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[2025] NSWSC 648
General information, not legal advice.
Supreme Court of NSW
2025-06-20
Black J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: In the matter of Yowie Group Ltd [2025] NSWSC 648
Hearing dates: 18 June 2025
Date of orders: 20 June 2025
Decision date: 20 June 2025
Jurisdiction: Equity - Corporations List
Before: Black J
Decision: Declare that notices issued by the Plaintiff convening a meeting of the shareholders of the Defendant, stating intention to move a resolution at that meeting removing Defendant’s directors, and stating intention to nominate new directors for election are each valid. Declare that the Defendant’s notice to shareholders that the meeting called by the Plaintiff is postponed and has changed venue is invalid. Order that an independent chair conduct the meeting called by the Plaintiff.
Catchwords: CORPORATIONS – Directors and officers – Appointment, removal and retirement of directors – Notice – Where Plaintiff issued notice of intention to move a resolution at general meeting of shareholders removing directors of Defendant and notice of intention to nominate new directors – Whether notices were valid
CORPORATIONS – Meeting of members – Notice – Where Plaintiff issued notice to Defendant’s shareholders convening a general meeting of shareholders – Where Defendant’s directors resolved to postpone and change venue of general meeting of shareholders– Whether Defendant’s directors’ resolution was valid – Whether Plaintiff’s notice was valid – Where independent chair of general meeting of shareholders ordered
Legislation Cited: - Corporations Act 2001 (Cth) ss 127, 198G, 203D, 224–225, 229, 249F, 447A, 659B, 1322(4)
- Evidence Act 1995 (NSW) s 140
Cases Cited: - Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
- Cambria Green Agriculture and Tourism Management Pty Ltd v Tasmanian Planning Commission [2020] TASSC 58
- Central Exchange Ltd v Rivkin Financial Services Ltd (2004) 213 ALR 771
- Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Aust) Pty Ltd (2000) 201 CLR 520
- Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd (2020) 148 ACSR 217
- Drillsearch Energy Limited v McKerlie [2009] NSWSC 517
- Elderslie Finance Corporation Ltd v Australian Securities Commission (1993) 11 ACSR 157
- Gangemi v Osborne [2009] VSCA 297
- Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725
- Holmes v Life Funds of Australia Ltd [1971] 1 NSWLR 860
- Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; (1974) 3 ALR 448; [1974] AC 821; [1974] 1 All ER 1126
- Humes Ltd v Unity APA Ltd (No 1) [1987] VR 467
- Knox v Nile [2021] NSWSC 538
- Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd (2007) 62 ACSR 178
- Metalicity Ltd v Allen (2002) 165 ACSR 509
- National Roads and Motorists’ Association Ltd v Scandrett (2002) 171 FLR 232
- NM Superannuation Pty Ltd v Hughes (1992) 27 NSWLR 26; (1992) 7 ACSR 105
- Re Order of AHEPA NSW Inc [2018] NSWSC 458
- Re Compaction Systems Pty Ltd & the Companies Act [1976] 2 NSWLR 477
- Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990)
- Re Jervois Mining Ltd (2016) 117 ACSR 205
- Re Wave Capital Ltd (2003) 47 ACSR 418; [2003] FCA 969
- Re Yowie Group Ltd [2025] NSWSC 524
- Residues Treatment and Trading Co Ltd v Southern Resources Ltd (No 2) (1989) 15 ACLR 770; 7 ACLC 1130
- Reuter v Electric Telegraph Co (1856) 6 E & B 341
- Showa Shoji Australia Pty Ltd v Oceanic Life Ltd (1994) 34 NSWLR 548
- Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14
- Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285
- Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2001) 166 FLR 144; (2001) 40 ACSR 221; [2001] NSWCA 427
Category: Principal judgment
Parties: Keybridge Capital Ltd (Plaintiff)
Yowie Group Ltd (Defendant)
Representation: Counsel:
J Emmett SC / D Krochmalik / D Monteith (Plaintiff)
M Green SC / A Ford (Defendant)
Solicitors:
Mills Oakley (Plaintiff)
KCL Law (Defendant)
File Number(s): 2025/213618
By Originating Process filed on 4 June 2025, the Plaintiff, Keybridge Capital Ltd (“KCL”) seeks relief in respect of several issues relating to a general meeting of the Defendant, Yowie Group Limited (“YGL”) convened under s 249F of the Corporations Act 2001 (Cth) (“Act”). I will first address the background to the application, then several aspects of the chronology and the affidavit and other evidence and then determine the relevant issues. The proceedings have gone to hearing in circumstances of commercial urgency and, in order to deliver judgment in them promptly, I address only those matters that are necessary to determine them, although I have had regard to all the evidence filed and the parties’ submissions in their entirety.
By way of background, KCL and YGL are each public companies listed on Australian Securities Exchange (“ASX”). Prior to a share placement announced by YGL on 12 May 2025, which is the subject of a pending application by KCL in the Takeovers Panel, KCL held 66.78% of the total shares on issue in Yowie. After that placement, KCL’s shareholding was reduced to 58.07%, but KCL still holds the majority of the shares in YGL. Since April 2025, KCL has been seeking to exercise its statutory right as a shareholder with the requisite number of shares in YGL to call a meeting of YGL’s shareholders to consider the replacement of YGL’s current directors, two of whom had previously been removed as directors of KCL by its shareholders. YGL has contested aspects of that process.
I first set out the affidavit evidence on which the parties relied. KCL reads the affidavit dated 4 June 2025 of its solicitor, Ms Reid, who addresses information relating to shareholders and officers of the relevant companies. Her evidence, read without objection (Reid 4.6.25 [11]), is that KCL’s shareholding in YGL was one of its largest assets, and I recognise that that matter emphasises KCL’s proper interest in the identity of the directors of YGL. Ms Reid addressed the history of KCL’s notices (“203D Notices”) under s 203D of the Act served on YGL; KCL’s request for access to KCL’s share register; KCL’s notice given on 24 April 2025 of its intention to nominate candidates for election as directors of YGL (“Director Nomination Notice”); YGL’s subsequent off-market bid to acquire shares in KCL; YGL’s private placement of approximately 15% of its shares; KCL’s calling of the general meeting of YGL (“YGL 249F Meeting”); and YGL’s purported postponement of that meeting.
KCL also read two affidavits of Mr Ravell, who is a director of KCL. The first of those affidavits, dated 10 June 2025, referred to KCL’s proposal that Dr Austin act as independent chair of the YGL 249F Meeting and also referred to steps now taken by Australian Style Group Pty Ltd (“ASG”), to convene a general meeting of KCL’s shareholders, an one hour before the time initially scheduled for the YGL 249F Meeting, seeking to remove the present directors of KCL. ASG is a company associated with Mr Bolton, who is a former director of KCL and resigned as a director or YGL on the morning of this hearing, although he remains as an executive of YGL. By his second affidavit dated 17 June 2025, Mr Ravell refers to other proceedings between KCL and YGL, which include an application made by KCL to set aside a creditor’s statutory demand issued by YGL to KCL, and also addresses the fact that YGL had not communicated with KCL to raise any concerns as to information contained in the notice of meeting for the YGL 249F Meeting before purporting to postpone that meeting.
