ADAMS -v- YINDJIBARNDI ABORIGINAL CORPORATION RNTBC [2014] WASC 467 (9 December 2014)

3 The plaintiffs seek declarations as to the validity of their convening of the general meeting, and of the materials they caused to be issued to the defendant's members to give them notice of the meeting. The defendant has not sought to enjoin the holding of the meeting, either by interlocutory or by permanent injunction.

4 The defendant corporation currently has 12 directors, two of them being the first plaintiff, Ms Adams, and Ms Tucker.

5 The defendant's current board of 12 directors were all appointed at the last annual general meeting of the defendant (for the financial year ending 30 June 2013), which was only held (at Roebourne) on 10 September 2014.

6 Customarily, according to the defendant's 'rule book', which is, effectively, the Constitution of the defendant, directors serve for a period of 12 months: see rule 5.5, at page 9 of the rule book. (The defendant's rule book was received in evidence as exhibit 2.1, being tab 1 within exhibit 2, which is the received trial bundle.)

Legislation governing Aboriginal and Torres Strait Islander corporations**

7 I start by mentioning several significant provisions in the relevant Commonwealth legislation governing Aboriginal and Torres Strait Islander corporations, namely the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). This legislation was referred to by all parties as the 'CATSI Act'. I will continue to use the acronym in these reasons.

8 I observe, by reference to the preamble of that Act, it says:

The Parliament of Australia intends that the following law will take effect according to its terms and be a special law for the descendants of the original inhabitants of Australia.

The law is intended, for the purposes of paragraph 4 of Article 1 of the International Convention on the Elimination of All Forms of Racial Discrimination and the Racial Discrimination Act 1975, to be a special measure for the advancement and protection of Aboriginal peoples and Torres Strait Islanders.

9 There can be no doubt the provisions of the CATSI Act, in large measure, display very strong parallels to provisions found within the Corporations Act 2001 (Cth). The conceptual notions of a corporation holding a separate legal personality, with governance by a board of directors that are accountable to the corporation's members (analogous to shareholders) are seen to be replicated in the CATSI Act.

10 Judges have commented upon similarities between the Corporations Act and the CATSI Act and they have accordingly interpreted provisions of the CATSI Act by reference to case law applicable to the regulation of companies under the Corporations Act. By example, therefore, the provisions found in the CATSI Act, in terms of the obligations and duties of a director, bear strong textual parallels to provisions from the corporations legislation.

11 There are also very close textual similarities between the Corporations Act and provisions in the CATSI Act relating to the convening of general meetings of members of an Aboriginal and Torres Strait Islander corporation. See generally as to these parallels Pat v Yindjibarndi Aboriginal Corporation RNTBC [No 2] [2012] WASC 491 [19] (Pritchard J) and Registrar of Aboriginal and Torres Strait Islander Corporations v Ponto [2012] FCA 1500; (2012) 208 FCR 346 [50] (Reeves J).

12 In pt 2G.2, div 2 of the Corporations Act, under a heading 'Who may call meetings of members', are found s 249C and s 249CA(1) (applicable to listed public companies). Both say:

A director may call a meeting of the company's members.

13 By parallel, compare s 201-1 of the CATSI Act (a replaceable rule), which in similarly direct terms says:

A director of an Aboriginal and Torres Strait Islander corporation may call a general meeting of the corporation.

14 Rule 4.3 within the rule book for this defendant corporation, under a heading 'General meetings', says:

15 Rule 4.3 goes on to provide that a number of members can ask directors to call a general meeting. Where that request transpires, the directors must call the general meeting within 21 days.

16 Although s 201-1, as a replaceable rule, was open to being replaced, within the defendant corporation's bespoken rule book, substantively as may be seen from the text of rule 4.3, it was not - except to remove a reference to Aboriginal and Torres Strait Islander corporations more generally.

17 There are further provisions of the CATSI Act I should mention. Section 201.20 deals with the time required by way of notice, and other aspects of the mechanics for the calling of a general meeting of members. No issues arise in the proceedings advancing any objection by way of form, or as a procedural irregularity against the calling of the general meeting that is convened for Monday, 10 November 2014.

The confines of the dispute No live issue as to the procedural steps by Ms Adams and Ms Tucker taken to notify members

18 At an earlier point a number of procedural objections by the defendant were raised in passing correspondence between the parties' respective solicitors against the convening of the 10 November general meeting. They are found articulated in exhibit 2.14, a communication from the defendant corporation's Queensland solicitors, Cleary Hoare, of 24 October 2014, to the plaintiffs' solicitors, Bennett + Co. By way of illustration it was then said by Cleary Hoare:

We are instructed that the two directors were not entitled to give written notice of the proposed General Meeting and were not entitled to stipulate in the Notice that proxies may be held by persons who are not members of YAC. The Notice is, accordingly, invalid.

19 That issue is no longer live, but the correspondence gives insight to what I would term now redundant procedural objections taken for the defendant against Ms Adams and Ms Tucker convening the general meeting (also seen set out in par 10 in the statement of claim of the plaintiffs).

20 Referring to a letter which became exhibit 2.15, it is pleaded Cleary Hoare once asserted on behalf of the defendant:

(10.2) only the defendant was entitled to call a general meeting of members and to give at least 21 days' notice to members;

(10.3) only the defendant corporation could determine and issue written notice of a general meeting and specify the contents of that notice;

(10.4) an individual director was not entitled to move a motion at a general meeting, and the only way by which a motion to remove directors may be validly moved was in circumstances where at least 10% of the members of the defendant proposed such a resolution, and notices were signed by the members proposing to move that resolution.

21 None of those contentions, which were live at one point in October 2014, were pressed before me at the trial - and, in my view, very correctly so, as I can assess no underlying merit in any of those propositions.

22 At a point it also appeared to be contended on behalf of the defendant that although a director might be able to exercise a power to 'call', ie, cause, a general meeting to be convened, all the procedural steps in terms of actually issuing notifications of the meeting to members, needed to be done by the corporation itself, and could not be done by the individual director without reference to the corporation (that procedural work being done here on behalf of Ms Adams and Ms Tucker, by the plaintiffs' solicitors: see the uncontradicted affidavit of Claire Lillian Laan sworn 30 October 2014, received in evidence as exhibit 4). I reject that redundant contention as well, for what it was worth.

23 The reasons of Lindgren J in NSX Ltd v Pritchard [2009] FCA 584; (2009) 178 FCR 151 stand to the contrary. In particular, I adopt his Honour's interpretation of the word 'call', as regards a director's power to unilaterally call such a meeting of members. His Honour concluded:

The overwhelming effect of the general dictionaries and law dictionaries referred to above is that the sending of notice is an essential element of the calling of a meeting [22].

The defendant's assertion of a lack of good faith and/or improper purpose by Ms Adams as a director

24 The main argument pressed at trial on behalf of the defendant against the 10 November 2014 general meeting proceeding as called was different. It was an argument predicated upon a contention that Ms Adams, in exercising her director's power to convene a general meeting, needed to exercise that director's power in good faith and for a proper purpose. So much may be readily accepted as a matter of principle. But all contentions of fact by the defendant suggesting the absence of good faith or lack of a proper purpose by Ms Adams and Ms Tucker in calling the 10 November 2014 general meeting are rejected.

25 In that environment, two statutory provisions emerge as important. First, s 201-55 of the CATSI Act, which says:

A general meeting must be held for a proper purpose.

(1) A director or other officer of an Aboriginal and Torres Strait Islander corporation must exercise his or her powers and discharge his or her duties:

(a) in good faith in the best interests of the corporation; and

(b) for a proper purpose.

...

(2) A person who is involved in the contravention of subsection (1) contravenes that subsection.

The right of members of an Aboriginal or Torres Strait Islander corporation to appoint proxies

26 Before I leave the CATSI Act, I need to refer to some provisions relevant to use of proxies at a general meeting.

27 First, s 201-35 sets out some basic prerequisites for what the notice of a general meeting must say. It says:

A notice of a general meeting must

...

(d) if a member is entitled to appoint a proxy - contain a statement setting out the following information:

(i) that the member has a right to appoint a proxy;

(ii) whether or not the proxy needs to be a member of the corporation.

29 It is apparent from the text of s 201-35(d) that, in certain circumstances, members may not be able to appoint a proxy. But if they are, then the notice of the general meeting needs to say that in terms. Moreover, the notice must also say whether or not a proxy, if nominated, needs to be a member of the corporation. Here the notice sent out met these requirements. It said a nonmember (of the corporation) could be appointed as a proxy holder for this meeting.

