Reported Decision : 42 ACSR 407 (2002) 20 ACLC 1333 New South Wales Supreme Court CITATION : Australian Securities and Investments Commission v Whitlam [2002] NSWSC 591 FILE NUMBER(S) : SC 4421/01 HEARING DATE(S) : 18/6/02,19/06/02,20/06/02,21/06/02,24/06/02,24/06/02,26/02/02,27/02/02,28/06/02,28/06/02,29/06/02,01/07/02,02/07/02 JUDGMENT DATE : 19 July 2002 PARTIES : Australian Securities and Investments Commission - Plaintiff Nicholas Richard Whitlam - Defendant JUDGMENT OF : Gzell J COUNSEL : Mr M A Pembroke SC with Mr D R Stack for the Plaintiff Mr A J Bannon SC with Mr J Stephenson for the Defendant SOLICITORS : Australian Securities and Investments Commission Lawyer for the Plaintiff Watson Mangioni Corporate and Commercial Lawyers for the Defendant CATCHWORDS : CORPORATIONS - Supervision Regulation and Correction - Failure to sign proxy poll paper - Failure to sign a failure to vote - Whether name and initials are a signature - Whether proxy directed to chairman is directed to an office - Corporations Law (Cth), s 250A(1)(c) - Failure of chairman and proxy to vote on a poll in the way directed - Corporations Law (Cth), s 250A(4)(c) - Whether duty as chairman distinct from duty as director - Failure to act honestly - Corporations Law (Cth), s 232(2) - Improper use of position - Corporations Law (Cth), s 232(6) - Chairman proffering amended minutes on his remuneration to board for confirmation - Failure to exercise due care and diligence - Absence of damage to company - Corporations Act 2001 (Cth), s 180(1) - Absence of dishonesty - Relief from liability - Corporations Act 2001 (Cth), s 1317S(2) - EVIDENCE - Admissibility - Document containing representation based partly on observation and partly on judgment - Admissible as business record - Evidence Act 1995, s 69(2)(b) Corporations Law (Cth) Companies (New South Wales) Code Corporations Act 2001 (Cth) LEGISLATION CITED : Evidence Act 1995 Australian Securities and Investments Commission Act 2001 (Cth) Bills of Exchange Act 1909 (Cth) Conveyancing Act 1919 Statute of Frauds Link Agricultural Pty Ltd v Shanahan, McCallum & Pivot Ltd [1999] 1 VR 466 Vrisakis v Australian Securities and Investments Commission (1993) 11 ACSR 162 at 213 Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 Neat Holding Pty Ltd v Karajan Pty Ltd (1992) 110 ALR 449 at 449-450 Leeman v Stocks (1951) Ch 941 Schneider v Norris (1814) 2 M & S 287 (105 ER 388) Evans v Hoare (1892) 1 QB 593 Knight v Crockford (1794) 1 Esp 190 (170 ER 324) Saunderson v Jackson 3 Bos & Pul 238 (126 ER 1257) Johnson v Dogson (1837) 2 M & W 653 (150 ER 918) Durrell v Evans (1862) 1 H & C 174 (158 ER 848) Cohen v Roche [1927] 1 KB 169 Commonwealth Bank of Australia v Muirhead [1997] 1 Qd R 567 Deputy Commissioner of Taxation v Boxshall (1988) 19 FCR 435 John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 at 134 CASES CITED : National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 37 ACSR 629 at 644-645 BYNG v London Life Association Ltd [1990] Ch 170 at 188 Wall v Exchange Investment Corporation [1926] Ch 143 at 146 The Second Consolidated Trust Ltd v Ceylon Amalgamated Tea & Rubber Estates Ltd [1943] 2 All ER 567 at 569 Marchesi v Barnes [1970] VR 434 Australian Growth Resources Corp Pty Ltd v Van Reesema (1988) 13 ACLR 261 Shaw and Smith, The Law of Meetings - Their Conduct and Procedure, 5th ed (1979) at 56 Joske's Law and Procedure at Meetings in Australia, 8th ed (1994) ch 6 Davidson, Company Meetings, 2nd ed (1992) at par 1002 Lumsden, Managing Proxies and the Role of Chairman, Australian Institute of Company Directors (1998) Lang, Horsley's Meeting, Procedure, Law and Practice, 4th ed (1998) at par 6.10 Puregger, The Australian Guide to Chairing Meetings 9th ed (1997) at 57-61 Shearman, Shackleton on the Law and Practice of Meetings, 9th ed (1997) at 57-61 Moore, The Law and Procedure of Meetings, (1979) at Ch 13 Clyne, The Law of Meetings, (1971) at Ch 20 Renton, Guide for Meetings and Organisations, 4th ed (1985) at 30-38 DECISION : Declarations of contravention of the Corporations Law (Cth) s 232(2) , 232(6) and s 250A; Declaration of contravention of Corporations Act 2001 (Cth) s 180(1) and relief from liability under s 1317S(2) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J FRIDAY 19 JULY 2002 4421/01 AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v NICHOLAS RICHARD WHITLAM JUDGMENT 1 The plaintiff claims that the defendant as proxy failed to vote against a resolution at an annual general meeting of a company in accordance with the instructions of the members who appointed him proxy and thereby contravened the Corporations Law (Cth), s 232. The plaintiff also claims that the defendant altered the minutes of a meeting of directors of a company and thereby breached one or other or all of the Corporations Act 2001 (Cth), s 180, s 181 and s 182. 2 The annual general meeting in question was that of NRMA Ltd ("NRMA") of 28 October 1998. The company subsequently changed its name to the National Roads and Motorists' Association Ltd. The plaintiff alleges that one or other or all of the Corporations Law (Cth), s 232(2), s 232(4) and s 232(6) as they stood at that time, were breached. Those provisions were as follows: "(2) An officer of a corporation shall at all times act honestly in the exercise of his or her powers in the discharge of the duties of his or her office. … (4) In the exercise of his or her powers and the discharge of his or her duties, an officer of a corporation must exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation's circumstances. … (6) An officer or employee of a corporation must not, in relevant circumstances, make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the corporation." 3 The Corporations Law (Cth), s 1317DA provided that the above provisions were civil penalty provisions. Section 1317EA(3) provided that the court might, in addition to declaring that a person had contravened such a provision, make either or both of an order prohibiting the person from managing a corporation for a specified period and an order that the person pay to the Commonwealth a pecuniary penalty. These provisions are deemed to be included in the Corporations Act 2001 (Cth) by virtue of s 1401. The plaintiff seeks such orders. 4 The minutes in question were those of a directors' meeting of NRMA Insurance Group Limited ("NIGL") of 11 August 2000. NIGL was registered on 30 November 1999. It grew out of the demutualisation and listing of NRMA Insurance Ltd ("NRMA Insurance"). The Corporations Act 2001 (Cth), s 180(1), s 181(1) and s 182(1) as they then applied were as follows: "180(1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer … 181(1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith and in the best interests of the corporation; and (b) for a proper purpose … 182(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation." 5 The Corporations Act 2001 (Cth), s 1317E provided that the above provisions were civil penalty provisions. Section 1317G provided that the court might, in addition to declaring that a person had contravened such a provision, make an order that the person pay to the Commonwealth a pecuniary penalty. Section 206C provided that the court might, in addition to declaring that a person had contravened such a provision, make an order prohibiting the person from managing a corporation for a specified period. The plaintiff seeks such orders. 6 The defendant's poll papers with respect to votes directed to him as proxy in his capacity as chairman of the annual general meeting were split so that he had a separate poll paper for votes to be exercised in favour of a resolution, a separate poll paper for votes to be exercised against the resolution and a separate poll paper for undirected votes. The rules applicable to the meeting required a poll paper to be signed to constitute a valid vote. The defendant filled out but did not sign the poll paper with respect to 3,973 votes against resolution 6. The effect of their exclusion from counting resulted in resolution 6 being passed as a special resolution. Of the 15,165 members of NRMA who lodged valid appointments of proxy with respect to that resolution, 4,429, or in excess of 29%, instructed their proxy to vote against the resolution. 7 The minutes of the meeting of the board of directors of NIGL of 11 August 2000 prepared for circulation to the directors for the following board meeting on 6 September 2000, contained a discussion of the defendant's remuneration arrangements stating that four items had been noted. The defendant caused replacement pages to be circulated to the other directors the day before their meeting. The replacement page with respect to his remuneration package replaced the word "noted" with the words "recommended by the Board Committee" and added at the end of the four items the words "IT WAS RESOLVED to accept these recommendations". 8 Resolution 6 had its origin in the 1997 annual general meeting of NRMA. The company is referred to as "the Association" in its constitution. Article 89 provided that the directors should be paid out of the funds of the Association as remuneration for their ordinary services as directors such sum as might from time to time be determined by a meeting of members. The article provided that the amount was to be fixed as a lump sum which was to be divided amongst the directors as they should agree and, failing agreement, equally. 9 Resolution 6 at the 1997 annual general meeting proposed the amendment of the NRMA constitution to introduce a new definition of "NRMA entity" to mean the Association, NRMA Insurance and all entities controlled by either or both of them. It proposed an amendment to art 89 by replacing the reference to ordinary services as directors with a reference to ordinary services as directors of NRMA entities and it proposed the introduction of a new art 89A providing that a director should not accept any remuneration for ordinary services as a director of any NRMA entity other than from the Association. The object of the amendments was to put the control of the remuneration of directors within the NRMA group in the hands of the members of NRMA. The proposal was supported by the defendant. Resolution 7 at the 1997 annual general meeting was an ordinary resolution, conditional upon the passing of resolution 6, that the remuneration payable to directors under art 89 be increased by $617,000 to $665,000. Resolution 6 failed to achieve the 75% vote necessary to its passing as a special resolution. 10 The attempt to consolidate directors' fees in NRMA was repeated at the 1998 annual general meeting. Resolution 6 provided for the introduction of the definition "NRMA entities", the substitution of the words "ordinary services as directors of NRMA entities" for the words "ordinary services as directors" in art 89, the introduction of art 89A that a director must not accept any remuneration for ordinary services as a director of any NRMA entity other than from the Association and the insertion at the end of art 89 of the sentence: "The fixed sum shall be $665,000 per annum unless otherwise determined under this article", ie, the consolidated fee level sought at the 1997 annual general meeting. Resolution 7 at the 1998 annual general meeting, again conditional upon the passing of resolution 6 as a special resolution, proposed the increase of the amount specified in art 89 by $190,000 to $855,000. The resolutions were again supported by the defendant. 11 Article 31 of NRMA's constitution entitled the President to take the chair at each meeting of members. The defendant was the President of NRMA and chaired the 1997 and 1998 annual general meetings. 12 Deloitte Touche Tohmatsu held a contract with NRMA to provide returning officer services to the company. It provided these services at both the 1997 and 1998 annual general meetings. Nicholas Peter Hullah was the partner responsible for carrying out these duties. He has some expertise in performing returning officer or scrutineer functions. He has acted in this capacity at all general meetings of Brambles Industries Ltd since 1995 and he has provided advice and guidance within his firm in relation to these matters. He advised National Mutual in relation to the voting and counting at the general meeting to approve demutualisation of that company. Mr Hullah drafted the adjudication rules used by NRMA at its annual general meetings. Materially, those rules provided that a proxy's poll paper was invalid if not signed. 13 Article 47 of NRMA's constitution required an instrument appointing a proxy to be deposited at the registered office of the company not less than 47 hours before the time for the holding of the meeting. The 1998 annual general meeting was to be held on Wednesday 28 October at 9.00 am. In the week before the annual general meeting, Mr Hullah provided a daily summary of the proxies for, against and unallocated with respect to each resolution to be considered at the meeting. On Friday 23 October 1998 Mr Hullah sent a report to Lisa Storrs, one of the assistant secretaries of NRMA, by facsimile at 5.48 pm. With respect to resolution 6 it stated that 14,272 members had lodged instruments appointing proxies of which 4,162 directed their proxy to vote against the resolution. The "no" vote was thus in excess of 29%. Mr Hullah had written "25%: 3568" thereby drawing attention to the fact that the "no" vote was in excess of 25%. Lisa Storrs forwarded Mr Hullah's report by facsimile to the defendant at 7.05 pm on Friday 23 October 1998 with a covering note: "Reports as discussed". 14 The time for lodgement of appointment of proxy forms for the 1998 annual general meeting expired at 10 am on Monday 26 October 1998. Mr Hullah said he had a telephone conversation with the defendant on that day: "On 26 October 1998, Mr Whitlam and I had a telephone conversation to the following effect. I do not now recall whether he called me or I called him. I said: "I have the results of the proxies." He said: "Can you please fax me the results of the proxies." During the conversation, I said words to the effect: "The numbers indicate that all Resolutions will succeed, except for Resolution 6 which will fail. However, because Resolution 6 will fail, Resolution 7 will also fail." At another point during the conversation, Mr Whitlam said words to the effect: "Can you tell me how proxy holders must lodge their voting papers? In what circumstances, can a proxy holder fail to acquit his or her responsibilities properly causing the votes not to be counted?" I replied words to the effect: "There are various scenarios. A proxy holder could miscount the number of votes which he or she had to lodge. The proxy holder may also leave the meeting prior to the poll being called. The proxy holder may fail to sign the proxy poll paper." He said words to the effect: "Is it possible to split the proxy holder poll papers relating to the votes which are directed to the chairman of the Meeting so that they are on three separate pieces of paper; votes lodged in favour, votes lodged against, and undirected votes?" I said words to the effect: "It is possible but why would you want it done in that way?" He said words to the effect: "The way the poll papers are at the moment, I have to add it up and I'm under all these pressures. I am concerned about my ability to correctly transcribe the information from the left-hand side to the right-hand side. If I have it only on one page, then the difficulty does not arise." 15 The poll papers to be used at the 1998 annual general meeting contained the resolution number, the name of the proxy and, on the left hand side the number of votes held in favour, against, not directed and the total number of votes held. This information was placed on the paper by Mr Hullah's staff. The proxy was required to record on the right hand side of paper, the number of votes in favour, the number of votes against and the total number of votes. The proxy was also required to insert his or her surname, initials, membership number, postal address and signature. 16 The defendant said that his conversation with Mr Hullah was far more limited: "On 26 October 1998, I had a telephone conversation with Mr Hullah. I cannot recall precisely when the conversation occurred. The conversation was to the following effect: I said: "You know how difficult these AGMs are. We have all had difficulty with the calculations when we have had to assign the undirected proxies either for or against a motion. I've experienced difficulties in the past with this. Would it be possible to put all the proxies on separate sheets of paper so that there is a sheet for the proxies in favour, a sheet for the proxies against and a sheet for the undirected proxies? Then all I would have to do with respect to the different categories of proxies would be fill out my name and serial number and the like and cast them, with the only decision I would need to make being how I would cast the undirected proxies." Mr Hullah: "I can't see any problem with that. I will make the necessary arrangements." The defendant denied that the conversation included the other matters recalled by Mr Hullah. The defendant categorically denied asking in what circumstances could a proxy holder fail to acquit his or her responsibilities. 17 On 27 October 1998 Mr Hullah said he had a further conversation with the defendant: "On 27 October 1998, I had a further telephone conversation with Mr Whitlam. I believe he called me. He said words to the effect: "You have advised me that it is possible to split the proxy holder poll papers. Could you prepare the proxy holder poll papers relating to the votes which are directed to the Chairman of the Meeting so that they are on three separate pieces of paper. On the first piece of paper I want the votes lodged in favour of the Resolution, on the second I want the votes lodged against the Resolution and on the third I want the "undirected" votes. Even though it means I have to sign more forms, I would like you to prepare the forms in that fashion.' I said words to the effect: "OK. Is this to be done just for the Chairman?" He said words to the effect: "I want this to be done only for the votes which are directed to the Chairman, and not the other directors. The proxy holder poll papers which are directed to all other proxy holders and myself in my own name can be prepared in the normal fashion." Mr Hullah said that in the course of his experience he had never encountered such a request. 18 Mr Hullah said he sought legal advice from Minter Ellison. Anne Mackenzie advised him that the law had changed and that the Corporations Law (Cth), s 250A(4) made it mandatory for the chairman of a meeting to vote on a poll and vote in the way directed by the member. She informed Mr Hullah that it was an offence not to do so. Mr Hullah asked that a copy of s 250A be faxed to him. After receiving the facsimile, Mr Hullah said he spoke with the defendant again: "After speaking with Ms Mackenzie and receiving her fax, I telephoned Mr Whitlam later on 27 October 1998 and had a telephone conversation with him to the following effect. I said: "I've spoken to Minters. There is a new provision in the Corporations Law. This is paragraph 250A(4)(c) which states that "if the proxy is the chair – the proxy must vote on a poll, and must vote that way". If he doesn't, its an offence." He said: "Can you please send me a copy of section 250A?" 19 The defendant denied that he had the first conversation of 27 October 1998 recalled by Mr Hullah and he said that he had no recollection of the second conversation. He said that he was not a lawyer and would not have relied upon his own reading of a piece of legislation and that if he wanted a copy of the section he would have asked Dr Gaye Schofield Morstyn, group secretary and general counsel of the NRMA group. 20 Mr Hullah said that following his second conversation with the defendant on 27 October 1998 he prepared his final report addressed to the chairman of the meeting on votes directed to proxy holders. He placed a copy of the report in two envelopes one addressed to the defendant at his offices at 131 Macquarie Street, Sydney, the second addressed to the NRMA Secretariat at level 24, 388 George Street, Sydney. The reports were hand delivered. The reports showed that of the 15,165 votes directed to proxy holders with respect to resolution 6, 4,429 were directed against the resolution. That figure was, again, in excess of 29%. 