Blake v Carlingford Bowling Sports and Recreation Club Ltd [2024] NSWSC 1078 | Case summary

Affidavit evidence and chronology

Mr Blake, helpfully, provided a chronology of key events, which are in narrow scope. I have had regard to that chronology, the affidavit evidence to which I referred above and documentary evidence in setting out the chronology of events which appears below.
The Club was incorporated on 7 October 1953 and, on 13 April 2017, it amalgamated with the Denistone Sports Club and acquired the Denistone Premises by that amalgamation (Blake 20.2.24 [8], [12]). In March 2020, Mr Blake became a member of the Club (Blake 20.2.24 [1]).
At the Club's 2020 AGM, held on 20 December 2020, inter alia, Mr Bale was elected as Senior Vice Chairperson and Ms Turner elected as a director (Blake 20.2.24, [39(a)], [43(b)]). At the Club's 2021 AGM, held on 28 November 2021, Mr Gudmunson and Mr Pocock were elected as ordinary directors (Blake 20.2.24, [37]-[38]). At the Club's 2022 AGM, held on 28 November 2022, Mr Gleeson was elected as Chairman and Ms Uren and Mr Blake were elected as directors (Blake 20.2.24, [34]-[36]; Johns, [16], [20]).
It appears to be common ground that, on 25 September 2023, the Club's board approved the adoption of new by-laws which limited the number of former Denistone Bowling Club members who could sit on the Club's board to two. On 27 November 2023, Henry J delivered judgment in the Carabetta Proceedings holding that those by-laws were invalid.
On 29 November 2023, the Club's 2023 AGM was opened and dealt with some business but, apparently as a result of the recent judgment in the Carabetta Proceedings, the results of the election were not declared and a fresh ballot was to be held (Ex D1, CB 804-807). Towards the end of that meeting, the solicitor acting for the Club referred to the Carabetta Proceedings and observed that a declaration of the ballot would not be made that day and that the AGM would be adjourned "until the Board has gone through, [sic] the declaration and decides their next steps"; she read a statement that is set out in the minutes; and the minutes then record that the meeting was adjourned. There is no reference to a formal step taken by the chair to adjourn the meeting; or that members were asked to give their consent to the adjournment, or did so; or that the date to which the meeting would be adjourned had been determined or identified. I will assume, without deciding, that the meeting was validly adjourned where it is not necessary to decide that question to determine the proceedings.
On 11 December 2023, the Club's Chief Executive Officer and Secretary, Mr Johns, emailed an agenda for an upcoming board meeting on 14 December 2023 to directors (Ex D1, CB 259)
On 14 December 2023, a meeting of directors of the Club took place, initially attended, relevantly, by Mr Gleeson as Chairperson, Mr Bale as Senior Vice Chairperson, Ms Turner and Messrs Pocock, Blake and Gudmunson (Blake 20.2.24, [57]-[59]; Blake 2.8.24 [57]-[59]; Johns [41]; Ex P1, CB 267-271). There was consideration of an appeal against the earlier decision of Henry J; the renewal of power contracts for the Carlingford and Denistone premises; and Mr Gleeson expressed the view (no longer put by the Club) that the terms of appointment of Mr Bale and Ms Turner would expire on 20 December 2023 and proposed a motion to invite Messrs White and Cashmore to the board. Mr Blake then left the meeting; Mr Gudmunson also then left the meeting; and Mr Pocock remained at the meeting. The meeting closed on the basis there was then no quorum. The minutes record "unfinished business" from that meeting, being the invitation of Messrs White and Cashmore to join the board, the contract for the sale of the Denistone Premises, and charges against a member of the Club; and power contracts.
On 15 December 2023 at 12:29pm, Mr Gleeson emailed Mr Johns requesting that Mr Johns organise a board meeting for Monday, 18 December 2023 at 3pm "to discuss on going matters from yesterday" (Ex D1, CB 844). On the same date, Mr Johns sent an email (Ex D1, CB 845) to the several directors, including Mr Blake, indicating that: "I have been asked by the Chairperson to arrange a meeting on Monday 18th December 2023 at 3pm, to consider matters that were not resolved at the meeting on Thursday 14th December 2023."
Later that afternoon, at 4:41pm, Mr Gudmunson emailed Mr Johns and other directors explaining that he would be away the following week which, was, of course, the week before Christmas (Ex D1, CB 846). On Sunday 17 December 2023 at 9:04am, Mr Pocock emailed Mr Johns advising that for health and personal reasons he would not be available for any meetings before Christmas (Ex D1, CB 847). Also on 17 December 2023 at 2:49pm, Mr Blake emailed Mr Johns advising that he would be interstate on holidays and would not be available for a meeting until after 26 December 2023 and raising questions as to a lack of notice and agenda for the meeting (Ex D1, CB 848). It is likely that all parties then anticipated that issues as to the sale of the Denistone Premises would be addressed at that meeting, as was ultimately the case.