30 Section 20135(d), concerning proxies, must be read in conjunction with div 201E, under the heading 'Proxies'.

31 Section 201-90, which is a replaceable rule, also addresses the subject of proxies, as follows:

Who may appoint a proxy

(1) A member of an Aboriginal and Torres Strait Islander corporation who is entitled to attend and cast a vote at a general meeting may appoint a person as the member's proxy to attend and vote for the member at the meeting.

Proxy may be individual or body corporate

(2) The person appointed as the member's proxy may be an individual or a body corporate.

32 Rights held by proxies are then identified under s 201-95. I also mention, without quoting, s 201-100, on appointing a proxy.

33 There is nothing in these provisions of the CATSI Act to deny the ability of a member to appoint a proxy who is not a member of the relevant Aboriginal and Torres Strait Islander corporation. The ability to appoint a body corporate as a proxy strongly suggests otherwise. If that right to appoint a non-member proxy is to be denied, it should be denied in explicit terms. The legislation I have just mentioned renders it crystal clear that, unless that ability is denied in explicit terms under the Constitution (rule book) of a relevant Aboriginal and Torres Strait Islander corporation, then there is no bar to a member of the corporation appointing a person as their proxy merely on the basis that the person nominated to hold the proxy is not a member of the corporation.

34 I explore that issue a little further, when I come to examine the defendant's rule book.

35 There was a large measure of agreement between the parties in terms of the underlying facts for this expedited trial. First of all, there was a submitted statement of agreed facts, which I received as exhibit 1.

36 Then, almost all underlying documents, received in evidence as part of the agreed trial bundle (exhibit 2), were put before the court without controversy.

37 There was a limited amount of further evidence. The affidavit of Ms Laan became exhibit 4, dealing with how the procedural requirements for advising the defendant corporation's members of the proposed general meeting for Monday, 10 November, were met. There was no crossexamination of Ms Laan or, for that matter, in respect of any of the affidavit evidence that was received from either party at this expedited trial.

38 Hence, the scope of the trial materials, from an evidentiary perspective, was confined and largely uncontroversial.

The dispute as it emerged from the evolving defence pleadings

39 The key underlying issue of controversy standing between the parties was not a procedural irregularity or a mechanical deficiency in the calling of this general meeting by the two directors. Rather, it was a question of their good faith and the allied question of their asserted improper purpose in doing so by the defendant.

40 That crystallisation emerges from an analysis of the parties' respective pleadings.

41 The plaintiffs filed their writ, indorsed with a statement of claim, on 28 October 2014. The defendant then responded with a succession of evolving amended defence pleadings, the most recent being the reamended defence and counterclaim lodged 5 November 2014, which I refer to as the 'defence'. For reasons given at the time, I had to refuse leave to the defendant at the trial to lodge another further reamended defence and counterclaim.

42 Almost everything contended for in the statement of claim is ultimately admitted by the defendant, save for the relief claimed.

43 Paragraph 1 is admitted, with a minor qualification that the defendant, rather than being a prescribed body corporate under the CATSI Act, is actually a registered native title body corporate (RNTBC) and prescribed body corporate for the Yindjibarndi people under the Native Title Act 1993 (Cth), and an Aboriginal and Torres Strait Islander corporation for the purposes of the CATSI Act. So much is accepted.

44 Paragraphs 2 to 6 are then admitted by the defendant.

45 Where the defendant joins issue on its pleading is over the fundamental contention of the plaintiffs that the notice of general meeting was validly issued, and that the proposed resolutions for the forthcoming general meeting are validly moved.

46 By its counterclaim, the defendant seeks a declaration that the notice and any meeting of the defendant's members purported to be held in response to the notice is invalid and of no force and effect.

47 Although no injunction was sought by the defendant to restrain the holding of the looming general meeting, nevertheless, applying the test explained by the High Court in Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564, there clearly presents, in my view, a live issue concerning the validity of the notice of 16 October, that was signed by Ms Adams and Ms Tucker and reflecting their efforts as directors of the defendant corporation to convene a general meeting of the defendant's members for Monday, 10 November, and as to the resolutions seen proposed.

48 Paragraphs 7 and 8 of the statement of claim then contend:

1. By a notice dated 16 October 2014 Ms Adams, together with a fellow director, Ms Jill Tucker, exercised Ms Adams' rights pursuant to rule 4.3 of the YAC rule book to call a meeting of members of YAC to be held at the Roebourne Community (50 Cent) Hall on Monday, 10 November 2014 at 10.00 am.
2. The purpose of the meeting was to consider and if [thought] appropriate to pass resolutions for the removal of 10 directors of YAC and resolutions for the appointment of 10 directors, including the appointment of the second plaintiffs as directors of YAC.

49 The defendant responds to that plea under defence par 12, in terms:

As to the allegations in [8] of the Claim YAC:

(a) repeats its plea at [11] above;

(b) says that the intended purpose of the meeting is as pleaded; and

(c) says that the meeting was called for an improper purpose for the reasons pleaded at [11] above and [14], [15] below.

50 Therefore, it can be seen the defendants' response under par 12 to the asserted purpose of the plaintiffs in convening the meeting lies in its defence at par 11.

51 Defence par 11 responds to the allegations in par 7 of the statement of claim, concerning the notice of 16 October 2014 convening the meeting, pursuant to rule 4.3.

52 It is admitted Ms Adams called a meeting of members of YAC by a notice of 16 October 2014, signed by her and Ms Jill Tucker, but 'in the following circumstances as contended'.

53 The pleaded circumstances raised under defence par 11 are as follow:

54 That is a reference to the annual general meeting of the defendant for the financial year ended 2013, but actually held on 10 September 2014. That event may certainly be accepted. Not only did Ms Adams attend, but she was also elected at that meeting as a director of the defendant at that time, along with Ms Tucker.

(b) by reason of her attendance at the September Meeting, Adams was aware that each of the following member directors, not including her and Tucker, were appointed by the consensus of YAC members.

56 Then follows an identification of the 10 other directors of the defendant from a Mr Daniels to a Lyn Cheedy (as number 10).

57 Defence par 11(c) pleads Ms Adams was aware, or as a director should have been aware, that:

(i) YAC was required to hold its 2014 annual general meeting by November 2014 unless otherwise extended by the Registrar of Indigenous Corporations;

(ii) at an annual general meeting, the election of directors is to be considered.

58 There are then some particulars, which need not be repeated.

59 Defence par 11(d)(i) pleads that between the September 2014 meeting and 16 October 2014, Ms Adams signed a request to call and arrange a general meeting to put resolutions to remove 10 directors appointed at the September 2014 meeting and appoint 10 new directors - all of whom, except for a Ms Gloria Lee, had been nominated as directors at the September 2014 AGM. That document is referred to as the 'Adams Request'. So much is essentially uncontroversial. The question of whether it goes anywhere or not is another thing.

60 Likewise, par 11(d)(ii) asserts that Ms Adams knew that other requests in the same terms as the Adams request had been signed by other members of the defendant.

Next follows defence par 11(e) in these terms, contending:

the Notice was sent out on 16 October 2014 with a letter accompanying the Notice signed by Adams and Tucker which stated -

'The reason we have done this is that we have been contacted by a large number of members, including members who have requested a meeting of members be called and it appears to us that the current directors appointed at the Annual General Meeting of the Company held on 10 September 2014 do not have the support of the members.'

61 Significantly as to Ms Adams' purpose, as will be seen, the defendant then expressly pleads, by par 11(f):

the requests by members was [sic] the reason for her [Adams'] decision to call the general meeting.

despite having the knowledge of the requests as pleaded above, Adams failed to advise or make YAC officers other than Tucker, aware of the requests by members.

63 Under its pleaded defence for this trial by pars 11(e) and (f) then, the defendant accepts that the reason Ms Adams gave in her 16 October 2014 letter for calling the general meeting was her actual reason. That is, Ms Adams had been prompted to act as she had in calling the meeting by requests to her from other members of the defendant corporation, with a view to considering and passing resolutions to remove and appoint directors.

64 It will be recalled that all these pleas are incorporated by reference into defence par 12, which responds to par 8 of the statement of claim.

65 It is highly significant then that the reason of Ms Adams and Ms Tucker that is pleaded by the plaintiffs for the meeting being called as pleaded in par 8 is essentially what is seen stated in the letter of 16 October 2014.

66 I have not overlooked, under par 12(c) of the defence, the defendant also refers to pars 14 and 15. There it says that this meeting was called for an improper purpose.

