Melissa Alexander v Nicholas Edgar Burne [2015] NSWSC 345

Supreme Court New South Wales

Medium Neutral Citation: Melissa Alexander v Nicholas Edgar Burne [2015] NSWSC 345 Hearing dates: 25 March 2015 Date of orders: 01 April 2015 Decision date: 01 April 2015 Jurisdiction: Equity Division Before: Young AJA Decision: Question answered favourably to defendant. Catchwords: CORPORATIONS – meetings – two-thirds of members to approved sale – two-thirds of those present and voting required Cases Cited: Foster v Mullanphy Planning Mill Co 4 SW (2d) 260 (Miss) Broom v Batchelor (1856) 25 LJ Ex 299 Knowles v Zoological Society of London [1959] 1 WLR 823; [1959] 2 All ER 595 Category: Principal judgment Parties: (Defendant 10) Grant Thornton Australia Limited (Defendant 11) MSB Group Pty Ltd (in Liquidation) ACN 127 122 043 Representation: Counsel: M Condon SC (Plaintiff) DFC Thomas (Defendants 1-9) DG Guidolin (Defendant 10)

Solicitors: Somerset Ryckmans (Plaintiff) Moray & Agnew (Defendants 1-9) Maddocks (Defendant 10) File Number(s): 2013/171685

Judgment 1. HIS HONOUR: The plaintiffs were unit holders of a trust which appears to have been carrying on an accountancy business. As will appear in more detail later, the Unitholders Deed provided that the business could be sold provided that a special majority of the Unitholders so agreed. The plaintiffs claim and the defendant denies that the appropriate resolution to sell the business was passed by the appropriate majority. 2. The proceedings came on for case management before me and I directed that a separate issue be determined ahead of the other issues in the case and it is that separate issue that is the subject of these reasons. 3. The order that I made on 6 March 2015 was that the following question be posed as a separate issue "was the resolution to approve a proposed merger between Grant Thornton and Capital BDO identified in paragraph 25 of the further amended statement of claim filed 11 January 2013 (FASC) passed by a special majority vote of the Unitholders within the meaning of clause 6.1(b) of the Unitholders Deed identified in paragraph 16 of the FASC?" I tried that question on 25 March 2015 but time ran out before I could give an extempore judgment. I now do so. 4. At the hearing, Mr Miles Condon SC appeared for the plaintiffs, Mr DFC Thomas appeared for the first nine defendants (other Unitholders) and Mr DG Guidolin appears for the 10th defendant (the purchaser). Although I have described the transaction as a sale and purchase, the parties would prefer to call it a merger. I merely use the word purchase for simplicity as it is not at all necessary to delve into the actual transaction in order to answer the separate question. 5. I do, however, need to look closely at the Unitholders Deed. 6. Clause 6.1(b) provides "no Decision regarding a Unitholders Matter may be implemented unless it is Passed by Special Majority vote of the Unitholders". Unitholders are defined and they include the matters designated Unitholders Matters in clause 6.2 and 6.2(a)(iv)(v) cover entering into a merger with another firm or selling or disposing of a material part of the business. Again, 6.2 emphasises that these matters must be determined by the Unitholders by a Special Majority. 7. Mr Condon submits that the members must mean all the members. Mr Thomas denies this and notes the word "all" is not there. Usually all the word "the" signifies is a definite something: see eg Broom v Batchelor (1856) 25 LJ Ex 299. That statement however does not take us closer to the solution in this case. 8. A key definition is that of "Special Majority". It reads, "Special Majority means a vote of a majority (in number and not equity) of the persons eligible to vote in respect of a resolution". 9. It is common ground that a meeting was convened of the Unitholders to make the required decision. There are 69 or possibly 70 Unitholders. Notice was given to all of them. If the definition of "Special Majority" means that one must look for two-thirds of the membership, then the number of affirmative votes would need to be 46 or 47. 10. There are no doubts as to the facts on the matter of the vote. The meeting was held on 27 April 2012. 59 Unitholders were in attendance by person or proxy. A quorum was declared because 75% of the Unitholders were so present, cf clause 6.3(e) of the Unitholders Deed. 11. After the resolution was put the Unitholders voted by poll. The scrutineers announced the result of the poll as follows: Those eligible to vote by proxy or being present 59 Abstain 12 Total to be considered 47 Yes votes 44 No votes 3 47