KCL also reads the affidavit dated 17 June 2025 of Mr Hamilton, a director of KCL and its chair, which responds to Mr Ranger’s evidence as to other proceedings involving KCL and addresses a takeover bid made by YGL for KCL and the position in proceedings in the Takeovers Panel concerning that bid, and the meeting under s 249F of the Act called by ASG in respect of KCL.
YGL reads the affidavit dated 15 June 2025 of Mr Andrew Ranger, an executive director of YGL, who has responsibilities for aspects of its operations and financial performance. He addresses the nature of YGL’s business and refers to a chronology of dealings between YGL, KCL and WAM Active Ltd (“WAM Active”), a shareholder in KCL. Mr Ranger, rightly or wrongly, takes a different view of the relevant events to that taken by KCL and communicated by it to YGL shareholders in information concerning the proposed removal of YGL’s directors. It is apparent that he has relied on information provided by Mr Patton and Mr Bolton, the latter of whom resigned as chair of YGL on the morning of this hearing, in respect of significant matters and has not adequately engaged with significant steps taken by YGL, including its provision of information to ASX that is false and misleading in a significant respect. By a second affidavit dated 18 June 2025, Mr Ranger referred to dismissal by the Takeovers Panel of YGL’s application to the Panel and to the fact that YGL had now initiated the process of review of the Panel’s adverse decision to it.
On 23 May 2024, it appears that YGL and KCL entered into loan agreements which are in issue in other proceedings and which are relied upon by YGL to assert that KCL has an improper purpose in replacing its directors. YGL contends that it advanced in excess of $4.4m to KCL between 24 May 2024 and 24 December 2024. On 6 February 2025, YGL demanded payment of in excess of $4.56m from KCL consisting of principal and interest. YGL subsequently unsuccessfully opposed an application brought by a shareholder in KCL, WAM Active, to terminate the voluntary administration of KCL, relying on the asserted failure by KCL to pay the amount of the debt that YCL claimed against it. I return to these matters below.
On 10 February 2025, Messrs Bolton and Patton were removed as directors of KCL following resolutions passed at a general meeting of its members called under section 249F of the Act. Mr Patton, as chair of that meeting, sought to adjourn that meeting prior to a vote on the resolutions but the shareholders present elected a new chair and the resolutions to remove Mr Bolton, Mr Patton and a third director of KCL, Mr Dukes were passed. The validity of those resolutions has since been confirmed in other proceedings in this Court.
On 1 April 2025 and 9 April 2025, KCL issued notices of its intention to move resolutions for the removal of YGL’s board of directors pursuant to s 203D of the Act (“First 203D Notice” and “Second 203D Notice”, respectively and, together, as defined in [3] above, “203D Notices”). The First 203D Notice was directed to KCL’s intention to move resolutions for the removal of YGL’s then directors, Messrs Bolton, Patton and Ranger as directors of YGL pursuant to s 203D of the Act. As I noted above, Mr Bolton and Mr Patton resigned as directors of YGL on the date of the hearing of these proceedings.
On 7 April 2025, YGL announced to the ASX that Messrs Agocs and Schwarze had been appointed as directors of YGL effective from 1 April 2025. The evidence establishes that at least Messrs Agocs and Schwarze have other family or business relationships with Mr Bolton but it is not necessary to determine that matter. As I noted above, on 9 April 2025, KCL then issued the Second 203D Notice directed to their removal as directors of YGL.
By an affidavit dated 17 April 2025 (Ex P3, CB 1159) in proceedings in the Court of Appeal between Mr Bolton and WAM Active, the solicitor acting for WAM Active and a majority of KCL’s directors read affidavit evidence setting out, on information and belief, the intention of KCL’s directors to issue a request to YGL for a copy of its members register under s 173(3) of the Act; issue a notice of intention to nominate KCL’s nominees for election as directors of YGL (which must occur at least 30 business days prior to a general meeting at which the election of the directors is to be considered) as required by YGL's constitution; and issue a notice of general meeting and an explanatory memorandum calling a general meeting of YGL under s 249F of the for members of YGL to consider resolutions for the removal of the current directors of YGL and resolutions for the appointment of KCL's nominees as directors of YGL. I infer that, in the ordinary course, Mr Bolton’s legal representatives would then have made him aware of that matter, even if he was not present in Court and did not review the transcript, and YGL did not lead evidence of Mr Bolton to the contrary.
“We are instructed that our client will consent to the second step and you may rely upon this email as evidence of such consent.”
It seems to me that that email was a present consent to a future step, namely the giving of the Director Nomination Notice. So far as their any ambiguity as to that matter, I grant relief under s 1322 of the Act below.
On 24 April 2025, KCL gave the Director Nomination Notice which stated that KCL intended to propose its nominated persons for election as directors of YGL “at a general meeting of [YGL] which occurs at least 30 Business Days from the date of” the notice. On 24 April 2025, KCL also requested access to YGL’s register of members under s 173 of the Act. On 1 May 2025, YGL released an ASX announcement stating that it “has not received nominations from [KCL]” and “does not propose to engage with the intention to nominate”. The same day, YGL refused to provide a copy of its register of members to KCL.
At a board meeting held on 8 May 2025, KCL’s board ratified the several steps as to which any question of authority arises in these proceedings, including the issue of the 203D Notices and the Director Nomination Notice (Ex D2).
On 9 May 2025, KCL made a further request for access to YGL’s register. On the same day, YGL released an ASX announcement entitled “[YGL] announces scrip takeover bid for [KCL]”. A “defeating condition” to the bid was that KCL did not “issue a notice pursuant to section 249D, 249F or 249G for the purpose of convening a meeting of [YGL’s] shareholders” or “propose a resolution at a meeting of [YGL] shareholders that would influence the control or composition of the [YGL] board of directors”.
On 12 May 2025, KCL commenced proceedings against YGL seeking an order that YGL provide a copy of YGL’s register of members. On the same day, YGL announced that it had resolved to issue 34,405,185 new shares in YGL under a private placement. The share placement reduced KCL’s voting power from 66.78% to 58.07%. KCL has brought an application in the Takeovers Panel concerning the issue of these shares.
On 13 May 2025, KCL’s solicitors wrote to YGL’s then solicitors referring to the meeting of members of YGL that KCL intended to call under s 249F of the Act to replace YGL’s board of directors. On 14 May 2025, at a directions hearing before Nixon J in the proceedings brought by KCL for access to YGL’s register, YGL’s Counsel stated that:
“The purpose [of the call for access to YGL’s register] is so that they can call a meeting under 249D in order to remove Mr Bolton and other existing directors to replace them with nominee directors from Keybridge”
The reference to s 249D was plainly intended to be to s 249F, where KCL as a member was proposing to call a meeting of YGL under s 249F of the Act.
By email dated 19 May 2025 from Mr Patton to other directors of YGL (Ex P7, 8), he rightly asked whether an earlier affidavit “doesn’t count as a valid notification” of the proposed removal of YGL’s directors, where YGL proposed to deny that it had received notice of such a removal in its communication with ASX. Mr Bolton responded on the same day arguing that that earlier affidavit was “infected by the same problems of validity”, indicating that he would forward it to solicitors and ask. There is no evidence as to whether he did so.
