Nagler v Volski [2001] NSWSC 1094

New South Wales Supreme Court

CITATION : Nagler v Volski [2001] NSWSC 1094 CURRENT JURISDICTION: Equity Divisiion FILE NUMBER(S) : SC 5342/01 HEARING DATE(S) : 26/11/01 JUDGMENT DATE : 26 November 2001

PARTIES : Lucie Nagler - Plaintiff H Volski & Co Pty Limited (In Liquidation) - Defendant JUDGMENT OF : Barrett J

COUNSEL : Mr D. Neggo, Solicitor - Plaintiff SOLICITORS : Koffels - Plaintiff CATCHWORDS : CORPORATIONS - general meeting - person holding shares in own right and as executor is only one member - corporate shareholder purportedly represented at meeting - no evidence of appointment of proxy or corporate representative - both natural persons in attendance may have constituted entire mind and will of corporate shareholder - adjournment to initiate curative application under s.1322 LEGISLATION CITED : Corporations Law Corporations Act 2001 CASES CITED : East v Bennett Bros Ltd [1911] 1 Ch 163 Re Hastings Deering Ltd (1985) 9 ACLR 755 DECISION : Application adjourned

3 IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J MONDAY 26 NOVEMBER 2001 5342/01 – LUCIE NAGLER v H VOLSKI & CO PTY LTD (IN LIQUIDATION) JUDGMENT

HIS HONOUR: 1 The plaintiff, Mrs Nagler, seeks an order terminating the winding up of H Volski & Co Pty Ltd. That company apparently became the subject of a members' voluntary winding up as a result of a special resolution purportedly passed at a meeting of its members held on 25 June 1998. 2 I was informed by Mr Neggo, when the matter came before me this morning, that the Chief Judge in Equity had on a previous occasion expressed some reservations as to whether the special resolution for winding up had been passed. The reservations arose from doubts (which I share) about the effectiveness of the proceedings at the general meeting supposedly held on 25 June 1998. 3 Mr Neggo has now led evidence from which I can confidently make a finding that the members of the company at the time of the supposed meeting were Mrs Nagler herself and a company called HLP Holdings Pty Ltd. Mrs Nagler, it appears, held shares in her own right and also as the executrix of the will of her deceased first husband, Mr Volski, but, of course, that does not make her two members. One person, despite various capacities and despite holding parcels of shares in different interests, can only ever constitute a single member of a company. And this is so even if the person's name appears more than once in the register of members, with each entry signifying some different underlying capacity or shareholding account. 4 The doubt in my mind arises from the fact that the persons stated in the minutes to have been present at the meeting are Mrs Nagler and her second husband, Mr Nagler, the latter "representing HLP Holdings Pty Ltd". The meeting was purportedly held, as I have said, on 25 June 1998, that is, before the introduction of the provisions in Pt 2G of the Corporations Law which commenced on 1 July 1998 and are now found in Pt 2G of the Corporations Act 2001. 5 Having regard to the provisions in force at the relevant time, being those in Pt 3.3 of the Corporations Law as it then stood, a company such as HLP Holdings Pty Ltd would properly have been regarded as capable of voting at a general meeting of another company on 25 June 1998 through the intermediation of Mr Nagler only if he had been duly appointed as a proxy by an instrument duly lodged with the company or if he had been a representative appointed in accordance with the then s.249(3), that is to say, by resolution of the board of directors of HLP Holdings Pty Ltd. A certificate under the seal of HLP Holdings Pty Ltd would, by virtue of s.249(6), have been prima facie evidence of such an appointment. There is not in evidence, however, anything to indicate that Mr Nagler had been appointed as a proxy in the way I described or that he had been appointed a representative under s.249(3). 6 There is, therefore, a substantial doubt as to whether Mr Nagler's physical presence at the supposed meeting meant that HLP Holdings Pty Ltd was properly regarded as present. There is, as a result, a further substantial doubt as to whether there was a meeting at all, given that, in its ordinary connotation, the word "meeting" denotes a plurality of persons and that this cannot be regarded as one of those odd situations where one person might constitute a meeting because there is only one person within the class of which a meeting is to be held: cf East v Bennett Bros Ltd [1911] 1 Ch 163; Re Hastings Deering Ltd (1985) 9 ACLR 755. 7 Mr Neggo has suggested to me that the situation is one which might be rectified by resort to s.1322 on the footing that apparent absence of a proxy or representative appointment in favour of Mr Nagler is an irregularity capable of being cured under that section. He has told me that it appears from the material he has that Mr and Mrs Nagler were, at the relevant time, the only directors of HLP Holdings Pty Ltd and that they were probably also, directly and indirectly, the only persons having an interest in the share capital of that company. If this is shown to be so, it might be inferred that HLP Holdings Pty Ltd would have made a formal appointment of Mr Nagler, had the necessary machinery been put in motion, and that Mr Nagler in fact acted at the behest of the two natural persons (himself and his wife) capable of determining every action of that company – in other words, its entire guiding mind and will. 8 There is merit in this suggestion and it may well be that s.1322 is a means of resolving the doubt which exists about the regularity and validity of the proceedings of 25 June 1998 so that the way can then be paved to proceed with the application for termination of the winding up. Another possibility, of course, is that the winding up never took place so that there is nothing to terminate. 9 In the circumstances, the appropriate course is that Mrs Nagler's application for an order terminating the winding up of H. Volksi & Co Pty Ltd be stood over so that further consideration may be given to these issues and Mrs Nagler may, if she wishes to do so, pursue formally the avenue of seeking an order under s.1322. 10 I therefore stand over this application to 9.30am on Thursday 29 November 2001 before me.