21 A rehearsal for the annual general meeting took place on Tuesday 27 October 1998. Mr Hullah said that he attended the meeting in the afternoon and handed a copy of the Corporations Law (Cth), s 250A to the defendant during the rehearsal. The defendant said that he attended the rehearsal at 10 am and left at 12 noon. He said that Mr Hullah did not give him a copy of the provision. 22 Robert John Dempsey is a corporate adviser and consultant. From February 1998 he was retained to provide various consulting services to NRMA. On 25 June 1998 Eric Dodd, then acting chief executive officer of NRMA, signed a contract with Mr Dempsey's company for him to provide strategic advice to Mr Dodd. Mr Dempsey said that the defendant telephoned him at about 7.30 am on the morning of the annual general meeting: "Mr Whitlam and I had a lengthy conversation. The 1998 Annual General Meeting of NRMA was to be held that day. I expected a number of issues to arise. I particularly remember a part of the conversation which was in words to the following effect. Mr Whitlam said: "The media's okay this morning." He then went on to say words to the effect: "In regard to the proxies, I think everything is fine except for resolution 6." I said: "Directors' fees". He said: "Yep, but I may just have to forget to sign that one." I said: "I don't think you should do that." He said: "Well, the vote is very close." I said: "I don't think – Nick, I don't think that it's a very good idea." He said: "Well, we'll see." The defendant categorically denied that he had the conversation with Mr Dempsey. He said that in the numerous conversations that he had with Mr Dempsey after 28 October 1998 this conversation was never mentioned. The defendant said that his relationship with Mr Dempsey had become strained after June 1998 when he thought Mr Dempsey had undermined him in his desire to become chief executive officer of NRMA and that he had worked with Ms Keating, a close confidante, against the defendant's interests. The defendant believed that in October 1998 Ms Keating bore him malice and it was inconceivable that he would divulge information which could be so harmful to him to Mr Dempsey. Particularly was this so because the defendant had formed the view in the period leading up to the annual general meeting that Ms Keating was attempting to organise his removal as President. He said he would not have armed Mr Dempsey with information that could be used against him by Ms Keating. 23 On the morning of the annual general meeting the defendant picked up his poll papers at the meeting venue. They were arranged in a logical sequence. Calculators were available to directors. The defendant said that he did not have a calculator. A transcript of proceedings at the annual general meeting was in evidence. It records a deal of interjection and heckling, particularly early in the meeting. The meeting was adjourned for order to be restored. A cognate debate on resolutions 1 to 5 took place following which the defendant directed that polls be held on each of the first five motions. Dr Morstyn then gave instructions on how to complete poll cards and proxy poll papers for each of the resolutions with the aid of slides. After instructing members present in person how to fill out their poll cards for resolution 1, Dr Morstyn instructed proxy holders on filling out the right hand side of their poll papers including an instruction to complete the identification details and sign the poll paper. This was followed by the warning: "If you don't sign the poll paper your proxy votes will be invalid." Dr Morstyn then moved to each of resolutions 2,3,4 and 5. There followed a cognate debate on resolutions 6 to 8 followed by a similar direction by the defendant that polls be held on those resolutions. Again Dr Morstyn instructed the audience on the compilation of poll cards and proxy poll papers with the aid of slides. With respect to poll papers held by proxies for resolution 6, Dr Morstyn instructed that the identification details should be completed and the poll papers signed, again warning that if a poll paper was not signed the proxy votes would be invalid. Dr Morstyn then took the audience to resolutions 7 and 8 indicating, finally, that Mr Hullah's staff would collect the poll cards and poll papers marked 6 to 8. The defendant then directed that the poll cards and poll papers be counted as expeditiously as possible. When the polls closed, the defendant announced that the results would be posted in the foyer of the NRMA office at approximately 10 am the next morning and published in the Sydney Morning Herald and Daily Telegraph on Saturday 31 October 1998. Subject to the declaration of the polls, the defendant then declared the meeting closed. The minutes of the annual general meeting were also in evidence. They state that Mr Hullah declared the polls closed at 4.06 pm and the defendant declared the meeting closed at 4.07 pm. 24 Mr Hullah's staff prepared up to seven proxy poll papers for the defendant for each resolution. The poll paper in the name of the defendant personally was compiled in the same way as the poll papers for all other proxies. There were three poll papers for each of resolutions 1 to 7 in which the word "Chairman" had been inserted by Mr Hullah's staff. On the left hand side one contained the number of votes in favour with the same total, another contained the number of votes against with that same total and the third contained the number of non-directed votes with that total. "Chairman Supplementary" poll papers arising from appointment of proxy forms nominating no proxy or the failure of a nominated proxy to attend the meeting, were likewise constructed. There were no undirected votes with respect to resolution 8 and the defendant held five proxy poll papers. The defendant filled out all his 54 proxy poll papers without mistake. He failed to sign the poll paper on resolution 6 with respect to 3,973 votes directed against the resolution. 25 The defendant denied that he deliberately omitted to sign the poll paper to vote against resolution 6. He said his omission was an inadvertent mistake. He said when placing the poll paper with the other poll papers in the ballot box he intended that the votes he exercised should be counted. He said that at the time of the meeting the number of proxies with respect to resolution 6 was known by Dr Morstyn and members of her staff as well as by Mr Hullah and members of his staff. If he had thought about it, any failure on his part to exercise the votes against resolution 6 directed to him as proxy would have been obvious to these people, with none of whom he had a relationship other than a working one. He said he had no recollection of being specifically aware that the Corporations Law (Cth), s 250A obliged him as chairman to vote proxies directed to him. However, he was of the view that he was obliged to vote as members appointing him proxy directed. He said he did not deliberately breach any obligation he owed and would never have contemplated breaching such an obligation in any circumstances whatsoever, let alone circumstances in which it was inevitable that any failure to vote would be discovered. Many members had been vigorously demonstrating their displeasure with the board during the course of the meeting. He believed that there were other board members who would have been only too willing to use such information against him, in particular Ms Keating, whom he suspected was involved in an attempt to have him removed as President. Any lapse in his performance as chairman of the meeting would have been used against him. Above all, he said that he would never have risked exposing his wife and children and family to the disgrace of such a deliberate wrongdoing on his part, or risked exposing to ruin his personal reputation for integrity along with everything he had worked for for so many years. He said the significance to him of his reputation as an honest director could not be overstated and that the press release on 6 September 2001 that the plaintiff had commenced these proceedings had the effect of two invitations to join boards being dissipated and a consultancy being suspended pending the outcome of these proceedings. He said that the takeover of SGIO Insurance Ltd ("SGIO") was well advanced at the time of the 1998 annual general meeting and that it was highly likely that he would serve on the board of that company. He said that if resolutions 6 and 7 were passed, he understood his fees would increase by $30,000 per annum from 1 December 1998 to $135,000, an increase of $17,500 for the balance of the year ended 30 June 1999 and $30,000 for the full year to 30 June 2000. He said that in fact he received $52,500 from SGIO in the year ended 30 June 1999 and $105,000 in the year ended 30 June 2000. 26 The defendant said that he could not explain his failure to sign the poll paper but there were a number of matters in which he was heavily occupied: providing assistance to Credit Suisse First Boston in their development of a report on restructuring options within the NRMA group, negotiations and discussions with Motor Trades Association in respect of a so-called Quality Repair System which had been introduced experimentally by NRMA in Wollongong, chairing the subcommittee of the NIGL board which had delegated authority with respect to the SGIO takeover, moving house, moving offices and his eldest son commencing HSC examinations that week. A meeting of his group within the NRMA board was held on 22 October 1998 which he described as a difficult meeting. There was to be a further meeting on 27 October 1998 but Ms Keating and two others did not attend, fuelling his concern that his Presidency was under threat. 27 The annual general meeting was held following floods at Wollongong and a refusal by insurers, including NRMA Insurance, to indemnify victims. The Defendant said there was a demonstration right outside and inside the auditorium prior to and during the meeting. He said the interjections continued throughout the meeting. He said there were no microphones in the well of the hall which was the source of most of the interjections. He found the accounts of flood victims distressing. The meeting was very long and difficult. He said he felt under a great deal of tension and pressure. 28 The defendant said that if his instruction to Mr Hullah had been carried out he should have had nine poll papers for each resolution but he only had seven. He said that confused him and he felt a degree of frustration as to the non-compliance with his instructions. The poll paper on resolution 2 in the name of the defendant personally related to 108 votes with 59 in favour, 6 against and 43 not directed. The defendant filled in the right hand side of the poll paper with 65 votes in favour, 6 against and a total number of votes cast of 108. He did not know how he arrived at 65 in favour when he had cast all non-directed votes in favour on the two split poll papers related to non-directed votes. He cited this as an example of inadvertence on his part. 29 The defendant remembered taking an inordinately long time to complete his voting papers during the first block of voting and thinking that people were waiting for him to finish. He blamed this in part on a mixture of two regimes: one as he had directed and the other in relation to the single poll paper for votes directed to him personally as proxy. He said that with respect to the second block of voting he had, again, to deal with the problem of confirming that there were two poll paper regimes for each resolution. He said that with respect to resolution 8 there were only five poll papers because there were no undirected votes and that, while the poll paper in favour showed 7,966 votes on the left hand side, it did not repeat that number as the total of the proxies. He said his recollection was that he again took quite a long time to complete the second block of voting papers, but not as long as the first. He said that his recollection was that interjections from the hall did not abate during this process. 30 Richard James Talbot has been a director of NRMA continuously since November 1990 with the exception of a period from October 2000 to December 2001. He was present at the 1998 annual general meeting. He was seated towards an edge of the stage between Jane Singleton and Dr John Campbell. He said that after the voting had finished with respect to resolutions 6 to 8 he left his seat and approached Mr Hullah who was in the auditorium just in front of the stage and asked him how the proxies were running for resolutions 6 and 7 and, in particular, for resolution 6. Mr Talbot said that Mr Hullah said he could not give him that information and Mr Talbot returned to his seat. He said that a little while later he again approached Mr Hullah who said he had already told him that he could not give him that information and if he wanted the numbers he should speak to the chairman: "I then approached Mr Whitlam who was on the stage. I said to him words to the effect: "Can you give me the numbers for Resolution 6." He said words to the effect: "I will not tell you the numbers. But I can tell you that yes, they're up. You owe me a big favour. Wait till you see what I've done for you." Mr Talbot said he returned to his seat and relayed the conversation to Ms Singleton and Dr Campbell. 31 The defendant denied that Mr Talbot had approached him during or after the voting on resolutions 6 to 8. He said that as soon as he closed the meeting the lights were dimmed, the directors left their seats and he left the lectern in the centre of the stage. He categorically denied that he had any conversation with Mr Talbot in which he intimated that he had deliberately not signed the poll paper or that he knew before Mr Hullah showed him the unsigned paper that he had not signed it. He denied categorically that he had said anything about doing Mr Talbot a big favour in the context of deliberately not signing the poll paper. He said that he and Mr Talbot were not on close terms and had been opposed on a number of issues including demutualisation. He said it was inconceivable that had he formulated a plan not to sign the poll paper he would have admitted such to Mr Talbot. He said that his group on the Board of NRMA had decided to maintain Mr Talbot on his current committees and if, which he considered very unlikely, he had said to Mr Talbot: "You owe me a big favour. Wait till you see what I've done for you", it was most likely related to Mr Talbot's position on various fee-paying committees and boards of subsidiary companies. 32 Mr Hullah said that just after 4 pm during the counting of the votes Mr Talbot approached him and asked him for the proxy numbers. He said he could not give him that information and he would have to ask the defendant. While the votes were still being counted, and to the best of his recollection after his conversation with Mr Talbot, Mr Hullah said that he was approached by a member of his staff, Caithlin McCabe who handed him the unsigned poll paper of the defendant. He approached the defendant at the rear of the auditorium. He said: "I showed the unsigned proxy holder poll paper to Mr Whitlam, and we had a conversation to the following effect. I said: "This poll paper is not signed. Was this a deliberate action on your part?" He replied: "I realise that this makes the vote invalid. I am acting in the best interests of the organization. You can see that this place is ungovernable." Mr Hullah said that the defendant did not offer to sign the poll paper nor did he ask him to do so. 33 The defendant said that he was outside the auditorium when Mr Hullah approached him and asked to speak to him. He said that he and Mr Hullah returned to the auditorium where Mr Hullah showed him the unsigned poll paper and they had a conversation to the following effect: "Mr Hullah: "This proxyholder poll paper is one of yours. It is not signed. The proxyholder poll paper is for resolution 6. It covers proxies which were directed to you as Chairman to vote no. The poll paper has been completed correctly in all respects except one, it is not signed." I said: "I can see that." Mr Hullah: "You realise that an unsigned proxy cannot be counted." I said: "I think I know that. What can I do?" The defendant said that he looked at Mr Hullah to see if he would give him some guidance or suggest a solution. He said this was not given. He said that Mr Hullah did not ask him to sign the poll paper and he was uncertain whether it was appropriate to sign after the votes had been cast. He said that as he walked away from Mr Hullah he said words to the following effect: "You've just seen that AGM, which some people tried to make a farce. This place is becoming ungovernable. What can I do?" The defendant said he made this statement in light of the fact that the people affected by the Wollongong floods had become quite emotional and he was upset at another issue been raised. The defendant denied that Mr Hullah had said anything about deliberate action on his part. He said he would have been offended had those words been used and he would have recalled Mr Hullah using them. He denied saying to Mr Hullah that he realised that the vote was invalid. The defendant denied that he said anything about acting in the best interests of the organisation although he said it was possible that, after referring to people making a farce of the annual general meeting, he described them as not acting in the best interests of the organisation, although he did not specifically recall saying so. The NRMA Insurance annual general meeting was scheduled to commence at 6.30 pm. After his conversation with Mr Hullah, the defendant said that he went to Tattersall's Club to have a swim. 34 After his conversation with the defendant, Mr Hullah sought legal advice from Ms Mackenzie and Mark Standen, a partner of Minter Ellison, and was advised that the votes on the unsigned poll paper should not be counted. Mr Hullah said that after receiving that advice, he informed Clair Craven, another assistant secretary of NRMA, what had occurred including the advice given by Minter Ellison. Mr Hullah returned to the counting room and instructed his staff not to count the votes. Shortly after that, Ms Craven approached and invited Mr Hullah to a meeting with Dr Morstyn. Dr Morstyn told Mr Hullah not to declare the result because she was to seek further legal advice. 35 The defendant returned to the meeting room at about 5.30 pm and was approached by Dr Morstyn soon after who asked whether they could meet with Mr Standen. The defendant said that Dr Morstyn told him: "That proxy you didn't sign was for resolution 6 and may affect the outcome of the resolution." At the meeting the defendant said that a conversation to the following effect took place: "Ms Morstyn: "I think you are aware that the Chairman has not signed one of his proxies and if it were not to be counted it could affect the outcome of resolution 6." Mr Standen: "I am ware of that." I said: "What can we do? What is the correct procedure? Where do we go from here?" Mr Standen: "The rules are clear. Gaye, as secretary you said several times during the meeting that unsigned proxies could not be counted. The paper had to be signed before the polls closed. The polls are closed and it is too late now. You cannot count an unsigned proxy." Ms Morstyn: "There may be a legal challenge to such a course of action." I said: "What can we do?" Mr Standen: "Well you can't count the proxies because the form is unsigned. That is the appropriate course of action." I said: "In that case, on your advice, the proxies are not to be counted." 