First Plaintiff Second Plaintiff Third Plaintiff v First Defendant

First Plaintiff Second Plaintiff Third Plaintiff v First Defendant - [2014] VSC 367 - VSC 2014 case summary — Zoe

[39]

15 Committee of management

(1) Seven persons shall be elected at the first general meeting of a Trust to form a committee of management of the Trust, and of these -

(a) two shall be elected to hold office until the second annual general meeting;

(b) two shall be elected to hold office until the third annual general meeting; and

(c) three shall be elected to hold office until the fourth annual general meeting.

(2) The members of a Trust shall from time to time in general meeting as may be required elect a person to fill any vacancy in the committee of management.

(3) Any person elected to fill a vacancy arising by expiration of the term of office for which a member was elected shall hold office until the third annual general meeting following his or her election, and any person elected to fill a vacancy otherwise arising shall hold office for the balance of the term of office of the member he or she replaces.

(4) It shall not be necessary for a member of a committee of management of a Trust to be a member of the Trust.

(5) No person shall be disqualified from being elected as a member of a committee of management of a Trust by reason of the fact that he or she is an officer or employee of the Trust or is interested in a contract made by the Trust, but a member of a committee of management shall not vote or take part in any discussion on any matter affecting any contract in which he or she may be interested (other than a contract of service).

(6) The office of a member of a committee of management of a Trust shall become vacant if the member -

(a) becomes of unsound mind or otherwise incapable of acting;

(b) becomes bankrupt;

(c) resigns from office in writing addressed to the Chairperson of the Trust; or

(d) is removed from office by a resolution of which special notice is given passed at a general meeting of the Trust.

(7) A member of a committee of management shall be A member of a committee of management shall be eligible for re-election.

(8) The members of a committee of management of a Trust shall be entitled to receive such fees and travelling expenses (if any) as are from time to time fixed by resolution of the Trust passed in general meeting.

(9) A committee of management shall at its first meeting -

(a) elect one of its members to be Chairman of the Trust, and determine the period for which he is to hold office;

(b) appoint a Secretary of the Trust; and

(c) appoint some place to be the office of the Trust -

and thereafter make such elections determinations and appointments as often as may be required.

(10) A committee of management shall meet at least six times in each year.

(11) Three members of a committee of management shall constitute a quorum at any meeting.

(12) During a vacancy in the office of any member of a committee of management, the continuing members may (if there is a quorum) act as if the vacancy had not occurred.

(13) Subject to this Act, a question arising at any meeting of a committee of management shall be decided by a majority of votes of those present at the meeting, but where there is no majority, the Chairperson of the Trust or, if he or she is not present, the person chosen to preside at the meeting in his or her absence, shall have a second or casting vote.

[89]

I refer to recent discussions between my office and your Acting CEO regarding the forthcoming annual general meeting for the Framlingham Aboriginal Trust (Trust), and the term of office of persons elected to fill vacancies that have arisen on the Committee of Management (CoM) for the Trust.

As you are aware, the Minister for Aboriginal Affairs is responsible for the administration of the Aboriginal Lands Act 1970 (AL Act) and is assisted by the Office of Aboriginal Affairs Victoria (OAAV) in this role. You have sought advice from OAAV on the terms of office of a person appointed to fill a vacancy on the CoM, as prescribed by the AL Act.

Subsection 15(3) is relevant to determining the period of appointment for members elected to fill a vacancy on the CoM. The person elected to fill the vacancy arising by the expiry of the term of office of a member of the CoM will hold office until the Third annual general meeting following the election of that person. If a vacancy arises for a reason other than expiry of a term of office, (if, for example, the person resigns, see section 15(6)), then the person elected to fill the vacancy will only hold office for the balance of the term of office of the vacating member.

I understand that members of the Trust will be requested to elect persons to fill vacancies on the CoM at the forthcoming AGM. Section 22(2) requires that the Secretary call the AGM. The Secretary is responsible for ensuring that the contents of the notice of AGM comply with legislative requirements and are correct and not misleading. The notice should include accurate information about the circumstances in which a vacancy has arisen (i.e. whether on expiry of a term or for other reasons) because this will determine the term of office for the person elected to fill that vacancy. Persons elected to replace members whose term of office has expired, will hold office until the third AGM following their election.

You may be assisted in carrying out your duties by obtaining legal advice regarding the information contained in the notice for the forthcoming 2013 AGM (including appointments to fill vacancies on the CoM and the terms of office for persons so appointed) to ensure that the AGM can proceed without challenge. On 6 September 2013 OAAV was advised by Framlingham Aboriginal Trust of the names of the members of the Committee of Management as required by sub-sections 23T(1) and 24AA(1)(b). That advice failed to identify the expiry of each member's term. Could you please provide that information at your earliest convenience.