On Monday, 18 December 2023 at 10:32am, Mr Johns advised Mr Blake, Mr Pocock and Mr Gudmunson (with a copy to Mr Gleeson) of the agenda for the board meeting at 3pm that day (Ex D1, CB 849).
At a board meeting held on 18 December 2023 (Ex P2, CB 385), attended by Mr Gleeson as Chairperson, Mr Bale as Senior Vice Chairperson, Ms Uren and Ms Turner, the board purported to appoint Mr White a director "so that a quorum would be available to consider urgent Club matters; resolved to execute the contract for the sale of the Denistone Premises; and also addressed questions as to disciplinary action against a member and the renewal of power contracts for two premises. At the meeting on 18 December 2023, a further resolution was passed moved by Mr White and seconded by Ms Uren, the board appoint Mr Cashmore as director. Also on 18 December 2023, at 4:40pm, Mr Blake emailed Mr Johns raising issues as to the board's quorum and its power to appoint directors (Ex D1, CB 850).
On 19 December 2023 at 10:59am, Mr Johns emailed Mr Blake, Mr Pocock and Mr Gudmunson (with a copy to Mr Gleeson) (Ex D1, CB 852-853) that a meeting was held on 18 December 2023; only four directors were present at the meeting when it opened and, pursuant to s 201H of the Corporations Act 2001 (Cth) ("Act") and cl 20.8 of the Club's constitution, the four attending directors appointed Mr White as a director to make up a quorum for the directors' meeting; Mr White then joined the board meeting; and the board then resolved that Mr Cashmore be appointed as director of the Club and that the Club execute a contract for the sale of the Denistone Premises to Ryde Council. Mr Johns also advised Messrs Blake, Pocock and Gudmunson that a further meeting was scheduled on 19 December 2023, where the first item on the agenda would be the reappointment of Mr Bale and Ms Turner as directors, on the basis that their term expired on 20 December 2023.
On the same day at 12:49pm, Mr Blake emailed Mr Johns (Ex P1, CB 290) advising that he was on holidays and was in Victoria and moving around, and sought the board's approval for his absence from that meeting. Also on that day, at 1:11pm, Mr Pocock emailed Mr Johns advising that he was not available for that meeting and attaching a medical certificate (Ex D1, CB 854-855). At about the same time, Mr Gudmunson emailed Mr Johns advising that he was away and raising concerns about a lack of notice of the meeting (Ex D1, CB 856).
At a further meeting held on 19 December 2023 (Ex P2, CB 387), attended by Mr Gleeson, Mr Bale, Ms Uren, Ms Turner, Mr White and Mr Cashmore, directors were advised of the exchange of contract for the sale of the Denistone Premises with Ryde City Council, and resolutions were passed for the reappointment of Mr Bale and Ms Turner as directors of the Club.
On 29 December 2023, Mr Blake emailed Mr Johns to request that a board meeting be convened (Ex P1, 297). At that board meeting on 11 January 2024, Mr Blake raised issues as to the board's composition, quorum and its power to appoint directors (Blake 20.2.24, [73]-[75]).
On 19 January 2024, Ms Turner resigned as a director (Ex D1, 753) and, on 21 January 2024, Mr White resigned as a director (Ex D1, 754).
At a further board meeting on 22 January 2024 (Ex P1, CB 389-390), initially attended by Mr Gleeson as Chairperson, Mr Bale as Senior Vice Chairperson, Ms Uren, Mr Cashmore, Mr Blake, Mr Pocock, and Mr Gudmunson, Mr Blake and Mr Gudmunson were requested to leave the meeting; Mr Blake then raised an issue as to quorum if he and Mr Gudmunson left that meeting; and, after they left the meeting, resolutions to issue Notices of Charges to them and suspend their membership were passed. The latter resolution was: "That pursuant to clause 15.2 of the Constitution, the Board suspend Alan Blake from all rights and privileges as a member of the Club until the charges are heard."
Also on 22 January 2024, the Club issued a Notice of Charge to Mr Blake (Ex P1, CB 302) on the circumstances in which Mr Blake had left the board meeting on 14 December 2023. That Notice of Charge stated that: "Pursuant to clause 15.2 of the constitution you are immediately suspended from all rights and privileges as a member of the Club until the Charges are heard. This suspension includes the suspension from the right and privilege to attend at any premise of the Club and the right and privilege to vote in any election conducted by the Club."
A Notice of Charges was also issued to Mr Gudmunson (Ex D1, CB 859-864).