67 Various contentions are then seen under pars 14(a) and (b), as to an asserted failure of Ms Adams to make other directors of the defendant aware of the existence of the other member requests (for a meeting to be held). It is also alleged that Ms Adams ought to have participated in discussions with other directors, as to whether it was in the best interests of the defendant corporation to call a general meeting - at which resolutions to replace the directors would be considered. It is contended under defence par 15 that there was a failure by Ms Adams to comply with her duty as a director - in terms of her manifesting good faith, and that the general meeting under par 15(b) was, in effect, called for an improper purpose.

Case law on the propriety of calling a meeting of members of a company under the Corporations Act 2001 (Cth)

68 As to alleged improper purpose of a director in exercising a power, qua director, it is useful to first consider some case authority dealing with the Corporations Act.

69 The first decision that I refer to is a decision of Beach J, Humes Ltd v Unity APA Ltd [No 1] [1987] VicRp 42; [1987] VR 467, dealing with a contested takeover and, in that context, a request for the calling of a general meeting.

70 Beach J needed to consider the bona fides of the urgent meeting request, initiated by the minority shareholder in the takeover context. There is, obviously, a key distinction to be recognised as between requisitioning a general meeting by a group of requesting shareholders, as opposed to the requisitioning of a general meeting by a director. Nevertheless, Beach J's observations concerning the former situation, I find, are helpful by extension of his reasoning. At (470) his Honour said:

The uncontradicted evidence of Unity APA's director [the director of the requisitioning minority interest holder]is that the meeting is being called with a view to achieving the removal of the directors named in the resolutions, something which in his opinion is in the best interests of Humes and its shareholders. If that is the true motive of Unity APA, it cannot be said it is not acting bona fide. It can only be said that a minority shareholder is not acting bona fide in requisitioning a general meeting if his objective is something other than the passing of the resolutions contained in the requisition. That is not the situation in the present case.

71 His Honour referred to an earlier case in New South Wales, Adams v Adhesives Pty Ltd [1932] NSWStRp 7; (1932) 32 SR (NSW) 398, a decision of Harvey CJ in Eq. Beach J distinguished that case in these terms (471):

But there his Honour was considering the duties of the minority shareholders once they had assumed the powers of the directors. That is not the situation in the present case. If Humes' directors do not convene the appropriate meeting within the time stipulated and Unity APA does, Unity APA will then become a quasi-official of the company and thereafter be required to exercise the rights given it in a manner which has regard to the interests of the company as a whole. But until such time as it does so, it is my opinion ... entitled to act in furtherance of its own interests, provided however that its requisition for the meeting is bona fide, in that its objective is to have the resolutions passed and not simply to harass the company and its directors.

It is however no part of my function to determine the prospects of success or failure on those resolutions. A minority shareholder is given a statutory right to convene a general meeting for the purpose of placing resolutions before the shareholders of the company. It is for the shareholders to pass or reject such resolutions, not for the Court.

When Unity APA first requisitioned a general meeting that meeting was combined with the annual general meeting of Humes. I consider it is arguable that if a meeting is called for the sole purpose of considering the resolutions in the requisition of 7 November Unity APA may have a better prospect of success than it did at the annual general meeting. It is also to be remembered that Unity APA's offer to the shareholders of Humes is still on foot. By the time a further general meeting is held it may well have increased its shareholding in Humes.

74 And then highly significantly, in my view, Beach J concluded in these terms:

In my opinion this Court should be very reluctant to interfere with a minority shareholder's statutory right to requisition a general meeting. I consider it should only do so when it is clear that the purpose for calling the meeting is something other than the passing of the resolutions contained in the requisition. I am not satisfied that that is so in the present case. Whilst it is clear the calling of a further meeting will cause inconvenience to the directors and shareholders of Humes, and expenditure of the order of $100,000, Humes has not satisfied that me that Unity APA's motive in calling the meeting is other than to have passed the resolutions it proposes to place before the meeting.

75 I also note a decision of Palmer J in National Roads and Motorists' Association Ltd v Scandrett [2002] NSWSC 1123; (2002) 171 FLR 232 [52] - [56]. In particular, I note his Honour's observations at [53], rejecting a submission (which he found to be confused) that the purpose for which a requisition for a meeting is made equated to the motive of the requisitionist making it. He observed that if the purpose for which the requisition is made is truly to have a meeting of members convened in order to consider, and if thought fit then to pass, a relevant resolution, then it did not matter that the requisitionist was motivated to pursue that purpose by 'ill-will or self-interest'.

76 I also mention observations by Nicholson J in Reefton Mining NL v Kimbriki Nominees Pty Ltd [2007] FCA 17; (2007) 61 ACSR 72 [39], concerning importance in any assessment of purpose of the nature of the statutory right which is being exercised by the directors. Directors may exercise many different and distinct powers. The nature of a statutory power of a director to convene a meeting for a vote to be taken is an important consideration, arising out of the very character of the democratic exercise that is being engaged upon.

77 Last, I mention a decision of Barrett J in Dhami v Martin [2010] NSWSC 770; (2010) 241 FLR 165, in regard to directors convening a meeting pursuant to s 249Q of the Corporations Act, and by analogy referable, in my view, to equivalent powers under the CATSI Act. His Honour observed:

Mr Martin and Mrs Martin argue, however, that neither of the proposed resolutions set out in the notice of meeting became a resolution of the company in general meeting through the assent given by Mr Dhami alone. The foundation of this argument is the proposition that the holding of the 'meeting' (that is, in the event, the one-person 'meeting' constituted by Mr Dhami) was inconsistent with s 249Q of the Corporations Act. [8]

78 Section 249Q, equivalently to s 201-55 of the CATSI Act, says that a meeting of a company's members must be held for a proper purpose. His Honour went on to observe at [10] that the meeting had two purposes, one proper, one improper, by his assessment. He said:

The fact that one of them was not a 'proper purpose' will not affect the holding of the meeting if the other was for a 'proper purpose'.

79 Therefore, although in Dhami v Martin there was an improper purpose of seeking to interfere with the directors' management, there was also a valid purpose, namely, to take a vote on the constitution of the company board. That was a legitimate purpose. His Honour's observations at [10] as to the one proper purpose being enough are significant here.

Propriety of calling a meeting of the members of the defendant in this case

80 Applying that body of case authority to the evidence in the present case, it seems that the case authority goes all one way and against the position of the defendant. It is demonstrable, indeed, it is accepted, as I assess the defence pleading, that this defendant corporation essentially accepts the purpose of the first named plaintiff and Ms Tucker that is contended for under par 8 of the statement of claim. That was the averred purpose of considering and, if thought appropriate, passing resolutions at the convened general meeting for a removal of 10 directors of YAC and for the appointment of replacement directors, including the second plaintiffs.

81 The only real argument put against that purpose by the defendant emerges out of the aggregation of pars 11, 14 and 15 of the defence.

82 The underlying contention would appear to be that, because of the particular characteristics of Aboriginal and Torres Strait Islander corporations, and then regulated by a rule book of the character as is seen manifested here for this defendant corporation, the theme of 'consensus' is highly important.

83 It is argued that this notion effectively means that before any director exercises their (undoubted) power to call a general meeting of members, the director first needs to meet and satisfy certain (unwritten) preconditions. Such preconditions argued for seem to include telling other directors of the receipt of requests (for a meeting) by other members, then participating in discussions with the other current directors over whether or not it really is actually in the best interests of the corporation for a general meeting to be called by the director (where resolutions are to be put to remove most of the existing directors).

84 It was argued as well that in circumstances where there has recently been an annual general meeting of the defendant corporation held on 10 September 2014, the obligation of a director to act in good faith in the best interests of their corporation were not met - unless there had first been a dialogue seeking consensus with other directors informing them of the existence of the body of members who wanted to convene another meeting to elect a new board, because they were not satisfied with the composition or performance of the existing board, or parts thereof.

85 The pragmatic difficulties presented by holding such discussions with the aim of seeking consensus, given the nature of the removal resolutions, is almost self evident.

86 The consensus contention, I think, arises out of the fact that the defendant's rule book, by its dictionary (in rule 22), defines 'consensus' this way:

consensus means general agreement among the members present as to a particular matter whereby differing points of view, if any, have been considered and reconciled and any decision is generally agreed upon in accordance with law and custom. For the avoidance of doubt, a decision made by consensus in accordance with law and custom, does not necessarily require that the decision be agreed upon unanimously.

