, Aveo, to be excluded (as it is by cl 13.3(1)(vii) of the ASD and cl 5.5(b) of the SHD) from voting its securities in a super majority resolution to terminate for performance based reasons. 76 The applicants also highlight that the conferral by SHD cl 5.4 of an express power on securityholders to initiate meetings to consider termination of the ASD under cl 13.3(a)(vi) speaks "strongly to the absence of such a power of initiation" in respect of termination for cause under cl 13.3(a)(vii). 77 For these reasons, the applicants conclude that: (a) while REST can validly convene a general meeting under s 249F without any statutory restriction on the character of the resolutions that may be put (such as constrains RVT under s 252D), the mere power to convene a meeting is irrelevant if REST has no power under the relevant Constitutions or the Act to propose a resolution that RVGM be "removed" and its appointment be "terminated in accordance with cl 13.3(a)(vii) of the [ASD]"; (b) the meetings called are for legally ineffective resolutions and so are futile and ought not be permitted to proceed and give a forum to that futility or provide a basis for those participating in the resolutions to proceed (for example by way of exerting pressure on the Boards of the Stapled Entities) on the basis of legally ineffective resolutions. 78 I reject all of these arguments. 79 There is no restriction on REST's ability to convene a meeting to put the proposed resolution under ss 249F and 252D of the Act. Moreover, I do not see any restriction in the SHD, the relevant Constitutions or the Act against REST putting the proposed resolution. There is nothing in the Constitutions that so restricts. Further, if the Act allows the convening, then it seems to me that it would also permit putting the proposed resolution. Further, there is no restriction in the SHD. Clause 4.2 so permits. Moreover, cl 5 does not provide for any relevant restriction against putting the proposed resolution. 80 Clause 4.2 of the SHD expressly provides that securityholders in a Stapled Entity may request or call and arrange to hold general meetings in accordance with the requirements and procedures under any applicable law. The applicants' submission that '[o]ther than as provided for in cl 5.4 of the SHD, the Securityholders have no rights under the Constitutions of RVAL and RVT to convene meetings' is incorrect. 81 Further, there is nothing in the SHD, the other constituent documents of the Stapled Entities, or the Act which precludes securityholders from proposing any type of resolution pursuant to any relevant provisions of the Act. Nor do those documents address the efficacy of any resolution proposed by securityholders under the Act. 82 Pursuant to the Act, members of a company with at least 5% of the votes may convene a 'general meeting' (s 249F) and give notice of a resolution that they propose to move (s 249N). 83 Further, cl 5.1 of the SHD and cl 13 of the ASD contemplate that a meeting of members may be held to vote on resolutions concerning the removal or termination of RVGM as Advisor. 84 The SHD provides that any proposal by the Stapled Entities in respect of a "Securityholder Reserved Matter" must be approved by a resolution having the requisite majority for that Securityholder Reserved Matter as specified in Schedule 1. Removal of RVGM as "Advisor" is a Securityholder Reserved Matter which requires approval by a "Super Majority Resolution", being a resolution that has been passed by at least 75% of the total votes that may be cast by securityholders entitled to vote on the resolution (including securityholders who are not present in person or by proxy), excluding (in this case) the "Excluded Securityholders" (i.e. Aveo and RVGM) in accordance with cl 5.5(b)(i) of the SHD. 85 Clause 13.3(a)(vii) was included in the ASD to provide protection for non-Aveo securityholders in circumstances where AVGM underperformed. It is quite consistent with that intent that securityholders be permitted to call a meeting of members for the purposes of voting on the resolution required by cl 13.3(a)(vii). 86 The applicants contend that the text of cl 5.1 of the SHD providing for "proposal" by the Stapled Entity and "approval" by securityholders requires a sequence of initiation by the Stapled Entity and subsequent approval by securityholders. But in my view the "proposal" refers to the Stapled Entity's intended steps in respect of the Securityholder Reserved Matter (i.e., terminating the appointment of the Advisor), not initiating a process leading up to that result. As REST correctly contends, the "approval" by securityholders is equally capable of being given before the Stapled Entity determines to take the step of termination. 