It is plain that there is a dispute as to the validity of the Director Nomination notice since, in YGL’s letter to ASX dated 19 May 2025, signed by Mr Patton (Ex P1, CB 608, 610), YGL characterised that notice as a “purport[ed] intention statement to nominate directors” and contended (contrary to the evidence that I addressed above) that it was not sent with the consent of KCL’s then voluntary administrator. By the same letter, YGL denied to the ASX that it or its directors had been made aware that a person or persons holding more than 50% of its ordinary shares intended to call, or requested the directors to call, a general meeting to appoint or remove directors of YGL. That denial was plainly false or at best highly misleading.
On 21 May 2025, Nixon J ordered that YGL deliver a copy of its register of members to KCL: Re Yowie Group Ltd [2025] NSWSC 524. YGL and KCL have both brought applications in the Takeovers Panel since that date.
By 22 May 2025, Mr Schwarze was considering the question of a postponement of any s 249F meeting called by KCL, before that meeting was called, and he sent an email to Mr Ranger and Mr Agocs on that date contemplating that possibility, noting that it was “probably for the full board and best handled by Nick [Bolton]”.
On 26 May 2025, KCL called the YGL 249F Meeting pursuant to s 249F of the Act to be held on 27 June 2025 to vote on resolutions to replace the current directors of YGL including Mr Bolton and Mr Patton, and also Mr Agocs, Mr Schwarze and Mr Ranger. Mr Green, with whom Mr Ford appears for YGL, drew attention to the notice of the general meeting and explanatory memorandum issued by KCL in respect of the YGL 249F Meeting and to a proposed amendment to YGL’s constitution to delete the reference to s 225 of the Act (which I will address below) in cl 13.3 of that constitution and the resolutions in respect of the removal and replacement of directors of YGL.
On 29 May 2025, ASG issued a notice to convene a general meeting of KCL’s shareholders under s 249F to be held at 9.00am on 27 June 2025 (one hour before the YGL 249F Meeting) seeking to remove KCL’s board of directors.
On 1 June 2025, Mr Patton issued an invitation to other directors of YGL to attend a meeting of YGL’s directors to approve an ASX announcement to the postponement and change of venue for the YGL 249F Meeting (Ex P7, 1) in which that agenda item was phrased in a manner that assumed that the meeting would be postponed.
I first address a preliminary question as to whether the Court can hear this application. YGL contended that it could not, and that the proceeding had been commenced in contravention of s 659B of the Act where the passage of the resolutions at the YGL 249F Meeting will trigger a defeating condition in YGL’s takeover bid for KCL. It also sensibly accepted that the hearing should proceed and this matter should be determined in this judgment.
Mr Green addresses the scope of s 659B and s 659C of the Act and submits, and I accept, that their intent is to make the Takeovers Panel the main forum for resolving disputes about a takeover bid until the bid period has ended. Nonetheless, consistent with authority, I accept that the Court should not treat its jurisdiction as excluded unless the statutory words clearly and unambiguously apply in the relevant circumstances; s 659B applies only in respect of Court proceedings in relation to a takeover bid or proposed takeover bid, and the question whether proceedings are Court proceedings in relation to a takeover bid is tested at the date of the application brought to the Court: Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd (2007) 62 ACSR 178 at [27]-[28]; Cromwell Corporation Ltd v ARA Real Estate Investors XXI Pte Ltd (2020) 148 ACSR 217 at [64]; Metalicity Ltd v Allen (2002) 165 ACSR 509 at [38]ff.
These proceedings relate to the validity or otherwise of the steps taken to call the YGL 249F Meeting and will not determine any question as to the takeover bid by YGL for KCL. It is not to the point that these proceedings may have a connection with the relevant parties’ strategies in respect of that takeover bid or that the outcome of the proceedings (and, no doubt, many other events) may have a practical impact upon the bid. The Court’s jurisdiction is therefore not excluded by the existence of YGL’s bid for KCL and YGL did not submit it was excluded by KCL’s reference of other matters to the Takeovers Panel.
First, KCL seeks declaratory relief to the effect that the 203D Notices, the Director Nomination Notice and the YGL 249F Meeting notice were validly issued and effective to convene a general meeting of shareholders to be held at 10.00am on 27 June 2025. It is plain that there is a real dispute as to this issue, where YCL, under the authority of its current board, have published announcements to the ASX claiming that the 203D Notices and the Director Nomination Notice were not validly issued by KCL to YGL, that YGL does not regard these documents as having been received by YGL under the Act and stating that YGL’s current board had resolved to postpone the YGL 249F Meeting to 14 July 2025 “to the extent the purported meeting is valid”. That dispute will properly be quelled by declaratory relief.
As I noted above, on 1 April 2025, KCL issued the First 203D Notice. That notice was signed by two of KCL’s directors in the manner provided by s 127 of the Act. At that time, KCL was in voluntary administration, although orders terminating the administration under s 447A of the Act took effect on 8 May 2025. The First 203D Notice was issued pursuant to leave granted by Nixon J on 1 April 2025 under s 198G(3)(b) of the Act.
As I also noted above, on 9 April 2025, KCL issued the Second 203D Notice of its intention to move resolutions for the removal of Messrs Agocs and Schwarze as directors of YGL pursuant to s 203D of the Act. The notice was, again, signed by two of KCL’s directors in the manner provided by s 127 of the Act. The Second 203D Notice was issued pursuant to leave granted by Nixon J under section 198G(3)(b) of the Act on 8 April 2025.
On 24 April 2025, KCL issued the Director Nomination Notice to YGL giving notice that KCL intended to nominate five individuals for election to the office of director at a general meeting. That notice was given in accordance with the requirements of cl 13.3 of YGL’s constitution and enclosed signed consents to the nomination by each of the persons nominated for election.
As Mr Emmett, with whom Mr Krochmalik and Mr Monteith appear for KCL, points out, YGL has taken the position in an announcement to the ASX that the 203D Notices were not validly issued to YGL and that YGL does not regard these documents as having been received by YGL under the Act. That announcement takes that position on the basis that the notices were not authorised by KCL because they were not approved by a resolution of KCL’s board of directors; the directors who executed them had “no delegated authority” to do so, referring to s 128(4) of the Act; and that the Director Nomination Notice was not authorised by KCL’s then voluntary administrator.
Mr Emmett responds, first, that the 203D Notices were issued with the Court’s approval under s 198G(3)(b) of the . The effect of that approval is to avoid a contravention of s 198G of the in the issue of those notices while KCL was in administration and not to confer any authority for them that was otherwise absent. Second, Mr Emmett submits that the effect of the document having been signed by two directors is that each of the 203D Notices was executed by (not on behalf of) KCL, in the same way as if the corporate seal was affixed: [2020] TASSC 58 at [18]-[19]. He also submits that YGL was entitled to rely on the fact that the document had been duly executed by KCL under s 129(5) of the , although I recognise it chooses not to do so. These matters also do not confer any authority for the 203D Notices that was otherwise absent. Mr Emmett also submits that YGL (and Mr Bolton and Mr Patton) was represented in Court on each of the occasions when Nixon J made the orders granting leave to serve the notices under s 198G(3)(b); there was no appeal from those orders; and, having been granted leave to be heard in the proceedings, YGL should not be permitted to contend that the 203D Notices, issued in accordance with Nixon J’s orders, are not valid. I do not accept that submission where those orders were directed only to avoiding any contravention of s 198G of the in giving those notices.