87 There is an evident lack of clarity from that definition over what might actually ever constitute a consensus.

88 The lack of clarity comes from at least two sources. One is the explicit statement seen in the last sentence, that there does not need to be unanimity. Second is the eliptical reference in the definition to differences being considered and reconciled and any decision generally agreed upon 'in accordance with law and custom'.

89 Incorporation into a definition of 'consensus' of the phenomenon of 'law and custom' needs to proceed by reference to the accompanying dictionary definition of 'law and customs' in the rule book, which I assess is meant to be imported, albeit the term used is 'law and custom' rather than 'customs' plural.

90 Nevertheless, the dictionary definition of this latter term is:

law and customs means the body of traditions, laws, customs and beliefs recognised and held in common by the common law holders, and includes those traditions, laws, customs and beliefs exercised in relation to a particular area of land and waters, traditionally accessed resources, and persons.

91 So a 'consensus' is defined and must be applied to accord with that given definition of law and custom. But that explanation of 'law and custom' is porous. By its very character it seems to be, for any external curial body, an intangible and, so, very much capable of generating debates over whether or not some unwritten feature or notion or concept is actually a law or a custom or not.

92 In a context of a need to find a consensus, applying that ill-defined law and custom touchstone presents as vague and potentially problematic.

93 Moreover, that threshold of consensus finds itself without any express support in the CATSI Act. It is a notion found as used in the rule book (or constitution) of this particular defendant.

94 In a general sense, one can see a generalised wisdom in seeking, where possible, a consensus for the decisions of corporate boards. It is often said that the best board chairs always do strive to govern by a broad based consensus, rather than by formally demanding divisions by director votes upon every issue.

95 No sensible person would want to deprecate such a wholesome notion of consensus in a general sense. Seeking consensus in directors' board meetings, in terms of evaluating the merits or demerits of proposals for actions by the board of directors of a corporation is one thing.

96 But attempting to apply the notion of 'consensus' in the very different context of a general meeting of some 200 assembled meeting voters, and with some members exercising proxy votes, or there being other persons attending who act as proxies, presents as a totally different proposition in terms of workability.

97 Consensus applied to decisions of general meetings may prove difficult to follow in practice. It may be some issues at a general meeting may lend themselves to being resolved by ascertaining a broad level of support, rather than by a divided vote. However, a contested board election, needing to be resolved as between potentially hundreds of voting members would, in the ordinary course of events, throw up great difficulties in attempting to find consensus - if no-one can be elected except by applying an indeterminate notion of consensus at a general meeting. In fact, the defendant's rule book recognises that very issue and provides for its resolution on a poll.

Procedure to be taken at general meetings of the defendant

98 The rules of the defendant, when it comes to a general meeting, and particularly for an election of directors, are explicit in terms of stipulating how, at the end of the day, any disagreement between members is to be resolved.

99 This issue is dealt with explicitly under rule 4.10 of the rule book, in the following terms:

4.10.1 Subject to sub-rule 4.10.2, and unless otherwise provided in these rules, matters shall be decided at a general meeting by consensus.

4.10.2 Unless otherwise provided in these rules, where a matter cannot be decided at a general meeting by consensus, the person chairing the general meeting may call for the matter to be decided by a poll.

4.10.3 For the purposes of a poll, if called in accordance with sub-rule 4.10.2:

(a) each member has only one vote, by show of hands or by any other means nominated by the person chairing the meeting; and

(b) unless otherwise provided by these rules, a resolution put to the vote at a poll shall be decided by a three-quarters (3/4) majority of votes cast.

4.10.4 A declaration by the person chairing the meeting that a resolution has been passed shall be evidence of that fact.

4.10.5 Decisions made at general meetings shall be binding on the directors.

100 It is immediately apparent that what is only a commencing position of decisionmaking by consensus at a general meeting under rule 4.10.1 is ultimately subjected to rule 4.10.2. There is a stipulated ability to call for a poll, unless otherwise provided in the rules, where an issue cannot be decided by consensus. Highly relevant to that event is rule 4.11 which says:

Any member entitled to vote on the resolution or the chair can demand a poll.

Members can appoint a person as proxy to attend meetings and vote for them.

Proxies can also speak at meetings and join in demanding a poll. They can vote if their appointment allows them to.

A proxy appointment must contain the member's name and address, the corporation's name, the proxy's name, the meeting where the proxy is going, and it must be signed by the member.

The corporation must receive the proxy's appointment at least 24 hours before the meeting.

A person must not be a proxy for more than one member.

102 Bearing in mind s 20135 and s 20190 of the CATSI Act, there is nothing I discern in the rule book of the defendant that says for this Aboriginal and Torres Strait Islander corporation that a member may only appoint another member as their proxy.

103 Section 20135 of the CATSI Act provides that a notice of meeting must explicitly address that issue. There is nothing in the defendant's rule book that prohibits any member appointing a nonmember to be their proxy.

104 I render those observations as to proxies because of a contention about that here to the contrary, and raised erroneously, as I assess it, in the passing solicitor correspondence.

Is the purpose pleaded by the plaintiff a proper purpose?

105 The state of the authorities, then, upon my review is clear. Once it is accepted that the purpose of Ms Adams and Ms Tucker, as is articulated by the plaintiffs under par 8 of the statement of claim, actually was to consider and, if thought appropriate, pass resolutions for the removal of 10 directors and resolutions for the appointment of 10 directors, including the appointment of the second plaintiffs as directors, it must necessarily then follow that the general meeting has been called for a proper purpose. The defendant's contention characterising such conduct as improper, by reason of a failure to meet certain unwritten consensus prerequisites before a director's power to call a meeting is exercised, in my view, is wholly misconceived.

106 A director's power to call a meeting is one with which a court ought not lightly interfere. This fundamental aspect of corporate governance protection as between a corporation constituted by shareholders is the same governance protection that is made applicable in respect of the responsibilities of a board of an Aboriginal and Torres Strait Islander corporation to its members. There must be a proper accountability to members and there must, as well, exist the underlying confidence in a board of directors from the majority of the corporation's members.

107 It is not a court's role to inhibit a corporation's members from exercising a democratic right to choose the board of directors. In the present case, no injunction is sought seeking to restrain the general meeting that has been convened.

108 There is no subsisting procedural grievance, as I assess it, to the mechanics that have been deployed by Ms Adams and Ms Tucker in terms of their convening the general meeting.

109 The only challenge that has really emerged in terms of an asserted improper purpose, or a failure to exercise a power in good faith, must, in the end, be rejected on the basis of it being essentially inconsistent with the defendant's pleaded acceptance of the very reason for the convening of the meeting, as was articulated by Ms Adams and Ms Tucker in their correspondence to members.

110 It is also significant that two present directors of the defendant, not just Ms Adams, have called this general meeting.

111 At the end of the day, a particular statutory power of a director to call a general meeting is being exercised. That feature needs, as Nicholson J observed in Reefton, to be at the forefront. It is one thing for a director to exercise, say, their vote at a board meeting in a particular way, or to take decisions to expend money, to vote to acquire property for the corporation, or so forth. Those types of different decisions by directors all carry their own particular weighting considerations, as regards assertions of good faith or improper motive. But here, the particular power being engaged is simply to cause a meeting to be convened at which votes upon resolutions about the composition of the board are to be taken. A court should be rightly sensitive about intruding against such a fundamental corporate governance event, in my view.

112 At the general meeting the identified removal and nomination resolutions which have been proposed for the composition of the board under the covering notice of meeting material of 16 October 2014 will be considered by assembled members.

113 It is the assembled members who will then decide whether or not to accept or reject the resolutions as framed, in accord with the rule book's provisions on consensus, law and custom, or ultimately, by a vote on a poll. What is foreshadowed to happen, in my view, is a fundamental manifestation of corporate democracy at work. It is a basal manifestation of what is properly required in terms of corporate governance, as regards the cardinal responsibility of an elected board of directors to enjoy the confidence of the corporation's constituent members. In that respect, there is no difference at all, as I assess it, between an Aboriginal and Torres Strait Islander corporation and a company that is limited by shares.

114 That is particularly so given that, by rule 4.10.3(a), each member holds only a single vote. Therefore, unlike for some companies, with this Aboriginal and Torres Strait Islander corporation, there can be no possibility of an individual, or group of individuals, exercising a disproportionate or oppressive level of voting power, by virtue of controlling the majority shareholding vote of members. As we have seen, the meeting outcome will depend, in the first place, upon whether the resolutions are passed by way of consensus among perhaps hundreds of members of the Yindjibarndi community or, failing that, by a supermajority on a one member-one vote basis on a poll.