36 Later in the evening Mr Hullah was informed by Ms Craven that the advice had been cleared and he was to release the results of the count on resolution 6 based on that legal advice by excluding the defendant's unsigned poll paper. Mr Hullah concluded his report on the results of resolutions 1 to 8 at about 9 pm. Mr Hullah's report on resolution 6 showed total votes cast of 11,262 with spoilt papers of 3,995, the percentage in favour being 95.7% with 456 proxy votes and 26 votes in person against the resolution. The certificate showed that 92 members voted in person at the meeting. Mr Hullah handed his reports to Ms Craven at a drinks function following the conclusion of the NRMA Insurance annual general meeting. 37 Dr Morstyn created a diary note shortly after the meeting in the following terms: "FILE NOTE RE AGM 1998 – PROXY POLL ON RESOLUTION 6 The Returning Officer approached me at around 4.30 pm on 28.10.98 and informed me that the Chairman had forgotten to sign a number of proxies and that this would result in resolution 6 being recorded as carried, rather than not carried. He said that he had discussed the issue with Mark Standen and the Chairman. I then approached the Chairman and Mark Standen around 5.45 pm on 28.10.98 to discuss the matter. I said that the Returning Officer had spoken to me about the Chairman not having signed some proxies which would mean that the result of Resolution 6 of the last meeting was going to change from not being carried to being carried. I said I was worried because I thought that the result may be open to a legal challenge, but that my impression from speaking to the Returning Officer was that Minters had given advice that the appropriate course of action was not to count the votes, since the proxy poll papers had not been signed. Mark Standen said that the Returning Officer had spoken to him and Anne McKenzie about the unsigned proxy poll papers and that the Returning Officer had also spoken to the Chairman. Mark Standen said that counting those votes where the proxies were not signed by the chairman would not be consistent with the announced rules of the meeting which had been read out repeatedly at the meeting. He also raised the issue of whether we should now act contrary to those rules. He said that while the Corporations Law placed a personal obligation on the Chairman to vote the proxies in the manner directed by the member, there were no provisions covering procedural errors such as someone forgotting ( sic ) to sign the proxy poll paper and the error being discovered after the polls had closed. He concluded by saying that, taking into account all the relevant issues, it was his opinion that it was appropriate not to count the votes on the unsigned proxy poll papers in accordance with the announced rules of the meeting. There was no further discussion on this issue at this meeting and the meeting concluded at approximately 5.55pm." 38 Mr Hullah said he commenced to prepare a file note on Friday 30 October 1998 which he finished on Monday 2 November 1998. The report contained the following passages: "Matters leading up to the meeting Upon receipt of the first report, being that which dealt with proxy votes, I received a call from Mr Whitlam. We discussed various issues in relation to how proxy holders must lodge their voting papers and in what circumstance such proxy holder could fail to acquit his/her responsibilities properly causing the votes not to be counted. This included varies scenarios whereby a proxy holder could miscount what he/she had to lodge, the proxy holder leaving the meeting prior to the poll being called, and a failure to sign the proxy holder report. Mr Whitlam made a request which I considered somewhat unusual as I had never received such a request in the past. This request was to prepare the proxy holder report relating to those votes which had been directed for the Chairman of the Meeting to vote, to be prepared on three separate pieces of paper. On the first piece of paper would be the votes which had been lodged in favour of the motion, on the second piece of paper would be the votes which had been lodged against the resolution and on the third piece of paper would be the votes which were undirected and left to the Chairman to direct either for or against the motion. This contrasts with the normal situation where one piece of paper is prepared for each resolution and contains information about votes in favour, against and undirected (see attached example). Furthermore Mr Whitlam requested that the reports for the Chairman be the only ones prepared in this fashion. The proxy holder reports for all other proxy holders and for himself in his own name were to be prepared in the normal fashion. Whilst I deemed this request somewhat unusual, I concluded that it was perfectly acceptable to prepare the report in this fashion if that was the wish of the Chairman of the Meeting and accordingly I instructed that that is how the reports should be prepared. Subsequent discussion with Mr Whitlam As a result of my discussion with Mr Whitlam, I became concerned as to what would be my legal situation if he did not lodge the proxy holder report containing the votes lodged against Resolution No 6. I therefore telephoned Ms A McKenzie of Minter Ellison, the NRMA's corporate solicitors, to request her advice in this matter. Having outlined my concerns, Ms McKenzie drew my attention to a new provision of the Corporation's ( sic ) Law which was inserted effective I July 1998. This is paragraph 250A(4)(c) which states "if the proxy is the chair - the proxy must vote on a poll, and must vote that way;" Ms McKenzie then faxed to me this section of the Corporations Law as it was not included in my copy of the Corporations Law because it did not include the latest amendments. Ms McKenzie and I agreed that, consequent upon the insertion of this new section of the Corporations Law, it would be illegal for the Chairman not to lodge the proxy form. I considered this sufficiently important to phone back Mr Whitlam and to make him aware of this new requirement of the Corporations Law. This I did immediately having spoken with Ms McKenzie on the afternoon of 27 October. Matters arising at the meeting … At this stage, my staff commenced counting the votes cast on the remaining three votes and shortly thereafter a member of my staff, Ms C McCabe, drew to my attention that the proxy holder report of the Chairman for Resolution No 6 for the votes against was unsigned. I took the proxy holder report out of the Tally Room and went in search of the Chairman, Mr Whitlam. I encountered Mr Whitlam at the rear of the auditorium and pointed out to him that his report was unsigned and asked whether this was a deliberate action on his behalf. He did not directly answer this question but I recall that he said "I realise that this makes the vote invalid. I am acting in the best interests of the organisation. You can see that this place is ungovernable." It was clear to me that he did not wish to redress the situation by signing the proxy holder report. I did not ask him to sign the report." The report goes on to describe Mr Hullah's taking of legal advice from Ms Mackenzie and Mr Standen, his alerting Ms Craven to the situation, his meeting with Dr Morstyn and the later advice by Ms Craven that the legal advice had been cleared. 39 On 29 October 1998 there was an all-day meeting of directors of NRMA. Dr Morstyn was in attendance. She said that the defendant's failure to sign the poll paper was not raised at the meeting. That evening Dr Morstyn, who was dissatisfied with the Minter Ellison advice, did some research and found Link Agricultural Pty Ltd v Shanahan, McCallum & Pivot Ltd [1999] 1 VR 466 which supported a different conclusion. In that case, the chairman of a meeting directed that voting papers be placed in ballot boxes under the supervision of a returning officer. A proxy inadvertently failed to put a proxy voting card in the ballot box before the close of the poll. The chairman ruled that the votes not be counted. Had they been counted, a different result of the poll would have ensued. The Court of Appeal held that the chairman's ruling was invalid because it did not facilitate the purpose of the power conferred upon him to facilitate the ascertainment of the will of the majority of eligible voters. Since there was evidence of the result of the poll if the proxy votes had been counted, it was open to the court to declare that result 40 Dr Morstyn worked from home on Friday 30 October 1998. She telephoned the defendant and told him that the legal advice they had been given was not correct and it seemed that the company did have an obligation to count the votes but it was probably something which needed senior counsel's advice. Dr Morstyn said the defendant replied: "We should try to have the results withdrawn" and asked that Mr Hullah be contacted. It was too late to remove the announcement from the newspapers which published the results on Saturday 31 October 1998. Independently, Lisa Storrs and Clair Craven had taken separate legal advice which was also inconsistent with the advice given by Minter Ellison. 41 Mr Hullah's file note indicates that he was telephoned by Ms Craven on Friday 30 October 1998 and informed of the contrary advice. She advised him to seek his own separate legal advice and he attempted to do so on that day. Later Dr Morstyn telephoned him and suggested that he speak with the defendant. This Mr Hullah says he did. Of portion of that conversation his file note states: "Mr Whitlam went on to say that he had sought legal advice on the day from Mark Standen and this advice had confirmed that his proxy holder report was invalid. Mr Whitlam went on to say that he was now, within one hour of having been made aware of the fact that there are those who wished to overturn the decision, taking action to redress the situation. He made reference to the fact that there would seem to be some people who may be suggesting that his actions may be deliberate and they would need to be extremely careful as he had his reputation to defend…" The defendant said he had no recollection of having a conversation with Mr Hullah on 30 October 1998 but he said to anyone who wanted to listen that if there was any suggestion that he had acted deliberately they should "put their house on it". 42 On Monday 2 November 1998 Mr Hullah attended a meeting chaired by the defendant with Mr Dodd, Dr Morstyn and Mr Standen during which the defendant said that he might well have said if anybody suggested that he had failed to sign the poll paper deliberately they should be prepared "to put their house on it". 43 On 2 November 1998 oral advice was taken from Richard Conti QC, as he then was, and Dr Morstyn prepared a memorandum to all the directors stating that the advice was that the chairman was justified in publishing an amended result showing that resolution 6 was not carried and a meeting of the board to discuss the matter would be arranged as soon as possible. A written advice was subsequently received from Mr Conti and circulated to directors on 4 November 1998. It relied upon the Link Agricultural decision in concluding that the poll on resolution 6 was invalid. A special board meeting was called for 5 November 1998. 44 Mr Talbot said that a few days before that directors' meeting he and another director, Ian Yates, spoke to Mr Hullah and became aware of the way in which the poll papers for the defendant had been split. He attended the board meeting by telephone. He said that the defendant gave a chronology of events at the annual general meeting which did not refer to the split poll papers. Mr Talbot said that he raised the issue by asking over the telephone if the defendant could tell him the form that his proxy papers took. Dissatisfaction was expressed at the meeting that the directors had not been informed earlier of the defendant's failure to sign the poll paper. It was unanimously resolved to accept the opinion of Mr Conti. Mr Talbot did not raise the discussion he said he had with the defendant at the annual general meeting. 45 Following the meeting of 5 November 1998, Mr Talbot made a file note in a diary he took to all directors' meetings in which he recorded circumstances which he considered significant with respect to the affairs of the company and his role as a director. The diary entry is headed "AGM Note" and was written on the page for 28 October 1998. It is in the following terms: "During AGM resolutions proxy vote I approached the Returning Officer (Nic Hullah) (sitting in front of stage) + asked the Figures (number of proxy's) received for Resolution 6 + 7 – I asked on 2 separate occasions. Hullah would not tell me – I reported this to Singleton & Campbell. After the second refusal – (Hullah said I should ask Chairman as he had the figures) – I approached Nic Whitlam (at the lectern - centre stage) and asked if he would tell me the figures. Whitlam refused to tell figures but Whitlam said "Yes, they're up. You owe me a big favour. Wait till you see what I've done for you". I resumed my seat (near Singleton/Gavin/Campbell) and reported to them what Whitlam had said to me. We (Singleton/Campbell/Talbot) were puzzled at what he meant by "Wait till you see what I've done for you". When I approached Whitlam to ask this question he seemed nervous and "ill at ease". After the Insurance AGM I approached Whitlam on stage to say good bye. Whitlam was standing with Mary Eassan and seemed pale and nervous. I told Whitlam that Mary Eassan had informed me during the Insurance AGM (Easson + I sat together) that Keating/Geeson/Callaghan were trying to get the numbers together to get rid of Whitlam as President. Easson said Geeson wanted to be President and he was "hopeless & a dope". I said to Whitlam "At least with me Nic you can see me coming from a long way off and you know the direction I head in". Whitlam said "I know I can always count on you to tell me to my face". (Saw Mary Easson in car park – she said Keating had a big row with their group and stormed out of meeting). * I have written this note after the 5 Nov Board meeting now realising the significance of what Whitlam said at the AGM." 46 In November 1998 the defendant prepared a file note as follows: " FILE NOTE At about 5.30 pm on Wednesday 28 October, Gaye Morstyn approached me and asked me to meet with Mark Standen of Minter Ellison. She had become acquainted with the fact that I had inadvertently omitted to sign one of the proxy papers for Resolution 6 at the Limited AGM, as had Standen. The meeting was relatively brief, probably no more than five minutes, but I recall Standen's advice to be, certainly, that not counting these unsigned proxies was "an appropriate course of action". In giving this advice he reminded us that Gaye, as Secretary, had said on several occasions during the AGM that unsigned proxies could not be counted. Gaye, for her part, said "There may be legal challenge to such a course of action". My recollection is that each of us understood this to be the case, but that Standen's advice was unqualified and therefore I resolved that it was appropriate not to count the votes." 47 The defendant prepared a further file note in December 1998 which contained the following: "Shortly after the close of the Limited AGM on Wednesday 28 October, Nick Hullah asked to speak to me. He walked me into the auditorium and produced from his suit jacket pocket one of the proxy forms for the NRMA Limited AGM. He pointed out that it was one of mine, that it related to Resolution 6 and covered nearly 4,000 proxies which had been directed to me as chairman to vote 'no' and that they had been completed correctly in all respects except one which was that the document was unsigned. It was not clear to me whether Hullah was asking me to sign it then or not. He certainly did not say anything or indicate that. He did say words to the effect that "you realise that an unsigned proxy cannot be counted". I confirmed that that was my understanding. I rhetorically asked what can I do. He did not reply. I remember then walking off muttering something like "You have just seen that AGM, which some people tried to make a farce. This place is becoming ungovernable. What can I do?" The file note went on to recount a request by some directors to meet with them after the NRMA Insurance annual general meeting, his meeting with Dr Morstyn and Mr Standen, his meeting with fellow directors at the conclusion of the NRMA Insurance annual general meeting and the directors' meeting on 29 October 1998. The file note continued: "On Friday 30 October, during the afternoon, Gaye Morstyn left a message for me to call her urgently. We did not speak until about 5.45 pm, at which time she told me that a recent case ("the Link case") could allow me as chairman of the NRMA Limited AGM on 28 October, to have the disallowed 'no' proxies related to Resolution 6 counted. I immediately asked that the publication of the results in the weekend's press be suspended, the Returning Officer be informed and that senior counsel's advice be obtained. Later that evening I left a message for the Deputy President, mentioning only another matter, asking her to call me that weekend since I wanted to inform her of the situation." The file note referred to the taking of advice from Mr Conti and continued: "Upon receiving Mr Conti's advice on 3 November, I resolved to amend the previously declared outcome of Resolutions 6 and 7. Before formally doing so, I thought it appropriate to allow the board to discuss the matter. I decided to do this, not because I expected that anything any board member said would cause me to change my decision, but rather out of respect for them and because I had been informally advised that as the directors were the only parties with any legal status in my decision, it was correct to do so. The meeting was called for 5 November and it unanimously resolved to note and accept the opinion of Mr Conti QC dated 5 November. With that, I revised my earlier ruling, and caused the previously "invalid" votes to be counted." 48 So far as the second complaint against the defendant is concerned, the matter of the defendant's remuneration package was considered at a meeting of the NIGL board committee on 10 August 2000. Geoffrey Ashton Cousins chaired the meeting during the absence of the defendant while this matter was discussed. A first and second draft of the minutes of that meeting were in evidence. The reporting of this matter in both drafts did not differ greatly. The second draft contained the following: "… Messrs Whitlam and Dodd and Ms Morstyn returned to the meeting at 5.25 pm. The full meeting was informed that it was resolved to recommend to the Board that it pay a base fee of $70,000 to each non-executive director of the company with the Chairman to be paid three times that amount together with a continuing fee of $90,000 for his chairmanship of the IMA Board and that in recognition of the Chairman's specific responsibilities and on–going duties, that shareholders be asked to grant to the chairman 50% of any allocation to the Chief Executive Officer under the proposed employee share plan." 49 Graeme Phillip Blackett was one of the company secretaries of NRMA and NRMA Insurance in August 2000. One of his duties was to take notes and to prepare minutes of meetings of the boards of directors within the NRMA group including meetings of the board of NIGL. The usual practice was for a member of his staff to prepare draft outline minutes in advance of the meeting based on the material in the board papers. He then attended the meeting and took notes. After the meeting he dictated the minutes using the outline and his notes. Once he was satisfied with his draft minutes he circulated them for correction and comment to the defendant, Mr Dodd and Dr Morstyn. After incorporation of any amendments suggested by these three, Mr Blackett would send the final draft to the defendant for his final review. Once any additional changes by the defendant had been made, that version of the minutes was inserted in the board papers for the next meeting. 