[121]

15. Inside the meeting room at the Lady Bay Resort were the remaining Trust shareholders and almost all of the then current Committee of the Trust. There was a security guard at the door of the meeting room. At this time some of those who were part of the group outside tried to enter the meeting room to discuss what was happening. Some of the Trust shareholders already inside the meeting room refused entry to some of these people.

16. Those outside the meeting then tallied the number of voting shares which they held between them. The view among those people was that they would only have a majority of votes at the meeting if I were allowed to vote my 900 shares. It was also clear to those outside that the Chairman and other incumbent Trust Committee members intended to exclude me from the meeting and from voting my shares.

17. Accordingly I approached the door of the meeting at about 10.00 am with my solicitor Shayne Daley. Also near the door at that time were Geoffrey (Possum) Clark-Ugle, Kyeema Penrith, the Trust secretary, and the security guard.

18. I attempted to enter the meeting. Kyeema Penrith then said to me that I was not allowed to enter the room as my name was not on the list of those entitled to attend.

19. I then asked to see the list. Kyeema then said to me that I was not a shareholder and the Trust had a letter from the Trustee in Bankruptcy stating that my shares were in dispute.

20. I then asked who was disputing my shares as I had already received notification of the meeting on the basis I was a shareholder.

21. I then introduced Shayne Daley to Kyeema. He then also asked Kyeema if I was being refused entry to the meeting. Kyeema said I was being excluded and the bankruptcy letter said so. Shayne Daley continued discussing the position of the trustee in bankruptcy but at this point Geoffrey (Possum) Clark-Ugle stepped in and said 'Well, I am the Chairman and I say he can't come in'. I took this last statement as a definitive refusal of my entry to the meeting.

22. Thereafter I returned to the group waiting outside. When I told them that I had been excluded from the meeting they agreed that there was no point in their trying to participate in the meeting without me and they all left.

23. I was upset by being excluded from the meeting. Never before in all my years of attending Trust meetings have I or any other member of the Framlingham community been excluded from a general meeting of the Trust. I am also aggrieved by the unwarranted action of the Committee in treating my shares in the Trust as being 'in dispute' so that I was unable to test in an election of Committee members the level of support which I enjoy among Trust shareholders. Quite independently of my shareholding, I consider that the refusal of my nomination was contrary to s 15(4) of the Aboriginal Lands Act 1970 (Cth) as explained in paragraph 29 of Jeremy Clark's affidavit.

[144]

IT BE DECLARED that:

1. The purported annual general meeting of the Framlingham Aboriginal Trust ("the Trust") held on 16 December 2013 ("the 2013 Meeting") was contrary to the Aboriginal Lands Act 1970 (Vic) ("the Act") and was conducted in a manner oppressive to one or more of the members of the Trust (including the plaintiffs) and accordingly was null and void and of no effect.

2. The second defendant and all other persons claiming to hold office as members of the committee of management of the Trust ("the Committee") including those persons purportedly elected or appointed as members of the Committee at or after the 2013 Meeting no longer validly hold office as members of the Committee and all seven positions as members of the Committee have become vacant.

3. Each of the first and second plaintiffs is a member of the Trust holding respectively 900 shares and 1,000 shares, subject to any rights in respect of such shares which the trustee of the bankrupt estate of Geoffrey Wayne Clark may have pursuant to the Bankruptcy Act 1966 and each of the first and second plaintiffs, is entitled to vote in the election directed by paragraph 5 of these Orders as the registered owner of that number of shares, and irrespective of such shareholding is entitled to nominate in the said election as a candidate for membership of the Committee.

AND IT IS ORDERED that;

4. There be an election to fill all seven positions as members of the Committee, such election to be conducted by an officer of the Department of Aboriginal Affairs ("the Returning Officer") to be nominated by the Secretary of the said Department.