115 In all those circumstances, it seems the declarations which are sought by the plaintiffs under the agreed issues, to which I will now turn, are appropriate.

116 As regards agreed issue 1, there should be a declaration, in my view, that a general meeting of the defendant Yindjibarndi Aboriginal Corporation RNTBC has been validly called for 10.00 am on 10 November 2014 at the Roebourne Community (Fifty Cent) Hall.

117 As regards a second agreed issue concerning each of the motions as set out in the notice of general meeting, and whether they are able to be proposed at the general meeting, called for 10.00 am on 10 November 2014 at the Roebourne Community Hall, the answer to that issue is, yes.

118 There should issue declarations in such terms: namely, that each of the motions set out in the notice of general meeting of 16 October 2014, which is exhibit 2.6, is able to be proposed at the general meeting of the defendant called for 10.00 am on 10 November 2014 at the Roebourne Community (Fifty Cent) Hall.

119 A following question presents in relation to proxy holders, as dealt with in the notice calling the meeting of 16 October 2014. I have accepted implicitly a submission of Mr Bennett yesterday, that his prayer for relief under par 13.1, seeking a declaration as regards the validity of convening a meeting of members, to be held in accord with the terms of the notice, enlivens this proxy issue. The terms of the notice do, in fact, make an express reference to the right of members to appoint a proxy on their behalf, and which proxy is not a member of the defendant corporation.

120 This falls under prayer for relief 13(3), as regards such supplementary declarations as may be required, to ensure that the meeting is valid and, more particularly effective, in accordance with the Act and the rule book.

(The reasons for judgment concluded at 11.07 am. There was then argument over further dispositive orders to be made, seen at ts 107 - 113. Further reasons were then delivered extemporaneously, in the terms seen below. These further reasons below have also been edited from the transcript.)

121 A subsidiary issue that has emerged is set out in par 3.1 of exhibit 1. The Court, having found that the general meeting has been validly called, is asked whether the defendant is required to confine the business of the meeting to the resolutions the subject of the notice of general meeting.

122 Certainly, the resolutions the subject of the notice of 16 October 2014 are appropriate business for the meeting to consider in accordance with the rule book. The rule book then identifies as potentially relevant certain members' rights. In particular, rule 3.3 states at item 3:

• can put forward resolutions at general meetings.

123 The significance of that, it would seem, is its breadth and liberality in terms of what a member might do at a general meeting.

124 The second paragraph of rule 4.4 provides that general meetings are for 'everything in the notice of the meeting'. That raises a question whether that phrase 'everything in the notice of the meeting' is exclusive, in a sense of eliminating anything else that might arise from the floor of a general meeting, otherwise validly convened, or that is put to the meeting by the chairperson.

125 Rule 4.5 deals with what a notice of general meeting must say. It is in fairly standard terms, requiring 21 days' notice (first paragraph) being given to various persons (second paragraph). It is then mandatory, by the fourth paragraph, in terms of what the notice must set out. Item 2 in the fourth paragraph is the 'business of the meeting'. It then states notices can be served personally and the like.

126 So, the broad thrust of the rules for this particular Aboriginal and Torres Strait Islander corporation is that the members who receive notice of the meeting should enjoy a full and proper opportunity by notice to consider the business of the meeting before they attend and then vote upon that business. Ergo, any new business that is not the subject of the notice ought not be just introduced without notice at the meeting, to be voted upon, in my view. This issue has not really been the subject of extensive argument, and I have not had the opportunity to canvass the general law concerning the scope of a Corporations Act company meeting by way of analogy.

Rights of members of the defendant at a general meeting not to be preempted

127 I am not presently prepared to make a declaration in the terms as sought under par 3 of the minute of proposed orders handed up by counsel for the plaintiffs, which is that the business of the meeting be confined to the resolutions on the notice of meeting.

128 The reason is that there may arise some generally ancillary matters concerning the business of the meeting as notified on 16 October 2014, or it may be that some matters arise by way of the unanimity of the meeting. Or it may be that some extraordinary issue arises by law, with urgency, in the context of a properlyconvened general meeting. I am not prepared in an anticipatory way to rule any of that out at this time even before the meeting happens.

129 It may be that in the meeting's aftermath I would then need to make some sort of declaration about the validity of a late resolution that is outside what is earlier notified by the scope of the business of the meeting. But I prefer to deal with any such eventuality after the meeting, rather than in anticipation.

130 In those circumstances, I am not prepared to make the order in the terms as sought under par 3 of the plaintiffs' prayer.

131 The last contentious point arises in relation to costs and whether the plaintiff should have liberty to make an application by written submission in respect of the payment of costs by non-parties and, if so, how that is done.

132 It seems to me that the plaintiffs should have that liberty. Whether it is exercised or not is a matter for the plaintiffs in due course.

133 The plaintiffs seek that liberty, effectively, so that they are not locked out, in terms of making an application in due course upon proper material. I do not think it is proper for me to close such an application out at this time, although I say nothing at all about its ultimate merits or demerits.

134 The orders as sought under par 7 of the minute handed up by counsel for the plaintiffs are appropriate.

CITATION : ADAMS -v- YINDJIBARNDI ABORIGINAL CORPORATION RNTBC [2014] WASC 467 (S)

Costs - Costs against non-parties - Proposal for joint liability with unsuccessful defendant party for costs - Circumstances in which an order of that kind might be made - Senior officers of unsuccessful party - No evidence unsuccessful party impecunious - Applications refused

Second Plaintiffs : Mr M L Bennett & Ms T J C Elder

1 These reasons address an application by the plaintiffs seeking orders for costs against non-parties to this litigation.

2 The special costs order is sought against two officers of the defendant, the Yindjibarndi Aboriginal Corporation RNTBC ('YAC'): its CEO, Mr Michael Woodley, and its general counsel, Mr George Irving. (The defendant did not take part in the special costs application.)

3 The plaintiffs sought orders that Mr Woodley and Mr Irving be made jointly liable for the plaintiffs' costs along with the defendant corporation, which is the subject of my earlier taxed costs orders, as I will explain.

4 While Mr Irving is a legal practitioner admitted in this jurisdiction, the costs order was not sought against him under O 66 r 5(1) of the Rules of the Supreme Court 1971 (WA), or otherwise under the court's powers to regulate legal practitioners.

5 On 6 November 2014, I heard an expedited trial to determine the validity of a notice given by the first plaintiff and another director of YAC, Ms Jill Tucker, seeking to convene a general meeting of the members of the defendant corporation (ie, YAC) and the validity of certain motions proposed to be put to such a general meeting.

6 On 7 November 2014, I delivered ex tempore reasons and judgment (the reasons were later published as Adams v Yindjibarndi Aboriginal Corporation RNTBC [2014] WASC 467; (2014) 104 ACSR 29, on 9 December 2014), granting the plaintiffs declaratory relief concerning validity of the calling of the general meeting of YAC members and motions to be put to the general meeting, as set out in the notice.

7 On 7 November 2014, the successful plaintiffs sought liberty to bring an application in respect of payment of the plaintiffs' costs by non-parties. As set out in Adams [131] - [133], I granted the plaintiffs such liberty to apply. The plaintiffs have subsequently sought such orders in respect of Mr Irving and Mr Woodley.

8 Following an exchange of written submissions between the plaintiffs and the non-parties, I heard oral submissions on the non-party costs application by the plaintiffs, on 12 May 2015.

9 The basis for the plaintiffs obtaining special costs orders against Mr Irving and Mr Woodley as non-parties to the litigation is said to arise from the non-parties' instructions on behalf of YAC to a Queensland firm of lawyers, Cleary Hoare Solicitors ('Cleary Hoare'), to act for YAC in these proceedings and to oppose the holding of the general meeting sought by the plaintiffs. This is in circumstances where, it is said, Messrs Irving and Woodley lacked authority to instruct Cleary Hoare, or to cause YAC to incur the substantial costs of defending the proceedings, under provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (WA) (CATSI Act) and YAC's constitution (referred to as its 'Rule Book').

10 There is no suggestion the defendant corporation is unable to, or has expressed an unwillingness to, fully meet all the plaintiffs' taxed costs of the expedited trial as I ordered YAC to bear, on 7 November 2014.

11 The evidence in the application for special costs orders against the nonparties was provided under a number of affidavits.