50 That procedure was followed with respect to the minutes of the meeting of the board of directors of NIGL on 11 August 2000. Mr Blackett's handwritten notes taken at the meeting were in evidence. They noted that the meeting commenced at 9.03 am. They noted that at 2.16 pm Mr Cousins assumed the chair while the defendant's remuneration was considered. Mr Blackett's notes refer to four issues. First, that the defendant's remuneration should be three times a base fee of $70,000. Secondly, that he continue to get directors' fees from Insurance Manufacturers of Australia Pty Ltd. Thirdly, that he get the same committee fees as others. His note on the fourth issue was as follows: "Recommendation when option scheme in place, in principle perf rem of Chair tied to perf rem of CEO, - Chair gets 50% of options scheme in place for the CEO, whatever is in place which must be agreed by the board." There is a marginal note: "+ subject to a plan moving forward." The note continues: "Final scheme to be brought back to the board for sign-off. - Board approves - fees - 3 x + IMA fees + - an additional option scheme relating to retirement allowance carried - NRW returned @ 2.41 pm." 51 Mr Cousins was examined on oath under the Australian Securities and Investments Commission Act 2001 (Cth), s 21. Portion of the transcript of his examination was in evidence. Mr Cousins was chairman and chief executive of the largest advertising agency in Australia and subsequently was the first chief executive officer of Optus Vision. This experience spanned some 30 years. He has been and is a director of a number of public companies. In August 2000 he was a member of the board of NIGL and a member of the board committee. Mr Cousins took the chair at the board meeting on 11 August 2000 when the defendant left the meeting while his remuneration package was discussed. He gave a verbal report on the recommendations of the board committee. It was a verbal report because the minutes of the meeting on the previous day were not then available. Mr Cousins said that the directors approved the cash component of the defendant's remuneration but had not approved the performance component. 52 Mr Cousins said that following the board meeting on 11 August 2000 it was decided that he or Mr Hamilton should inform the defendant what had taken place in his absence. He said he was not certain whether it was him or Mr Hamilton who did this. In any event he said there was a subsequent conversation between him and the defendant in which he indicated that the fourth item had not been approved by the board. Mr Cousins could not recall when that conversation took place. It could have been after the board meeting and he assumed it was some time between 11 August 2000 and 6 September 2000, the date of the subsequent board meeting. 53 The defendant said that shortly after the 11 August 2000 board meeting he had an informal discussion with one or more directors about what had been agreed in his absence. He did not recall a specific discussion with Mr Cousins and had no recollection of being told that any element of his remuneration package, recommended by the board committee, had not been approved by the board. 54 In the week after the 11 August 2000 board meeting, Mr Blackett prepared draft minutes according to his usual practice and sent them to the defendant, Mr Dodd and Dr Morstyn. A short time later, Mr Blackett said that the defendant telephoned him and indicated that he had a number of amendments. He suggested that Mr Blackett contact Dr Morstyn who took the minutes of the NIGL board committee meeting on 10 August 2000 and he could use those minutes to better reflect what was reported to the NIGL board. Those minutes were subsequently e-mailed to Mr Blackett who said he cut and pasted portion of them into his minutes, also incorporating the other changes suggested by the defendant. He said he then sent the amended minutes to the defendant and Dr Morstyn for their final comment and review. He could not recall whether any further amendments were made. 55 The defendant's usual practice was to annotate the first set of draft minutes using a red pen and return the minutes to the secretariat. He said occasionally Dr Morstyn telephoned him to query a change which he had suggested. He said he expected that any amendments suggested by him would be queried by Dr Morstyn or Mr Blackett if they did not accord with their recollection or notes. He said that on occasions he saw the hand written notes of the person from the secretariat who attended a board meeting if there was some uncertainty about what was said. The defendant said he received the first draft of the minutes of the meeting of 11 August 2000 about a fortnight after the meeting and he made suggested amendments in red pen and returned the minutes to the secretariat. He received no comments from Dr Morstyn or from Mr Blackett. 56 On Friday 1 September 2000 Mr Blackett said he caused the final version of the minutes to be inserted into the board papers for the NIGL board meeting scheduled for 6 September 2000. Those minutes contained the following: "Mr NR Whitlam then left the meeting at 2.16 pm to enable discussion of remuneration arrangements in place for the Chairman. Mr GA Cousins assumed the Chair in the absence of the Chairman. The following points in relation to Chairman's remuneration were then noted: · that, according to industry practice, the Chairman's fee be three times the base fee, that is $210,000 per annum; · the chairman continues to receive fees for serving on the board of Insurance Manufacturers' of Australia Pty Limited; · the chairman is entitled to Committee fees on the same basis as all other non-executive board members; · when an equity participation plan is in place, in principle, the performance remuneration of the Chairman be tied to the performance remuneration of the Chief Executive Officer so that when the Chief Executive Officer's remuneration is considered by members, members be asked to grant the Chairman 50% of any shares allocated to the Chief Executive Officer. Mr NR Whitlam returned to the meeting at 2.41 pm and resumed the Chair." 57 Mr Blackett said that what was unusual about his draft minutes was the use of the words "it was noted". He usually used the word "resolved". But he agreed with the following proposition: "Q: So, as far as you were concerned, if someone had changed what is set out here to "the board resolved to accept the following four recommendations", you would have thought it accurately reflected what you had set out to achieve? A: Yes" 58 Mr Blackett said there was often disagreement at subsequent board meetings as to the accuracy of the minutes. There were occasionally pretty violent disagreements. With the exception of one director, he was the only person taking contemporaneous notes and he sometimes wondered when he looked back at those notes how directors at subsequent board meetings could place the interpretation contended for upon the prior discussion. 59 The defendant said that the board papers for the meeting of 6 September 2000 were delivered to him on Friday night 1 September 2000 or Saturday morning. He said he was telephoned during the weekend by Dr Morsytn who informed him that the first draft of the minutes had been circulated with the board papers in error. 60 The defendant said that he made an attempt to reconstruct the suggestions which he had previously made and sent them to the secretariat on Monday 4 September 2000. He said he received no comment from Dr Morstyn that any of the suggested amendments were inaccurate. He said he recalled agreeing with Dr Morstyn that the revised version should contain underlining and revision marks in order to indicate the changes. He said the minutes circulated to directors on 5 September 2000 contained his suggested revisions. 61 The revisions were not confined to the discussion of his remuneration package. There were many grammatical corrections and amendment of descriptions. For example, a resolution to approve the signing of a memorandum of understanding with a third party for project Star was changed to a resolution to approve the signing of a memorandum of understanding with the prospective joint venture party concerning project Star. A reference to Mr Stanwell indicating that compliance is a growth area in the issue of corporate governance was changed to Mr Stanwell indicating that compliance is an area attracting growing interest in corporate governance. Generally, it may be said of the suggested amendments that they were directed towards greater precision of expression. The defendant said that his suggested amendments to the discussion of his remuneration package were matters of semantics. The words "in principle" had been added to the board committee's recommendation with respect to the fourth item and he interpreted this to mean that the board had "watered down" the board committee recommendation. He said that he did not make the changes to reflect events that did not occur at the meeting. He said it would have been irrational of him deliberately to attempt to get other directors to agree to something which he knew had not been agreed. 62 In relation to the defendant's remuneration package, the replacement minutes deleted the words "then noted" in the extract set out at par 56 above and inserted in their stead the words "recommended by the Board Committee" and, apart from two minor corrections of grammar, the words "IT WAS RESOLVED to accept these recommendations" were added after the final bullet point. 63 Portions of the transcript of Dr Morstyn's examination under the Australian Securities and Investments Commission Act 2001 (Cth) were in evidence. She said that the reason for the defendant's amendments was because he had not seen the original draft. She recollected seeing the handwritten alterations of the defendant and when Mr Blackett went home ill she finished the task of sending out the amended minutes with the memorandum of 5 September 2000. She did not notice the changes made by the defendant to the discussion of his remuneration package. Later she said that she did not think to question any of the alterations, including those to the portion of the minutes when the defendant was not present, because none of his suggestions particularly "screamed" at her as wrong because they accorded with her understanding of what the board thought it was doing and thought it had resolved. 64 Mr Cousins said that at the directors meeting of 6 September 2000 he and Anne Keating stated that the minutes were not accurate. The defendant said that Ms Keating raised objection to that part of the minutes relating to his remuneration and that Mr Cousins agreed with her. He told those present that they should determine what had been agreed and he did not participate in the discussion. The revised wording of the minutes was further amended in the minutes confirmed at that meeting to substitute for the fourth bullet point the following: · "when an equity participation plan is in place, the performance remuneration of the Chairman be referred back to the board for its consideration both in relation to quantum and as to the best way to proceed." 65 Pamela Anne Bardsley took notes at the meeting of the board of directors of NIGL of 6 September 2000. They were in evidence. They indicated that Ms Keating expressed concern with the resolutions which had been changed substantially. It was not resolved to accept them. The notes indicate that Mr Cousins and Mr Stanwell agreed that they were not resolved but were noted only. A cryptic note attributed to Mr Hamilton states: "Agree remuneration items, and option plan to be put". 66 The minutes of the meeting of the board of directors of NIGL on 6 September 2000 contained the following with respect to the minutes of the previous meeting: "Minutes of the previous meeting of the board held on 11 August 2000 were noted. In particular the board discussed that part of the item "Committees–Update" relating to the remuneration of the Chairman appearing on page 18. In relation to that section, it was noted that at the board meeting on 11 August 2000, the last point listed on page 18 of the draft minutes in relation to an equity participation plan were not correct. The first three points were approved by the board and the fourth in relation to a broad based share option plan would be examined further and referred back to the board for its consideration both in relation to quantum and as to the best way to proceed." There followed a further amendment and a resolution to confirm the minutes subject to those amendments. The minutes of the meeting of 6 September 2000 were confirmed without amendment at the meeting of the board of directors of NIGL on 27 October 2000. 67 There are clear conflicts in the evidence which require resolution. In this regard much depends upon my assessment of the demeanour of the witnesses who appeared before me. 68 Mr Cousins was a most impressive witness. His recollection of events was tested in cross-examination. Mr Cousins expressed frustration at the conclusion of his examination under the Australian Securities and Investments Act 2001 (Cth) saying that he could not understand why the issue as to the alteration of the minutes of the meeting of the board of directors of NIGL of 11 August 2000 had become such a great matter of discussion. A set of draft minutes was produced and they were not accurate. They were corrected. The board did not approve an incorrect set of minutes, so that why the matter had become such great debate was beyond his comprehension. He said: "For the life of me I can't see that it was a matter of any substance whatever, because the board corrected every set of minutes that ever came to it. I can't remember a meeting of this board, anyway, where some part of the minutes, draft minutes, were not then changed." It was put to Mr Cousins that he felt a strong degree of frustration and impatience with the proceedings. He denied impatience. He said he believed it was his responsibility, and still did, to co-operate and he believed he had. He said: "I certainly, as I believe I indicated in that statement, regarded this matter then and do now as a complete irrelevancy. For the life of me I couldn't see why anyone would bring a case based on the alterations of a draft set of minutes, which is something that happened – I have been on a lot of public company boards, and it is very rare for a draft set of minutes not to be altered." 69 It was put to Mr Cousins in accordance with Ms Bardsley's notes that he agreed with Ms Keating when she said that her concern was with the actual resolutions at page 18 of the minutes of the meeting of 11 August 2000 which had changed substantially. It had not been resolved to accept them. Ms Bardsley's precis of what she attributed to Mr Cousins and Mr Stanwell was: "Agree was not resolved. Were noted only". Mr Cousins disagreed with the note. He said on a number of occasions during his cross-examination that his clear recollection was, and he said so at the meeting, that the board had accepted the first three recommendations but not the last. The board did not accept that there should be a performance based component in the defendant's remuneration package and referred the matter back to the board committee for further consideration. The board committee sought advice on the matter and, in the event, did not proceed with the recommendation. 70 It was submitted that Mr Cousins' evidence was unreliable for a number of reasons. First, the notes taken by Ms Bardsley had him and Mr Stanwell agreeing with Ms Keating, the note with respect to whom referred to the non-acceptance of resolutions in the plural. Mr Cousins denied that he asserted that none of the resolutions had been agreed at the previous meeting. He was the chairman who reported on what had been recommended by the board committee on the previous day during the discussion while he was chairman. He was adamant that the first three issues were agreed by the board and it was the fourth issue which was not. That accords with what happened at the meeting of 6 September 2000. The Board accepted that the minutes were accurate in indicting that the first three items had been resolved. It was the fourth item which was the subject of amendment. Ms Bardsley did not give oral evidence in the proceedings before me. Having had the advantage of observing Mr Cousins in the witness box, I accept his evidence in preference to the notes taken by Ms Bardsley at the meeting of 6 September 2002. 71 Secondly, it was submitted that Mr Cousins' evidence that he spoke to the defendant about what had and had not been agreed with respect to his remuneration package was unreliable because Mr Cousins ultimately agreed that, sitting in the witness box, he did not recall whether he spoke to the defendant at all about his remuneration package between the two meetings of 11 August and 6 September 2000. That is true, but the answer must be taken in the overall context of Mr Cousins' evidence. He had said that someone was deputised to speak to the defendant after the first meeting to tell him the result of the board deliberations on the issue. He did not recall whether it was him or Mr Hamilton who performed that task. He said, however, that whether or not it was him who performed the task, he had a separate conversation with the defendant in which he told him what had been agreed and not agreed with respect to his remuneration package. What he did not recall was when that conversation took place but he assumed it was between the two meetings. His ultimate answer was an honest one. He could not recall whether he spoke between the two meetings. If this conversation took place, the only logical inference to be drawn is that it took place between the two meetings. There was no point in discussing the issue with the defendant after the meeting of 6 September 2000 at which the earlier minutes were amended to reflect the board's rejection of an in principle agreement to provide performance incentives for the defendant linked to those of the chief executive officer. 72 In accordance with my directions, the defendant's affidavit was not sworn until after the close of the plaintiff's case. In it the defendant said that it was likely that shortly after the board meeting of 11 August 2000 he had an informal discussion with one or more directors about what had been agreed in his absence. He said that he did not recall a specific discussion about the matter with Mr Cousins and he had no recollection of being told that any of the elements of his remuneration package recommended by the board committee had not been approved. In cross-examination, the defendant agreed that in making his revisions to the minutes of the meeting of 11 August 2000 he did not rely upon information given to him by Dr Morstyn or Mr Blackett. When asked on what basis he made the amendments to the discussion of his remuneration package he said he had spoken with each of the directors with the exception of Ms Keating between the two board meetings. He said he had discussions with Mr Astbury, Mrs Callaghan, Mr Cousins, Mr Dodd, Mrs Easson, Mr Hamilton and Mr Stanwell. The defendant added Mr Ross although he gave an apology for the 11 August 2000 meeting. The defendant said that each of these persons to a more or less extent gave him information which justified his making the revisions in the minutes. He denied that Mr Cousins explicitly told him that the performance remuneration package was not approved by the Board. 73 The defendant's affidavit was carefully prepared. Mr Pembroke SC who with Mr Stack appeared for the plaintiff, submitted that it was crafted to within an inch of its life. There is no mention of information conveyed by each of the directors and in the affidavit the defendant said that he could not recall a conversation with Mr Cousins. The defendant gave the evidence of his discussions with each of the directors belligerently as he did with a deal of the evidence given in cross-examination. That evidence represents a significant departure from an affidavit prepared in circumstances in which it can be expected that every aspect of the matter favourable to the defence would be covered. Having observed the defendant give this evidence, I find the assertion that each of the directors, including Mr Cousins, provided information justifying the amendments made to the minutes by the defendant to be incredible and I reject it. 74 The defendant said he relied on the lack of response from Dr Morstyn and Mr Blackett as an indication that his revisions of the minutes were accurate. Mr Blackett did not see the revisions. As far as he was concerned, the minutes he inserted in the board papers for the meeting of 6 September 2000 included the revisions of the defendant. Dr Morstyn said that the revisions were made because the defendant had not seen the first draft prepared by Mr Blackett. That evidence was at odds both with the evidence of Mr Blackett and with the evidence of the defendant who said that he was told by Dr Morstyn that Mr Blackett's first draft before amendment by him had been included with the board papers by mistake. The defendant's revisions were seen by Dr Morstyn but her evidence was equivocal. At one stage she said that she did not recall seeing the amendments made with respect to the defendant's remuneration, at another she said that the revisions, including those with respect to the remuneration package, did not particularly "scream" at her as wrong. I find the evidence of Dr Morstyn in this regard unsatisfactory. 