5. The said election be conducted by the Returning Officer in accordance with the following directions:

(i) the Returning Officer shall fix a date for an annual general meeting of the Trust ("the annual general meeting") to be held in place of the 2013 Meeting at which shall be conducted the said election to fill all seven positions as members of the Trust, such date to be not more than 60 days after the date of this Order;

(ii) the Returning Officer shall give notice of the annual general meeting to each person shown on the Register of Members of the Trust as a shareholder by sending by post to each such person at his or her address shown in the said Register of Members a notice specifying the date of the annual general meeting fixed by the Returning Officer and advising that, pursuant to an Order of this Court, an election will be conducted at the annual general meeting for all seven positions on the Committee;

(iii) the Returning Officer shall advise in the notice referred to in (ii) above that nominations of persons seeking to be elected to positions on the Committee should be submitted in writing to the Returning Officer by a date to be fixed by the Returning Officer and specified in the said notice, being a date not less than seven days nor more than fourteen days before the date fixed for the annual general meeting;

(iv) the Returning Officer shall enclose with the notice described in (ii) and (iii) above a form of nomination for use by persons seeking to nominate candidates for election as members of the Committee;

(v) the Returning Officer shall publish in the "Warrnambool Standard" not less than 14 nor more than 21 days before the day fixed for the annual general meeting the notice described at (ii) above and the form of nomination described at (iv) above and shall advise in the said advertisement that nominations in the said form should be forwarded to the Returning Officer by the date fixed for the close of nominations in accordance with (iii) above;

(vi) in the event that more than seven nominations are received by the date fixed in accordance with (iii) above, the Returning Officer shall prepare and issue to each member of the Trust attending the annual general meeting in person and desiring to vote in the said election a ballot paper containing an instruction that the voter should strike out the name of each candidate for whom he or she does not wish to vote but so that at least one and not more than seven names remain not struck out;

(vii) the Returning Officer shall ensure that the ballot papers are marked by each voter and collected by the Returning Officer so as to constitute a secret ballot save that the identity of each voter shall be known to the Returning Officer for the purpose of conducting the poll described at (viii) below;

(viii) after collecting all completed ballot papers the Returning Officer shall count the poll allocating to each vote a weight equal to the number of shares in the Trust of which the member casting that vote is registered as the owner and shall declare the result of the poll.

6. (a) The seven persons declared elected by the Returning Officer in

accordance with paragraph 4(viii) of these Orders or, if no more than seven nominations are received in accordance with paragraph 4(iii) and 4(v) above, then the seven persons so nominated shall constitute the Committee as at and from the date of the annual general meeting and shall elect one of their number to be the Chairman of the Trust;

(b) The two persons receiving the lowest number of votes in the poll conducted by the Returning Officer shall hold office until the annual general meeting of the Trust to be held in 2015, the two persons receiving the next lowest number of votes shall hold office until the annual general meeting of the Trust to be held in 2016 and the three persons receiving the highest number of votes shall hold office until the annual general meeting to be held in 2017;

(c) In the event that no more than seven nominations are received by the Returning Officer in accordance with paragraphs 4(iii) and 4(v) of these Orders or in the event that sub-paragraph (b) above cannot be applied because of an equality of votes, the Returning Officer shall determine by lot the member or members to retire before a particular annual general meeting in accordance with sub-paragraph (b) above.

7. The directions contained in paragraph 5 of these Orders and the election conducted by the Returning Officer in accordance therewith shall be of full force and effect notwithstanding any contrary or inconsistent provision of the Act.

8. The defendants and each of them be restrained until the declaration of the poll directed by paragraph 5(viii) of these Orders or until further order from granting or terminating any lease or licence of or over any land of the Trust and from disposing of any assets of the Trust or disbursing any funds of the Trust except for meeting the ordinary recurrent expenses of the Trust.

9. The first defendant pay the plaintiffs' costs of these proceedings, including any reserved costs, such costs to be taxed in default of agreement.

10. Liberty be reserved to any party [and to the Minister for Aboriginal Affairs] to apply on not less than 48 hours' notice in writing to the other parties and the Minister.

[232]

Whether or not a company is being conducted in a manner oppressive to certain shareholders depends upon all the circumstances and it is not possible to attempt a universal definition. However, in the kind of situation which arises in this case and having regard to the matters relied upon by the petitioner and the supporting members, the following elements are I think included in the matters postulated in the section and are also established by the authorities: -

Those alleging that the affairs of the company have been conducted in a manner oppressive to them must establish, as one element, conduct which the Court of Appeal has recently restated in the case of Re Jermyn Street Turkish Baths Ltd ..., as conduct which "is unfair or, to use the expression adopted by Viscount Simonds in Scottish Co-operative Wholesale Society Ltd v Meyer ..., 'burdensome, harsh and wrongful' to the other members of the company or some of them, and lacks that degree of probity which they are entitled to expect in the conduct of the company's affairs: see Scottish Co-operative Wholesale Society Ltd v Meyer and Re H. R. Harmer Ltd...".