12 The plaintiffs' evidence is principally found across five affidavits:

1. three affidavits by Ms Taleesha Jayne Conlan Elder, respectively sworn 28 October 2014, 21 November 2014 and 13 March 2015, with their internal attachments;
2. an affidavit of the first plaintiff, Ms Adams, sworn 16 March 2015; and
3. an affidavit of Ms Jill Tucker, sworn 16 March 2015.

13 The nonparties raised no objections to the plaintiffs' affidavits (ts 119), save for suggesting that parts of the evidence of Ms Tucker and Ms Adams were not relevant to the nonparty costs application.

14 (The plaintiffs also rely on minutes of a board meeting of YAC of 23 October 2014, found in an affidavit sworn earlier by Mr Michael Woodley of 4 November 2014 and noted below.)

15 The first affidavit of Ms Elder, sworn 28 October 2014, was made in support of the application for an urgent trial (as subsequently ordered). It broadly established the rules applicable to the calling of general meetings of YAC and, specifically, the manner in which a general meeting was called by notice dated 16 October 2014. This affidavit attached correspondence between solicitors for the plaintiffs, officers of YAC (including one of the non-parties), and Cleary Hoare, concerning the validity of the notice of meeting and its proposed resolutions. The correspondence shows Cleary Hoare responded to initial letters from solicitors for the plaintiffs, expressing a view in one letter of 24 October 2014 that the notice given by the plaintiffs requisitioning the general meeting was invalid, and by another of that date disputing (as per their instructions) the account of proceedings at a board meeting. There is a reply from the solicitors for the plaintiffs of 27 October 2014 (attachment 'TJE8') querying how solicitors Cleary Hoare could lawfully act for YAC, indicating the plaintiffs were not aware of any specific resolution authorising Cleary Hoare to act (nevertheless proceeding on the basis Cleary Hoare would defend any proceedings brought and inviting conferral between the legal representatives).

16 The second affidavit of Ms Elder, sworn 21 November 2014, is specifically prepared in support of the application for nonparty costs orders. It attaches detailed correspondence from 28 October 2014 to 18 November 2014 passing between the solicitors for the plaintiffs and Cleary Hoare. It includes as well a polling form for the general meeting of YAC members held 10 November 2014.

17 By letter dated 18 November 2014 (attachment 'TJE15') the solicitors for the plaintiffs expressly contended Cleary Hoare was not validly instructed. They sought information regarding which officers of YAC had instructed Cleary Hoare to defend the proceedings.

18 Cleary Hoare replied by letter the same day ('TJE16') indicating it had taken its instructions from the CEO of YAC (Mr Woodley), YAC's inhouse counsel (Mr Irving) and 'other executive staff'.

19 The affidavit also attached an affidavit by Mr Lyn Cheedy, chairperson of YAC, which, as Ms Elder deposed, had been served on the plaintiffs, but not filed (attachment 'TJE17'). It set out particulars of a 31 October 2014 YAC board meeting and attached minutes and YAC's audited financial statements.

20 The third affidavit of Ms Elder, sworn 13 March 2015, attached correspondence in mid to late February 2015, passing between solicitors for the plaintiffs and the appointed solicitors for the non-parties - regarding the costs incurred by YAC in defending the primary proceedings. Included with a response from solicitors for the non-parties (attachment 'TJE20') were a number of invoices from Cleary Hoare, Lemonis Tantiprasut (a Perth firm of solicitors) and counsel, totalling roughly $119,000. These legal costs invoices appear to have been paid by YAC - but, in any event, they are not the opposition's legal costs in respect of which the non-party costs orders are being sought.

21 The affidavit of Ms Adams, sworn 16 March 2015, provides background to the primary proceedings, including her recounting of discussions at YAC board meetings. It relates that Ms Adams is a director both of the defendant and of the Wirlumurra Yindjibarndi Aboriginal Corporation RNTBC (WMYAC). The affidavit refers to a YAC board meeting held on 23 October 2014, prior to commencement of these proceedings, at which it is related that Mr Irving had said that a general meeting of YAC members, as Ms Adams and Ms Tucker sought to requisition, had not been validly called; that civility then deteriorated, and that as Ms Adams had another meeting to attend, she had left that board meeting without conceding to Mr Irving's invalidity contention (which, as was subsequently determined under these proceedings, was wrong).

22 Ms Adams also relates the events of a YAC board meeting of 10 February 2015 - at which Mr Woodley and Mr Irving (themselves not directors) are said to have insisted Ms Adams suffered from a conflict of interest and should not be present, following which she had left that meeting. She relates that at the time of her affidavit she had not been provided with minutes of certain YAC board meetings. Ms Adams' affidavit also notes that minutes of a 31 October 2014 board meeting suggest the minutes of the 23 October 2014 board meeting were confirmed unanimously, but that she was not present at the 31 October 2014 board meeting.

23 The affidavit of Ms Tucker, sworn 16 March 2015, indicates that she attended the 31 October 2014 YAC board meeting. She does not recall a motion being put or voted on confirming the minutes of the 23 October 2014 board meeting. She also relates that Mr Woodley and Mr Irving had insisted at the board meeting that Ms Tucker suffered from a conflict of interest and says that she had left the meeting after they repeatedly told her to leave and she had felt pressured to leave. She further says that at later YAC board meetings (after the holding of the meeting the subject of the primary proceedings), held on 27 November 2014, 18 December 2014 and 10 February 2015, Mr Woodley and Mr Irving repeatedly insisted Ms Tucker had a conflict of interest. As a result, Ms Tucker says she had then left each of the board meetings.

24 The non-parties' evidence relied upon to resist the application for special costs orders against them, is found across four affidavits, namely:

1. two affidavits of Mr George Marshall Irving, sworn 23 January 2015 and affirmed 16 March 2015, with their attachments; and
2. two affidavits of Mr Michael Woodley affirmed 4 November 2014 and sworn 23 January 2015.

25 The plaintiffs raise a number of objections against parts of these affidavits - going to both form and substance. Some of these objections were conceded. It was not necessary to resolve the remaining objections.

26 The 23 January 2015 affidavit of Mr Irving, sworn in opposition to nonparty costs orders against himself and Mr Woodley, sets out Mr Irving's background and describes events from 2011 - 2014, generally. Mr Irving says that on reviewing the plaintiffs' notice requisitioning a general meeting of YAC members he had contacted Cleary Hoare for assistance in relation to corporations legal issues. He refers to resolutions of the YAC board in 2011, 2012 and 2014 (and attaches minutes of board meetings setting out these resolutions). The scope and relevance of these resolutions was disputed by the plaintiffs, as set out below.

27 Mr Irving also says he and Mr Woodley approved Cleary Hoare's invoices for payment.

28 In relation to the 23 October 2014 YAC board meeting, Mr Irving says that he had advised the directors that Cleary Hoare agreed with his opinion as to the [in]validity of the notice, that the entire board accepted this and that noone present had raised any issue over the engagement of Cleary Hoare.

29 In relation to the 31 October 2014 YAC board meeting, Mr Irving relates that he advised the YAC board that he had briefed Cleary Hoare to 'handle' (ie, resist) the litigation, that one hearing had already occurred, and that no YAC directors or executive officers who had been present had objected to the engagement of Cleary Hoare, or to YAC's resisting of the plaintiffs' application generally.

30 This affidavit of Mr Irving also attaches minutes of the 23 October 2014 (also included in the 4 November 2014 affidavit of Mr Woodley) and 31 October 2014 YAC board meetings, and of the YAC general meeting subsequently held on 10 November 2014.

31 The 16 March 2015 affidavit of Mr Irving attaches an attendance and voting register and a polling tally concerning the 10 November 2014 general meeting of YAC.

32 The 4 November 2014 affidavit of Mr Woodley had been made for the purposes of the primary proceedings. Relevantly here, it contains, as Annexure 3, a copy of the minutes of a YAC board meeting of 23 October 2014. These minutes, which are in respects inconsistent with the plaintiffs' evidence (see above), set out particularly some notes of a discussion between Mr Irving, Mr Woodley and the plaintiffs. They would suggest that Ms Adams at one point had accepted that the notice of the meeting was not valid (on the basis of Mr Irving's proffered legal advice), and that she had seconded a motion for the 2014 YAC AGM to be held in early December 2014, before leaving the meeting prior to the board resolving to design a director appointment procedure.

33 The 23 January 2015 affidavit of Mr Woodley briefly sets out his position in relation to some events in dispute. He notes that he had 'coapproved' Cleary Hoare's invoices. He agrees with Mr Irving's summary of the 23 October 2014 and 31 October 2014 board meetings. He also suggests a lawyer from Cleary Hoare was included in some of these board meetings via a telephone link and that some of the YAC directors had asked questions of that Cleary Hoare lawyer.