75 It was further submitted that Mr Cousins' evidence was unreliable because he was adamant that the fourth item had been rejected on 11 August 2000 whereas the minutes of that meeting, as amended on 6 September 2000, recorded a resolution to accept the four items, the last one rephrased as: "when an equity participation plan is in place the performance remuneration of the chairman be referred back to the board for its consideration both in relation to quantum and as to the best way to proceed." When this was put to Mr Cousins he agreed that he might have been in error as to precisely what was agreed on 11 August 2000. However, he later said that his recollection was clear on the point as opposed to remembering the precise words of the particular minute and his recollection was coloured by the subsequent events, namely, if it had been approved by the board it would not have gone back to the board committee, which it did, for further consideration. When Mr Blackett's evidence was put to him, Mr Cousins maintained his position: he put a proposal to the board, the board did not approve part of it, he was not infallible, but that was his recollection. I accept Mr Cousins' recollection of the events. Mr Blackett's notes are clearly significant as the contemporaneous notes of the minute taker, but neither is he infallible. Mr Cousins is a man of considerable experience as a board member and, as chairman at the time of the relevant discussion, I prefer his recollection of events to an interpretation of the notes taken by Mr Blackett. 76 Mr Cousins had been deputised to speak to Ms Keating with a view to her resigning from the board of NIGL. That approach was unsuccessful and Mr Cousins was involved in acrimonious discussion with her. It was submitted that Mr Cousins' evidence of what transpired at the board meeting of 11 August 2000 should not be accepted because, it was suggested, Mr Cousins agreed with Ms Keating's rejection of all resolutions because he wished to appease her. This proposition was put to Mr Cousins in cross-examination he said: "I think you misunderstand my character rather fundamentally if that's the proposition". I reject the submission having formed the view that Mr Cousins was not influenced by a desire to appease Ms Keating by his conduct at the meeting of 11 August 2000. 77 I found Mr Cousins a most reliable and impressive witness and where his evidence conflicts with that of the defendant, I accept the evidence of Mr Cousins. I find that the defendant was informed by Mr Cousins following the meeting of the board of directors of NIGL of 11 August 2000 and before he made his revisions to the minutes of that meeting which were circulated to the directors on 5 September 2000, that the fourth item in the recommendations of the board committee on his remuneration package had not been agreed by the board. 78 The making of the amendments to the minutes by the defendant in contradiction of what he had been told by Mr Cousins without checking Mr Cousins' recollection with Dr Morstyn or Mr Blackett or fellow directors and without resolving the issue with Mr Cousins if further information suggested that Mr Cousins was mistaken, demonstrates a high degree of arrogance. That the defendant was capable of such arrogance accords with my assessment of him in the witness box. 79 The first item on the agenda for the meeting of the board of directors of NIGL on 6 September 2000 was the confirmation of the minutes of the meeting of 11 August 2000. Yet the confirmation was not addressed until well into the meeting. I do not draw any ulterior motive on the part of the defendant from this circumstance. Evidence was led to show that confirmation of the minutes of one other NIGL board meeting took place later in the meeting and the same had happened at 19 board meetings of NRMA between 28 May 1998 and 29 June 2000. 80 A forerunner of the Corporations Act 2001 (Cth), s 180(1) was the Companies (New South Wales) Code, s 229(2) which created an offence if an officer of a corporation did not at all times exercise a reasonable degree of care and diligence in the exercise of his powers and the discharge of his duties. Of that provision, Ipp J in Vrisakis v Australian Securities and Investments Commission (1993) 11 ACSR 162 at 213 said that it would be rare for an offence to be committed without the company suffering damage as a result because the negligence necessary to establish a criminal charge is greater than that required to establish civil liability. NRMA did not suffer damage as a result of the defendant's amendment of the minutes. 81 A breach of the Corporations Act 2001 (Cth), s 180(1) gives rise to a civil penalty and I do not regard the absence of damage to NRMA as ousting its operation. In my view a reasonable person who occupied the office of President of NRMA and had the same responsibilities as the defendant, would not have proffered the amended minutes to the board of directors of NIGL after being apprised of the matters conveyed to the defendant by Mr Cousins without taking steps to ascertain that that information was inaccurate. 82 I find that, in the circumstances, by revising the minutes of the meeting of the board of directors of NIGL of 11 August 2000 relating to his remuneration package, by causing the revised minutes to be circulated to the other directors and by entertaining their adoption at the board meeting of 6 September 2000, the defendant did not exercise the degree of care and diligence that a reasonable person in the position of the defendant would exercise and that the defendant was in breach of the Corporations Act 2001 (Cth), s 180(1). 83 I am not satisfied, however, that the defendant was in breach of the Corporations Act 2001 (Cth), s 181(1) or s 182(1). It was not up to the defendant to determine the accuracy of minutes of NIGL board meetings. That was a function of the board of directors. The defendant did not by his actions gain any additional remuneration to which he was not entitled or cause to be recorded in a company document his entitlement to such remuneration. He was proffering a set of minutes for approval by the board in a climate of opposition, sometimes violent opposition, to him from some of its members where it was the norm, rather than the exception, that minutes were not confirmed without amendment. The defendant did not gain an advantage or cause detriment to NRMA by his action and the proffering of the minutes for consideration by his fellow board members was not an improper purpose. The position would be different if the defendant hoodwinked his fellow directors into confirming a false set of minutes. However, this board was not hoodwinked. 84 So far as the other issue is concerned, there are a number of other respects in which I found the defendant's evidence unsatisfactory. The clear inference from the note by Lisa Storrs to the defendant on the facsimile sent to him at 7.05 pm on Friday 23 October 1998 is that he and Ms Storrs had spoken and he was expecting the progressive results of the proxy count. The defendant was evasive about this issue in cross-examination. He agreed that the note implied that Ms Storrs had discussed with him the fact that the reports had been received from Mr Hullah. He did not recall having such a conversation. He did not know if the facsimile was received by his machine. He had no idea whether he was waiting for the facsimile. He did not accept that he read the facsimile when received nor whether he read it subsequently. Again belligerence intruded. He had no recollection whatsoever of awaiting the information on the Friday night. He was asked: "Q: Would you listen carefully to the question. You wanted to know the up to date proxy count on the Friday night, didn't you? A: No, I don't know that to be true. I knew the general trend of the proxies. That's what I knew. That was the knowledge I had at that time." 85 The defendant maintained that this was the state of his knowledge at the time of the annual general meeting on the following Wednesday. He did not know it to be the case that at some stage he read the figures with respect to resolution 6. It may have happened. He did not deny it. He agreed that if he had read the figures there was no possibility resolution 6 would be carried. He maintained, however, that his knowledge was a general one of the trend of proxies and that with respect to resolution 6, it was a tight run thing. He was asked the source of his understanding that it was a tight run thing and said he believed he was told either by Dr Morstyn or her staff and more likely by Dr Morstyn. He could offer no explanation as to why that statement would be made to him in light of the proxy figures as at 23 October 1998. Dr Morstyn's evidence did not support the contention that she was the source of his understanding that it was a tight run thing. It is difficult to accept that the defendant who had chaired the 1997 annual general meeting at which a like resolution had failed to pass, would not have been concerned to know the up to date proxy figures. It is incredible that, having been sent those figures after a conversation with Ms Storrs, he could have maintained the view that the fate of resolution 6 was a tight run thing. 86 Mr Hullah's report of Friday 23 October 1998 with respect to resolution 6 showed that 14,272 members had lodged instruments appointing proxies of which 4,162 directed their proxy to vote against the resolution. The "no" vote was thus in excess of 29%. Mr Hullah had written "25%: 3568" thereby drawing attention to the fact that the "no" vote was in excess of 25%. On that basis, for the resolution to pass, all proxy holders would have to exercise all unallocated votes in favour of the resolution and 2,442 members would need to attend the meeting in person and all vote in favour of the resolution. Mr Hullah's report on voting at the 1997 annual general meeting showed that only 84 members voted in person on resolutions 6 and 7. I find that it was obvious to a reasonable person who perused Mr Hullah's report of Friday 23 October 1998 that resolution 6 was doomed and, in consequence, resolution 7 would fail to achieve any increase in directors' fees. 87 It is even more incredible that the defendant maintained that his state of knowledge was that it was a tight run thing at the annual general meeting. Mr Hullah had hand delivered his final report on the proxy votes the day before the annual general meeting. The defendant said that he did not recall receiving the report. He had moved his offices. In cross-examination he agreed that he had seen the report at some stage and he imagined he saw it before the annual general meeting. He denied that he wanted to know the final proxy count before the meeting. He said that the numbers would be read out at the meeting and they were, either by him or by Dr Morstyn. The transcript of the proceedings of the annual general meeting indicates that total proxy numbers only were read out. When a request to reveal the details of the proxies was made at the beginning of the debate on resolutions 6 to 8, Dr Morstyn indicated that this was not required of a mutual company. 88 While conceding that it was likely that he was shown the report with the final proxy votes before the annual general meeting, the defendant maintained his assertion that he only knew a general trend. He said if he had set his mind to the precise figures in the report he would have realised that it was not a tight run thing but he did not address the precise figures when shown the report. The report showed that of the 15,165 votes directed to proxy holders with respect to resolution 6, 4,429 were directed against the resolution. That figure was, again, in excess of 29%. If all the proxy holders exercised the undirected votes of 4,096 in favour of the resolution it would require an additional 2,551 members to attend in person and all to vote in favour of the resolution for it to be passed. Again, I find that any reasonable person analysing Mr Hullah's report would conclude that resolution 6 was doomed and, in consequence, resolution 7 would be ineffective. 89 It was put to the defendant that he did not have a serious belief that the number of persons who voted from the floor at the annual general meeting might be sufficient to reverse the result which would otherwise flow from the proxy votes. He said that was precisely his understanding. There were hundreds of people being bussed in from Wollongong and elsewhere, all of them ill-disposed towards the board. It was put to him that if they were ill-disposed, there was no reasonable basis for his belief that votes from the floor might result in resolution 6 being passed. He agreed with that proposition but said that he believed that the matter might be decided on the floor. He believed it was a tight run thing and there would be hundreds of people attending the annual general meeting. 90 I do not accept the defendant's testimony in this regard. It was clear to anyone who read Mr Hullah's final report on the proxies that resolution 6 was doomed. It could not possibly have been passed on the floor of the meeting. I do not accept that the defendant was aware of Mr Hullah's final report on the proxies but failed to apprise himself of its contents. I find that the defendant was aware before the annual general meeting of 28 October 1998 that the votes of members who had appointed proxies to vote on resolution 6 would result in resolution 6 not being passed as a special resolution. 91 The defendant said that interjections from the hall did not abate during his voting on resolutions 6 to 8. A video of proceedings during the voting on those resolutions was in evidence. It was put to the defendant that the video indicated that things were quiet during the voting. The defendant said that the video had both visual and audio and he had no recollection of what the audio was like. He said it was very clear to him that the room was very noisy. Later the defendant said that he was badgered and harried. When it was put to him that this was not an assertion in his affidavit, he said that if he had not mentioned it in the affidavit, that was an omission. I do not accept this evidence of the defendant. The transcript of the proceedings at the annual general meeting records interjections early in the proceedings but not while voting on resolutions 6 to 8 was taking place. That there was a lack of interjection during voting on resolutions 6 to 8 is confirmed by the video. It shows the defendant going about his task of entering up his poll papers at the lectern without any reaction to noise. The procedure is orderly. There is no excessive shuffling of paper. Indeed, there is more paper sorting when the defendant places his completed poll papers in the polling box than there is while he fills them out. There is nothing to suggest that the defendant was badgered or harried by external influences. 92 I have difficulty in accepting the defendant's version of the conversation which took place between him and Mr Hullah when he was presented with his unsigned poll paper. The defendant's version of the conversation is set out at par 33 above. There is no expression of shock and no assertion of mistake which one would expect from a person who had inadvertently failed to sign the document. Nor was there any inquiry of Mr Hullah as to what effect upon the vote, failure to count the poll paper would have. One would expect the chairman of a meeting to want to know this fact. In cross-examination, the defendant agreed that he had given no explanation to Mr Hullah. The following exchange took place: "Q: You didn't give Mr Hullah any explanation at all, did you? A: No. Q: You didn't say that you were distracted, did you? A: No, he was at the meeting. Q: You didn't say that you made a mistake? A: No. Q: You didn't say that you don't know how it happened? A: No, he had just shown me the paper. Q: You didn't say that you could not believe that it had happened? A: No. None of those things. Q: You did not say a word to Mr Hullah to explain to him that your mistake was an unexpected surprise and an innocent mistake, did you? A: He sought no explanation. Q: Wasn't it obvious -- A: He was informing me. Q: It was obvious to you, Mr Whitlam, that the circumstances called for you to make some explanation to that effect didn't it? A: No, no, no." 93 The defendant denied the circumstances provided him with the opportunity, immediately, to assert that he was innocent of any wrongdoing. The defendant is a man of imposing physical size and presence. It is inconceivable that, had he wanted to explain, he could not have done so there and then. The defendant accepted that he believed at the time this conversation took place that a failure to sign the poll paper would result in the votes not being counted. But he denied that he did not want any guidance from Mr Hullah and denied that he thought that nothing further could be done. If the defendant believed that there was something that might be done why did he not seek legal advice himself or ask Mr Hullah to do so? Instead, the defendant went of to Tattersall's Club to have a swim before the NRMA Insurance annual general meeting at 6.30 pm. If the defendant had, indeed, made a mistake and thought there was something which could be done, one would have expected him to put procedures in train and not leave the premises to take a swim. One would have expected such a mistake to loom large in his mind and one would have expected him to want to give an explanation of his inadvertence. Yet an explanation rates no mention in either of the file notes the defendant prepared later in the year. 94 In Mr Hullah's version of the conversation set out at par 32 above, the defendant said: "You can see that this place is ungovernable". The defendant said that as he walked away from Mr Hullah after the brief conversation he says took place he said: "You've just seen that AGM, which some people tried to make a farce. This place is becoming ungovernable. What can I do?" I have difficulty with this portion of the alleged conversation as well. Why would a chairman confronted with an unsigned poll paper, offer no explanation as to his failure to sign but add this gratuitous comment? The version of the conversation given by Mr Hullah in which the ungovernable nature of the organisation is presented as a reason for failing to sign the proxy paper has far more congruence about it than does the gratuitous comment about an ungovernable organisation maintained by the defendant. 95 Nor do I accept the defendant's evidence that the filling out of the poll papers was a complicated task or that the pressures of recent events intruded. The video of the voting process shows a composed defendant proceeding in regular fashion with the filling out of the poll papers. The poll paper in question was one of the first in the second tranche of voting. He had no calculations to make. The orderly way in which the video depicts the defendant filling out the poll papers belies his suggestion that he had to come to grips with two different voting regimes or that the omission of a total on a poll paper caused him difficulty or that five rather than seven poll papers for resolution 8 created difficulty. I find that the defendant's failure to sign the relevant poll paper was not caused by these measures. 