The First Ground: Lack of Notice
29The first ground of challenge to the retainer that Mohammad raises is that reasonable notice was not given of the directors' meeting of Motels, which purported to resolve to instruct DEA Lawyers to act on behalf of Motels in the 2011 proceedings.
30Notice of a directors' meeting to be held at 1pm on 17 June 2011 at Unit 5, 500 Princes Highway, St Peters was given by way of Notice of Directors' Meeting on 16 June 2011 ("the Notice"), Exhibit A, 73. Moreover, there is no clear evidence whether the Notice was sent by mail or email. The state of the evidence is at least consistent with it being sent by email. The Notice included a statement of the proposed consideration of a resolution that DEA Lawyers be instructed to Act for Motels amongst the foreshadowed business at the meeting.
31Article 114 of the Articles of Association of Motels ("the Articles") provides that a director may at any time summon a directors' meeting. The Articles do not specify a particular notice period preceding a directors' meeting. Neither is there a general law requirement of a particular notice period, which must precede a directors' meeting.
32However, there is a general law requirement that reasonable notice of a directors meeting must be given to all directors: Toole v Flexihire Pty Ltd (1991) 6 ACSR 455, 461 per Demack J; Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912 at [25] per Lander J; Dhami v Martin [2010] NSWSC 770 at [47] per Barrett J; McMaster v Eznut Pty Ltd [2006] WASC 109 at [161] - [169] per Simmonds J.
33Similarly, although not applying as a replaceable rule to Motels, Corporations Act, s 248C provides that a director calling a directors meeting must give reasonable notice to every other director. In deciding what is fair and reasonable the nature of the company, the practice of the directors of the particular company and the nature of the business to be transacted at the meeting are important factors: Toole v Flexihire Pty Ltd (1991) 6 ACSR 455 at 461 per Demack J. Relevantly, notice will not be reasonable if it does not allow the directors sufficient time to attend the meeting: Toole v Flexihire Pty Ltd (1991) 6 CSR 455 at 461 per Demack J. Notice must be given even if the director is outside the jurisdiction: Mitropoulos v Greek Orthodox Church and Community of Marrickville & District Ltd (1993) 10 ACSR 134.
34Mr Jenkins argued for Mohammad that because the notice of the directors' meeting was not reasonable, the resolution purporting to instruct DEA Lawyers to act for Motels in the 2011 proceedings is not valid. Mr Jenkins says that the one day's notice given was not reasonable, because Abbas was overseas, in Iran, and that was insufficient time for Mohammad to attend the meeting. As the party impugning Mr Doyle's authority to act, Mohammad carries the onus of proof of establishing material which would show that the notice of the directors' meeting was not reasonable.
35Mohammad has not discharged that onus. Mohammad submits that as Abbas was in Iran at the time when the notice was served, reasonable notice of the directors' meeting was not given. But, Mohammad has not adduced admissible evidence that Abbas was in fact in Iran at the time when notice was served. Abbas sought to rely upon an email from Abbas dated 16 June 2011 to the Associate to Sackar J when the matter was listed before his Honour, which email asserted that he was in Iran at the relevant time. But during argument I reserved my decision on whether that email could be used as evidence of the facts asserted within it. I now rule that it cannot be so used. There was no obvious impediment at the time of hearing for Mohammad to obtain evidence of Abbas' whereabouts at the relevant time by more conventional means. Indeed Abbas was within the jurisdiction at the time of hearing the present motion.
36But for the following reasons, even if Abbas was overseas, in Iran, at the time Notice was given, I would not find that the Notice was unreasonable.
37First, Motels is a proprietary company limited by shares with only 2 (or, on one view - see below, at most 3) directors, such that a short time period for notice was reasonable. Secondly, as the party with the onus, Mohammad raises no evidence of the practice of the board of directors in relation to the giving of notice for directors' meeting from which comparisons relating to the Notice can be made. Thirdly, the nature of the business to be transacted at the meeting - being the commencement of the 2011 proceedings and the giving of instructions to DEA Lawyers to act for Motels in the 2011 proceedings - was reasonably urgent given the imminence of the hearing before Sackar J, therefore justifying a short period of notice. For example, in McMaster v Eznut [2006] WASC 109 at [169] and [178] Simmonds J recognised that the urgency of appointing an administrator was grounds for a short period of notice being, in that case, notice at or just before the directors meeting. Fourthly, technology might have facilitated Abbas' attendance at the directors' meeting: Corporations Act, s 248D. Mohammad adduces no evidence as to why technology could not have facilitated Abbas' attendance at the directors' meeting or whether or not all the directors of Motels had consented to the use of technology such that technology could have facilitated Abbas' attendance at the directors' meeting. In short, there may be many reasons why a meeting notice period of one day was justifiable.
38Mohammad has not adduced evidence sufficient to show that these reasons do not apply. So there is no basis to impugn Mr Doyle's authority to act on the grounds that there was a lack of notice of the 17 June 2011 directors' meeting. Thus, on this first ground the evidential onus does not shift to Mr Doyle.