34 The principles applicable to the making of nonparty costs orders are well developed, so I will only briefly discuss and assemble some of the leading case authorities.

35 This court holds a discretion to order costs against a nonparty: see s 37 of the Supreme Court Act 1935 (WA), WHW v Commissioner of Police [2014] WASCA 153 (S) [7], Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [39] (Steytler P), note also Oxer v Astec Paints Australia Pty Ltd [2008] SASC 210 [28] (Duggan J, Doyle CJ and Anderson J agreeing) in relation to the similarly worded Supreme Court Act 1935 (SA) s 40(1). The discretion is unfettered, but it must be exercised judicially: Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 192 (Mason CJ and Deane J), Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154 [74]. The only fixed requirement appears to be a need to show a sufficient connection between the non-party and the unsuccessful party and litigation, which is material to the question of costs: Dunghutti [89].

36 The categories of non-party costs order scenarios cannot be said to be closed: Swick Nominees Pty Ltd t/as Swick Drilling Australia v Norncott Pty Ltd [No 3] [2013] WASC 173 (S) [49] (Allanson J). Broadly speaking, it will be a consideration of the interests of justice in each particular case which will govern the availability of costs orders against non-parties: see, eg, WHW v Commissioner of Police [2014] WASCA 153 (S) [17].

37 Nonetheless, a nonparty costs order is exceptional and is to be granted only in limited circumstances: Kebaro Pty Ltd v Saunders [2003] FCAFC 5 [103]. Such an order is not punitive in character: Dunghutti [95]. The order should not be made except in the 'clearest of cases': Dunghutti [96].

38 Many of the exceptional situations where non-party costs orders have been previously made concern the insolvency of a primary entity and its consequent incapacity to meet an adverse costs order made against it as an unsuccessful participant in litigation. In Knight, Mason CJ and Deane J recognised the general category of case involving 'circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation': Knight v FP Special Assets Ltd (192 - 193) (Mason CJ and Deane J). Not all cases fall within this general category. But each of the underlying features (particularly the insolvency of an actual party to the litigation) will bear upon the assessment as to whether the exceptional order should be granted against a non-party: see Swick Nominees [50] (Allanson J).

39 Whilst the exercise of the court's discretion is clearly not just limited to circumstances where the unsuccessful party to litigation is insolvent, orders beyond underlying circumstances of insolvency do present as being even more exceptional: Dunghutti [87] - [91].

40 Moreover, many of the exceptional situations where such orders have been made, on close analysis, can be seen to concern non-parties who have been assessed to have been (wrongly) acting in their own personal interests, or improperly.

41 Where, as here, the non-parties sought to be subjected to such costs orders are officers of the (unsuccessful) corporate party to litigation, it will be relevant to consider the underlying reasons for which they caused the unsuccessful party to bring (or resist) the proceedings, the legal qualifications of the nonparties, and the nature of any legal advice which the non-parties had received in relation to the bringing or defending of proceedings: see Dunghutti [97]-[100]. Merely benefiting in some fashion from underlying litigation would not of itself present as being enough to justify such an order. But the holding of a direct personal financial interest in the litigation may be very relevant. It is not necessary to show bad faith, if a direct personal financial interest or potential benefit from the litigation is shown: see Vestris v Cashman (1998) 72 SASR 449, 457 (Olsson J) and case authorities cited therein, referred to in Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281 [17] (Steytler J). It may also be said to be inappropriate to judicially determine if nonparties have acted in their own interests, in circumstances where the unsuccessful party is in a position to meet an order for costs: Dunghutti [100].

42 Finally, the timeliness of notice given to non-parties that legal costs will be sought directly against them may be relevant. This notice may be informed by an application for security: Vestris v Cashman (457 - 458) (Olsson J). However, this may be less useful when the primary entity is solvent. See also Huntingdale Village Pty Ltd (Receivers and Managers Appointed) atf Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 (S) [27]-[30] (Le Miere J).

43 Here, in circumstances of correspondence passing between the parties, and for reasons that will be seen, it is not necessary to assess the adequacy of notice given to Messrs Irving and Woodley by the plaintiffs about a personal costs exposure.

44 The plaintiffs provided two tranches of written submissions, of 21 November 2014 and 2 April 2015, canvassed by counsel for the plaintiffs in oral argument at the hearing of the application on 12 May 2015.

45 The plaintiffs point to a largely unconstrained discretion of the court as regards non-party costs orders. They observe that the categories of case for which a non-party costs order may be made are not closed and that it is not necessary for the unsuccessful defendant to be shown to be impecunious. Consequently, they argue that it is overall just, in present circumstances, that the non-parties be ordered to be made jointly liable, along with YAC, for their taxed costs of the failed resistance to the plaintiffs' action.

46 The plaintiffs are critical of the erroneous stance adopted by the nonparties, particularly Mr Irving, against the plaintiffs' requisitioning of a general meeting, during YAC board meetings. They note, in effect, that the trial was ultimately defended for YAC upon legal arguments different to Mr Irving's legal advice to the YAC board (the basis ultimately raised in resisting the application was dramatically distinct: see Adams [18] - [24]). The plaintiffs emphasise that Mr Irving's advice was effectively abandoned at the trial by the defendant's counsel, on the basis it was 'untenable'. The plaintiffs say that the non-parties by their conduct have thereby 'caused' YAC as the defendant corporation (which I repeat takes no part in this application) to expose itself to the wholly unnecessary financial loss and burdens of:

(a) its own lawyers' and counsel's costs on a failed defence of the plaintiffs' successful application (as noted above, there is no suggestion that these costs have not been paid); and

(b) the plaintiffs' taxed costs which were ordered against YAC, on the basis of costs following the event of YAC's resistance failing at the trial (the costs exposure which this application is concerned with).

47 It should be noted again that there is also no suggestion put to me on this application that YAC has expressed an unwillingness to fully meet the plaintiffs' taxed costs, as has been ordered. This is of some significance, in circumstances where the present application seeks only to make the non-parties jointly liable with YAC for the plaintiffs' taxed costs. Of course, once paid, any joint liability for these costs would be discharged (ie, to the plaintiffs).

48 The plaintiffs say that as members of the defendant corporation, as regards YAC meeting the plaintiffs' taxed costs, they ought not be prejudiced by the defendant corporation's funds being diminished by, in effect, the folly of resisting the plaintiffs' requisitioning of a general meeting. They say a special costs order is fully justified because, in their view, it is the foolhardy conduct of the non-parties which has caused the defendant to incur, unnecessarily, very substantial legal costs to the plaintiffs. This conduct they say was 'wholly unreasonable'.

49 The plaintiffs also contend Mr Irving and Mr Woodley either held no authority or insufficient authority to instruct solicitors to resist the action, pointing, in particular, to a lack of any specific contemporaneous YAC board resolution. They seek to distinguish previous general resolutions relied on by the nonparties (see below) as outdated (in the sense of expired), insufficiently specific, or inapplicable - having regard to context.

50 The plaintiffs also submit, in any event, the non-parties lacked authority to cause YAC to incur the legal expenses of resisting the action, pointing to a general authorisation for expenditure being limited to $100,000, by the defendant's constitution ('Rule Book' rule 5.14), and suggesting the absence of a specific resolution authorising the costs that were ultimately incurred. They note the invoices to YAC totalling roughly $119,000 appear to have been split, potentially so they would each look to fall below a $100,000 threshold. Counsel for the plaintiffs suggested that an adoption of an incorrect position without authority added a 'rogue' element, going beyond the nonparties merely being found to be proven wrong in their decision making and advice to YAC, as things turned out.

51 At the hearing of the application the plaintiffs sought to explain why non-party costs orders were sought against Messrs Irving and Woodley, making them jointly liable with the defendant. If made jointly liable (with YAC) for the plaintiffs' taxed costs of the action, they suggest the defendant corporation might then resolve to not pay the plaintiffs' costs - as the amount would exceed a $100,000 authority limit and that the YAC board may not achieve a consensus required to take decisions under its constitution. (It is relevant to recall that Ms Adams, the first plaintiff, and Ms Tucker both remain as directors of YAC.)

52 The plaintiffs do accept that if YAC fully meets the costs order, the nonparties will have no remaining liability to the plaintiffs.

53 The plaintiffs contend that the evidence earlier canvassed from their materials demonstrates that the non-parties were closely connected with the litigation and, in effect, have caused the plaintiffs' litigation.