96 In contrast with the evidence of the defendant is that of Mr Hullah. I received 85 pages of written submissions on behalf of the defendant including 25 pages as to why I should not accept the evidence of Mr Hullah. I endeavour to summarise those submissions, although not in the same order, hereunder. 97 Mr Hullah said he began to prepare his file note on 30 October 1998. He was advised on that day to seek separate legal advice. Mr Hullah was subjected to an exhaustive cross-examination during the course of which he said he might have commenced to prepare his file note on 29 October 1998. It was submitted that this discrepancy tells against the credit of Mr Hullah. He was cross-examined as follows: "Q: Do you recall seeing ( sic ) in your affidavit that you commenced making the file note on 30 October, paragraph 50, your first affidavit? A: Is this my supplementary or - - Q: Your first affidavit. A: First affidavit. Q: The last paragraph. A: Yeah. Q: Do you want to change that evidence? A: No. Q: Why did you start mentioning the possibility of 29 October this morning? A: Because I know that I started to write the file note after the annual general meeting. I've said in my affidavit I started it on the 30th. I said now that it might have been the 29th. I don't see what hangs on that. Q: So what, you don't want to really answer the question? A: I have answered the question. Q: Overnight you realised that you had been told on the 30th that you'd better get your own legal advice? A: No, I knew that before. Q: And you've added the possibility of 29 October this morning to try and resist the suggestion that you commenced to prepare the note after being told to get the legal advice, haven't you? A: No. Q: Why did you add the suggestion of the possibility of 29 October? A: Because I know I started to prepare a file note after the meeting. The meeting concluded on the 28th, there were things happening on the 29th and 30th and that's why I said it might have been the 29th. I said here in my affidavit it was the 30th." 98 I do not regard this difference in testimony if, indeed, it be a difference to reflect upon the credit of the witness. Mr Hullah was required in the course of his extensive cross-examination to recall details of his involvement as returning officer at the annual general meeting on 28 October 1998 with a precision beyond the scope of most individuals. He was a quietly spoken man who retained his composure throughout the two days he was in the witness box and I have no doubt that his evidence in this regard was his honest attempt to recollect the events. It is immaterial whether he commenced this task before or after he was advised to seek separate legal advise because he clearly finished it after that recommendation was made to him. If there be any need to resolve this issue, I accept Mr Hullah's evidence that he commenced to compile his diary note before he was advised to take separate legal advice. 99 It was submitted that this was no ordinary file note. Mr Hullah had claimed legal professional privilege with respect to it when required for examination under oath under the Australian Securities and Investments Act 2001 (Cth). It was suggested that it followed that the diary note was prepared for the purpose of obtaining legal advice to protect Mr Hullah's position and that of Deloitte Touche Tohmatsu which, under its agreement with NRMA, was required to indemnify NRMA against any liability arising out of the performance of the returning officer functions. In cross-examination it was suggested to Mr Hullah that he was concerned potentially about his firm's legal situation. He said he was, as ever, concerned to ensure that he performed his functions properly so as to protect both his own and his firm's legal position and reputation. The mere fact that legal professional privilege was claimed does not mean that the document was not a contemporaneous file note prepared by Mr Hullah in the ordinary course of his business. The claim to privilege might well have been misconceived. Furthermore, Mr Hullah sought legal advice which was confirmed later in the evening of the annual general meeting and he acted in accordance with it. What exposure did he or his firm have in those circumstances? Mr Hullah said that he was not concerned with the exposure of his firm, having acted upon legal advice. I do not regard Mr Hullah as other than an independent professional who, in the performance of his duties, brought into existence his file note. As he said he was always concerned to perform appropriately to protect not only himself and his firm from legal action but also to preserve his and his firm's reputation. That does not cast doubt upon the accuracy of the file note. Nor does the suggestion that he take separate legal advice in circumstances where there is no real exposure to a call on the indemnity. 100 Mr Hullah's file note is criticised because it does not, with respect to the initial conversation with the defendant, make reference to any discussion about proxy numbers. Mr Hullah said that in his conversation with the defendant on 26 October 1998 he said he had the results of the proxies and was asked to send them to the defendant. It was submitted that the diary note was fundamentally flawed. Mr Hullah said that he did not seek to set out everything that had transpired in the diary note but only the salient aspects and those parts of the conversations he clearly recalled he put in inverted commas. The fact is that the time for lodgement of appointments of proxy expired at 10 am on 26 October 1998, following which Mr Hullah did have the final proxy numbers. That no reference is made to this part of the conversation in the file note does not detract from its accuracy. It did not purport to be a complete record of what was said. 101 It was common ground that the defendant told Mr Hullah that the reason he wanted to split the poll papers was to avoid the difficulty of having to undertake arithmetic calculations and to avoid the risk of miscounting. There is no reference to this explanation in Mr Hullah's file note. He was taken to task over this omission in cross-examination. He said that it was an oversight on his part and if he were making the record again he would have included that explanation. I do not regard that the failure as casting doubt on the veracity of the file note nor as reflecting on Mr Hullah's credit. 102 Mr Hullah gave evidence of two conversations with the defendant about splitting the poll papers, one on 26 October 1998, the other the following day. His file note refers to one conversation only after the delivery of his final report on proxies on 27 October. The defendant said there was but one conversation on this topic on 26 October. It was submitted that this inaccuracy reflected upon the reliability of his evidence. 103 In cross-examination, Mr Hullah agreed that his diary note had not recorded two conversations with respect to the split of poll papers. He said that he may have effectively run the two conversations together. In preparing the file note he did not consider it of critical importance to separate them. In cross-examination he maintained his statement that two conversations had taken place, but he said there was a doubt in his mind as to whether it was only discussed on the one occasion. That a conversation had taken place on 26 October 1998 was common ground. The defendant deposed to a conversation as did Mr Hullah. Ms McCabe recorded that Mr Hullah instructed her on the evening of 26 October to prepare the poll papers for votes directed to the chairman separately for votes directed for, votes directed against and undirected votes. Mr Hullah conceded that his file note was inaccurate in suggesting that the first conversation took place on 27 October. The discrepancy is not that Mr Hullah ascribed an initial conversation to 27 October but rather whether a second conversation took place. In his affidavit the defendant denied the first conversation with Mr Hullah on 27 October and swore that he had no recollection of the second conversation to which Mr Hullah deposed advising him of the new Corporations Law (Cth), s 250A. In cross-examination the defendant said that the conversation "did not happen", a phrase he repeated on a number of occasions. The defendant also denied receiving a copy of s 250A from Mr Hullah at the rehearsal for the annual general meeting on that day. According to the defendant, therefore, there was no contact with Mr Hullah on 27 October relating to members' votes directed to him as proxy or his obligation with respect thereto. 104 In his examination under the Australian Securities and Investments Commission Act 2001 (Cth), Mr Hullah had said that he was aware of the changes to the Corporations Law (Cth) but he had an old copy and he got Ms Mackenzie to send him the amendments by facsimile. It was submitted that this evidence was inconsistent with his file note. However, at his examination Mr Hullah also said that he discussed with Ms Mackenzie the obligation of a chairman to exercise votes directed to him as proxy because he wanted to make sure that his understanding of the Corporations Law (Cth) was correct. The note on the facsimile sent by Ms Mackenzie to Mr Hullah clearly indicates that a conversation took place between them in relation to s 250A. I do not see that anything turns upon the suggested conflict. Mr Hullah was examined two and a half years after the events in question. Submissions with respect to inconsistency in testimony must be considered in light of the fact that a person's memory is not infallible. The gravamen of the evidence is that Mr Hullah consulted Ms Mackenzie and received advice with respect to the Corporations Law (Cth), s 250A. 105 Ms Mackenzie sent a facsimile to Mr Hullah at 2.59 pm on 27 October 1998 attaching a copy of the Corporations Law (Cth), s 250A and stating: "As I noted on the phone, the relevant provision would appear to be section 250A(4)(c)". There is no doubt that Mr Hullah sought and received legal advice which comprised or included the legal obligation of the defendant to vote as proxy in accordance with members' instructions. Why would he take that course unless, as he said, he was concerned that his conversation or conversations with the defendant suggested that the defendant might not exercise votes in accordance with the instructions of members? Mr Hullah said that he spoke with the defendant soon after receiving the facsimile. That fits in with the defendant's evidence that he was back in his office after lunch at that time. Mr Hullah said he gave the defendant a copy of s 250A at the rehearsal for the annual general meeting. The defendant denied that he received the document. He denied that he returned to the rehearsal in the afternoon. Mr Hullah originally thought he had sent the provision to the defendant by facsimile but his memory was assisted by a conversation he had with Ms McCabe who told him that he had handed the section to the defendant on the afternoon of 27 October at the rehearsal. In my view the sequence of events is more indicative of the version of events given by Mr Hullah than it is of the denial of any relevant contact with Mr Hullah on 27 October. In light of the impression I formed of Mr Hullah as a thoughtful, quiet and, perhaps, timid person who nonetheless maintained his recollection of events based upon his contemporaneous file note during his cross-examination, I prefer his evidence in this regard to that of the defendant. I find that Mr Hullah did have a conversation in the afternoon of that day when he drew the defendant's attention to s 250A. I further find that it is more likely than not that Mr Hullah had a second conversation with the defendant in the morning of that day on the split of the poll papers. 106 In his file note Mr Hullah said that while the defendant's request to split the poll papers was somewhat unusual, he concluded that it was perfectly acceptable and he instructed his staff to do so. He did this by instruction to Ms McCabe on the night of 26 October 1998. He said in cross-examination that he sought Ms Mackenzie's advice on splitting poll papers. It was suggested to him that this was not an issue identified by him in his affidavit. He said that when in his affidavit he had sworn that he informed Ms Mackenzie that the defendant had asked him a number of question in relation to proxy votes, one of the matters he raised was the efficacy of splitting the poll papers. It was put to him that this was not stated as a topic of conversation with Ms Mackenzie in his file note. He said that the file note was not intended to record everything that was discussed. I accept Mr Hullah's statement that the file note was not intended to be a verbatim record and nor was his indication of the content of his discussion with Ms Mackenzie in his affidavit. Notwithstanding his view that splitting of poll papers was perfectly acceptable, he said he was in the habit of taking legal advice on matters because he had a general concern to make sure that he was doing the right thing. 107 Mr Hullah said that when he spoke with Ms Mackenzie he said he had just had a conversation with the defendant. It was submitted that this was an inaccurate statement because the conversation on splitting the poll papers had taken place the previous day. However, in view of my finding that it is more likely than not that a second conversation on the topic took place on 27 October 1998, the expression he used was completely justified. 108 Mr Hullah said that he informed Ms Mackenzie that the defendant had asked him a number of questions in relation to proxy votes. It was submitted that on Mr Hullah's own evidence the defendant had asked only one question about how one could avoid one's responsibilities. I reject this submission. Mr Hullah deposed to a number of questions on that topic raised by the defendant. 109 In the file note Mr Hullah said he became concerned as to his legal position if the defendant did not lodge the proxy paper. In his affidavit he said he asked Ms Mackenzie what the legal situation was if a proxy holder did not vote all his proxies. When the issue is whether an effective vote was exercised, I do not find any conflict in Mr Hullah's evidence by his alternative use of the words 'lodge' and 'vote'. 110 Mr Hullah said that in his conversation with Ms Mackenzie he raised the question whether the defendant as chairman of the meeting could rely on a vote by show of hands. Mr Hullah did not say that this was a matter discussed with the defendant. In cross-examination, he said his recollection was that he had discussed the matter with Ms Mackenzie as stated in his file note, but his file note does not so state. In his examination under the Australian Securities and Investments Commission Act 2001 (Cth), Mr Hullah said he did not recall specifically discussing the topic with Ms Mackenzie. I do not regard such a comparatively small discrepancy as casting doubt on the reliability of Mr Hullah as a witness. With the length of time that has elapsed since the events in question, such imperfections are to be expected. 111 In his file note, Mr Hullah said that when he confronted the defendant with the unsigned poll paper he asked whether it was a deliberate action on the defendant's part. In his examination under the Australian Securities and Investments Commission Act 2001 (Cth), however, Mr Hullah said he did not ask the defendant whether he meant to sign it, whether he had intentionally not signed it. Mr Hullah had refreshed his memory of what the defendant had said to him from his file note to answer a question recorded some three pages earlier in the transcript of his examination. He said he did not refresh his memory of what he had said to the defendant in answering the questions he did. He said his answer at his examination was inaccurate. It was put to Mr Hullah that when he used the words "deliberate action" in his file note he was intending to record the import of what may have been said and in fact what he may have said was something like: "Are you aware it's not signed?". Mr Hullah said he thought that was probably fair. However, the defendant in cross-examination denied that Mr Hullah had used those words and said he did not know why his counsel had put the proposition to Mr Hullah. While this aspect of Mr Hullah's evidence is unsatisfactory, it does not loom large in the scheme of things because it is common ground that Mr Hullah confronted the defendant with the unsigned poll paper and whether he asked whether the defendant was aware that the poll paper had not been signed or whether he asked whether it was a deliberate action on the part of the defendant, the occasion called for an explanation by the defendant which was not forthcoming. 112 Mr Hullah told Dr Morstyn at his meeting with her later in the evening that the defendant had forgotten to sign the poll paper. It was submitted that Mr Hullah's evidence was not reliable in light of this exchange. In my view, however, it is understandable that Mr Hullah did not assert a deliberate failure to sign the poll paper to Dr Morstyn. The question to be answered was whether the unsigned poll paper should be counted or not. That did not depend upon deliberate action or lack thereof on the part of the defendant. Dr Morstyn was an employee of NRMA. It is understandable that Mr Hullah did not raise with her the possibility that the President had failed, deliberately, to sign the poll paper. 113 Mr Tyres sent his draft report to Mr Hullah for comment. The report stated that Mr Hullah did not have a copy of the up-to-date Corporations Law (Cth) and obtained s 250A from Ms Mackenzie. It contained no reference to a conversation with the defendant with respect to how one might fail to acquit one's responsibilities nor to the conversation between them when Mr Hullah showed the defendant the unsigned poll paper. Mr Hullah signed a confirmation of factual accuracy suggesting an alteration to the report, irrelevant for present purposes. Mr Hullah said the Tyres' report was inaccurate and while he certified to its correctness he did so on the basis that having read it he believed that it was substantially materially correct and did not think anything turned upon the differences. The Tyres' report had Mr Hullah engaging in two conversations with the defendant on 26 October 1998. Mr Hullah said that was inaccurate. The second conversation occurred on 27 October 1998. It was submitted that these inaccuracies should lead me to discredit the evidence of Mr Hullah. In re-examination Mr Hullah said he did not tell Mr Tyres what the defendant had said to him when he showed him the unsigned poll paper. He said the defendant had made it clear to him in their subsequent meeting that should anybody state that he had acted deliberately they should be prepared to "put their house on it". He said he believed that the words which the defendant had spoken to him could be construed as a slur on his name and under the circumstances he determined not to provide that information other than in a court of law. There is mention of a threat, but not in those terms, in Mr Hullah's file note but when asked whether he was threatened in his examination under the Australian Securities and Investments Commission Act 2001 (Cth), he said "no, not at all". Mr Hullah's examination was under oath. That he should deny a threat if he then recalled that one had been made, is reprehensible. The defendant did not recall that he had used the words in a private conversation with Mr Hullah but he had said that he used the words to anyone who would listen to him. Notwithstanding the unsatisfactory nature of Mr Hullah's evidence in this regard, I accept that he was threatened by the defendant and resolved not to give the evidence except in a court of law. 114 In his examination under the Australian Securities and Investments Commission Act 2001 (Cth), Mr Hullah said he thought he might have said to the defendant during the conversation when he confronted him with the unsigned poll paper: "You realise that this makes this invalid". It was put to Mr Hullah that it was illogical for the defendant to repeat that phrase. However, in his examination Mr Hullah had gone on to say that he did not know what exactly or specifically he said and so it was wrong of him under those circumstances to suggest what he had said. He did not recall. 