87 I also agree with REST that there is no logic which demands that the Stapled Entities initiate termination of RVGM's appointment to the preclusion of securityholders. As they point out, there are features of the constituent documents and their context which support the contrary construction: (a) Clause 13.3(a)(vii) is a provision inserted for the protection of securityholders. It excludes Aveo and RVGM from voting because of the interest which those entities have in that issue. It enables securityholders to approve certain matters. It explicitly requires resolution by securityholders and is thereby amenable to resolutions proposed by securityholders. Similarly, Schedule 1 to the SHD lists other Securityholder Reserved Matters suitable for action by securityholders before the Boards can take such steps. (b) Further, as REST points out, the timeframes for taking advantage of the opportunity in cl 13.3(a)(vii) demonstrate that the efficacy of cl 13.3(a)(vii) may only be achieved if securityholders propose a resolution. The conditions under cl 13.3(a)(vii) are assessed as at 30 June, but only available considerably later (as in fact in 2015, by around 31 July). If securityholders requested the board to convene a meeting, the Act would allow two months for that meeting to be held. Any meeting must be called with 21 days' notice, and up to 7 days for service of the notice. But any resolution must be passed by 30 September. 88 The applicants have contended that by reason of the existence in the SHD of cl 5.4 for convening a meeting in relation to a resolution for the purpose of cl 13.3(a)(vi) of the ASD, and the absence of any particular provision in respect of cl 13.3(a)(vii), that it may be inferred that there was an intention to deny such a right or facility. But drawing such an inference is problematic to say the least. Clause 13.3(a)(vii) was inserted late in the drafting process, and may not have addressed every aspect drafted for cl 13.3(a)(vi). Further, cl 5.4 is directed at modifying the Act's provision for the directors' decision to call a meeting requested by securityholders; it requires the meeting to be called within 20 business days, rather than consideration of up to two months. Moreover, cl 5.1 of the SHD is a provision which identifies the safeguard against Stapled Entities exercising powers for Securityholder Reserved Matters without securityholder approval. It does not require that such matters only be raised, and that securityholder approval for them only occur, after the Stapled Entities have taken steps to call a meeting. the power to call a meeting of RVT to pass a super majority resolution 89 Termination of the ASD is a Securityholder Reserved Matter requiring approval as a "Super Majority Resolution", which is a resolution defined in cl 30 of the SHD as a resolution "that has been passed by at least 75% of the total votes that may be cast by securityholders entitled to vote on the resolution (including securityholders who are not present in person or by proxy" (emphasis added). 90 Under s 9 of the Act, a "special resolution" is one where the resolution is passed by 75% of votes cast, not votes that may be cast. The applicants have contended that because the voting base by which the 75% is calculated is fundamentally different, a super majority resolution is not a "special resolution" for the purposes of the Act. It is contended that while the members of RVT have the power pursuant to s 252D to convene a meeting of members to consider and vote on "special" and "extraordinary" resolutions, they have no power under the Act or the relevant Constitution to convene meetings to consider super majority resolutions. It is said that the notice issued by REST in respect of RVT purports to exercise a specific statutory power conferred by s 252D. Yet the exercise of power is only effective if the resolution proposed is a resolution of a kind covered by s 252D. But it is contended that it is not, and therefore the notice is ineffective. 91 I reject these arguments as well. In my opinion, a "Super Majority Resolution" is a form of and within the class of a "special resolution". By pure arithmetic, a resolution satisfying the requirement of 75% of the total votes that may be cast would also satisfy the requirement of "at least 75% of the votes cast by members entitled to vote"; moreover "entitled" would embrace factoring out those properly excluded. 92 In my opinion, the Notice issued by REST in relation to the meeting of RVT members proposes a "special resolution". Further, the explanatory statement accompanying that Notice states that the resolutions being considered are "special resolutions" and sets out the relevant statutory requirements for such resolutions. 93 Finally, the second limb of the s 9 definition refers to a resolution that "has been passed" by at least 75% of the votes cast by members entitled to vote on the resolution. The satisfaction of this limb can only be determined once the votes on the resolution have been cast — it does not expressly refer to any particular voting threshold that the proponent of the resolution may be seeking to exceed in order to trigger a statutory or contractual right. Further, the definition of special resolution does not refer to any particular types or categories of resolution that might be passed under the Act or otherwise. 94 In summary, the Notice is valid. CONCLUSION 95 For the above reasons, I dismissed the applicants' application with costs. I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach. Associate: Dated: 11 September 2015