54 However, the plaintiffs did not demonstrate why the underlying litigation participation failure scenario as seen here is significantly different from that where decisions are made by CEOs of other (eventually) unsuccessful corporate parties in litigation where at the end there must usually be a winner and a loser. The plaintiffs suggest only that YAC has been 'dragged into' this litigation without having a proper opportunity to decide to not resist the general meeting sought to be requisitioned by the plaintiffs.

Non-party's submissions resisting (joint) costs orders against them

55 The non-parties provided written submissions of 25 March 2015. They were amplified by counsel at the hearing.

56 The non-parties point to the substantial body of case law already seen, requiring exceptional circumstances to be shown before an order for costs will be made against a non-party, particularly when an unsuccessful party (as here) presents to be in a position to meet the adverse order for taxed costs. They say that this is far from an exceptional case.

57 The non-parties dispute the plaintiffs' contention that neither Mr Woodley nor Mr Irving were authorised to instruct Queensland solicitors, Cleary Hoare, or to cause YAC to incur the costs of resisting the plaintiffs' action.

58 The non-parties point to various resolutions, broadly worded, at YAC board meetings of 10 March 2011, 22 February 2012 and 23 January 2014 (the scope or relevance of which is disputed by the plaintiffs). In particular, the nonparties contend that these resolutions of the YAC board instructed and authorised both Mr Woodley and Mr Irving to instruct solicitors to resist the Wirlu-Murra group (which they say was attempting to take control of YAC by means of the plaintiffs' requisitioned general meeting). The non-parties further contend the engagement of Cleary Hoare was made known to the YAC board at the 23 October 2014 and 31 October 2014 board meetings.

59 The non-parties say further that they did not maintain or finance this action and did not cause the action, in a sense of starting it by some negligent act. They are not a party to a closely related action and are not involved in some relevant group litigation. The non-parties say, and I would accept, that they have not at any stage ever acted to advance their own personal interests by their decisions taken for YAC.

60 The non-parties say that this costs application is being used as a de facto derivative action by some members of the defendant corporation against them. They argue that the costs orders sought are, in substance, to the benefit of the defendant (ts 152). They argue that where the litigation has been managed on behalf of a solvent limited liability corporation with authority from that corporation, non-party costs orders as sought would be unjust.

61 They further suggest that the costs orders, if granted, may be used against the non-parties in a fashion which could potentially appear to be improper (ts 152), and that practical issues might arise in determining any distribution of liability as between Mr Irving and Mr Woodley and the abilities of each (with YAC as the defendant corporation) to seek contribution from each other.

62 In response to the contention that the invoices for legal services exceeded the general $100,000 limit for authorised expenditure, the non-parties say that the invoices were split in a reasonable manner (as between solicitors and counsel) and that, in any event, an exceeding of the limit (which is disputed) would be an internal manner for the defendant to resolve.

63 The non-parties note that they would enjoy the benefit of the 'business judgment' rule, as officers of YAC under the CATSI Act s 265-1, if they ever came to be sued for negligence by the defendant corporation - as regards the resisting of the plaintiffs' proceedings. They also suggest that they would be protected by some form of estoppel, if the defendant corporation (hypothetically) ever brought proceedings against them. Lengthy submissions were made on the estoppel point (refuted by the plaintiffs). It is not necessary for me to resolve those arguments in order to determine this application.

64 The non-parties seek their taxed costs of resisting this application.

Evaluation: non-parties were 'wrong but not rogue'

65 I am not ultimately persuaded in exercising a discretion here towards the making of non-party costs orders, that this is a sufficiently established, clear or exceptional case concerning these two non-parties. On my assessment, this was a case of the non-parties being shown to be 'wrong' in their advice to YAC, but not 'rogue'. The court undoubtedly holds power to grant the orders sought. But it is well established that a court should only make such orders in the clearest of cases. On my assessment, this is not such a clear case.

66 It was not in dispute that Mr Woodley and Mr Irving instructed Queensland solicitors Cleary Hoare to resist the plaintiffs' requisitioning of a general meeting and then their subsequent litigation seeking to validate their position. In that respect, both men clearly do appear to have a sufficient connection to the proceedings to support such orders in a causative sense. But more is required.

67 While Mr Irving is a legal practitioner admitted in this jurisdiction, that fact does not seem to attract any particular significance or weight, in present circumstances. It is not possible given privilege constraints to fully probe the full extent of legal advice provided to YAC by Cleary Hoare. However, there is no suggestion to me that the legal advice of Cleary Hoare was to not resist or not defend the plaintiffs' action, and that such legal advice was suppressed, ignored or resisted due to the conduct of Mr Woodley or Mr Irving. Nor is it shown that Mr Irving failed to communicate any relevant legal advice from Cleary Hoare to the YAC board.

68 I can accept that the non-parties were of a certain pre-disposed state of mind against the plaintiffs' attempts to convene a general meeting, following the defendant's board meetings of 23 October 2014 and 31 October 2014. But the present application should not descend to an exercise in nitpicking over the terms of minutes of YAC board meetings, or to raise technical objections over the scope of what Mr Woodley and Mr Irving were authorised to do or not do, without express YAC board approval. That is all a matter for the YAC board to pursue and address as it sees fit, in terms of the levels of confidence it reposes in the two men, at this time or otherwise.

69 The plaintiffs put significant emphasis on the general $100,000 limit of authorisation for expenditures which they say the non-parties were subject to, and that costs incurred arguably exceeded. But the issue is not whether Mr Woodley and Mr Irving were permitted to expend YAC funds without specific board approval. The present application is not about the legal fees YAC has incurred to its lawyers or to counsel. That is again a matter for YAC and its board to resolve.

70 The key issue, and the cause of the defendant's resulting exposure to the plaintiffs' taxed costs, were decisions to resist the plaintiffs' requisitioned general meeting of YAC members, seeking to pass motions to spill the YAC board.

71 The plaintiffs' application searches to show some impropriety crutch to found this claim for costs, but fails in that endeavour on my assessment. There is no evidence that YAC repudiated the conduct of its non-party officers, as regards YAC's own costs, or its present exposure to the plaintiffs' taxed costs. If the plaintiffs' resolutions had passed at the general meeting and a new board had repudiated the non-parties' actions, the situation might have been different. But that is not the case. Any lack of authorisation for expenditures would appear to raise only an internal matter for YAC to pursue against its officers, if it sees fit to do that.

72 In the circumstances, it is up to YAC, not the plaintiffs, to pursue internally Mr Irving or Mr Woodley over any alleged negligence, incompetence or any breach of their employment contracts - on the basis of poor judgment. That is not a matter for the plaintiffs to second-guess, in the present context of a non-party costs application, notwithstanding that they are members and directors of the defendant.

73 A more detailed analysis of the underlying motives of Mr Woodley and Mr Irving might be justified, if the defendant corporation had been shown to be unable, or manifestly unwilling to meet the taxed costs order made against YAC, now favouring the plaintiffs. It is another barrier to the plaintiffs' application, that the defendant corporation presents as solvent and both able and willing to meet the taxed costs order to the plaintiffs. In recognising this difficulty as faced by the plaintiffs, I am not imposing a precondition of impecuniosity for an order, as was suggested by counsel for the plaintiffs. Rather, I am simply recognising this to be one highly relevant factor and tending here against a grant of non-party costs relief by joint orders - which would not alleviate YAC of its exposure to the plaintiffs' taxed costs. Speculating that the defendant could elect not to meet the taxed costs order (as was suggested by counsel for the plaintiffs) if the orders sought were made, is not sufficient. I will not approach the evaluation on the basis that the primary entity is unable or unwilling to meet the plaintiffs' taxed costs.

74 There is no suggestion the defendant's board has lost faith or confidence in Mr Woodley or Mr Irving, despite what would appear to have been an ongoing and expensive series of erroneous decisions on behalf of YAC to resist the holding of the requested general meeting of members, as sought by the plaintiffs.

75 Mr Woodley and Mr Irving were causal contributors to that conduct - but I do not find that in the erroneous position they caused and counselled YAC to follow vis-à-vis the plaintiff, that they acted improperly, or in their own interests, or on some frolic of their own.

76 Whilst Mr Woodley and Mr Irving would remain answerable longerterm to the YAC board and to the members of the defendant, there is no basis to make them jointly liable with the defendant upon a non-party costs order.

77 For reasons I have set out above, the non-party costs application should be refused, and with the non-parties' costs of resisting the present application to be taxed if not agreed and payable by the plaintiffs to the non-parties.