115 In cross-examination Mr Hullah said that one of the topics of conversation with the defendant on 26 October 1998 was discussing the ways in which people had failed to acquit their responsibility. It was submitted that this statement had a different emphasis from discussing ways in which a person could cause the votes not to be counted. I fail to see that there is any material difference in the two modes of expression and certainly not a difference reflecting upon the credit of Mr Hullah. 116 In similar vein was the submission that a further example of Mr Hullah's unreliability related to the part of the conversation in which he said that the defendant told him he was concerned about his ability to transcribe information from the left hand side of the poll paper to the right hand side whereas the defendant said the calculations caused difficulty rather than transcription. If there is any lack of precision in the description of the problem, it does not in my view reflect upon the credit of Mr Hullah. 117 I conclude that Mr Hullah was a reliable witness and I prefer his evidence to that of the defendant where there is a conflict. 118 The Evidence Act 1995, s 140 prescribes the standard of proof in civil proceedings as the balance of probabilities and provides that the court may take into account in deciding whether it is so satisfied the nature of the cause of action or defence, the nature of the subject matter of the proceedings and the gravity of the matters alleged. This provision reflects the common law position. In Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 the High Court discussed the quality of persuasion required for this purpose, when the law requires the proof of any fact the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. In civil matters the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal: "But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency." To similar effect is the statement of the majority of the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-450. 119 The findings of fact that I have made as set out above have been made bearing this imprimatur in mind. I am persuaded and find as facts that that the defendant did ask Mr Hullah on 26 October 1998 in what circumstances proxy holders could fail to acquit their responsibilities and was told that a proxy holder could miscount the number of votes, might leave the meeting prior to the poll being called and might fail to sign a proxy paper. It is common ground that the defendant was provided with up to three poll papers with respect to members' appointments of him as proxy in his capacity as chairman of the meeting. It is common ground that he failed to sign the poll paper with respect to members directing him to vote against resolution 6. I find that the defendant filled out that poll paper for resolution 6 at a time when the meeting was quiet and that he displayed no inconvenience in completing his tasks. I am satisfied that the poll paper in question was one of the earliest the defendant filled out with respect to resolution 6. I find that Mr Hullah in confronting the defendant with his unsigned poll paper said words to the effect: "This poll paper is not signed. Was this a deliberate action on your part?" to which I find the defendant responded in words to the effect: "I realise this makes the vote invalid. I'm acting in the best interest of the organisation. You can see that this place is ungovernable". I find that this statement to Mr Hullah implies foreknowledge. I find that there was no reaction by the defendant consistent with innocence. I find that on 30 October 2002 the defendant said to Mr Hullah words to the effect that if he suggested the failure to sign the poll paper was a deliberate act he should be prepared "to put his house on it". I find that this attempt to silence Mr Hullah is consistent with guilt. I infer from my findings of fact that the defendant deliberately failed to sign the poll paper in question. Mr Hullah had no reason to manufacture his file note or his evidence. I have found his evidence reliable having considered the criticisms of the defence. 120 Until he swore his affidavit in these proceedings, the defendant had not suggested to anyone that he was better off with the failure of resolution 6 and therefore lacked a motive in having it passed. His only explanation for his failure to raise the issue earlier was that it was an omission. The stance that he lacked a motive conflicts with his support of resolution 6 both before and at the annual general meeting. The basis for his contention is the fees in fact drawn by him because of his position on the board of SGIO. The possibility of a takeover of SGIO did not arise until September 1998 and there was no guarantee that it would be successful. The defendant agreed that the SGIO might not become a wholly-owned subsidiary. If it did not, there was doubt as to his position on the board and doubt as to the level of fees that he might draw. I find this evidence to be a recent reconstruction on the defendant's part that reflects badly on his credit. The defendant's public position was support for resolution 6. If it was passed the directors collectively, and he individually, stood to gain an increase in fees upon the passing of resolution 7. I find that the defendant had a motive to have resolution 6 passed. 121 I have not dealt with the evidence of Messrs Talbot and Dempsey because I prefer to base my judgment upon the evidence of Mr Hullah. 122 It was submitted to me that I should not accept Mr Talbot's evidence of his alleged conversation with the defendant set out in par 30 above because the video of the proceedings of the annual general meeting during the voting on resolutions 6 to 8 does not show him leaving his seat. In cross-examination Mr Talbot said he made three attempts to obtain the proxy figures. He left his chair on the stage, went along the stage and down into the auditorium and spoke to Mr Hullah. He returned and reported to Ms Singleton and Dr Campbell in between whom he was seated at the annual general meeting. He left his seat again and followed the same procedure but on this occasion he went back up on the stage to where the defendant was standing at the lectern in centre stage and spoke to him there before returning to his chair and again reporting to Ms Singleton and Dr Campbell. Mr Talbot said that his attempt to obtain the figures took place after the close of the poll on resolutions 6 to 8 and before the end of the meeting. This was a matter of a minute later. He said he may have sought the information before voting on resolutions 6 to 8 or in the lull between the two lots of voting. He said he was as sure as he could be that he made these approaches during the meeting. The video of the proceedings with respect to the voting on resolutions 6 to 8 does not show Mr Talbot leaving his seat. 123 Mr Talbot had made statements to the Channel Nine Sunday Programme in which he stated that he voted against resolution 7. His poll papers were in evidence and reveal that he voted 429 undirected votes from members in favour of the resolution. Mr Talbot's explanation was that he was referring to his own single vote and that with respect to the votes he held as proxy he had been lobbied by members of the board elected on his ticket to vote in favour of resolution 7 in an attempt to avoid bickering over a festering sore and in an attempt to arrive at an accommodation with the defendant. 124 Mr Talbot has the unfortunate habit of overstating his position. In the interview with Mr Lyons of Channel Nine, Mr Talbot said this of the defendant: "He admitted that somehow he had forgotten to sign this form that he'd had specially crafted so as he could forget to sign it. First time in the NRMA's 75 year history, special proxy forms was used, where if he left his signature off it, you know, off the "NO" votes in other words. Funny how his signature made it on to all the "YES" votes and his signature made it on to all the open votes that he cast in favour, but he left his signature off the "NO" votes. And so by his own so called rules then, he…that made all of those votes invalid. The 4,000 votes...3,995. That made them all invalid. Well I mean that's just a nonsense, your proxy is your proxy, you send it in, it has to be processed. Just because he makes up some sort of stupid rule about how he bundles them all together and if he forgets to sign that bit of dunny paper that he has wrapped around them all, then they can't be cast, well I mean … that's what the QC said isn't it?" Mr Talbot said that he was just giving his point of view. 125 Prior to the meeting of the board of directors of NRMA on 5 November 1998, Mr Talbot was told by Mr Hullah that the defendant's poll papers had been split into three. He said that he formed the view that failure to sign the poll paper was deliberate and, he said, he realised the significance of what he said the defendant had said to him at the annual general meeting. Yet he did not raise the conversation at the directors' meeting. Nor did he raise it at the subsequent meeting on 26 November 1998, nor did he mention it to Mr Tyres. Mr Talbot's explanation was that Mr Tyres was a member of staff and he as a director did not want to pressure him. The Tyres' report was discussed at a board meeting on 25 March 1999. Mr Talbot did not raise the conversation at that meeting either, when it was resolved unanimously that the Tyres' report be referred for legal opinion including senior counsel as to any course of action that the board should take. 126 On the other hand, Mr Hullah corroborated one aspect of Mr Talbot's evidence to the effect that he was approached on one occasion by Mr Talbot after the close of the annual general meeting on 28 October 1998 when he said he could not give Mr Talbot the information and that he should ask the defendant. Mr Talbot said that when he approached Mr Hullah he looked nervously at him. Mr Hullah said he was not nervous and there was no reason for him to be so. 127 The defendant's assertion that he may have said: "You owe me a big favour. Wait till you see what I've done for you" in the different context related to Mr Talbot's position on various fee-paying committees and boards of subsidiary companies arose for the first time in his affidavit sworn after the conclusion of the plaintiff's case. Significantly this proposition was not put to Mr Talbot in cross-examination. I am unimpressed by the defendant's evidence in this regard. It smacks of a reconstruction. Notwithstanding that it gives verisimilitude to a conversation with Mr Talbot containing those elements, and notwithstanding that such statements, if made, are consistent with my findings in relation to the conversations had between Mr Hullah and the defendant, in view of the serious nature of the plaintiff's process, the contradictions in the testimony of Mr Talbot leave me with an insufficient satisfaction that the conversation took place in connection with the voting on resolution 6. 128 I adopt a similar attitude to the evidence of Mr Dempsey. Mr Dempsey was retained to provide strategic advice to Mr Dodd. His alleged conversation with the defendant had a serious potential for adverse publicity for NRMA, yet he did not alert Mr Dodd to it. Neither did he tell Ms Keating who was a close confidante with whom he shared important information. Mr Dempsey said he learned from Mr Dodd of the failure of the defendant to sign the poll paper on Saturday 31 October 1998. Again, he made no mention of the alleged conversation. Mr Dempsey spoke with the defendant often after the annual general meeting. Again, he made no mention of the alleged conversation to the defendant or asked him for an explanation. He made no mention of the alleged conversation to Mr Tyres. 129 Shortly after the annual general meeting, Mr Dempsey said he told Alan Peter Hunt, a friend and legal adviser, of the conversation. Mr Hunt said that he spoke with Mr Dempsey approximately twice a week during 1998 and he had no recollection of being told that the defendant, prior to the annual general meeting, told Mr Dempsey he was thinking of not signing a poll paper. He said he was confident in his recollection because it was the sort of thing that would stand out in his memory and it did not. Both Mr Dempsey and the defendant gave evidence that their relationship had deteriorated in about the middle of 1998 when the defendant wished to become chief executive officer of NRMA and Mr Dempsey advised against it. The defendant said that he remained in contact with Mr Dempsey in an attempt to ascertain Ms Keating's attitude to various matters. I find it difficult to imagine that the defendant would have armed Ms Keating through Mr Dempsey with an observation so detrimental to his position. Furthermore, if the relationship which existed between the defendant and Mr Dempsey in October 1998 was such that the defendant trusted Mr Dempsey to keep to himself the conversation, why did Mr Dempsey not tackle the defendant about it after learning on 31 October 1998 that the defendant had not signed the poll paper? 130 On the other hand, Optus records established that he defendant telephoned Mr Dempsey on the morning of the annual general meeting and a conversation took place. At his examination under the Australian Securities and Investments Commission Act 2001 (Cth) Mr Dempsey said he told no one of his conversation with the defendant. At the end of that examination he was told he could come back if he had any further things to say. Mr Dempsey said that he recalled having a conversation with Mr Hunt and he arranged for a further examination during which he revealed this information. He did not speak with Mr Hunt before his further examination and he maintained his recollection of a conversation with Mr Hunt notwithstanding his understanding that Mr Hunt had no recollection of such a conversation. 131 There is a congruence between the conversations I have found took place between the defendant and Mr Hullah and the alleged conversations between the defendant and Mr Talbot on the one hand and between the defendant and Mr Dempsey on the other. There is a temptation to say that the three were not collaborators and, having found that one conversation took place contrary to the assertion of the defendant, his denial of the other conversations should also be rejected. The defendant's continued statements that the conversations "did not happen" had a hollow ring to them. However, bearing in mind the seriousness of the plaintiff's allegations, I am concerned with the effect of the evidence of Mr Hunt. I accept his evidence that if Mr Dempsey had told him of the alleged conversation with the defendant, it would have stood out in his memory. The contradiction between his testimony and that of Mr Dempsey leaves me with an insufficient satisfaction that the conversation deposed to by Mr Dempsey took place. 132 In their written submissions, Mr Bannon SC who with Mr Stephenson appeared for the defendant, raised a number of arguments. The first was that the defendant did not fail to vote on behalf of the 3,973 members who instructed him to vote against resolution 6. 133 In its statement of claim, the plaintiff alleged that the defendant failed "to vote" against resolution 6 in accordance with the instructions of 3,973 members. Particulars were given one of which was abandoned at the commencement of trial. The second particular was that the defendant failed to sign the poll paper when presented with the opportunity of doing so by Mr Hullah. Mr Hullah did not ask the defendant to sign the poll paper nor did the defendant offer to do so. Neither had a view as to the efficacy of taking that course after the polls had closed. In my view the second particular is not made out on the evidence. 134 The first particular is that the defendant failed "to sign" the poll paper in question. That particular has been made out on the findings I have made. Notwithstanding those findings, it is submitted that the defendant did not fail "to vote" by a failure "to sign". I reject this submission. The rules for the meeting required a signature on a poll paper for it to constitute a valid vote. Notwithstanding that legal advice subsequently obtained was to the contrary effect, the defendant was aware that a failure to sign a poll paper would cause Mr Hullah to exclude the votes contained therein from the count. I regard the particular as explanatory of the phrase "to vote" and to constitute a proper pleading. I find that the allegation has been made out. 135 Secondly, it was submitted that the opportunity to vote continued until the result was declared with the consequence that any failure to vote was based on the legal advice of Mr Standen and Ms Mackenzie given to the defendant and Dr Morstyn when the defendant returned to the meeting venue. The second particular might be said to imply an entitlement to vote after the polls had closed. The first particular does not have that temporal connotation. It is confined to a failure to vote before the polls had closed by a failure to sign the poll paper at that time. At that time no legal advice had intruded and I reject the submission. 136 Thirdly, it was submitted that the defendant signed the poll paper by filling in his name and initials. Reliance was placed upon a number of cases which have found, in the absence of a signature in the usual sense, that the insertion of the name of a party was sufficient to satisfy the requirement of writing for the purposes of legislation similar to the Conveyancing Act 1919, s 23C. 137 In Schneider v Norris (1814) 2 M & S 287 (105 ER 388) it was held that a document in which the name of the vendor was printed and that of the purchaser was written by the vendor was a sufficient memorandum of the contract within the Statute of Frauds to charge the vendor. Similarly, in Evans v Hoare [1892] 1 QB 593 it was held that a memorandum containing the name of the party sought to be charged inserted in some part of the memorandum by that party or his agent as being a party to the agreement, where such memorandum was presented for signature to the other party, was a sufficient signature to bind the party sought to be charged. 138 These decisions were relied upon in Leeman v Stocks [1951] Ch 941 in which an auctioneer filled in the name of the vendor in a form of contract which the successful purchaser signed. The vendor subsequently alleged that there was no memorandum in writing sufficient to satisfy the statute. An action for specific performance was successful. It was held that when the auctioneer obtained the purchaser's signature neither he, acting on the vendor's behalf, nor the purchaser intended any other signature ever to be added, but that both intended the document with the purchaser's signature to be the final written record of the contract and accordingly there was a sufficient memorandum to bind the vendor. Reference was also made to Knight v Crockford (1794) 1 Esp 190 (170 ER 324), Saunderson v Jackson 3 Bos & Pul 238 (126 ER 1257), Johnson v Dogson (1837) 2 M & W 653 (150 ER 918), Durrell v Evans (1862) 1 H & C 174 (158 ER 848) and Cohen v Roche [1927] 1 KB 169. 139 Those cases were decided in the context of a written instrument not intended to bear a signature of one of the parties. In this case, the rules for valid voting at the annual general meeting required both the filling in of a name and initial and the appending of a signature. 