“A step taken by a director without authority may be ratified. Ratification has the effect that the company is entitled to take advantage of the act as if the director had been authorised when he or she acted: Professor Ian Ramsay and Dr Robert (Bob) Austin, Ford, Austin and Ramsay‘s Principles of Corporations Law (15th ed, 2012, LexisNexis Butterworths) at [15.110] and [15.150]; Cmr *of Taxation (*Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35 at [20] ; (2000) 201 CLR 520 at 533; McHugh v Eastern Star Gas Ltd [2012] NSWCA 169 at [48].”
KCL also seeks a declaration that the notice of general meeting dated 26 May 2025 that it issued and despatched to shareholders of YGL under s 249F of the Act (“Notice of 249F Meeting”) is a valid notice convening the general meeting of shareholders of YGL to be held on 27 June 2025. It is again plain that there is a real dispute as to this issue given YGL’s ASX announcements and its stance in these proceedings, which will properly be quelled by declaratory relief. This declaration, and the other issues I have addressed above, raise the question of YGL’s other challenges to the meeting and I now address those challenges. I address the issues as to YGL’s postponement of the meeting below.
The first basis on which YGL opposes the application is its contention that the proposed resolution violates cl 13.3 of YGL’s constitution, which, it contends, “incorporates s 225 of the [Act] to prevent conflicted voting on direct elections”. I do not accept that submission for the reasons set out below.
I approach cl 13.3 of YGL’s constitution, on which YGL primarily relies, in its context. Clause 12.23 of YGL’s constitution relevantly provides that a shareholder is not entitled to vote on a resolution at a general meeting if they are prevented from doing so by the Act, the Listing Rules or YGL’s constitution. I find, below, that YGL is not prevented from voting at the YGL 249F Meeting by reason of any of those matters. Clause 13.3 of YGL’s constitution deals with the election of directors. That clause relevantly provides that:
“13.3 Election of Directors
Subject to the provisions of this Constitution, the Company may elect a person as a Director by resolution passed in general meeting. A Director elected at a general meeting is taken to have been elected with effect immediately after the end of that general meeting unless the resolution by which the Director was appointed or elected specifies a different time. No person other than a Director seeking re-election shall be eligible for election to the office of Director at any general meeting unless the person or some Shareholder intending to propose his or her nomination has, at least 30 Business Days before the meeting, left at the Registered Office a notice in writing duly signed by the nominee giving his or her consent to the nomination and signifying his or her candidature for the office or the intention of the Shareholder to propose the person. Notice of every candidature for election as a Director shall be given to each Shareholder with or as part of the notice of the meeting at which the election is to take place. The Company shall observe the requirements of Section 225 of the Corporations Act with respect to the election of Directors. If the number of nominations exceeds the vacancies available having regard to clause 13.1, the order in which the candidates shall be put up for election shall be determined by the drawing of lots supervised by the Directors and once sufficient candidates have been elected to fill up the vacancies available, the remaining candidates shall be deemed defeated without the need for votes to be taken on their election.”
“Therefore, members that are related to [YGL] cannot issue a s 249F Notice or propose resolutions to elect directors if to do so would permit the related entity to be given a financial benefit, which is the case here.
This for good reason because it prevents a majority shareholder from exercising its majority voting rights to the detriment of members as a whole by electing directors that will act in the interests of the majority shareholder or will not be able to exercise independent judgment free from conflict by reason of the director’s association with the majority shareholder.”
Mr Green also submits, at some length, that there is no inconsistency between cl 13.3 and cl 13.5 of YGL’s constitution. I need not address any question of inconsistency where the two deal with different circumstances. Mr Green also refers to principles of construction, to which I also have regard without repeating them. Mr Green also recognises a potential difficulty in his argument, arising from cl 32(f) of YGL’s constitution which provides that the ASX Listing Rules prevail over the provisions of the constitution in the event of inconsistency, and rule 6.9 of the ASX Listing Rules which provides that a holder of a share has a vote on a resolution to be decided by poll. I address that difficulty below.
Mr Emmett responds, and I accept, that it is plausible that the reference to s 225 of the Act in cl 13.3 of YGL’s constitution is a straightforward error and was a mistaken reference to s 225 of the former Corporations Law, which was plainly relevant to the election of directors, so far as it required that the appointment of directors of a public company be voted on individually. Mr Emmett also rightly recognises that there is not sufficient evidentiary basis for a finding to that effect, and I do not construe cl 13.3 on that basis.
Mr Emmett also rightly accepts that s 225 of the Act applies of its own force, to the extent that its provisions are engaged. However, Mr Emmett submits that it does not, without more, prevent KCL from voting on the replacement of the board of its majority-owned subsidiary; the resolutions to elect KCL’s nominees as directors of YGL do not, by themselves, give a “financial benefit” to KCL; and the fact that YGL claims an intercompany loan against KCL does not alter the position. He submits that the proposed resolutions regarding the identity of the board do not alter the rights between KCL and YGL in relation to that loan or in relation to any other obligation between the two entities. He also submits that the proposed resolutions to remove and replace the YGL board are made under cl 13.5 of YGL’s constitution, which is separate from the regime for rotation and election of directors under cll 13.2 and 13.3, and cl 13.3 is not capable of impacting entitlements to vote in respect of proposed resolutions under cl 13.5.
In submissions in reply as to cl 13.3, Mr Emmett points to a consequence of YGL’s submission, that a majority shareholder of YGL could not call a general meeting, or propose a resolution at a general meeting, or nominate persons for election to an office of a director at least if there existed inter-company loans between the companies. I accept that consequence is an odd one, but I nevertheless approach the question of the construction of YGL’s constitution as a matter of construction having regard to its terms and context. Mr Emmett also submits, in reply, that cl 13.3 does not apply to any of the relevant resolutions; that YGL’s constitution cannot exclude KCL’s statutory rights to call a meeting or for the majority to remove directors under ss 203D and 249F of the ; and that the incorporation of s 225 of the n cl 13.3 of YGL’s constitution would, in any event, do no more than require YGL to comply with the law. Mr Emmett also rightly contests the assumption made in YGL’s submissions that the appointment of a director of a company itself amounts to the giving of a financial benefit to the nominating shareholder.
“If any provision of this Constitution is or becomes inconsistent with the Listing Rules, this Constitution is deemed not to contain that provision to the extent of inconsistency.”
If cl 13.3 of YGL’s constitution operated in the manner that YGL contends, so as to exclude the exercise of voting rights by KCL, then it would be inconsistent with the voting rights conferred on KCL, and all shareholders, on a poll under rule 16.9 of the ASX Listing Rules on a poll and cl 13.3 would be deemed not to contain the relevant reference to s 225 of the Act to the extent of that inconsistency. YGL’s reliance on that clause cannot assist it for that reason.
