Relevant legal framework and principles
61 Mr Cao relies on s 232 and s 233 of the Act. Section 232 provides:
The Court may make an order under section 233 if:
(a) the conduct of a company's affairs; or
(b) an actual or proposed act or omission by or on behalf of a company; or
(c) a resolution, or a proposed resolution, of members or a class of members of a company;
is either:
(d) contrary to the interests of the members as a whole; or
(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.
62 Section 233 provides that the Court can make any order that it considers appropriate including those set out in subs (1).
63 In Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95 Basten JA, in considering the terms of s 232 of the Act, noted at [176] that the section had three elements, the first of which was to identify the relevant conduct. His Honour then went on at [177] to consider the second and third elements which he said respectively required characterisation of the conduct and identification of those who may be adversely affected by the conduct. At [180]-[184] his Honour said the following about the operation of s 232:
180 One effect of the expanded language adopted in 1983 appears to have been the abandonment of the restrictive definition of oppression, adopted in Scottish Cooperative Society, as requiring conduct which was "burdensome, harsh and wrongful": at AC 342; All ER 71 (Viscount Simonds). It is now appropriate to ask whether the action was conduct available to the officer in accordance with the constitution of the company; whether it was exercised in good faith, for a proper purpose, on the basis of relevant conditions and without taking into account irrelevant considerations: see Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 at 466; 61 ALR 225 at 230; 10 ACLR 87 at 91 (Wayde) (Mason ACJ, Wilson, Deane and Dawson JJ) and at CLR 469-70; ALR 233; ACLR 94 (Brennan J). In Thomas v H W Thomas Ltd [1984] 1 NZLR 686 at 693, Richardson J noted that there was overlap between the various concepts identified by the terms "oppressive, unfairly discriminatory or unfairly prejudicial":
The three expressions overlap, each in a sense helps to explain the other, and read together they reflect the underlying concern of the subsection that conduct of the company which is unjustly detrimental to any member of the company whatever form it takes and whether it adversely affects all members alike or discriminates against some only is a legitimate foundation for complaint … The statutory concern is directed to instances or courses of conduct amounting to an unjust detriment to the interests of a member or members of the company.
181 Richardson J was clearly seeking to emphasise the breadth of the preconditions, both in their terms and by reference to those whose interests might be affected. It is doubtful if his Honour intended to substitute the concept of "unjust detriment" for the statutory language. In Morgan v 45 Flers Ave Pty Ltd (1986) 10 ACLR 692 at 704, Young J held that the proper approach was to ask "whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair". His Honour proposed that the individual elements identified in the section should be considered "merely as different aspects of the essential criterion, namely commercial unfairness".
182 That approach left open the question of whether the sole criterion of "commercial unfairness" incorporated the fourth element in the definition, namely conduct "contrary to the interests of the members as a whole". In Re Polyresins Pty Ltd [1999] 1 Qd R 599 at 604-5; 28 ACSR 671 at 676, Chesterman J concluded that all four expressions overlapped and therefore each constituted an element in the broad criterion of "commercial unfairness". However, as noted by Campbell J in Turnbull v National Roads and Motorists' Assn Ltd (2004) 186 FLR 360; 50 ACSR 44; [2004] NSWSC 577 at [32], the structural change which removed the fourth element from the paragraph as it originally appeared and placed it in a separate paragraph, as now appears in s 232(d) and (e), required a different approach. The "contrary to the interests" element, now contained in paragraph (d), should be given a separate and independent operation because it may well cover conduct which is outside the scope of commercial unfairness.
183 Arguably there are two points of distinction which explain the separation of paras (d) and (e). Although para (e), by the inclusion of conduct oppressive to members, may include conduct oppressive to members as a whole, one sphere of operation of para (e), though not (d), is conduct which, either through intention or effect, operates prejudicially with respect to a member or class of members, as opposed to members as a whole. The second point of distinction is that the terminology of para (d) characterising conduct "contrary to the interests of" the members would appear to extend not only beyond disparate treatment of members, but also beyond conduct oppressive to the members as a whole. It is in this sense that the example given by Campbell J of "pointlessly wasteful" conduct has force.