140 The Bills of Exchange Act 1909 (Cth) provided that where any instrument was required to be signed by any person, it was not necessary that it be signed with that person's own hand, but it was sufficient if the signature was written thereon by some other person by or under authority. It was also provided that a person was not liable as drawer of a bill of exchange if that person had not signed it as such. In Commonwealth Bank of Australia v Muirhead [1997] 1 Qd R 567 the female appellant alone signed bills of exchange beneath the printed words "for and on behalf of" the names of both appellants. They failed in their contention that the male appellant was not liable as a drawer of the bills. It was held that in the absence of express provision to the contrary, legislation requiring signature of a document should not be taken to preclude signature by an agent and that in signing her name, as she was authorised to do by her husband, the female appellant adopted and authenticated the printed words on the bills. In so doing, she thus signed not only her own name, but that of her husband. Again, that context is far removed from the present which required the proxy, personally, to sign the poll paper. Reference was also made to Deputy Commissioner of Taxation v Boxshall (1988) 19 FCR 435 in which it was held that a bankruptcy petition was validly signed in the name of the appellant by his duly authorised agent signing the appellant's name. 141 I reject the submission that the poll paper in question was signed by the defendant. The poll paper not only required the filling out of name and initials. It also required the personal signature of the proxy. 142 Fourthly, it was submitted that contravention of the Corporations Law (Cth), s 250A(4)(c) did not, of itself, give the plaintiff jurisdiction to bring the proceedings. I agree with that submission. However, it does not dispose of the plaintiff's process. I am asked to make declarations and orders for penalty and disqualification under s 1317EA. That section applies if a court is satisfied that a person has contravened a civil penalty provision. Section 250A is not a civil penalty provision as that term is defined in s 1317DA. Section 250A(5) contains its own sanction for breach of the provision. A person who contravenes s 250A(4) is guilty of an offence if appointment as a proxy resulted from the company sending to members a list of persons willing to act as proxies, or a proxy appointment form holding the person out as being willing to act as a proxy. 143 The Corporations Law (Cth), s 232(2), s 232(4), s 232(5) and s 232(6) were civil penalty provisions in terms of s 1317DA. Fifthly, it was submitted that the defendant's conduct was not conduct within the scope of his office within the meaning of those provisions. The provisions relied upon by the plaintiff set out in par 2 above require an officer of a corporation to act honestly in the exercise of powers and the discharge of duties of office, to exercise the degree of care and diligence of a reasonable person in the exercise of powers in the discharge of duties of office and not to make improper use of the office to gain an advantage or to cause detriment. It was submitted that the functions of a chairman are distinct from the powers and duties of the office of director with the consequence that there was no breach of the civil penalty provisions. My attention was drawn to the well known distinction between powers conferred on a board of directors and powers exercised by members in general meeting (John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 at 134). 144 It is clear that the chairman of a meeting of members of a company has a number of clearly defined duties some of which are usually contained in a company's constitution, others of which are supported by authority and in the texts. I was referred to Shaw and Smith, The Law of Meetings - Their Conduct and Procedure, 5th ed (1979) 56, Joske's Law and Procedure at Meetings in Australia, 8th ed (1994) ch 6, National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 37 ACSR 629 at 644-645, Davidson, Company Meetings, 2nd ed (1992) par 1002, Lumsden, Managing Proxies and the Role of Chairman, Australian Institute of Company Directors (1998), Horsley's Meetings, Procedure, Law and Practice, 4th ed (1998) par 6.10, Puregger, The Australian Guide to Chairing Meetings (1998) 12-13, Shackleton on the Law and Practice of Meetings, 9th ed (1997) 57-61, Moore, The Law and Procedure of Meetings, (1979) ch 13, Clyne, The Law of Meetings, (1971) ch 20 and Renton, Guide for Meetings and Organisations, 4th ed (1985) 30-38. 145 In Link Agricultural at 480 it was said that the purpose of the powers conferred upon a chairman with respect to the conduct of polls was to facilitate the voting and counting of votes in order that the will of the majority of members should be reliably ascertained and whether or not there was error in a chairman's ruling depends on whether it was made in good faith and for that purpose. It was submitted this was a power qua chairman and not a power qua director. To this end I was referred to a number of decisions describing the power of a chairman to adjourn a meeting (Byng v London Life Association Ltd [1990] Ch 170 at 188), to allow a vote by a proxy (Wall v Exchange Investment Corporation [1926] Ch 143 at 146) and to demand a poll (The Second Consolidated Trust Ltd v Ceylon Amalgamated Tea & Rubber Estates Ltd [1943] 2 All ER 567 at 569). 146 It was submitted that to import the concept of the duties of a director into the duties of a chairman might place a chairman who was also a director in an intolerable position. It was submitted that a proxy is an agent of the member and must vote in accordance with the member's instruction. If a chairman/director was of the opinion that the directed vote was not in the best interests of the company, an intolerable position would arise if his duties as director intruded upon his duty as agent to comply with his principal's direction. 147 It was submitted that the defendant assumed the chair as President and acted qua chairman and not qua director and that the allegations of breach of a director's duty based on the failure to sign the poll paper are not sustainable. The defendant was required to vote as proxy against resolution 6 because he was the proxy holder in the chair. The obligation did not arise because he was a director of NRMA. It was further submitted that the Corporations Law (Cth) drew a distinction between a breach of the obligations of a director and a breach of responsibilities as chairman because s 250A contained its own penalty for breach of the chairman's obligation to vote as proxy in accordance with a member's direction. 148 Clearly, a chairman of a meeting owes duties which are distinct from the duties owed by a director. That does not mean, however, that the duties are mutually exclusive or that a breach of the Corporations Law (Cth), s 250A cannot also constitute a breach of s 232(2), s 232(4) or s 232(6). None of the authorities and texts to which reference is made above compel a contrary conclusion. 149 A director of a company does not cease to be a director because he or she chairs a meeting of members. If I, as chairman/director of a general meeting, refrain from demanding a poll when I have been appointed proxy to vote against a resolution approving the sale of company property to my wife at an undervalue, I am in breach of my duty as chairman and I am also in breach of my duty as a director to act in good faith in the best interests of the company and my duty not improperly to gain an advantage or cause detriment to the company. Likewise, if a poll is demanded and I fail to vote against the resolution on behalf of those members who appointed me proxy and instructed me so to do, I am in breach of the Corporations Law (Cth), s 250A(4)(c) and also in breach of s 232(2) and s 232(6). 150 Article 111 of NRMA's constitution provided that the board of directors should each year elect from their number a President. A power was conferred upon the President under art 31 to take the chair at each meeting of members. That was a power qua director. It was not a power shared by all directors but, nonetheless, it was a power obtained by the director elected as President and once that power was exercised, the Corporations Law (Cth), s 232(2) required the defendant to exercise that power honestly. In the exercise of that power, the defendant was subject to the duties discussed in the authorities and texts to which reference is made above. In the discharge of those duties the defendant was obliged to act honestly in terms of s 232(2). The position of the defendant as the director elected President included the power to chair meetings of members. The defendant was obliged, pursuant to s 232(6), not to make improper use of that position to gain an advantage for himself or any other person. In voting in accordance with the instruction of a member appointing him proxy, the defendant would not infringe any duties cast upon him as director. 151 Furthermore, the obligation of a proxy to vote in accordance with the instruction of the member appointing him or her is not confined to a chairman and does not have its foundation in the Corporations Law (Cth), s 250A(4)(c). It is a duty imposed upon every proxy (The Second Consolidated Trust at 570). A proxy, as agent, is duty bound to carry out the instructions of his or her principal. It follows that the failure of any director appointed as proxy to vote in accordance with the instructions of the member appointing him or her is in breach of duty qua director. 152 There was a controversy which does not arise under the Corporations Act 2001 (Cth), s 181(1), as to whether or not s 232(2) of the Corporations Law (Cth) required a consciousness that what was being done was not in the interests of the company (Marchesi v Barnes [1970] VR 434) or, whether the provision was breached where a director exercised powers in a subjectively honest way but for a purpose which the court determined was an improper one (Australian Growth Resources Corp Pty Ltd v Van Reesema (1988) 13 ACLR 261). On my findings, the defendant asserted when confronted with the unsigned poll paper by Mr Hullah that he was acting in the best interests of the organisation. I am not bound to accept that assertion of the defendant and I reject it. I have found that the defendant deliberately omitted to sign the poll paper. He had the deliberate intent to disenfranchise the members who had appointed him proxy and required him to vote against resolution 6 and he was seeking, deliberately, to over-ride the intent of the members of NRMA which he knew to be against the passing of resolution 6 as a special resolution. He had the necessary consciousness that what he was doing was not in the interests of NRMA and his action was deliberate conduct in disregard of that knowledge sufficient to bring him within the Marchesi principle. I reject the submission that the conduct of the defendant was not within the scope of his office as a director of NRMA for the purpose of s 232(2). 153 Sixthly, it was submitted that the conduct of the defendant was inadvertent and not intentional. I have already dealt with that issue. My finding is that the defendant deliberately failed to sign the poll paper in question. 154 Seventhly, it was submitted that the plaintiff had not proved the validity of a single appointment of the defendant as proxy so as to enliven any obligation to vote. 155 Mr Hullah did not personally check each of the appointments of proxy. He carried out sampling checks upon the work of his staff. The statement in the annexure to his final report of 27 October 1998 that 4,429 members had validly appointed proxies and instructed them to vote against resolution 6 was admissible if, as a business record, it fell within the Evidence Act 1995, s 69. The hearsay rule does not apply to such a document if the representation was made on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. For the purpose of the provision, a person is taken to have had personal knowledge of a fact if the person's knowledge of the fact was, or might reasonably be supposed to have been, based on what the person saw, heard or otherwise perceived. 156 Article 48 of NRMA's constitution required an instrument appointing a proxy to be in writing under the hand of the appointor, or the appointor's attorney, duly authorised in writing. It was submitted that Mr Hullah's staff were not familiar with the handwriting of members of NRMA and a matter of judgment outside the scope of the Evidence Act 1995, s 69 was involved in the representation which ceased to be one purely of fact. Likewise, it was said that judgment came to bear on determining the degree of spoiling which would render an appointment invalid. This objection was raised at the time of tender of Mr Hullah's report and I was invited to reserve my decision on it. 157 Many asserted facts are based upon a prior exercise of judgment. If I say an event happened at sunset I am exercising a judgment as to when the sun moved below the horizon. Yet my statement is one of fact. Mr Hullah's staff saw the instruments of appointment of proxy and exercised a judgment that they had been completed under the hand of respective members of NRMA. In my view there was a sufficient compliance with the Evidence Act 1995, s 69(5) to constitute personal knowledge of the asserted fact that a valid instrument appointing a proxy had been lodged with NRMA for the purpose of s 69(2)(b). Accordingly, I find that the defendant was validly appointed as proxy by 3,973 members of NRMA who instructed him to vote against resolution 6. 158 I was also invited to reserve my decision on a number of objections to the affidavits and documents. Events have largely overtaken those objections. It will be obvious from my recitation of the facts asserted on both sides, what material I regard as relevant and freed from other forms of objection. 159 Finally, it was submitted that none of the instruments of appointment of proxy satisfied the requirements of the Corporations Law (Cth), s 250A(1) and, thus, the obligation in s 250A(4) was not enlivened. 160 An appointment of proxy form was contained in the notice of the annual general meeting to be held on 28 October 1998. It provided a choice between the appointment of a named person and the appointment of the chairman as proxy. The Corporations Law (Cth), s 250A(1)(c) required an instrument of appointment of proxy to contain the proxy's name or the name of the office held by the proxy. Section 250A(2) provided that the constitution of a company might provide that an appointment of proxy was valid even if it contained only some of the information required by s 250A(1). It was submitted that no provision of the constitution of NRMA provided for any such relaxation. 161 The Corporations Law (Cth), s 82A(1) defines the term "officer" to include a director, secretary, executive officer or employee of the body or entity. It was submitted that a chairman was not included in this definition and was, in consequence, not an office. It was submitted that all instruments of appointment of the chairman as proxy were invalid. 162 In my view there are three answers to this submission. First, art 50 of NRMA's constitution provided that every instrument appointing a proxy should be in the form determined by the board of directors from time to time. The proper inference from the inclusion of the proxy form in the notice of meeting is that it was approved by the board of directors with the consequence that the Corporations Law (Cth), s 250A(2) was satisfied. The constitution provided that an appointment was valid even if it contained only some of the information required by s 250A(1). 163 Secondly, the definition of "officer" in the Corporations Law (Cth), s 82A was not exhaustive. Article 111 of NRMA's constitution provided for the election of office bearers. One such office bearer was the President who was entitled to, and did, assume the chair at the annual general meeting. The nomination of the chairman was the nomination of an office in the event, as happened, that the President assumed the chair. 164 Thirdly, the Corporations Law (Cth), s 250A(4)(c) assumed the appointment of the chair as proxy. It should be inferred, therefore, that s 250A(1)(c) includes within the notion of an "office", the chairman of a meeting. 165 As I have pointed out in par 5 above, the Corporations Act 2001 (Cth), s 180(1) is a civil penalty provision in terms of s 1317E(1)(a). Section 1317S(2) provides that if it appears to the court that a person has contravened a civil penalty provision but that the person acted honestly and, having regard to all the circumstances of the case the person ought fairly to be excused for the contravention, the court may relieve the person either wholly or in part from liability to which he or she would otherwise be subject. I was invited to exercise my discretion under this provision with respect to the defendant's alteration of the minutes of the meeting of the board of directors of 11 August 2000. To this end, testimonials as to the character and integrity of the defendant were in evidence. Having made findings reflecting badly upon the defendant's character and integrity, I am not impressed by the testimonials. 166 Nonetheless, while the defendant acted arrogantly and without due care and diligence, I do not think that he acted dishonestly in proffering the amended minutes. As I have said they were merely a draft submitted to the board of directors for its confirmation. Until they were confirmed, they had no force. There was no guarantee they would be confirmed. Indeed, the evidence was that they were likely to be further amended by a board divided into factions with some board members bitterly opposed to him. Mr Cousins would have his opportunity to voice his view of the minutes, as he did, and in view of his conversation with the defendant he was likely to do so. In my view, the defendant's dishonesty lay in denying the conversation with Mr Cousins rather than in putting forward the amendments to the minutes in conflict with what Mr Cousins had told him. 167 I agree with the sentiments of Mr Cousins when he said that for the life of him he could not understand why anyone would bring a case based on the alterations of a draft set of minutes when it is very rare for a draft set of minutes not to be altered by the board of directors. 168 In the exercise of my discretion under the Corporations Act 2001 (Cth), s 1317S(2) I relieve the defendant wholly from any liability to which he would otherwise be subject for his breach of s 180(1). 169 The Corporations Law (Cth), s 1317JA(2) is in like terms to the Corporations Act 2001 (Cth), s 1317S(2). I was invited to exercise my discretion under this provision with respect to the defendant's failure to sign the poll paper for votes against resolution 6. I decline to do so. The findings I have made negate an honest omission on the part of the defendant. 170 I find that the defendant by failing to sign the poll paper with respect to his appointment as proxy by 3,973 members of NRMA Limited (now National Roads and Motorists' Association Limited) who instructed him to vote against resolution 6 at the annual general meeting held on 28 October 1998, contravened the Corporations Law (Cth), s 232(2), s 232(6) and s 250A. I will make declarations to that effect under s 1317EA(2) and generally. I will hear the parties on the form of the declarations. 171 I have found that in revising the minutes of the meeting of the board of directors of NRMA Insurance Group Limited of 11 August 2000 relating to his remuneration package, causing the revised minutes to be circulated to the other directors and in entertaining their adoption at the board meeting of 6 September 2000, the defendant breached the Corporations Act 2001 (Cth), s 180(1). I will make a declaration to that effect under s 1317E(1). Being satisfied that the defendant, nonetheless, acted honestly with respect to the revision of the minutes, and having regard to all the circumstances, I have found that the defendant ought fairly to be excused for the contravention of s 180(1) and I have relieved him wholly from liability to which he would otherwise be subject in exercise of the discretion conferred on the court under s 1317S(2). I will hear the parties on the form of the declaration. 172 In accordance with directions previously made the question of penalty will be considered separately. I reserve the question of costs until the conclusion of that hearing. I will stand the matter over for the making of the declarations and the fixing of dates for the further hearing. I direct the parties to bring in forms of declaration in accordance with these reasons for judgment. 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