It is to be noted that Buckley, LJ, delivering the judgment of the Court, appears to have stated lack of probity of the kind described as an element additional to the requirement that the conduct must be unfair or burdensome, harsh and wrongful. In Scottish Co-operative Wholesale Society Ltd v Meyer, Lord Keith stated the test as "lack of probity and fair dealing", using the word "and". However, in Lord Keith's judgment in Elder v Elder and Watson Limited, adopted by Jenkins, LJ, in the case of Re Harmer Ltd, Lord Keith said: "oppression involves, I think, at least an element of lack of probity or fair dealing to a member in the matter of his proprietary right as a shareholder." There it is put in the alternative. In the light of these statements, I deal with this petition on the basis that there may be cases in which either lack of probity or unfairness may be sufficient in itself to make conduct oppressive to a member...

(2) The oppression must be of the members as such, that is in their capacity as shareholders. It was so decided in Re H. R. Harmer Ltd, ..., in respect of the English equivalent provision, namely, s210, and the Full Court in Re Bright Pine Mills Pty Ltd, held that this consideration applies to s186(1) of the Victoria Companies Act: see also per Lord Keith in the passage cited above from Elder v Elder and Watson Ltd.

(3) It appears to follow from the last-mentioned concept and the reference in the section to the affairs of the company being conducted in a manner oppressive to members that there must be something adverse or detrimental to the members' financial interests as shareholders. In all the reported cases of which I am aware, where oppression has been found, this has been the fact and it was this aspect to which I understand Jacob, J, referred when he said in Re Broadcasting Station 2GB Pty Ltd, that, the word oppressive involves, among other things, that "some member or members have suffered in a pecuniary sense in their capacity of members (Scottish Co-operative Wholesale Society v Meyer) that is to say, their rights as members have been affected".

(4) The affairs of the company must be being conducted in a manner oppressive to some member or members when the petition is presented. This is involved in the expression "are being conducted": see Re Jermyn Street Turkish Baths Ltd ....

(5) Oppression may occur even although all the members of a company are treated equally: see, for example, Meyer's Case. The unfairness may arise, for example, by reason of an advantage to a parent company.

(6) So far as the alleged oppressors are concerned, it must also be established it seems to me that oppression results from "some overbearing act or attitude on the part of the oppressor": Re Jermyn Street Turkish Baths Ltd. In delivering the judgment of the Court of Appeal, Buckley, LJ, having defined aspects of oppression applicable to that case, then said: "We do not say that this is necessarily a comprehensive definition of the meaning of the word 'oppressive' in s210, for the affairs of life are so diverse that it is dangerous to attempt a universal definition. We think, however, that it may serve as a sufficient definition for the present purpose. Oppression must, we think, import that the oppressed are being constrained to submit to something which is unfair to them as the result of some overbearing act or attitude on the part of the oppressor."

Having stated that what had earlier been said was not necessarily a comprehensive definition, his Lordship appears to me to have then stated what is a universal element in the sentence beginning "Oppression must, we think, import". Again, whilst not stating it as a universal test, the Full Court in Re Bright Pine Mills Pty Ltd, applied the test that "conduct would be oppressive within the meaning of s186 if directors or shareholders holding a controlling power in the direction of the company's affairs were to pursue a course of conduct designed by them to advance their own interests or the interests of others of their choice to the detriment of the company or to the detriment of other shareholders". The concept of "some overbearing act or attitude" appears to me to be involved in Viscount Simonds's expression "burdensome, harsh and wrongful". To determine whether conduct is unfair it is necessary to examine it from the point of view of both the alleged oppressed and the alleged oppressor...

(7) It is a corollary of the element referred to in (6) above that "it was not intended by s186 or s94 to give jurisdiction to the Court (a jurisdiction the courts have always been loath to assume) to interfere with the internal management of a company by directors who in the exercise of the powers conferred upon them by the memorandum and articles of association are acting honestly and without any purpose of advancing the interest of themselves or others of their choice at the expense of the company or contrary to the interest of other shareholders" (per the Full Court in Re Bright Pine Mills Pty Ltd).

Buckley, J, as he then was, referred to the same aspect in Re Five Minute Car Wash Service Ltd when he said: "The mere fact that a member of a company has lost confidence in the manner in which the company's affairs are conducted does not lead to the conclusion that he is oppressed; nor can resentment at being outvoted; nor mere dissatisfaction with or disapproval of the conduct of the company's affairs, whether on grounds relating to policy or to efficiency, however well founded. Those who are alleging to have acted oppressively must be shown to have acted at least unfairly towards those who claim to have been oppressed.[10]

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Judgment (284 paragraphs)

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Legislation Cited (24)

Cases Cited (5)