Second, cl 13.3 of the Act does not apply to the resolutions sought to be passed at the YGL 249F Meeting, because KCL here seeks to remove directors of YGL before the expiration of their period in office, and, by resolution, appoint other directors in their place, and that procedure is governed by cl 13.5 of YGL’s constitution, which does not incorporate a reference to s 225 of the Act. I accept that, as Mr Green contends, YGL’s constitution must be read as a whole, and by reference to applicable principles of construction, but that does not have the consequence that a requirement that does not apply to one procedure should be attached to it, because it applies to another different procedure.
Third, even if cl 13.3 of YGL’s constitution incorporates s 225 of the Act and then extends further to s 224 of the Act as Mr Green contends, those sections deal with the procedure for obtaining member approval for the giving of financial benefit under Ch 2E of the Act. Section 225 imposes certain obligations on the relevant company in respect of such a resolution, and the reference on that section in cl 13.3 would require YGL to comply with those obligations if they were otherwise applicable on the terms of the section. Those obligations apply, on the widest possible reading of the sections, where the resolution would approve the giving of a financial benefit (as defined in s 229 of the Act) to a related party. However, there is no evidentiary basis for Mr Green’s further assumption that the election of directors nominated by KCL would give a “financial benefit” to KCL for the purposes of Ch 2E of the Act. While I recognise that the concept of “giving a financial benefit” in Ch 2E of the Act is to be read widely and in accordance with s 229 of the Act, that does not have the consequence that the election of a director which has no apparent financial impact, positive or negative, on a shareholder can amount to a “financial benefit” under Ch 2E, without more.
For completeness, I have not neglected that cl 33.1 of YGL’s constitution requires YGL to comply with Ch 2E of the Act, dealing with related party transactions, although those provisions would apply to YGL irrespective of that provision. That does not alter the conclusions that I have reached above.
Second, Mr Green advances an extended submission that KCL has called the YGL 249F Meeting for an improper purpose, although the authorities to which he refers do not establish any requirement that a shareholder who calls a meeting under s 249F of the Act must do so in the interests of shareholders as a whole, rather than in the interests of that shareholder. Mr Emmett submits that a shareholder who requisitions a meeting of members, under the relevant statutory provisions, is entitled to act in its own interests, and I accept that proposition is established by authority: [1987] VR 467 at 470-471; (2002) 171 FLR 232 at [53]. There is no doubt, here, that the meeting is called for its stated purpose, namely, to remove and replace the existing directors of YGL, and it is not to the point that KCL considers that it is in its interests to do so. It is also not to the point that YGL’s directors may believe that they, rather than their proposed replacements, are preferable as directors of YGL, where that is a matter for YGL’s shareholders and not for them.
Alternatively, KCL seeks relief under s 1322(4)(a) of the Act curing any procedural defects in the steps that it has taken as set out above, including convening the YGL 249F Meeting. I recognise that there is a degree of ambiguity in the terms of KCL’s then voluntary administrator’s consent to the Director Nomination Notice, although it is not apparent that such consent was necessary to the validity of that notice, as distinct from avoiding a contravention of s 198G of the Act in respect of it. This matter provides sufficient reason to consider the grant of relief under s 1322 of the Act.
Section 1322 of the Corporations Act relevantly provides that:
1322 Irregularities
(1) In this section, unless the contrary intention appears:
(a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and
(b) a reference to a procedural irregularity includes a reference to: …
(ii) a defect, irregularity or deficiency of notice or time. …
(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; …
(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit. …
(6) The Court must not make an order under this section unless it is satisfied:
(a) in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii) that it is just and equitable that the order be made; and …
(c) in every case – that no substantial injustice has been or is likely to be caused to any person.
The case law has recognised that that section is a remedial provision to be applied with liberality, and reflects a broad legislative policy that the law should not inflict unnecessary liability or inconvenience or invalidate transactions because of non-compliance with its requirements, where such non-compliance is the product of honesty or inadvertence and where the Court can avoid its effects without prejudice to third parties or the public interest in compliance with the law, and that the Court will have regard to the purposes of the Act, the interests of all affected parties and the public interest in exercising its powers under the section: Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2001) 166 FLR 144; (2001) 40 ACSR 221; [2001] NSWCA 427; Re Wave Capital Ltd (2003) 47 ACSR 418; [2003] FCA 969.
In Weinstock v Beck (2013) 251 CLR 396 at [39]; [2013] HCA 14 (“Weinstock”), where French CJ observed that:
“Corporations, in contemporary Australian society, serve the purposes of enterprises, large and small, owned and operated by men and women, some of whom are sophisticated, knowledgeable and well-advised on matters of corporate governance and some, perhaps many, of whom are not. Section 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance and that it is not in the public interest that the validity of decisions made in relation to corporations be unduly vulnerable to innocent errors which may be corrected without substantial injustice to third parties. In accordance with its evident purpose, s 1322(4)(a) is to be construed broadly and applied pragmatically, principally by reference to considerations of substance rather than those of form.”
Hayne, Crennan and Kiefel JJ also there observed (at [55]) that the power given to the Court under that section is not to be hedged about by any implied limitation and Gageler J referred at [60] with apparent approval to the Court of Appeal’s observation in that case that the section is “to be construed with all the liberality that its language permits.”
Consistent with that remedial purpose, the word “contravention” in s 1322(4)(a) of the Act should be given the broadest available construction and extends to non-compliance with procedural provisions that are not framed in terms of obligation or prohibition, and the exercise of a power that a person does not have: Weinstock at [41]-[42] (French CJ), [53]-[56] (Hayne, Crennan and Kiefel JJ), [62]-[63] (Gageler J). The Court may determine that a challenged act is “not invalid” by reason of a contravention of an applicable statutory provision or rule of the relevant body and “[t]he effect of a declaration under the provision is limited to overcoming invalidity flowing from a particular contravention or contraventions”: Weinstock at [40] (French CJ), at [65] (Gageler J).
The conditions set out in s 1322(6)(a)(i)–(iii) are not cumulative, and satisfaction of any one of them will meet the requirements of s 1322(6)(a): Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424 at [80]; [2006] NSWSC 725. KCL may therefore support its claim for relief on the basis that one of the three conditions in s 1322(6)(a) (that the matter is essentially of a procedural nature, the persons concerned acted honesty, or it is just and equitable that the order be made) is satisfied and that no substantial injustice has been or is likely to be caused to any person (s 1322(6)(c)). Whether there is "substantial injustice" for the purposes of s 1322(6)(c) involves a weighing of the prejudice if the order is made against the prejudice suffered by, relevantly, other members of the association if it is not made: Re Compaction Systems Pty Ltd & the Companies Act [1976] 2 NSWLR 477 at 493; Gangemi v Osborne [2009] VSCA 297. A meeting may be validated under this section, although notice of that meeting was not properly given, if that failure does not cause substantial injustice to any person: Holmes v Life Funds of Australia Ltd [1971] 1 NSWLR 860. The onus is on KCL, which seeks to invoke the operation of the section, to establish that no substantial injustice has been or is likely to be caused to any person: Elderslie Finance Corporation Ltd v Australian Securities Commission (1993) 11 ACSR 157 at 160. I have here drawn on my summary of the applicable principles in Re Order of AHEPA NSW Inc [2018] NSWSC 458 at [20]ff.
Mr Emmett here submits, and I accept, that any irregularity of the type asserted by YGL in its public announcements concerning the validity of the 203D Notices and the Director Nomination Notice (and, I add, the matters noted in paragraph 56 above) is plainly of a procedural nature; those involved in any contravention acted honestly, where KCL’s directors obtained the Court’s leave to issue and serve the 203D Notices; and approached KCL’s then voluntary administrator and obtained his apparent consent to issue the Director Nomination Notice; it is just and equitable to validate any contravention because it is in the interests of YGL’s shareholders as a whole to consider and vote on the resolutions proposed in the notice of the YGL 249 Meeting, in the exercise of an important shareholder right; and in the circumstances of this case, there would be no injustice, and no “substantial injustice”, by making an order validating any defect as to authority with respect to the relevant notices in question. I will order the relief sought under s 1325 of the on that basis.
KCL also seeks an order under s 1322(4) of the Act appointing an independent chair for the YGL 249F Meeting. Mr Emmett points out that the Court has power under s 1322(4) of the Ac**t to “make such consequential and ancillary orders as the Court thinks fit”. He submits that it is appropriate, in the circumstances of this case and having regard especially to the adversarial approach taken by YGL’s board of directors facing removal, for the Court to appoint an independent chair for the YGL 249F Meeting. As Mr Emmett points out, the Court made such an order in Re Jervois Mining Ltd (2016) 117 ACSR 205 (“Jervois Mining”), where Lindsay J held (at [74]) held that the appointment of an independent chair was in the best interests of the members of the company as a whole, allowing the will of the shareholders to be ascertained in an orderly way and minimising risks of procedural misadventure.
YGL initially opposed the appointment of an independent chair, on the basis that Mr Ranger would be appointed the chair of the meeting. It is plain that, first, Mr Ranger has a personal interest in seeking to resist his removal as director of YGL, where that would put at risk his future remuneration from his executive role with YGL; and it is also plain that he would likely face a significant conflict of duty and interest in chairing the meeting, between his duties to YGL as to the conduct of that meeting and his personal interest in retaining his position and remuneration, which would be acute in respect of questions such as the eligibility of KCL to vote, where it would likely vote in a manner that was plainly adverse to his personal interests. In supplementary submissions made with leave on 19 June 2025, subject to its submissions that the Court should not determine the matter by reason of s 659B of the Act (which I have addressed above) and without accepting that YGL’s directors had a material personal interests in the matter (which I address below), YGL accepted that, if the Court were minded to do so, an independent chair ought to be appointed to conduct the YGL 249F Meeting.
I am satisfied that YGL’s directors, each of whom was facing a resolution to remove them, have taken a highly adversarial approach to the calling of the meeting; the Court has power to grant the relief sought where it has made orders under s 1322 of the Act; and the making of this order is in the best interests of YGL’s shareholders as a whole and will minimise the risks of procedural misadventure in accordance with the approach adopted in Jervois Mining. It was common ground that, if I reached that view, Dr Austin was well-qualified and appropriate to perform that role, and that common ground was plainly correct. I will make the order sought and appoint Dr Austin to that role.
Where I make this order under s 1322 of the Act, it is not necessary to decide whether I could have granted corresponding relief under s 1324 of the , by reason of a contravention or threatened contravention of s 195 of the by YGL’s directors. Had I not made this order on either basis, and subject to hearing the parties, I would have heard the parties as to whether I should appoint a receiver and manager to YGL to conduct the meeting in accordance with the principles summarised and case law noted by Henry J in [2021] NSWSC 538.
KCL also seeks a declaration that the decision of YGL’s board on 2 June 2025 to postpone and change the venue for the YGL 249F Meeting was invalid. I have referred to the sequence of events in which that postponement took place above. KCL contends that the postponement and change of venue of that meeting was not in good faith or for a proper purpose, and each of YGL’s executive directors also had a material personal interest in such a decision where, under cl 17.1 of YGL’s constitution, each executive director would lose his executive role upon being removed as a YGL director.
First, Mr Emmett submits that, even if YGL’s directors did not have a material personal interest in the decision to postpone and change the venue for that meeting, that decision was not made in good faith or for a proper purpose. Mr Emmett refers to Central Exchange Ltd v Rivkin Financial Services Ltd (2004) 213 ALR 771 at [33] (“Rivkin”), where Emmett J observed that:
“…the circumstances in which it will be proper for the Board to postpone or change the place for a meeting called pursuant to s 249F, or to cancel such a meeting, will be limited and such powers must, of necessity, be exercised extremely sparingly so as not to frustrate the right conferred by s 249F. If the Directors change the place, as well as the time, they must have some justification for doing so. The Directors cannot arbitrarily postpone or change the place for the meeting. Nevertheless, the powers exist. The question is whether they have been validly exercised in the present case.”
“In asking whether the postponement was for a proper purpose, the Court’s task is to identify the actual purpose of the directors who voted in favour of the resolution, having regard to the character and operation of the resolution in relation to the facts and circumstances surrounding it”.
Mr Emmett also submits that Court should place particular weight on the objective circumstances, and little weight on the subjective assertions by the directors, including as they appear in YGL’s announcement about the postponement dated 2 June 2025.
In response, Mr Green accepts that the YGL directors’ power to postpone meetings is limited by the requirement that they act in good faith and for the benefit of members in doing so. Mr Green submits that YGL’s board acted to postpone the meeting for a period of 14 business days “to allow all shareholders to be properly informed about the proposed resolutions” and that the postponement of the meeting was necessary to allow time for YGL to provide further information to shareholders. I do not accept that submission. Putting aside the difficulties which arise in the application under s 195 of the Act in respect of any steps taken by YGL’s directors in this context, and the conflict of duty and interest which they presently face, which I address below, it was open to YGL to provide such information to shareholders as it considered should properly be provided to them in respect of the meeting, but there is no apparent reason that it needed additional time to do so. There is also no evidence that YGL has in fact done so since it adjourned the meeting.
Mr Green also submits that the explanatory memorandum does not disclose to shareholders the relevance of 13.3 of YGL’s constitution, namely that votes cannot be cast on a resolution by members who may obtain a financial benefit from the resolution. I have rejected that construction of the clause above and no such disclosure was required. This submission is in any event no answer to the substantial improper purposes of the YGH directors to which I refer below.
I bear in mind that, in determining whether directors have exercised their powers for a proper purpose, the Court will examine the power which the directors have exercised to determine the purpose for which the power was granted. The court will then determine the substantial purpose for which the power was in fact exercised, in order to determine whether the power was exercised honestly and in the interests of the company and, in determining whether a purpose is proper, the Court will respect the director's judgment in questions of business management: Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; (1974) 3 ALR 448; [1974] AC 821; [1974] 1 All ER 1126 per Lord Wilberforce at AC 835. In Residues Treatment and Trading Co Ltd v Southern Resources Ltd (No 2) (1989) 15 ACLR 770; (1989) 7 ACLC 1130, Perry J noted that the court will examine the "objective commercial justification" of a course of action, but only for the purpose of assessing the credibility of assertions by the directors as to their motives. Where directors act partly for a proper purpose and partly for an improper purpose, the Court will ask whether the directors would have exercised the power "but for" the impermissible purpose, and an exercise of the power will be invalid if the power would not have been exercised apart from the impermissible purpose: (1987) 162 CLR 285.
“Although the Constitution does not require the provision of reasons, the Board wishes to advise members that the postponement and change of venue for the EGM is necessary for a number of reasons, including (but not limited to):
● [YGL] refers to its earlier announcement on 1 May 2025 and its response dated 19 May 2025 to an ASX Query letter which was released onto the [announcement platform] on 20 May 2025, regarding the validity of the meeting request.
● [YGL] notes that separate applications have been made to the Takeovers Panel by [KCL] and YGL both pertaining to the prospective meeting. One regarding [KCL’s] ability to call the meeting (at least insofar as the change of board resolutions) during [YGL’s] takeover offer for [KCL] and the other involves voting eligibility at the meeting. Both of these matters must be resolved prior to the holding of the meeting.
● The purported notice of meeting raises issues about a constitutional clause that affects a number of the resolutions purportedly put at the meeting, where shareholders are not properly informed by the notice about the impact of that constitutional clause and the practical consequences of changing it.
● [YGL] has been made aware that a [KCL] shareholder, holding more than 5% of [KCL], issued, on 1 April 2025, a s 230D notice seeking the removal of all [KCL] directors and that a s 249F meeting has since been called by that shareholder seeking the removal of Mr Wilson, Mr Hamilton, Mr McCathie and Mr Ravell (WAM directors) from the [KCL] board.”
I will assume, without deciding, that these are some of the reasons for which YGL’s directors postponed the relevant meeting, although I find that there was an additional and substantial reason for doing so, not disclosed in that announcement. In accordance with the case law, I examine the objective commercial justification of the postponement, but only for the purpose of assessing the credibility of the directors’ assertions as to their purposes. The first dot point refers to an issue as to the validity of the meeting. I accept the directors may have held that concern, but a postponement of the meeting would not have resolved any question of its validity and that provided no rational basis to postpone the meeting. The second dot point refers to applications that had been made to the Takeovers Panel by KCL and YGL, but there was no reason to think that those applications would not be decided by the time the meeting took place; or that the Takeovers Panel did not have adequate powers to deal with any interaction between the conduct of the meeting and the Panel proceedings; or that, if the proceedings before the Takeovers Panel were not determined and the Takeovers Panel did not seek to prevent the meeting going forward, then shareholders could readily take account of the fact of the applications to the Panel in casting their votes at the meeting. That matter also provided no rational basis to postpone the meeting. The third dot point relates to the suggested issues about the operation of cl 13.3 of YGL’s constitution. I accept the directors may have held that concern; but a postponement of the meeting would not have resolved that issue and that also provided no rational basis to postpone the meeting.
The fourth dot point plainly reflected an improper purpose on the part of YGL’s board, where it was not part of its proper role to prefer the interests of ASG in its attempt to replace the directors of KCL to KCL’s interests as a shareholder of YGL in its attempt to remove YGL’s directors, or to postpone the YGL 249F Meeting, as YGL’s directors plainly did, so as to allow ASG further time to remove KCL’s directors before that meeting took place.
I also find that YGL’s directors had a further and substantial improper purpose in postponing the YGL 249F Meeting which was not disclosed by that announcement. As I noted above, YGL’s directors plainly knew that YGL’s takeover bid for KCL was structured to seek to dilute KCL’s shareholding in YGL, if KCL shareholders accepted that bid; Mr Ranger accepted that he knew the offer operated in that way in cross-examination; and I comfortably draw the inference that YGL’s directors postponed the meeting so as to allow additional time for any such dilution to take place. To the extent that Mr Ranger did not accept that he held that purpose in cross-examination, I am not persuaded by his denial of that matter and I infer that no evidence that could have been led by the other directors or former directors of YGL who did not give evidence, including Mr Patton and Mr Bolton, would have assisted YGL in displacing that inference.
I will hear the parties as to costs including as to any question of costs on a special basis and any third party costs orders. I therefore make the following orders:
Declare that the notice issued by the Plaintiff, Keybridge Capital Ltd (“KCL”) to the Defendant, Yowie Group Ltd (“YGL”) under s 203D(2) of the Corporations Act 2001 (Cth) (“Act”) dated 1 April 2025 is a valid notice of intention to move a resolution for the removal of directors at the meeting of YGL called under s 249F of the Act (“YGL 249F Meeting”).
Declare that the notice issued by KCL to YGL under s 203D(2) of the Act dated 9 April 2025 is a valid notice of intention to move a resolution for the removal of directors at the YGL 249F Meeting.
Declare that the notice of intention to nominate for election issued by KCL to YGL dated 24 April 2025 is a valid director nomination notice under YGL's constitution for the election of directors at the YGL 249F Meeting.
Declare that the notice of general meeting dated 26 May 2025 issued by KCL and despatched to shareholders of YGL under s 249F of the Act (Notice of 249F Meeting) is a valid notice convening a general meeting of shareholders of YGL to be held on Friday 27 June 2025.
Further and in the alternative to orders 1-4, declare, to the extent necessary, pursuant to s 1322(4) of the Act that the Notice of 249F Meeting is not invalid by reason of any contravention of the requirements of s 203D(2), s 249F or the requirements of cl 13.3 of the YGL's constitution, arising from any contravention of s 198G of the Act.
Order pursuant to s 1322(4) of the Act that Mr R P Austin act as independent chair of the general meeting of YGL scheduled for Friday 27 June 2025.
Declare that KCL is entitled to vote its interests as shareholder at the forthcoming YGL 249F Meeting on each resolution set out in the Notice of 249F Meeting.
Declare that the purported resolution by the board of directors of the YGL on 2 June 2025 pursuant to cl 11.2 of YGL's constitution to postpone and change the venue of the general meeting of shareholders convened by the Notice of 249F Meeting is invalid and of no effect.
Direct the parties submit agreed orders as to costs, or otherwise their respective proposed costs orders and submissions not exceeding five pages in Arial font 12 as to costs, by 4:00pm on 4 July 2025.
**********
Paragraph 77 - typographical error corrected.
(1938) 60 CLR 336
(2004) 213 ALR 771
(2000) 201 CLR 520
(2006) 201 FLR 424
(1974) 3 ALR 448
(2002) 171 FLR 232
(1992) 27 NSWLR 26
(1994) 34 NSWLR 548
(2013) 251 CLR 396
(1987) 162 CLR 285
(2001) 166 FLR 144
Mr Ranger was cross-examined. He gave guarded evidence, frequently qualifying his evidence by reference to the extent of his recollection. It is neither necessary nor appropriate that I reach a credit finding in respect of Mr Ranger, and I do not do so, where it is possible to determine this application by reference to uncontroverted documentary evidence. I am not persuaded by Mr Ranger’s denial that YGL had purposes in postponing the YGL 249F Meeting beyond those which it had identified in an ASX announcement. I address those purposes below.
By email dated 22 April 2025 (Ex P1, CB 551), the solicitor acting for the then voluntary administrators of KCL referred to a request for consent to issue the Director Nomination Notice; noted that that would need to occur after KCL had obtained the YGL share register, as to which the voluntary administrator had given approval; and indicated that:
On 2 June 2025, the directors of YGL attended a meeting which discussed the postponement and change of venue of the YGL 249F Meeting. The board raised several matters, including a suggested defect in the period of notice given for that meeting. No point of that character was taken on this hearing and it is not necessary to address that question, or any such issue arising in respect the notice issued by ASG in respect of KCL. On the same date, YGL announced to ASX that its board of directors had unanimously resolved, pursuant to cl 11.2 of YGL’s constitution, to postpone the YGL 249F Meeting to 10.00am on 14 July 2025 and change the venue of the meeting “to the extent the purported meeting is valid”. That announcement referred to YGL’s earlier ASX announcement on 1 May 2025 and its response dated 19 May 2025 to an ASX query letter which was released on 20 May 2025, regarding the “validity of the meeting request”. I will address the reasons it then gave for postponing the meeting in dealing with KCL’s challenge to that postponement below.
On 13 June 2025, YGL issued a bidder’s statement in respect of an off-market takeover bid for KCL to ASX (Ex P2, CB 1313). Mr Ranger was cross-examined about the structure of that offer, which contemplated that KCL’s present control of YGL would be diluted by the issue of YGL shares to KCL shareholders accepting the bid, to satisfy a condition that, by the end of the offer period, KCL no longer controlled YGL.
On the morning of this hearing, 18 June 2025, Mr Bolton and Mr Patton resigned as directors of YGL.
As to the Director Nomination Notice, I accept that KCL’s then voluntary administrator consented to the service of the notice under s 198G(3)(b) of the Ac**t, as I noted above, and, so far as there is any ambiguity as to that matter, I grant relief under s 1322 of the Act below. That notice was again signed by two directors of KCL in accordance with s 127 of the Act, but that does not advance the question of authority to issue that notice.
In the event, KCL’s board has ratified the issue of each of these notices and that is sufficient to establish their validity: Reuter v Electric Telegraph Co (1856) 6 E & B 341; Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Aust) Pty Ltd (2000) 201 CLR 520 at [20]; Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 at [73], where Rees J observed that:
I do not accept YGL’s submission as to the effect of cl 13.3 of YGL’s constitution for several reasons, and it is possible to address that issue briefly because of the straightforward character of those reasons. First, cl 32 of YGL’s constitution provides, in paragraph (f) that:
Mr Green contends that KCL’s true motivation in convening the YGL 249F Meeting and seeking to replace YGL’s directors is to avoid repaying $4.6 million owed to YGL and not YGL’s stated corporate governance concerns. Mr Green submits that “[KCL] owes [YGL] $4.6 million in overdue debt while simultaneously seeking to replace [YGL’s] entire board with [KCL’s] own directors.” That submission assumes, without establishing, the fact that debt is owed by KCL to YGL, a matter that is in dispute in other proceedings; and Mr Green’s further submission that this amounts to a “transparent attempt to avoid debt repayment by control”, and that that demonstrates an “improper purpose” underlying the proceedings, depends upon the unproved premise of the submission. I also do not accept this submission. I put aside, for present purposes, the fact that YGL did not bring any cross-claim which raised any affirmative case of that kind and I will assume, without deciding, that that issue is properly raised in YGL’s defence of the application brought by KCL. The evidence to which YGL refers does not allow the inference that KCL has any such purpose to be drawn, where it is at least equally if not more likely in the relevant circumstances that KCL’s true motivation is, as it says, is to replace directors of YGL in which it lacks confidence.
Mr Green also contended, in effect, that it would be contrary to the interests of YGL’s shareholders to vote in favour of the resolution for the removal and replacement of YGL’s directors, where YGL contends that a debt is owed by KCL to it and has issued a creditor’s statutory demand requiring repayment of that debt which KCL has sought to set aside. Any such debt arose in the context of more complex dealings between KCL, YGL and Mr Bolton, which are the subject of other proceedings in this Court, and Mr Green largely did not address those other dealings. It is plain from the matters that I have set out above that different views might be taken as to whether YGL’s directors should be removed and replaced; it is also plain that at least KCL does not share the belief held by YGL’s directors (other than Mr Bolton and Mr Patton who have now resigned) that they should remain in place; and that is properly a question for YGL’s shareholders rather than a matter for the Court.
The assessment of the YGL directors purpose here requires that I have regard to the directors’ statement of their purposes in the ASX announcement made on 2 June 2025, where YGL set out its board’s reasons for postponing the YGL 249F Meeting as follows:
I am comfortably satisfied that, even if YGL’s directors acted partly for a proper purpose in postponing and relocating the YGL 249G Meeting, they would not have exercised the postponement power but for their impermissible purposes of allowing ASG’s attempt to remove KCL’s directors to succeed, allowing KCL’s control of YGL to be diluted by YGL’s takeover bid, so as to preserve their control of YGL. In reaching this finding, I have not neglected that cl 15.16 of YGL’s constitution deals with directors’ disclosure obligations, but it does not relevantly limit directors’ fiduciary and other duties, where they would be prohibited from voting by s 195 of the Act. This finding is sufficient basis to declare the postponement and relocation of that meeting to be invalid and of no effect, and I make a declaration to that effect below.
Second, Mr Emmett submits that each of YGL’s directors had a material personal interest in the decision to postpone and made that decision in contravention of s 195 of the Act. If I were to determine that question, I would need to do so on the basis that a contravention of that section is a serious matter, and in accordance with the approach set in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (“Briginshaw”) and s 140 of the Evidence Act 1995 (NSW). A difficult question would then arise as to the effect of such a contravention, where s 195(5) of the Act provides that a director’s contravention of s 195(1) “does not affect the validity of any resolution”. Mr Emmett points to a further question as to the effect of a contravention of s 195(1) if all of the directors of YGL have a material personal interest in the resolution and all votes cast were forbidden by that section, and that question was noted but not decided in Drillsearch Energy Limited v McKerlie [2009] NSWSC 517. I do not need to decide the question of a contravention of s 195 of the Act here where I have found that the postponement of the YGL 249F Meeting was not made for a proper purpose and was invalid for the reasons addressed above, and I should not decide this question where I do not need to do so. It is plain enough that YGL’s directors and YGL’s legal representatives will nonetheless need to give very careful consideration to this question.
I should note, for completeness, that YGL made additional submissions as to this question, outside the scope of the limited leave that I had granted as to one matter, after the completion of the hearing, and at the same time sought leave to do so. I decline that leave in accordance with the usual principle that submissions should be made at the hearing; the fact that issues were fully addressed at the hearing; and where I will not decide this question in any event.