On 25 January 2024, Mr Johns wrote to Mr Blake (Ex P1, CB 309) advising that: "I am writing to notify you that in accordance with clause 15.2 of the Club's constitution and following the issue of the Notice of Charges to you, the board of the Club has resolved to suspend you from all rights and privileges as a director of the Club. This includes all rights and privileges as a director." Mr Johns' evidence, on cross-examination, was that he included the last sentence of that email of his own motion and had not been instructed by any director to do so. The Club did not take any step, in the several months since that advice was given to Mr Blake to correct that advice; nonetheless, the Club did not seek to support the suggestion that Mr Blake could have been, or was, "suspended" from his position as a director of the Club at the hearing. It was regrettable, to say the least, that the Club held to that position for so long, before recognising, rightly, that it was unsustainable.
By email dated 25 January 2024 (Ex P1, CB 310), Mr Blake reasonably requested information as to the basis on which the Club maintained that his "rights and privileges as a director" were also suspended; indicated his disagreement to the position; also rightly referred to the constitutional provisions relating to appointment of a director; and requested specified information. By an email dated 29 January 2024 (Ex P1, CB 312), Mr Johns responded that: "As you know these are matters for decision of the Board. I will bring to its attention at the Board meeting today that you disagree with the Board's decision to suspend you and advise you of its response. As for the documents you request and the change of time for the hearing, I will also bring this before the Board at its meeting today and advise you of its response."
Where Mr John's position is that the board had not instructed him to inform Mr Blake that he was suspended as a director of the Club, and he had done so because he understood that to be the consequence of Mr Blake's suspension as a member, that response was reprehensible. If the board had not made and had not instructed Mr Johns to convey that decision, how could that be said to be a matter for the board's decision; and who, then, would correct Mr John's error in treating Mr Blake as suspended as a director of the Club? In the event, none of the Club, the board or Mr Johns did so for the several months until this matter went to hearing.
At a further board meeting on 29 January 2024, the board resolved to cease operations at the Denistone Premises effective immediately (Ex P2, CB 391-392)
At a board meeting on 19 February 2024, Mr Gudmunson was found guilty of all charges (Ex P2, CB 393) and Mr Blake commenced these proceedings on 21 February 2024.
Turning now to the affidavit evidence, Mr Blake reads his affidavit dated 20 February 2024 which refers to the history of the Club. Mr Blake refers, in his first affidavit, to several directors of the Club, although there are debates as to the validity of their appointment and the term in which all of them have held office, and several meetings of the Club's board after 29 November 2023 are disputed. He also addresses the sale of the Denistone Premises by the Club to Ryde City Council, which appears to provide the background to the issues in dispute in the proceedings, and aspects of the chronology which I have set out above. By a second affidavit dated 2 August 2024, Mr Blake addressed the position as to minutes of later board meetings, raised additional questions as to the quorum of board meetings, and responded to aspects of Mr Johns' affidavit. Mr Blake was not cross-examined. Mr Blake also relied on the affidavit dated 2 August 2024 of his solicitor, Mr Imlay, which referred to correspondence between the solicitors, including in respect of the Cross-Summons filed by the Club, which is not now pursued. Mr Imlay was also not cross-examined.
The Club read the affidavit dated 12 April 2024 of its General Manager and Company Secretary, Mr Johns, which addressed aspects of the Club's activities and the conduct of the relevant board meetings. Mr Johns was cross-examined, although it will largely not be necessary to address the issues raised in his cross-examination in order to determine the proceedings. The Club did not lead evidence from its Chair or any director, but it is not necessary to draw any inference from that matter to determine the proceedings.

Whether the Club should be restrained from proceeding with the hearing of the Notice of Charges and taking any steps to support his suspension as member

There are several steps in Mr Blake's challenge to the validity of the resolution to issue the Notice of Charge against him. At my request, the parties summarised the respective steps in their submissions as to these issues in a "roadmap" provided after the conclusion of oral submissions, and I will largely follow their approach in addressing these issues. Whether Mr Bale's and Ms Turner's terms expired before 18 December 2023
This initial question turns on the construction of cl 18.5 of the Club's constitution and Schedule 4 of the Clubs Act. Mr Harris, who appears for Mr Blake, submits that Mr Bale's and Ms Turner's terms expired before 18 December 2023 (Plaintiff's Outline of Opening Submissions (PS) at [18]-[20]; T2-3, 24-29), namely on 29 November 2023, by reason of the "triennial rule" to which I referred above. It is common ground that Mr Bale and Ms Turner were each in Group 3 of the ballot at the AGM of the Club held on 20 December 2020 and they therefore held office for three years, with "year" having the definition to which I referred above. Mr Harris contends, and I have noted above, that the third AGM was held on 29 November 2023 although it was purportedly then adjourned without a declaration of the ballot for new directors, and their term expired on that date. Mr Hyde, with whom Mr Bui appears for the Club, submits to the contrary (Defendant's Outline of Opening Submissions (DS) at [19]-[21]; T46-47).
Mr Hyde does not now put that Mr Bale's and Ms Turner's term expired on 20 December 2023, the position previously taken by the Club. Instead, he submits that Ms Turner's term as a member of the board did not expire until 19 January 2024, when she retired, because the Club's general meeting opened on 29 November 2023 but was ultimately not completed until 20 June 2024 when a declaration of the result of the ballot for the election of members to the board was made (Blake [50]). Mr Hyde submits that Mr Bale's term as a member of the board did not expire until 20 June 2024, again because the Club's general meeting opened on 29 November 2023 but was not concluded until 20 June 2024, when a declaration of the result for the ballot for election of members to the board was made.
I prefer Mr Harris' to Mr Hyde's construction of cl 18.5 of the Club's constitution and Schedule 4 of the Clubs Act. First, as a matter of construction, the term "General Meeting" is defined as a meeting at which directors "are to be elected" and the 29 November 2023 meeting necessarily had that character as an AGM and did not lose that character because directors were not in fact elected at that meeting. Second, it seems to me that, contrary to Mr Hyde's submission, there is no need to answer any question whether the term of the director's office expired at the beginning of the meeting on 29 November 2023, or at the end of it, where I find that it expired at that meeting. Third, it seems to me that this approach allows a sensible operation to cl 18.5 of the constitution and Schedule 4 generally, where the Club will generally have the opportunity to elect new directors at an AGM, whether or not it takes advantage of that opportunity. Fourth, it seems to me that the position for which Mr Hyde contends would frustrate the operation of the triennial rule, because it would have the consequence, if no election for directors was held at the AGM in the third year, that directors whose terms would otherwise have expired would then continue in office for an indeterminate future period, or at least until the adjourned date of that AGM. That result is inconsistent with a triennial rotation of directors and would likely have the practical consequence that it would be difficult to restore an orderly rotation schedule, once it was disrupted in that way.
For completeness, Mr Harris also drew attention to my decision in Re Heartland Group Pty Ltd [2024] NSWSC 875, where I had referred to observations of Ward CJ in Eq in Camenzuli v Hawke [2022] NSWSC 168. Those decision do not advance matters here, where there was no failure by the Club or its directors to call the AGM by the time it was due, although that meeting ultimately did not proceed to an election of new members of the board.
Accordingly, the meeting on 18 December 2023 did not satisfy the quorum requirement, because it was attended by one Executive director, Mr Gleeson, and one ordinary director, Ms Uren, who remained in office, prior to the purported appointment of Mr White at that meeting as a director at that meeting. Whether Mr White was validly appointed as a director at the meeting on 18 December 2023 - quorum
Second, Mr Harris submits (PS [28]-[38]; T29-31) that Mr White was not validly appointed on 18 December 2023 because the meeting held on that date lacked a quorum. Mr Hyde responds (DS [24]-[35]) that, to the extent that there was no quorum (which is not admitted) for this meeting, that was a procedural irregularity which did not otherwise invalidate the events that occurred at the meeting.
I accept that, subject to the possible application of s 1322(2) of the Act, Mr White was not validly appointed on 18 December 2023 because the meeting held on that date lacked a quorum, given the conclusion that I have reached in paragraph [41]. However, the absence of a quorum falls within the scope of a "procedural irregularity" within the meaning of s 1322(1)(b) of the Act. Section 1322(2) of the Act then provides that a proceeding under the Act is not invalidated because of a procedural irregularity, unless the Court is of the opinion that that irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. I recognise that, in PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674, Young J observed that a predecessor of ss 1322(2), s 539 of the Companies Code 1981, was not available where a party deliberately carried on an invalid meeting and purported to pass resolutions that could only be validated by the Court's intervention under that section. However, several cases have not followed or have distinguished that decision, including where a meeting was convened in circumstances that it may be valid, but was invalidated by reason of a minority shareholder's not attending that meeting: Whitehouse v Capital Radio Network Pty Ltd (2004) 48 ACSR 569; [2004] TASSC 12; Chalet Nominees (1999) Pty Ltd v Murray [2012] WASC 147. The case law now recognises that s 1322 of the Act is potentially available in respect of a deliberate act: Nenna v Australian Securities & Investments Commission (2011) 284 ALR 386; [2011] FCA 1193; Re DUET Management Co 1 Ltd (2013) 95 ACSR 34; [2013] NSWSC 817. I accept that, in the particular circumstances, a procedural irregularity arising from a lack of quorum at the board meeting could potentially be validated by s 1322(2) of the Act as a matter of law, at least where the meeting was convened on the basis that it would have been validly held had Mr Blake and other directors attended it, but was not validly held by reason of their not doing so. The proposition that, as a matter of law, the section is capable of applying does not, however, necessarily have the result that it will apply to validate the meeting in the relevant circumstances. That turns upon the question whether the relevant irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court, and whether the Court by order declares the proceeding to be invalid.
I am ultimately not satisfied that substantial injustice is established here. I accept that it was not unreasonable for Mr Blake and the other directors who did not attend that meeting to have pointed out that it was called at very short notice in the week before Christmas, and each had expressed reasons for their non-attendance, although I recognise that they likely recognised that their not attending that meeting could delay or prevent the sale of the Denistone Premises and welcomed that possibility; the suggested urgency of the meeting was undermined in Mr Johns' cross-examination; Mr Johns and the Club did not explore whether a meeting could have been held, for example after Christmas or in early January, which all directors could have attended; and the conduct of the meeting in this way, where contentious issues relating to the sale of the Denistone Premises were addressed, potentially undermined the proper corporate governance of the Club. All of these are significant matters. Moreover, the decisions at this meeting were ultimately made by only two validly appointed directors, and only one of the four "ordinary" directors who were required, and that seems to me to undermine proper corporate governance to a significant extent.
On the other hand, the fact that Mr Bale and Ms Turner's terms had expired was hardly obvious and it is plain that it was not then recognised by the Club or its advisers, who understood they had been appointed for three calendar years. The resolution relating to sale of the Denistone Property was a late step in an extended process; a significant time has passed since this directors' meeting and the Club has dealt with third parties, including the Ryde City Council and its power supplier on the basis of matters that were there discussed or decided; members have had the opportunity to address the issue at a subsequent AGM, whether or not they did so; and the existence of a quorum at the meeting will not save the existing Notice of Charge against Mr Blake. On balance, I am not satisfied that the conduct of the meeting in this way ultimately caused or may cause substantial, or real, injustice to Mr Blake and members of the Club generally, and I am not satisfied that I should declare this meeting invalid for breach of the quorum requirement under s 1322(2) of the Act. For completeness, the Club did not seek an order as to this meeting under s 1322(4) and (6) of the Act. Whether Mr White was validly appointed as a director at the meeting on 18 December 2023 - power
Mr Harris also submits that the board lacked power under reg 31 of the Regulations or cl 20.8 of the constitution to appoint Mr White. Mr Hyde responds that Mr White was validly appointed as a director on that date pursuant to cl 20.8 of the constitution and, in an additional complexity, that his appointment to the board on 18 December 2023 under that rule only applied for that meeting and expired at the end of that meeting, and that he was again appointed at the 19 December 2023 board meeting, again in the exercise of the power under cl 20.8 of the Club's constitution, presumably also only for that meeting. I do not accept that submission, where there is no indication in the minutes of the board meetings on 18 or 19 December 2023 that the board took that approach rather than assuming that Mr White continued in office from the previous meeting.
I accept that Mr White was not validly appointed on 18 December 2023 because the board lacked power under reg 31 or cl 20.8 of the constitution to appoint Mr White in the circumstances. Clause 20.8 of the Club's constitution, to which I referred above, provides that: "The continuing members of the Board may act notwithstanding any vacancy in the Board, but if and so long as their number is reduced below the number fixed by this Constitution as the necessary quorum of the Board, the continuing member or members may act for the purpose of increasing the number of members of the Board to that purpose or of summonsing a general meeting of the Club, but for no other purpose."
Mr Harris also refers to Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725, where Barrett J considered a constitutional provision similar to cl 20.8 and observed that the reference to a "vacancy" was to "the situation where the minimum compliment of directors required by the constitution has previously been in office but there is now some deficiency, in the sense that less than the minimum compliment remains". I accept that that is the proper construction of that term; and that situation did not arise here, where the minimum compliment of directors remained intact, although there were not sufficient directors present at the particular meeting to satisfy the quorum requirement for that meeting. At the time of the appointment of Mr White as a director, the number of board members had not been reduced below the number of one Executive director and four ordinary directors fixed by the constitution for a quorum, because Mr Gleeson as an Executive director and Ms Uren and Messrs Blake, Gudmunson and Pocock remained as directors, although a quorum was not present at that meeting because three of the directors then in office did not attend it.
Regulation 31 of the Regulations in turn provides that the elected members of the governing body of a registered Club may appoint up to two persons as members of the governing body with the limitation that a person previously appointed on that basis is not eligible for reappointment on that basis, including reappointment after the end of his or her term. Mr Harris submits that Mr White was ineligible for appointment on this basis because he had previously been appointed to fill a casual vacancy and Mr Hyde contests that proposition. Mr Hyde submits that reg 31 of the Regulations should be read as directed to cl 21.6 of the Club's constitution and cl 5 of Schedule 4 of the Constitution, which provides for appointments to the board to fill a casual vacancy, rather than to an appointment under cl 20.8 of the Constitution. I do not accept that submission, where it seems to me that the exercise of the power to appoint a director under cl 20.8 of the constitution and the powers under cl 21.6 and cl 5 of Schedule 4 have similar results and there is no reason to read down the disqualification in reg 31 in that regard. It seems to me that the restriction in that regulation equally applies to appointments under cll 20.8 and 21.6 and cl 5 of Schedule 4 and there is no reason to narrow the statutory prohibition to prevent multiple appointments of the same person, so as to operate only in respect of particular rules. For completeness, Mr Harris also submits, and I accept, that s 201H of the Act does not assist the Club in respect of the 18 December 2023 meeting, where it is a replaceable rule and was excluded by cl 8 of the Club's constitution. The appointment of Mr White as a director was therefore not within power and was not valid. Whether Mr Cashmore was validly appointed as a director at the meeting on 18 December 2023
Third, Mr Harris submits (PS [28]-[38]; T31-32) that Mr Cashmore was not validly appointed on 18 December 2023 because the meeting still lacked that quorum and power. Mr Hyde responds (DS [41]-[65]; T52) that Mr Cashmore was validly appointed as a director of the board on 18 December 2023 because the meeting was properly constituted and it had the power to make that appointment, again relying on cl 20.8 of the constitution to meet the quorum requirement for that meeting, or cl 20.9 applies in the event the board was not properly constituted to validate the resolution appointing Mr Cashmore. While I held this meeting was not invalidated for lack of a quorum, I do not accept that Mr Cashmore was validly appointed as a director at this meeting under cl 20.8 for the same reasons that Mr White was not validly appointed as a director under that clause.
I turn now to the possible application of cl 20.9 of the Club's constitution, to which I referred above. Mr Harris draws attention to the construction of a somewhat similar provision in Wood v Inglis (2008) 68 ACSR 420; [2008] NSWSC 1147, where Barrett J referred, by reference to authority, to the fact that such a provision could not be used to override substantive provisions relating to the appointment of a director, and presupposed that an appointment was in fact made, although there was some "slip" in the way in which it occurred. His Honour held, in the particular facts, that that provision would not save an appointment which could only be made in a general meeting, where no general meeting took place. This clause also has a broad similarity to s 201M of the Act and the cases as to that section and its predecessors are also of assistance. That section does not validate the acts of a person who has not been appointed as a director at all, for example acts undertaken by a person who was appointed to the board without proper authority by another person whose appointment as director had lapsed: Morris v Kanssen [1946] AC 459 at 472; [1946] 1 All ER 586.
In Ashrafinia v Ashrafinia [2012] NSWSC 500 at [46], in dealing with an issue as to quorum, Slattery J observed that: "Corporations Act, s 201M makes effective acts by directors, if their appointment is invalid. Section 201M is only available where the invalidity of the directors' act is caused by the invalidity of his or her appointment. In Wood v Inglis (2008) 68 ACSR 420 at 433-434 Barrett J emphasised that s 201M only applies where there is a defective appointment. But here there is no evidence Leila was appointed. The situation in Wood v Inglis is similar: there s 201M was found not to operate, where the general meeting had the power to appoint directors but no directors' meeting was held. Neither Mr Doyle nor Karami can point to any directors' meeting appointing Leila as a director such as to attract the operation of s 201M. In Morris v Kanssen [1946] AC 459 at 472, Lord Simons noted that s 226(1), the predecessor to s 201M, "cannot be utilised for the purpose of ignoring or overriding the substantive provision relating to such appointment". Thus Corporations Act, s 201M does not save the 17 June 2011 meeting from invalidity for want of a quorum."
In Re Whitsunday Clean Sands Pty Ltd [2017] NSWSC 1199 at [16], I observed that: "[Section 201M] does not, on the authorities, validate the appointment of the director, as distinct from his or her acts as between the company and its members, when he or she was not properly appointed: see the authorities referred to in Australian Corporations Law: Principles and Practice [3.2.0185] and Ashrafinia v Ashrafinia [2012] NSWSC 500 at [46]."
For these reasons, I do not accept that cl 20.9 can save the appointment of Mr Cashmore as a director where the relevant defect was the lack of the substantive power to make it. The reappointment of Mr Bale and Ms Turner on 19 December 2023
A question may still arise as to the purported reappointment of Mr Bale and Ms Turner as directors of the Club at the meeting on 19 December 2023, then undertaken on the basis (now abandoned by the Club) that their terms as directors would expire the next day. It seems to me those appointments were not valid. First, there was no quorum at the meeting at the point that Mr Bale and Ms Turner were reappointed, because only one validly appointed "Executive" director, Mr Gleeson, and validly appointed ordinary director, Ms Uren, were then present. However, that meeting was likely not invalid for want of quorum by reasons of s 1322(2) of the Act for the reasons noted above. However, the re-appointment of Mr Bale and Ms Turner could not be made under cl 20.8 of the Club's constitution, for the same reason that Messrs White and Cashmore could not be appointed as directors under that clause. I also accept that Ms Turner and Mr Bale could not be appointed under reg 31 of the Regulations, because Ms Turner had been appointed to a casual vacancy on the Club's board once before in 2020 (Blake 20.2.2024 [43(a)]) and Mr Bale had also previously been appointed to the Club's board once before in 2021 on that basis (Blake 20.2.2024, [45]). These appointments were also not within power. Whether quorum requirements as to "Executive" and "ordinary" directors were satisfied at the 22 January meeting
It is convenient to treat the fourth and fifth matters put by Mr Harris together. Fourth, Mr Harris submits that Mr Bale was an "Executive" director, if he remained a director of the Club at any relevant time (PS [50]; T32-35.) Fifth, Mr Harris submits that the meeting on 22 January 2024 lacked a quorum once Mr Blake and Mr Gudmunson were required to leave the meeting, as there remained less than 5 validly appointed directors and/or less than 4 "ordinary" directors (PS [9]-[10], [45]-[52]; T23-24, 28-29 and 35). Mr Hyde responds (DS [41]-[64] and Annexure; T47-T48) that Mr Bale was an "ordinary" director at the board meeting on 22 January 2024 and that the board meeting on 22 January 2024 was properly constituted after Mr Blake and Mr Gudmunson left the meeting, as there were five validly appointed directors, one of whom was an "Executive" director, implicitly because Mr Bale could be treated as an ordinary and not an Executive director for that purpose.
As I noted above, cl 20.3 of the Club's constitution provides a quorum for meetings of the board shall be a minimum of one "Executive" and four "ordinary" directors. The term "Executive" is not defined in the Club's constitution; however, it is clear that it does not have its common usage as a director who is also employed as a manager of the Club, since cl 18.7 of the constitution provides that no member who is an employee of the Club shall be eligible to nominate, stand for or be elected or appointed to the board. Clause 20.5 in turn provides that the Chairperson will preside as chairperson at every meeting of the board; if the Chairperson is not present or is unwilling unable to act (implicitly, as chair), then the Senior Vice Chairperson shall preside; if he or she is not present or is unwilling or unable to act (implicitly, as chair), then the Junior Vice Chairperson shall preside as Chairperson; and, if the Junior Vice Chairperson is unable or unwilling to act implicitly, as chair) then the directors present shall elect a chairperson for that meeting. Notably, that rule does not allow for a possibility that if each of the Chairperson, Senior Vice Chairperson and Junior Vice Chairperson are not present, the directors may then continue; that provides strong support for the conclusion that the reference to "Executive" in cl 20.3 is to the Chairperson, Senior Vice Chairperson and Junior Vice Chairperson, as distinct from "ordinary" directors who do not occupy those roles. On that basis, if Mr Bale was a director, then he was an "Executive" director of the Club.
Mr Harris submits that the effect of cl 20.3 of the Club's constitution is that, at any meeting of the Club's board, at least five directors are to be personally present and four of them needed to be "ordinary" as distinct from "Executive" directors. Mr Hyde submits that cl 20.3 of the Club's constitution could be construed to read "Executive" as meaning the Secretary, as defined in the Constitution; or as meaning the Chairperson or the person presiding as the Chairperson only; or as meaning "either one" of the Chairperson, Senior Vice Chairperson or Junior Vice Chairman [sic]. There is, of course, a fourth possibility, which I consider to be preferable, namely that "Executive" director here means Chairperson, Senior Vice Chairperson and Junior Vice Chairperson. It seems to me that there is little reason to read the rule as treating the "Executive" as the company secretary, where a quorum requirement is ordinarily directed to the attendance of directors at a board meeting and it also seems to me that the term "Executive" does not apply only to the Chairperson and not to the Senior Vice Chairperson and Junior Vice Chairman [sic], where those other persons may chair the meeting if the Chairperson is not present or is unwilling or unable to act as chair of that meeting.
Mr Hyde also submits that this clause would be satisfied if two Executive directors and three directors who were not Executive directors were personally present at a meeting of the board. It seems to me that this clause distinguishes between an "Executive" director (being one of the persons who are the Chairperson, Senior Vice Chairperson and Junior Vice Chairman [sic] on the one hand) and "ordinary" directors who do not occupy one of those roles. The construction which Mr Hyde seeks to give to that clause allows no operation to the word "ordinary" in the phrase "ordinary directors"; had the clause been intended to provide for a minimum of five directors to attend, so long as one Executive director was present he could readily have used the words "other directors" rather than the words "ordinary directors". It seems to me that the latter phrase identifies that the other persons present must be from the class of directors who are not Executive directors.
Mr Hyde submits that this construction of this clause should not be adopted, because it would result in an "impractical situation" where a quorum was not reached if the Chairperson, Senior and Junior Vice Chairpersons, and three other directors were present at the board meeting. It seems to me that there is nothing impractical about that result, where the rule contemplates that at least four ordinary directors should be present at the meeting; and there is no obvious reason that that four "ordinary" directors would not or could not generally be present at a board meeting from a board of up to nine persons, six of whom would be "ordinary" directors. There is, also, it seems to me nothing illogical about not counting the Senior and Junior Vice Chairpersons as "ordinary" directors, where the clause draws an express distinction between an "Executive" and an "ordinary" director.
On that basis, a quorum was not established for the meeting on 22 January 2024, after Mr Blake and Mr Gudmunson left the meeting, because the directors present were Mr Gleeson as an "Executive" director; Mr Bale, whose term had expired and who had not validly been re-appointed for the reasons noted above, who would in any case have been an "Executive Director"; Ms Uren, who it is common ground was validly appointed and was an "ordinary" director; Mr Cashmore, who I have found was not validly appointed for the reasons noted above; and Mr Pocock, comprising one "Executive" director and two "ordinary" directors. For completeness, I did not understand the Club to rely on s 1322(2) of the Act as to this meeting and it did not seek an order as to this meeting under s 1322(4) and (6) of the Act. It does not seem to me that the meeting would have been automatically validated under s 1322(2), or that relief would have been available under s 1322(4) and (6) of the Act, where a decision to bring the charges against Mr Blake was a significant matter and there was likely real injustice to him in it being made without at least four validly appointed "ordinary" directors supporting it.
Mr Harris submits, sixth, that by reason of the fifth matter, the resolutions purportedly passed on 22 January 2024 to issue the Notice of Charges against Mr Blake and to suspend Mr Blake from all rights and privileges as a member of the Club were invalid and of no force and effect (PS [8], [52]). Mr Harris also contends and I accept that a resolution passed at an inquorate board meeting is invalid and of no force and effect, subject to any relief under cl 20.9 of the constitution or s 1322 of the Act: McCarthy v Wheeler and Wogan Hotels Pty Ltd [1998] VSC 67 at [35]; Anglo Australian Resources NL v Bloom Financial Advice Pty Ltd [2019] WASC 480 at [28]. Mr Hyde responds (DS [65]-[66]; T49-51) that, by reason of the Club's response to proposition 5, the passage of the resolution concerning the Notice of Charges against Mr Blake was and is valid or, alternatively, if the Plaintiff is successful in respect of proposition five, the resolution to issue the Notice of Charges to Mr Blake was and is valid pursuant to cl 20.9 of the Constitution. I do not accept Mr Hyde's submission given the conclusions that I have reached above. Application of cl 20.9 of the Club's constitution
Seventh, Mr Harris submits that cl 20.9 of the Club's constitution does not cure the invalidity of the relevant appointments or resolutions (T35 -36). Mr Hyde responds (DS [42], [66]; T49-52) that that clause applies to validate resolutions passed by the board at meetings held on 18 December 2023 and 22 January 2024, if the board at those meetings was not properly constituted. I have addressed this issue in respect of Mr Cashmore's appointment above. It seems to me that there was here not simply a "defect" in the relevant appointment or any lack of qualification to the appointment of directors; rather, the appointments were not within the scope of the board's power to make such an appointment and were substantively invalid. It also seems to me that, even if cl 20.9 would validate acts taken by Mr Bale or Mr Cashmore as a purported director, it does not validate their appointments as a director, and does not have the consequence that they may be counted toward the quorum of directors' meetings where that depends upon the validity of their appointment as directors. I have addressed related issues as to s 1322 of the Act to the extent that they were raised above.
Mr Harris submits that, for these reasons, and consistent with prayers 5-6 of the Summons, the Club should be restrained from proceeding with the hearing of the Notice of Charges against Mr Blake and restrained from taking any step to enforce the suspension of Mr Blake from all rights and privileges as a member of the Club. Mr Hyde responds (DS [65]-[66]; T49-52) that: "Prayer five of the Summons ought to be refused. The Court ought not interfere in the internal dispute mechanism of the Club and the Club ought not be restrained from the hearing of the Notice of Charges because the resolution made by the Board which gave rise to the Notice of Charges against Mr Blake, is and was valid, on the basis the Board was properly constituted or in the alternative, if the Board was not properly constituted, then the resolution remained valid pursuant to clause 20.9 of the Constitution. For the same reasons above, prayer six ought to be refused as the resolutions on 22 January 2024 was and is valid."
I have concluded that the meeting at which a resolution was passed by the board of the Club in respect of the Notice of Charges was inquorate and invalid and the relief sought by Mr Blake should be granted to this effect. The order sought by Mr Blake restraining the Club from taking any step to enforce Mr Blake's suspension from rights and privileges as a member of the Club should be made on the same basis.

Blake v Carlingford Bowling Sports and Recreation Club Ltd

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Legislation Cited (3)

Cases Cited (28)