184 More broadly, there is a danger in seeking to reduce the statutory language to the criterion of "commercial unfairness". Not only does that terminology distract attention from the statutory language, but it tends to ignore important distinctions between different kinds of complaint and, if taken out of the context in which it was originally formulated, ignores the relatively strict test for judicial intervention. It is analogous to reducing to one criterion the various bases upon which it is open to an appellate court to intervene in relation to a discretionary determination of a trial judge, as set out in House v R (1936) 55 CLR 499 at 505, or reducing the grounds of judicial review of administrative action to one composite criterion. These examples are not remote from the present issue: in Wayde, the High Court adopted language which was reminiscent of both legal principles.
64 It was not in contention that, in the absence of a time stipulation in the Constitution, reasonable notice of directors' meetings is required. In Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 912 (Wilson) at [17] Lander J observed that a directors' meeting must be convened in accordance with the company's constitution. At [23]-[25] his Honour said the following about the notice to be given to a company's directors for a meeting of directors:
23 Each and every director of Manna Hill Mining was entitled to notice of any meeting of directors: Bell v Burton (1994) 12 ACLC 1037.
24 Notice of the meeting can be waived or dispensed with if all directors attend and if all directors treat the meeting as a meeting of directors: Roden v International Gas Applications (1995) 18 ACSR 454 at 456 per McLelland CJ.
25 The notice must be reasonable: Toole v Flexihire Pty Ltd (1991) 6 ACSR 455; Re Homer District Consolidated Gold Mines; Ex parte Smith (1888) 39 Ch D 546. In determining what is reasonable, the practice usually adopted by the Board is a relevant consideration. If reasonable notice is not given to all directors the meeting is not valid unless all directors are present: Barron v Potter (1914) 1 Ch 895.
65 In Re Keneally (as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin apptd)) (2015) 107 ACSR 172; [2015] NSWSC 937 at [57] Black J said:
Mr Sulan, who appears with Ms Oreb for Ms Lam, submits that the time required for reasonable notice of a meeting depends "upon the circumstances and its limit is determined by what is fair to both parties": Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 567-8; 41 ALR 441 at 463; Hickey v Aselford [2003] NSWSC 185 at [26] (Hickey); McMaster v Eznut Pty Ltd (2006) 58 ACSR 199; [2006] WASC 109 at [162] (McMaster). In Hickey, Gzell J held that notice of a meeting to consider a resolution to appoint a voluntary administrator that was given one afternoon in respect of a meeting to be called for the following morning was reasonable notice. In McMaster at [169] and [178], a shorter period of notice was held to be reasonable where there was urgency in appointing an administrator and, in Ashrafinia v Ashrafinia [2012] NSWSC 500 (Ashrafinia), a short notice period was held to be reasonable where there was an urgent need to retain solicitors in respect of litigation. Mr Sulan submits that, in determining what is fair and reasonable, the relevant factors include the nature of the company and the nature of the business to be transacted: Toole v Flexihire Pty Ltd (1991) 6 ACSR 455 at 461; Ashrafinia at [33]. Mr Pritchard draws attention to substantially the same authorities as those to which Mr Sulan refers. The question essentially reduces to whether notice given at 1.16 pm of a meeting to be held at 3 pm that afternoon, being notice of less than 2 hours, was reasonable in the circumstances.
66 In the context of considering whether relief should be granted under s 1322(4) of the Act in relation to the period of notice given in that case, Black J said at [71]:
… The requirement for reasonable notice of a directors' meeting is an important part of good corporate governance, and it seems to me there is a public interest in majority directors not being permitted to call meetings at unreasonably short notice, in the absence of objective urgency, where directors and shareholders are at loggerheads. …
67 The question of whether there must be notice of the business to be discussed at a directors' meeting, an issue also raised by Mr Cao, was considered by Lander J in Wilson. At [26] his Honour said:
It is not essential that a director be given notice of the business to be conducted at the meeting, although it may be preferable and prudent to give notice of any special business: La Compagnie De Mayville v Whitley (1896) 1 Ch 788; Toole v Flexihire Pty Ltd (above).
See too Dhami v Martin [2010] NSWSC 770 at [47] where Barrett J noted that "[t]he general principle is that directors should come together whenever called on notice of reasonable length and without any expectation of being told why they are being summoned to a meeting".