ASIC V NRMA [2002] NSWSC 1135

Reported Decision : 43 ACSR 451 (2003) 21 ACLC 186

New South Wales Supreme Court

CITATION : ASIC V NRMA [2002] NSWSC 1135 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 5523 of 2002 HEARING DATE(S) : 25 November 2002 JUDGMENT DATE : 28 November 2002

Australian Securities and Investment Commission (Plaintiff) PARTIES : National Roads and Motorists' Association Limited (First Defendant) William Snodgrass (Second Defendant) JUDGMENT OF : Windeyer J at 1

S.C. Finch SC with him Mr G Rich (Plaintiff) COUNSEL : R. McDougall QC with him Ms E A Collins (First Defendant) In person (Second Defendant) Jan Redfern (Plaintiff) SOLICITORS : Corrs Chambers Westgarth (First Defendant) In person (Second Defendant) CATCHWORDS : CORPORATIONS LAW - meetings - whether a special general meeting had been "held" - Corporations Act 2001 s249D(5) and s1324(1)(a) LEGISLATION CITED : Companies Act 1961, s136 Corporations Act 2001, 249D, s1324 CASES CITED : Guss v Veenhuizen (1976) 136 CLR 34 DECISION : See paragraph 22

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

THURSDAY 28 NOVEMBER 2002

5523/02 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION V NATIONAL ROADS AND MOTORISTS' ASSOCIATION LIMITED & ORS

JUDGMENT 1 The affairs of NRMA remain in disarray. That state of affairs is likely to continue until legislative action is taken as often recommended by this Court. Until that is done the funds of the organisation will be consumed in responding to minority demands for meetings. Background 2 On 3 July 2002 in proceedings No. 3237 of 2002 and 3345 of 2002 I made orders extending to 10 September 2002, the time within which NRMA was required to call a general meeting of the company in response to certain requisitions of two groups of requisitionists who were conveniently called the Snodgrass requisitionists and the Dupree requisitionists. I also ordered that the time by which such meetings must be held up to and including 17 October 2002. The Snodgrass requisitionists sought the calling of a meeting to consider a resolution for the removal of a particular group of directors who were generally known as the Members First group of directors and the Dupree resolution sought the removal of the directors who were generally known as the Talbot group of directors. Had both resolutions been passed, and had the composition of the board remained as it was when I made the orders, the company would have been left without directors. That position changed prior to 17 October as certain directors resigned and other persons were appointed to fill the vacancies. 3 The requisitioned meetings were called for 17 October 2002. As is well known and as is established by the evidence and by agreed facts, the venue booked for the meeting was unable to hold all those persons entitled to attend and vote who wished to attend. The president, Mr Ross Turnbull, opened the meeting at 4.10 pm. He moved a motion for the appointment of Sir Laurence Street as chairman for the balance of the meeting. The vote on that motion was not concluded. At 4.47 pm Mr Turnbull, having satisfied himself that the venue was not large enough to accommodate those persons entitled to attend and vote, adjourned the meeting to a date to be fixed. It is agreed and accepted that in doing so he acted within power. 4 NRMA now proposes to continue the adjourned meeting on 14 January 2003. 5 The annual general meeting of the company is required to be held in 2002 unless an extension of time is granted by ASIC. The company has applied for an extension to 14 January 2003. Its stated intention is to hold the annual general meeting immediately prior to the adjourned meeting. The board of directors of NRMA has resolved – perhaps only in principle – to include in the general business the annual general meeting a resolution that all members of the board as at 8 November 2002 be removed from office. Mr Turnbull had proposed to the board that all directors should resign with the right, with any other candidates, of whom there are quite a number, to seek appointment or reappointment as a director. Those directors who in general support Mr Talbot, and are those whom the Dupree requisitionists wish to remove, did not agree to the spill proposed by Mr Turnbull so that it is likely that the resolution proposed by the present majority of directors will proceed to the annual general meeting. 6 A further complication has arisen because the requisite number of members have requested the directors to call a meeting of members for the purpose of considering a resolution for the removal as directors of five persons appointed to the board to fill casual vacancies arising as a result of the resignation of directors over the past few months. Messrs Scandrett and Snodgrass, who seem to be the chief protagonists for the anti-Members First group of members, are recognised as the chief organisers of the request for this meeting. It is of course ridiculously easy to round up the necessary 100 signatories for such a requisition. In proceedings No 5261 of 2002 in this Division, Palmer J held on 25 November that NRMA was obliged to call a meeting. As it was accepted that extensions of time were necessary for the calling and holding of this meeting, he referred it to me to decide this aspect. For reasons which will become obvious, I extended the time for the holding of this requisitioned meeting up to 15 January 2003. The company has made the necessary arrangements to book a venue sufficient to hold what would appear well above the number of persons likely to attend any such meeting. Present proceedings 7 The present proceedings before me were commenced by originating process filed on 15 November 2002. The document has all the hallmarks of rushed preparation and no check whatever. It may have been intended to be used in an interlocutory application to be filed in the earlier Snodgrass and Dupree proceedings. Paragraph 3 indicates that. If it were so intended it would have failed as those proceedings have long since concluded. In any event there are references in the originating process to its being an interlocutory application and it asks for orders against the plaintiff/respondent. What is really sought are orders against the defendant, NRMA. There is no respondent. This is a document filed by the solicitor for the Australian corporate regulator. I could have and perhaps should have just dismissed the proceedings but I proceeded to deal with them as if in proper form. The orders sought by ASIC are sought pursuant to s1324 of the Corporations Act 2001 (the Act) and are as follows: 1. That this Originating Process be made returnable instanter. 2. That the time for service of this Originating Process and the supporting affidavit be abridged to 5:00pm on 15 November 2002. 3. That the Plaintiff/First Respondent hold the meeting of members referred to in paragraphs 1 and 2 of the orders of this Honourable Court made in these proceedings on 3 July 2002 (the "Special General Meeting") on or before 17 December 2002. 4. That the Plaintiff/First Respondent send out notices of the Special General Meeting, including forms for the appointment of proxies, to members by post on or before 25 November 2002, such notices to include a statement to the effect that any member who has already voted by proxy need not appoint another proxy as their earlier vote will be counted. 5. That the Plaintiff/First Respondent publish notices of the Special General Meeting, including forms for the appointment of proxies, in the Sydney Morning Herald and the Daily Telegraph on or before 25 November 2002, such notices to include a statement to the effect that any member who has already voted by proxy need not appoint another proxy as their earlier vote will be counted. 6. That the Plaintiff/First Respondent count all proxy votes already received by the Plaintiff/First Respondent and include the proxy votes in any poll conducted at the Special General Meeting. 7. That the Plaintiff/First Respondent puts the two resolutions the subject of the requisitions calling for the Special General Meeting, to the Special General Meeting. 8. That the Plaintiff/First Respondent pay the costs of the Applicant. 9. Such further or other orders as this Honourable Court thinks fit to make. 8 The relevant parts of s1324 are as follows: 1324. Injunctions (1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: