Link Agricultural Pty Ltd v Shanahan & Ors [1998] VSCA 3

For the Respondents Mr. S.P. Whelan, Q.C. Blake Dawson Waldron

2. I have had the benefit of reading in draft the reasons for judgment of Kenny, J.A. I agree in her Honour's conclusions and with the reasons she assigns for them.

7. This proceeding concerns the polls held at the Annual General Meeting of Pivot Ltd. ("Pivot") on 15 December 1997. Pivot is incorporated as a company limited by shares. The company's activities have an agricultural focus and most of its shareholders are farmers.

11. Link Agricultural Pty. Ltd. ("Link"), Michael Stanley Shanahan and Allan McCallum are shareholders in Pivot. Link applies, first, for an extension of time in which to make application for leave to appeal from a judgment delivered on 30 January 1998 by a judge of the Court and, secondly, for leave to be joined as appellant in order to bring the appeal. There are two substantive issues raised by the appeal, if leave is given. The first is whether or not the Chairman ought to have permitted votes which were to be cast by Mr. Shanahan as proxy for a large number of shareholders to be included in the count for the election of directors after it was found that Shanahan had inadvertently failed to lodge the relevant voting paper in one or other of the ballot boxes. The second is whether or not a special resolution was required for the appointment of a director in the place of a director removed by ordinary resolution at the meeting.

14. The circumstances in which these proceedings are brought are as follows. Over the past couple of years, the members of the board of directors have differed markedly about certain aspects of the company's policy and, as a result, steps were taken last year by a number of shareholders to secure a differently constituted board.

A notice "requisitioning an Extraordinary Election of a Director of Pivot Limited .... at the forthcoming Annual General Meeting" of the company was delivered to the company's office on 31 October 1997. The notice relevantly stated:

"Pursuant to Section 252 of the Corporations Law 100 shareholders of the Company requisition the inclusion in the notice of the next Annual General Meeting of the Company [of] the following resolutions intended to be moved at that meeting as ordinary resolutions.

(a) That, in accordance with Section 227 of the Corporations Law, Mr. John McDougall be removed as a director of the Company.

(b) That, in accordance with Section 227 of the Corporations Law and by authority of this general meeting, Mr. Allan McCallum be appointed as a director of the company in place of Mr. McDougall."

Notice was later given by the board that there would be an Annual General Meeting of Pivot at 1.30 p.m. on 15 December 1997 at the Performing Arts Centre, Ivanhoe Girls' Grammar School and that the meeting would consider eight resolutions. It set out the three resolutions relevant to this proceeding in the following terms:

"Resolution 6: ELECTION OF TWO SHAREHOLDERS' DIRECTORS To resolve to elect two shareholders' Directors from the following candidates:

(a) Mr John Watson has submitted his nomination for election as a Shareholders' Director in accordance with Article 96 of the Company's Articles of Association ('the Articles').

(b) Mr Robert R Beggs retires by rotation in accordance with Article 90 of the Articles and, being eligible, offers himself for re-election as a Shareholders' Director.

(c) Mr James C S Cox retires by rotation in accordance with Article 90 of the Articles and, being eligible, offers himself for re-election as a Shareholders' Director.

(d) Mr William H Hill has submitted his nomination for election as a Shareholders' Director in accordance with Article 96 of the Articles.

Resolutions 7 & 8: REMOVAL OF SHAREHOLDERS' DIRECTOR MID-TERM, APPOINTMENT OF SUBSTITUTE To consider the following as resolutions to be put to the Meeting on the requisition of 327 shareholdings under Section 227 of the Corporations Law. Note that these resolutions are put to you only on the requisition of the 327 shareholdings, unlike all other business of the Meeting which is submitted on the recommendation of the Board. The resolutions are: Resolution 7: To consider and if thought fit pass the following resolution as a ordinary resolution:- 'That in accordance with Section 227 of the Corporations Law, Mr John McDougall be removed as a director of the Company.' Resolution 8: To consider and if thought fit pass the following resolution as a special resolution:- "That, in accordance with Section 227 of the Corporations Law and by authority of this general meeting, Mr. Allan McCallum be appointed as a director of the Company in place of Mr McDougall."

Although the requisitioning shareholders had sought the removal of McDougall and the appointment of McCallum by ordinary resolution, Pivot and, at the Annual General Meeting, the chairman (for most of the time Mr. J.C.S. Cox) maintained that the appointment of McCallum required a special resolution. Hence, Resolution 8, for the appointment of McCallum, was put to the meeting as a special resolution in the terms specified in the notice.

29. Other steps were taken to attempt to secure a change in the composition of the board. Shanahan, a director of Pivot since 1986, decided not only to support McCallum against McDougall, but also to support Mr. Robert Beggs and Mr. John Watson for board membership. Shanahan and the three candidates whom he supported posted a circular to Pivot's shareholders, soliciting their voting support and Shanahan's appointment as proxy at the forthcoming Annual General Meeting.

32. In accordance with the company's articles of association, the form of proxy required voters, first, to nominate the proxy; secondly, to indicate, by marking the appropriate box, how they cast their votes on Resolutions 6, 7 and 8; and, thirdly, to return the form some two days prior to 15 December 1997. This permitted all the proxy votes to be collated, analysed and counted before the Annual General Meeting.

35. The minutes of the Annual General Meeting held on 15 December 1997 record the presence of 161 shareholders, the directors (Messrs Cox, McDougall, Beggs, Langdon and Shanahan), 29 proxyholders, 3 investor shareholders and a substantial number of other individuals. On arriving at the meeting, Shanahan was informed by officers of Corporate Registry Services Pty Ltd, which was to conduct the elections to be held at the meeting, that he had been appointed proxy for 6,537 members and that this represented 12,411 votes. This much had been ascertained before the meeting, after the information in the forms of proxy (received by Pivot two days earlier) had been collated. Shanahan was given a summary about his proxy appointments, setting out the total number of votes specified for and against each of the relevant resolutions. In relation to Resolution 6, he was informed that he had been given authority to record 11,728 votes in favour and 125 against the election of Watson, and 11,817 votes in favour and 136 against the election of Beggs. The fact that the total number of votes which he was authorised to cast exceeded the number of members who had given him their proxies resulted from the fact that some members were entitled to cast more than one vote, depending on their shareholdings. On his arrival at the meeting, Shanahan was also given a number of proxyholder cards, including cards for Resolutions 6, 7 and 8, together with the voting papers relating to his personal shareholding. In relation to Resolution 6, Shanahan had only to fill in his name, sign the proxyholder card and place it in the ballot box because the results of the voting by Shanahan's appointors were already known (by virtue of the earlier collation and analysis of the information in the forms of proxy previously lodged with Pivot). Shanahan completed all the proxyholder cards (for all relevant resolutions) as required of him and placed them in his brief case for safe-keeping. When each resolution came to be discussed by the meeting, the chairman told the meeting of the outcome of the collation and analysis of relevant proxy votes. In relation to Resolution 6, he said:

"Proxy votes, John Watson, there have been 15,574 cast in favour, 2,837 against and nil votes abstained. Robert Beggs, there have been 16,825 votes cast in favour, 2,458 votes against and nil abstained. James Cox, there have been 5,591 votes cast in favour, 3,797 against and nil votes abstained. William Hill, there have been 4,107 votes cast in favour, 4,248 votes against and 1 vote abstained."

39. During the meeting, polls were called on each of Resolutions 3, 6, 7 and 8 and deferred until the conclusion of the last item of business. At the conclusion of the last item of business, the chairman (then Cox) appointed Roger Randle of Corporate Registry Services to be the returning officer and asked him to explain to the meeting how the polls were to be conducted. In response, Randle said that he had in his possession a document, entitled "Directions for a Poll", setting out the manner in which the polls were to be conducted and he invited the chairman "to take a copy and sign it for the purposes of identification". Presumably this is what the chairman did. Randle went on to say to the meeting that:

"... the polling this afternoon will be somewhat complexed (sic) and we will need to go through it carefully and in stages. I propose that all of the ballot papers will be collected at the one time, we won't do them separately."

The chairman adjourned the meeting for the purpose of enabling the polls to proceed.

44. In an affidavit sworn 16 January 1998, Shanahan deposed that:

"... the circumstances in which the vote was conducted were confused. People were talking and walking around, leaving the hall and re-entering. It was noisy. Mr. Randle may not have intended to place people under pressure by having his staff circulate through the hall collecting voting papers but the presence of one of Mr. Randle's staff waiting for the people in our row of seats did place me under pressure. He stood by waiting for approximately two minutes."

Whether or not there was any such general confusion as Mr. Shanahan suggests, it is conceded by the respondents that in the course of placing voting material in one of the ballot boxes, Shanahan inadvertently failed to place the proxyholder card for Resolution 6 in the ballot box. The failure was not discovered until after Randle had declared the polls closed.

49. When the counting was approaching completion and before the results were entered in the calculation sheets, Randle realised that not all the proxy votes for Resolution 6 had been counted. Upon examination it was found that the proxyholder card given to Shanahan was missing from the count. About an hour after the polls had been declared closed, Shanahan was invited to empty the contents of his brief case before Randle and another of Randle's colleagues. They discovered the card lodged between two folders sitting in the case. Shanahan requested that the card be accepted into the count and the very large number of votes which he had been directed to cast be included in the result. It fell to McDougall, who had acted as chairman for Resolution 6 because Cox was amongst the candidates for election, to decide whether or not to accept Shanahan's proxyholder card and the votes which it represented. McDougall decided to refuse Shanahan's request. Randle entered the figures, excluding Shanahan's proxy votes, into the calculation sheets and compiled poll reports for each of the relevant resolutions.

52. When the meeting was re-convened, McDougall ruled that he would not permit Shanahan to lodge his proxyholder card and would not allow the votes which it represented to be included in the count, stating:

" . . . the argument for re-opening the ballot and accepting the votes was that it would be disenfranchising a significant number of voters. The argument for not opening the ballot box was that rules are rules the ballot box had been closed. The ... members themselves could have voted directly rather than voting by proxy. I took account of the mood of the meeting and the expression of confusion that people expressed over the voting process and I also considered that by disallowing those proxies or the ballot box to be opened that it most closely retained the status quo."

There was a motion of dissent from the ruling. Mr. Antony Greenwood (who as it so happened is Shanahan's solicitor) called for a poll. Shanahan seconded the motion. McDougall, as acting chairman, stated that he would ask for "a show of hands from those people present", as the company's articles of association apparently contemplated: cf. Articles 61 and 63. In the result, however, the motion was not put to the meeting. Instead Randle was asked to read out the results (excluding Shanahan's proxy votes).

57. The result of the poll on Resolution 6, the election of directors, was:

Cox and Beggs were re-elected as directors. Had the proxy votes held by Shanahan been included in the result, Beggs would still have been declared elected but Watson would have been elected in the place of Cox.

66. The result of the poll on Resolution 7, the removal of a director, was:

Resolution 7 was carried as an ordinary resolution.

73. The result of the poll on Resolution 8, the appointment of a substitute director, was:

Resolution 8 was not carried as a special resolution.

80. Two days later, Shanahan and McCallum, as shareholders in Pivot, made application, by originating motion dated 17 December 1997, for declaratory and other relief, naming Pivot as the defendant. The application was heard by a judge of the Court on 19, 20 and 21 January 1998 and judgment was delivered on 30 January. His Honour made declarations that:

(a) the purported election of Cox as a director of Pivot on 15 December 1997 is invalid;

(b) the resolution required to appoint McCallum as a director of Pivot was an ordinary resolution;

(c) the resolution to appoint McCallum as a director was validly passed at the meeting of Pivot on 15 December 1997 and he was thereby appointed as a director; and

(d) the proxy votes given to Shanahan by members of Pivot were validly cast and John Watson was duly appointed as a director of Pivot at the meeting on 15 December 1997.

86. By summons dated 6 March 1998 Link applied to be joined "as an appellant" and for leave to appeal from the decision below. Because Link was not a party to the proceeding below, it requires the leave of the Court to bring the appeal: Cuthbertson v. City of Hobart [1921] HCA 51; (1921) 30 C.L.R. 16, at 25, 30. The Rules of Court require that an application for leave to appeal be made within 14 days after the decision, unless otherwise ordered: Rule 64.03(3). Being out of time, Link also applied orally for an extension of time to bring the appeal. These applications were opposed by the respondents (who were Shanahan, McCallum and Pivot) upon the basis, first, that the rule in Foss v. Harbottle [1843] EngR 478; (1843) 2 Hare 461; 67 E.R. 189 applied to deny Link standing to bring the appeal and, secondly, that a number of factors weighed against the exercise of discretion in Link's favour.

92. Possibly the best explanation of the rule in Foss v. Harbottle is that given by Jenkins, L.J. in Edwards v. Halliwell [1950] 2 All E.R. 1064, at 1066-67. Jenkins, L.J. said:

"The rule in Foss v. Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and on all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that, if a mere majority of the members of the company or association is in favour of what has been done, then cadit quaestio. No wrong had been done to the company or association and there is nothing in respect of which anyone can sue. If, on the other hand, a simple majority of members of the company or association is against what has been done, then there is no valid reason why the company or association itself should not sue. In my judgment, it is implicit in the rule that the matter relied on as constituting the cause of action should be a cause of action properly belonging to the general body of corporators or members of the company or association as opposed to a cause of action which some individual member can assert in his own right."

See also Burland v. Earle [1902] A.C. 83, at 93. It was submitted by counsel for the respondents that Link was seeking to exercise the company's right of appeal, out of time, and that it had no standing to do so, because of the proper plaintiff principle (only the company having standing to prosecute the company's appeal) and the internal management principle (a general meeting being able to call for an appeal or to ratify the decision not to bring one). I do not accept this characterisation of Link's application. Despite the terms of its summons, Link does not, it seems to me, desire to exercise a derivative right of any kind. Link seeks, as its counsel contended, to enforce its personal right as a member of Pivot to have the election and appointment of directors determined in accordance with the articles of association, including any rules or determinations lawfully made under them.

97. It has been said that the rule in Foss v. Harbottle has no application, alternatively there is an exception, where a shareholder sues to enforce a shareholder's individual rights against the conduct of the majority: cf. Shears v. Chisholm [1994] VicRp 75; [1994] 2 V.R. 535, at 635 per J.D. Phillips, J. I would not limit the occasion upon which a shareholder may vindicate personal or individual rights as a member to the situation where it is the conduct of the majority which has brought about the infringement. Further, it seems to me that one such personal or individual right is the right to have the election (or appointment) of a director to the board conducted (or made) in accordance with the company's articles of association. In my opinion, the rule in Foss v. Harbottle has no application where the conduct complained of operates to infringe a personal right pertaining to the shareholder as a member, either because the infringement is not capable of ratification by the members in general meeting at all or because, though capable of ratification, it has not in fact been ratified: compare and contrast: MacDougall v. Gardiner (1875) 1 Ch.D. 13 and Pender v. Lushington (1877) 6 Ch.D. 70 and Hogg v. Cramphorn [1967] Ch. 254 and Bamford v. Bamford [1970] Ch. 212; and see generally, Ford's Principles of Corporations Law (looseleaf, Butterworths, 1995-) paras.11.233-11.235, 11.250, 11.260; Lipton and Herzberg, Understanding Company Law 5th ed., pp.490-493; Gower's Principles of Modern Company Law, 6th ed., pp.660-670; Palmer's Company Law (25th ed., looseleaf, Sweet & Maxwell, 1992-) paras.8.808-8.812. I do not stay to determine precisely the terms of the rule when members' personal rights are infringed because in this case the rule, howsoever precisely formulated, must apply, there being no purported ratification (whether effective or ineffective) of any infringement of Link's personal right relating to the election and appointment of directors.

100. This view is not novel. In Kraus v. J.G. Lloyd Pty. Ltd. [1965] VicRp 35; [1965] V.R. 232, at 235-6, Hudson, J. held that the rule in Foss v. Harbottle did not operate so as to prevent a shareholder from personally enforcing his "individual membership rights" by action for an injunction against a person who was purporting to be a director although not validly appointed to the office. In Ryan v. South Sydney Junior Rugby League Club Ltd. (1974) 3 A.C.L.R. 486, Holland, J. said at 492:

"A distinction has to be drawn between personal and individual rights of a member given to him by the articles on the one hand and corporate membership rights on the other. This distinction is discussed in Palmer's Company Law 20th ed. p.494 et seq. The latter are rights which the member has agreed to submit to the will of the majority, provided that that will is expressed in accordance with the law and the articles. With respect to such rights the principle of the supremacy of the majority applies. Rights of the former kind cannot be affected or denied by the will of the majority. In Pender v. Lushington (1877) 6 Ch.D. 70 at 80, Sir George Jessel, and in Edwards v. Halliwell [1950] 2 All E.R. 1064 at 1067, Jenkins, L.J., pointed out that the rule in Foss v. Harbottle had no application to individual membership rights."

Applying this, his Honour held that the rule in Foss v. Harbottle had no application to a case in which a member sought to enforce his rights under the articles as a member to have an election of directors carried out in accordance with the articles (although the plaintiff in that case failed for other reasons). In Residues Treatment and Trading Co. Ltd. v. Southern Resources Ltd. (1988) 51 S.A.S.R. 196 at 198, King, C.J. (with whom Matheson, J. concurred and Bollen, J. in a separate judgment agreed) took the view that the rule in Foss v. Harbottle would not prevent a shareholder from seeking to protect by action the shareholder's personal rights, with the result that a shareholder might properly sue to prevent an allotment of shares unlawfully made. The Chief Justice said, at 202:

"A member's voting rights and the rights of participation which they provide in the decision-making of the company are a fundamental attribute of membership and are rights which the member should be able to protect by legal action against improper diminution. The rule in Foss v. Harbottle has no application where individual membership rights as opposed to corporate rights are involved ...

A similar view had earlier been taken in Efstathis v. The Greek Orthodox Community of St. George & Ors. [1989] 1 Qd.R. 146, at 151 in which Kelly, S.P.J. (with whom Ryan and Moynihan, JJ. agreed) held that the rule in Foss v. Harbottle had no application in that case where members of the defendant sought to enforce their rights as members to ensure that the duly elected council was not invalidly dismissed.

107. As a shareholder in Pivot, Link is a party to the statutory contract referred to in s.180 of the Corporations Law. (I refer to the provisions of the Law as it stood before 1 July 1998 and do so in the present tense. Although invited to say so if the amendments to commence that day were relevant to the appeal, neither party did.) The company's articles of association form part of that statutory contract. Link, like other members, is entitled to have the election or appointment to the board of directors decided lawfully in accordance with those articles: cf. Ryan (1974) 3 A.C.L.R. 486, at 495-6. If the chairman's decision not to permit Shanahan to lodge his proxyholder card was lawfully made, Link is entitled to maintain it. If resolution 8 (for the appointment of McCallum to replace McDougall) was required by law to be a special resolution, then Link is entitled to insist upon a special resolution as a pre-requisite for McCallum's appointment. This latter matter is plainly not capable of being cured by an ordinary resolution of a general meeting of Pivot; and I do not think that it would be open to a simple majority in general meeting to sanction a departure from the rules governing election to the board of directors when such a departure constitutes a breach of a fundamental personal right enjoyed by every member of the company.

110. Accordingly, I do not think that the rule in Foss v. Harbottle operates to prevent Link from being added as a party to the proceedings. It is unnecessary to decide what would have been the position had the motion of dissent proposed by Greenwood and seconded by Shanahan been passed by those present at the general meeting on 15 December 1997, the motion never having been put to the meeting.

113. Link, by its counsel, also relied on "the justice of the case" which, it was submitted, would permit departure from the rule in Foss v. Harbottle. In view of the conclusion I have reached as to the application of the rule in this case, I need not decide whether, or in what circumstances, there is such an exception. Cf. Campbell v. Kitchen & Sons Ltd. & Anor [1910] HCA 23; (1910) 12 C.L.R. 513 and 515, at 517, Scarel Pty. Ltd. & Yates v. City Loan & Credit Corp. Pty. Ltd. (1988) 17 F.C.R. 344, at 350, Biala Pty. Ltd. v. Mallina Holdings Ltd. (No.4) (1993) 13 W.A.R. 11, at 69-73, Shears v. Chisholm [1994] VicRp 75; [1994] 2 V.R. 535, at 635 and Mesenberg v. Cord Industrial Recruiters Pty. Ltd. (1996) 39 N.S.W.L.R. 128, at 132.

117. Where a person who was not a party to a proceeding at first instance seeks leave to be added as a party for the purpose of bringing an appeal from the judgment below, leave will ordinarily be given where the proposed appellant might properly have been a party to the proceeding at first instance: see Cuthbertson v. City of Hobart [1921] HCA 51; (1921) 30 C.L.R. 16, at 25. In view of the nature of the rights in issue, Link might have sought to have been joined in the proceeding as a shareholder who had participated in the polls conducted at Pivot's Annual General Meeting on 15 December 1997. Shanahan and McCallum sought to exercise their right to bring the proceeding in the first instance upon a similar, although perhaps not identical, basis.

3. Discretionary considerations affecting Link's preliminary applications

121. It was submitted by the respondents that, even if the Court were to take this view, leave should be refused and Link's application for an extension of time under Rule 64.03 should be declined, having regard to a number of factors, the most important of which were:

(a) if Link were wholly successful, the board would very likely be deadlocked and a further meeting of members would very likely result in a board as presently constituted by order of the judge below, but if Link were partly successful, that would have no effect on control of the board;

(b) a majority of the members voting wished the board to be constituted as the judge below had directed and there was no sizeable group of members in favour of appealing;

(c) the board, as constituted by order of the judge below, opposed the appeal;

(d) the burden of Link's complaint is disagreement with the policies of the Shanahan ticket and, in seeking leave, Link is seeking to agitate a complaint which the decision of the judge below had extinguished;

(e) the appeal would damage the company;

(f) the prospects of success on appeal were low; and

(g) in relation to the extension of time application, there was an insufficient explanation for the delay.

127. It is not, in my view, appropriate for the Court to speculate as to how the board would act, if it were differently constituted. Nor do I think it appropriate to speculate upon the future conduct of any general meeting of the company. Having regard to the nature of the rights which Link seeks to protect, I do not think Link should be precluded from bringing the appeal for the reason that a majority of the shareholders voting favoured the result ordered by the judge below, if that result was unlawfully obtained. Further, it is unnecessary to decide whether or not there was any appreciable opposition to "the Shanahan ticket" amongst Pivot's shareholders. Statements in affidavits filed on behalf of Link indicated that there might be, but this was denied by the respondents and, in the circumstances, I do not think that it mattered whether or not, in bringing these applications, Link had the support of a sizeable minority or of a member of the board. Whilst disagreement with the policies of the board may motivate Link's desire to appeal from the decision below, I do not think that this or any of the factors mentioned deprive it of its entitlement to have the election conducted and any appointment made to the board lawfully.

130. There were some general statements in the affidavits filed on behalf of the respondents that the company would suffer further damage if the appeal were permitted to proceed. These statements were at best no more than assertions and insufficient, in my view, to tip the balance against permitting Link to bring the appeal.

133. As appears below, I do not accept that the prospects of success on the proposed appeal were properly described as low.

136. In opposing the grant of leave to be joined as an appellant, the respondents also raised the possibility that Link was being used as a vehicle for Douglas Stephen Shears who has, it seems, already been involved in a considerable amount of litigation touching Pivot and who, the respondents suggested, was in fact behind the challenge to the decision below. In the face of these allegations, Michael Digby Best, who acts as solicitor for Link, has deposed that he does not act for Shears and that neither he nor his client has any arrangement with Shears (or City Farm Pty. Ltd., a company connected with him) in relation to the costs of the proceedings. I am not persuaded that any possibility of the kind alleged by the respondents is raised on the material before the Court and I am not prepared to draw an inference of ulterior motive on Link's part, as the respondents invited the Court to do.

139. In support of the application for an extension of time, counsel for Link submitted that that the reason for the delay in bringing application for leave to appeal appeared sufficiently from Mr. Best's affidavit sworn 26 March 1998, who said in substance that Link, not being a party to the proceeding below, had encountered difficulty in obtaining the trial judge's reasons for judgment and had not in fact obtained those reasons until 11 February 1998. Link had taken advice as to the possibility of bringing an appeal, first, from junior counsel, then, from senior counsel, issuing the summons, as noted earlier, on 6 March 1998. I reject the respondent's submission that the delay was, in the circumstances, excessive and the explanation inadequate. The respondents did not suggest that any prejudice arose from the delay (as distinct from bringing the appeal).

142. For these reasons, I should grant Link's application for an extension of time in which to make application for leave to appeal and its application to be added as party for the purpose of bringing the appeal.

146. As earlier noted, there were two principal matters raised by the appeal. The first was whether or not the judge below had erred in holding that the election of Cox to the board of directors was invalid on the basis that the chairman had been required as a matter of law to permit Shanahan to lodge his proxyholder card for Resolution 6, the election of directors. The second was whether the judge erred in holding that McCallum's appointment to the board required only a simple majority.

150. In considering the first of these matters, it is necessary to turn to Pivot's articles of association and the document, Directions for a Poll. The articles of association provide that, in the first instance, a question submitted to a general meeting is to be decided by a show of hands of the shareholders present and entitled to vote (Article 61). Unless a poll was demanded "a declaration by the Chairman that a resolution has been passed or lost, having regard to the majority required, and an entry to that effect in the book to be kept of the proceedings of the Company, ... is conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour or against the resolution" (Article 62). A poll, if demanded, -

"is to be taken in the manner and at the time and place as the Chairman of the meeting directs, and either at once or after an interval of adjournment or otherwise, and the result of the poll is deemed to be the resolution of the meeting at which the poll was demanded. ..." (Article 63).

"The general conduct of each general meeting of the Company and the procedures to be adopted at the meeting are as determined by the Chairman. At any time the Chairman considers it necessary or desirable for the proper and orderly conduct of the meeting, the Chairman may demand the cessation of debate or discussion on any business, question, motion or resolution being considered by the meeting and require the business, question, motion or resolution to be put to a vote of the shareholders present. The Chairman may require the adoption of any procedures which are in the Chairman's opinion necessary or desirable for the proper and orderly casting or recording of votes at any general meeting of the Company, whether on a show of hands or on a poll."

Pivot's articles of association provide for votes to be given either personally or by proxy (Articles 70 and 71; cf. Corporations Law, s.250) and if by proxy, provision is made for the voter to deposit "the instrument, letter or facsimile appointing a proxy or agent ..." "not later than 10 a.m. two days before the time for holding the meeting ... at which the person named in the instrument proposes to vote" (Article 72). The articles provide, in Article 71, that "[n]o appointment in writing of a proxy or agent to vote at any election of Directors or Auditors will be deemed to be valid unless it contains the name or names of the person or persons for whom the appointor desires to vote and, at any such election, no proxy or agent may vote except as authorised in the appointment".

157. It was presumably pursuant to Article 67 that the chairman signed and, it seems, signified his adoption of the document, Directions for a Poll, which Randle told the meeting was to govern the manner in which the polls were to be conducted at the meeting on 15 December. So far as relevant, those Directions provided as follows:

"15. Completed voting papers are to be placed in one of the ballot boxes under the supervision of the Returning Officer or his agent. 17. Any question arising in relation to the number of votes a member is entitled to cast, the admission or rejection of a vote, or qualification of any voter (or proxy, attorney, representative or executor/administrator) shall be referred by the Returning Officer to the Chairman for his determination pursuant to the Corporation's Articles. The Chairman's determination shall be final and conclusive. 18. The Returning Officer shall complete, sign and give to the Chairman of the Meeting a Poll Report as soon as practicable after the completion of the poll indicating in that report the number of valid votes cast 'FOR' and 'AGAINST' the motion. The report of the Returning Officer on a Poll Report shall be regarded as conclusive evidence of the votes cast in a poll. 22. The result of the poll shall be declared by the Chairman and advised to the meeting in such a manner as the Chairman determines."

161. The judge at first instance held, first, that the chairman had acted unreasonably in not directing that Shanahan be permitted to lodge his proxyholder card for Resolution 6 and, secondly, that the result of the poll was a result which included the votes represented by that card. Counsel for the appellant submitted that his Honour's approach was wrong and that the election was valid, having been conducted in accordance with Pivot's articles of association. Whilst conceding that the chairman must act reasonably in exercising the powers conferred by Articles 63 and 67 as to the conduct of any poll, counsel for the appellant submitted that the chairman had fully discharged his obligation in this case by providing a reasonable opportunity to vote, that is, by fixing a reasonable time and making reasonable provision for the taking of the polls on 15 December. A shareholder could not, appellant's counsel said, legitimately complain that his vote had not been included in the count when the failure to include it was due to the failure of his proxy to avail himself of the opportunity to place the proxyholder card in the ballot box. It was not open to his Honour to declare, so the appellant submitted, a different result upon the basis that the shareholder's proxy had done that which he had in fact failed to do.

164. As I understand the case, no party suggested that the Chairman had failed to provide a reasonable opportunity for an eligible shareholder to vote. In an affidavit sworn 14 January 1998, Randle, the returning officer, deposed that, before closing the polls, he twice asked the meeting if there was anyone still to complete and lodge voting papers. On the first occasion, he deferred closing the polls when it was indicated that not all voters had yet completed and lodged their voting papers. On the second occasion, there was no indication that anyone had yet to place papers in the ballot box and, accordingly, Randle declared the polls closed. This account was confirmed by Cox in an affidavit also sworn 14 January 1998.

167. In support of the submission that the Chairman had done all that the law required of him by giving eligible voters a reasonable opportunity to vote, counsel for the appellant relied upon a number of authorities, the chief amongst them being R. v. Rector, Churchwardens & Parishioners of St. Mary, Lambeth [1838] EngR 664; (1838) 8 Ad & E. 356; Baker & Downing v. Wood (1837) 1 Curt. 507; R. v. The Overseers of Sutton, in Lancashire (1864) 11 L.T. (N.S.) 487 and 13 W.R. 187; and Gribbin & Ors. v. Kirker (1873) 7 I.R. 30. Although these authorities relate to election to public office, I accept that they are not, for that reason alone, unhelpful. As they show, it is ordinarily incumbent on a person charged with responsibility for the conduct of an election, whether to public or private office, to ensure that there is a reasonable opportunity for eligible voters to vote, to fix a reasonable time for voting and to make reasonable provision for voting. The question is whether the law may require more of a person charged with responsibility for an election, depending on the circumstances. The authorities to which the appellant has referred do not, I think, settle the question. Plainly enough, voters cannot complain when their votes are not included in the count solely because they failed to avail themselves of the opportunity to vote. The authorities relied on by the appellant show that, depending upon the circumstances of the case, a person charged with responsibility for an election may not be bound to extend the opportunity to vote to permit a late voter to overcome his tardiness. For example, it may not be a proper exercise of discretion to extend the time for voting in an election to public office where the period for voting has been specified, publicly, in advance: R. v. Overseers of Sutton, in Lancashire, supra. The authorities relied on by the appellant concern elections to bodies of a very different kind, however, governed by a very different legal framework to the case in hand; and I do not think they stand for the proposition that a person charged with responsibility for the conduct of an election to office in a private corporation need never do more than provide a reasonable opportunity to eligible voters to vote. It seems to me that what the law requires of that person will depend upon the nature of the election, the circumstances of the case, and the legal framework in which the election is to be held.

170. As noted above, Articles 63 and 67 of Pivot's articles of association conferred on the chairman power to direct the manner, time and place for the taking of a poll and to require the adoption of procedures "for the proper and orderly casting or recording of votes". The respondents' case was, first, that the general law and these articles included the power to permit Shanahan to lodge his proxyholder card late and to direct that the votes represented by it were included in the count; and, secondly, that the powers exercisable by the chairman were not unfettered and were not to be exercised so as to deprive members of their vote.

173. The effect of Articles 63 and 67 was to confer upon the chairman a general power with respect to the conduct of elections by the members in general meeting. There was nothing in the articles or in the Directions for a Poll which prevented the chairman from exercising his discretion in favour of the proxy voters and Shanahan at the time Shanahan's mistake was discovered. Counting had not, it seems, been completed: it could not be, in the circumstances, until the chairman's ruling was known. Until the chairman's ruling was known, the returning officer was unable to enter the figures onto the calculation sheets, to complete the poll reports and give them to the chairman. There was no room for the operation of paragraph 18 of the Directions for a Poll (set out above). Absent any provision to the contrary, the power to correct a patent and inadvertent slip on the part of voters or their proxies which, if uncorrected, was likely to affect the result is to be implied from the very generality of the chairman's powers with respect to the conduct of the polls. The power to take remedial steps in the event of a mistake in the taking or counting of votes has been recognised before: in Hickman v. The Kent or Romney Marsh Sheepbreeders' Association (1920) 36 T.L.R. 528, it was held that the chairman properly called for a second vote on a resolution after announcing the result on the first vote, because he was not sure that the first vote had been taken or counted correctly. I accept the respondents' first contention, namely, that the chairman had the power to permit Shanahan to lodge his proxyholder card late.

176. I also accept the respondents' submission that the powers exercisable by the chairman were not unfettered. Broadly speaking, these powers could not be exercised so as unlawfully to deprive members of their votes: cf. Scullion & Anor. v. Family Planning Association of Queensland (1985) 10 A.C.L.R. 249; ANZ Nominees Ltd. v. Allied Resources Corporation Ltd. & Ors. (1984) 2 A.C.L.C. 783; Industrial Equity Ltd. v. New Redhead Estate and Coal Co. Ltd. [1969] 1 N.S.W.R. 565; and Oliver v. John Dalgleish & Ors. [1963] 1 W.L.R. 1274. This is not a case, however, in which a chairman's ruling operated to abrogate or restrict the rights of members to vote by proxy. It was not said by the chairman, in error, that the members who had appointed Shanahan their proxy had done so invalidly. Those members' evident desire to have their will reflected in the result for the election of directors was defeated only because their proxy failed to place his proxyholder card in the ballot box before the returning officer closed the poll on Resolution 6, and because the chairman declined to permit the card to be lodged afterwards. The question is, therefore, whether the chairman erred in declining to permit Shanahan to lodge his proxyholder card late with the result that the proxy voters lost the benefit of their rights to vote by proxy, not whether the chairman erred in abrogating or restricting the rights of those members to vote by proxy.

179. The purpose of the powers conferred upon the chairman with respect to the conduct of the polls was to facilitate the voting and the counting of votes upon the relevant resolutions in order that the will of the majority of members, eligible to vote and voting, should be reliably ascertained. Whether or not there was error in the chairman's ruling depends on whether it was made in good faith and for that purpose. The ruling will be invalid if made in bad faith or for an ulterior or impermissible purpose. It was not suggested here that the ruling was made otherwise than in good faith, but it was submitted by the respondents (the plaintiffs below) that it had not been made for the proper purpose.

182. Much the same test has been applied in determining the validity of an exercise of power by a director or directors in other, quite different contexts: see Whitehouse & Anor. v. Carlton Hotel Pty. Ltd. [1987] HCA 11; (1987) 162 C.L.R. 285, at 293 per Mason, Deane and Dawson, JJ. and Mills v. Mills [1938] HCA 4; (1938) 60 C.L.R. 150, 169 per Rich, J. and 185-6 per Dixon, J. It seems to me that the test formed the basis of Uthwatt, J.'s approach in The Second Consolidated Trust Ltd. v. Ceylon Amalgamated Tea and Rubber Estates Ltd. & Ors. [1943] 2 All E.R. 567 at 569. The issue in that case was whether the chairman failed to act according to law in deciding not to demand a poll and to accept a show of hands (pursuant to which the resolution in question was passed) in circumstances where the proxy votes had been counted in to constitute a quorum and, if counted in on a poll, they would have defeated the resolution. Uthwatt, J. held, at p.569, that the chairman was in breach of his duty, for the reason that -

"... the power to demand a poll is a power possessed by the chairman which is to be exercised or not to be exercised according to his decision whether it is necessary to exercise the power in order to ascertain the sense of the meeting upon the matter before them; in other words, it is a power directed towards enabling him to carry on the meeting for the purpose for which it is convened."

A like approach had earlier been adopted in National Dwellings Society v. Sykes [1894] 3 Ch. 159 where Chitty, J. had said at p.162 -

"... it is the duty of the chairman, and his function, to preserve order, and to take care that the proceedings are conducted in a proper manner, and that the sense of the meeting is properly ascertained with regard to any question which is properly before the meeting".

The last-mentioned passage has been referred to with approval on more than one occasion: see, e.g., John v. Rees [1970] Ch. 345, at 380 per Megarry, J. and Corpique (No.20) Pty. Ltd. v. Eastcourt Ltd. & Ors. (1989) 15 A.C.L.R. 586, at 594-5 per Cohen, J.

189. More recently, in Byng v. London Life Association Ltd. [1990] Ch. 170, the Court of Appeal in England held that in exercising powers as chairman of a meeting of the members of a public corporation, a chairman erred in law if, amongst other things, he did not take a decision reasonably with a view to facilitating the purpose for which the powers had been conferred. The Court held that the chairman in that case had erred in law in deciding to adjourn the meeting from the morning to the afternoon because the venue to which the members had first been summoned was unable to accommodate all those wishing to attend, in circumstances where many of the members present in the morning were unable to re-arrange their affairs on short notice so as to be present in the afternoon. Sir Nicholas Browne-Wilkinson, V-C, said at 189:

"In my judgment the chairman's decision must also be taken reasonably with a view to facilitating the purpose for which the power exists."

"The chairman's decision will not be declared invalid unless on the facts which he knew or ought to have known he failed to take into account all the relevant factors, took into account irrelevant factors or reached a conclusion which no reasonable chairman, properly directing himself as to his duties, could have reached, i.e. the test is the same as that applicable on judicial review in accordance with the principles of Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 K.B. 223. This was the approach adopted by Uthwatt, J. in Second Consolidated Trust v. Ceylon & Amalgamated Tea and Rubber Estates Ltd. [1943] 2 All E.R. 567 where he held a chairman's decision invalid on the grounds that he had failed to take into account a relevant factor."

Woolf, L.J. adopted a like approach, observing at 194, that in deciding whether the chairman's decision to adjourn the meeting was lawful -

"... the approach of the court is no different from that which it regularly adopts when reviewing the exercise of discretion by a public body under a statutory power. This is the position even though when acting as chairman of the meeting [the chairman] is not performing a public function and derives his powers either expressly or by implication from the articles of [the company]. While the source of his power is different from that of a person performing a public function, the well established principles which determine whether there has been a proper exercise of discretion by a public body apply to the exercise by [the chairman] of his powers. In particular he must have regard to the nature of the power which he is exercising and use the power for the purpose for which it was given."

I do not think that Mustill, L.J. differed on this aspect of the case: see [1990] Ch. 170, 194. It is unnecessary to decide in this case whether, for all purposes, the same test of the validity of a chairman's decision relating to the conduct of a general meeting of the members of a public corporation applies in this Court as in the English Court of Appeal. It is sufficient for this case to say that the validity of the chairman's ruling depends upon whether it facilitated the purpose of the power pursuant to which it was made.

198. Was the chairman's ruling not to accept Shanahan's proxyholder card made for the purpose of facilitating the voting and counting of votes in order that the will of the majority might be reliably ascertained? The answer is partly to be gleaned from the reasons given to the meeting by the chairman on 15 December 1997. The chairman sought to explain them further in an affidavit sworn by him on 14 January 1998. On his own account, the chairman was governed by five principal considerations. First, there was the fact that "rules are rules", that is, that the integrity of the voting process depended, in the chairman's view, upon adherence to the rules. Secondly, there was the fact (as the chairman saw it) that the voters had lost their opportunity to have their votes included in the result solely because of Shanahan's failure to fulfill his responsibility to them; and, thirdly, in appointing Shanahan as their proxy, the voters had chosen to place their participation in his hands. Fourthly, as the chairman saw it, in declining to accept Shanahan's proxyholder card, the status quo was best maintained and, finally, there was "the mood of the meeting and the expression of confusion that people expressed over the voting process". In relation to this latter matter, McDougall added, in his affidavit of 14 January 1998, that -

"It seemed to me from the debate at the Meeting that there was a strong view amongst the shareholders present that considerable confusion had been caused by aspects of the campaigning conducted by the Plaintiffs and that shareholders who had appointed a proxy rather than attending the Meeting might have voted in a different manner had they attended the meeting."

202. Save for the first and perhaps the last matters, none of these considerations bore much, if at all, upon the object of the power being exercised by the chairman in ruling upon whether or not to accept Shanahan's proxyholder card. The chairman did not, it seems, advert to the importance of the right to vote by proxy, deriving as it did from statute as well as from the company's articles. Nor did he take into account that the proxy voters had been seeking to exercise that right and that, but for Shanahan's error, they would validly have done so: cf. Scullion & Anor. v. Family Planning Association of Queensland (1985) 10 A.C.L.R. 249, at 254; ANZ Nominees Ltd. v. Allied Resources Corporation Ltd. & Ors. (1984) 2 A.C.L.C. 783, 787. He also failed to consider whether, in all the circumstances, the slip made by Shanahan was so minor that it could not justify him in deciding to exclude so many members' votes from the count if the decision he was to make was to be in furtherance of the purpose of the power.

205. The circumstances attending the poll showed that Shanahan's error was of a very low order indeed. As already noted, Pivot's articles (1) required an appointment of a proxy for the election of directors to nominate the candidates to be favoured by the voter with his vote; (2) required an appointment to be lodged with the company two days prior to the meeting; and (3) prohibited the proxy from voting except as authorised in the appointment: see Articles 71-72. Hence, prior to the meeting, the company knew that a large number of members had appointed Shanahan as their proxy and the result of the votes which those members wished to cast by their proxy. Presumably, it was on account of this latter fact that, in introducing Resolution 6, the chairman referred to the proxy votes as having been "cast" and announced the result of the count of those votes before the meeting began its discussion of the resolution. Further, before the polls were taken, the company and the chairman had notice that Shanahan was in attendance in his own interest and as proxy, intending to discharge his responsibility to his appointors. In relation to Resolution 6, he was obliged to do no more than fill in his name, sign the Resolution 6 proxyholder card and place it in a ballot box. Shanahan did everything except physically put that card in the box. He placed all the other papers touching the other resolutions, whether relating to proxy or personal votes, in the ballot box but not those touching the proxy votes for Resolution 6. In the circumstances of the case, Shanahan's inadvertent failure to place the card for Resolution 6 in the ballot box was no more than a slip of minor dimension. It was not the kind of slip which could have led to any doubt about the voters' true intentions: cf. Oliver v. John Dalgleish & Ors. [1963] 1 W.L.R. 1274, at 1278-9. If unremedied, however, it was a slip which prevented effect being given to the will of a large number of shareholders, who being eligible to vote, had sought to do so. In these circumstances, I do not think that it can be said that the chairman's ruling not to accept Shanahan's proxyholder card and the very large number of votes it represented was designed to facilitate the purpose of the power, to facilitate the voting and counting on Resolution 6 so as reliably to ascertain the will of the majority of the members.

208. In my view, the chairman's ruling on 15 December 1997 was invalid, as the judge below held. There being error shown, it was not only appropriate for the Court to intervene to set aside the chairman's ruling, as the judge below did, it was also open to the Court to declare positively the effect in law of the matters upon which the chairman had erroneously ruled and hence to declare that the chairman was, in the circumstances of the case, bound to accept Shanahan's proxyholder card: see, e.g., ANZ Nominees Ltd. v. Allied Resources Corporation Ltd. & Ors. (1984) 2 A.C.L.C. 783, at 789 and Oliver v. John Dalgleish & Ors. [1963] 1 W.L.R. 1274, at 1279-1280. But was it open to his Honour to declare the votes validly cast and Watson duly elected? The returning officer gave evidence that, whilst the chairman's ruling was pending, he had made an alternative count, including the proxy votes in the result, which would have seen Watson, not Cox, returned as elected. In this circumstance, it was, I think, open to his Honour to declare Watson duly elected by the meeting on 15 December 1997.

211. In view of the conclusion I have reached on this aspect of the case, it is not necessary to address separately the respondents' further submission that the proxy votes for which Shanahan was responsible had in fact been validly cast, notwithstanding Shanahan's error.

2. Whether an ordinary resolution was sufficient to appoint a replacement director

215. The second issue raised by the appeal concerned the appointment of McCallum as a director in place of McDougall. At the beginning of these reasons, I referred to the members' requisition, under s.252 of the Corporations Law, to include in the notice of the Annual General Meeting, first, an ordinary resolution "in accordance with Section 227 of the Corporations Law" for the removal of McDougall as director and, secondly, an ordinary resolution "in accordance with Section 227 of the Corporations Law" for the appointment of McCallum as director in place of McDougall. Section 227 of the Corporations Law relevantly provides:

"(1) A public company may, by resolution, remove a director before the end of the director's period of office, notwithstanding anything in its articles or in any agreement between it and the director.

(a) a resolution to remove a director under this section; or

(b) a resolution to appoint a person in place of a director so removed at the meeting at which the director is removed.

(9) A vacancy created by the removal of a director under this section, if not filled at the meeting at which the director is removed, may be filled as a casual vacancy. (10) A person appointed as a director in place of a person removed under this section shall be treated, for the purpose of determining the time at which that person or any other director is to retire, as if that person had become a director on the day on which the person in whose place that person is appointed was last appointed a director."

225. When the board came to give notice of the Annual General Meeting, it gave notice that the resolution for the appointment of McCallum in the place of McDougall was to be treated as a special, rather than an ordinary, resolution (although the resolution for the removal of McDougall continued to be treated as an ordinary resolution). At the meeting on 15 December 1997, the chairman (at this stage, Cox) maintained the position that the resolution for the appointment of McCallum needed to be a special resolution. Upon the declaration of the poll, the chairman announced that the votes in favour of McCallum (73.2%) were insufficient to pass a special resolution and the resolution failed. In requiring a special resolution for the appointment of McCallum, the board (as constituted prior to the meeting) and Cox relied on Pivot's articles of association, particularly Articles 79, 93 and 95. They read as follows:

"79(1) The shareholders' Directors will have power at any time and from time to time to appoint any person as a Director either to fill a casual vacancy or as an addition to the Board but so that the total number of Directors does not at any time exceed the maximum permitted number. (2) Any person chosen to fill a casual vacancy amongst the class of shareholders' Directors will only retain his office for so long as the vacating Director would have held office if no such vacancy had occurred. (3) Any person first chosen as an addition to the class of shareholders' Directors after the first adoption of this Article will hold office only until the conclusion of the next following annual general meeting of the Company but at that meeting will be eligible for re-election and will be taken into account in determining the number of shareholders' Directors who are to retire by rotation for re-election at that meeting.

93. The Company at any general meeting at which any shareholders' Directors retire in accordance with these Articles will fill the vacated office by electing a like number of qualified persons to be shareholders' Director.

95. The Company may by special resolution remove any shareholders' Director before the expiration of his period of office and appoint another qualified person in his place. The person so appointed will hold office during such time only as the shareholders' Director in whose place he is appointed would have held office if he had not been removed."

233. The judge below decided that, notwithstanding Pivot's articles of association, a special resolution was not required to appoint McCallum in place of McDougall, and declared that McCallum had been validly appointed by ordinary resolution.

236. There were three principal submissions made by counsel for the appellant on this aspect of the case. They were:

(a) Pivot's articles of association constituted a complete code with respect to filling the office of director;

(b) by dealing expressly with a director's removal and a substitute appointment, Article 95 left no room for any inherent power in the general meeting to appoint McCallum; and

(c) either Article 95 governed the appointment of McCallum as substitute director, or the position left vacant by the removal of McDougall was to be filled by the board as a casual vacancy.

242. As appears below, I do not accept these submissions. Section 227 of the Corporations Law confers a right on a public company, constituted by the members in general meeting, to remove a director by ordinary resolution. The importance of the statutory right is that it is to be enjoyed by the members "notwithstanding anything in its articles or in any agreement between it and the director": see s.227(1). The section also contemplates, in s.227(3)(b) and (9), that if the members in general meeting remove a director, they may in the same meeting appoint a replacement. Article 95 of Pivot's articles of association also confers a right on the members in general meeting to remove a director and to appoint another in his stead, but the right conferred by Article 95 is exercisable only by special resolution. Section 227 and Article 95 stipulate different further requirements for the exercise of the rights they confer. Neither provision prevents recourse to the other. Section 227 and Article 95 create concurrent and alternative procedures pursuant to which the company in general meeting may remove a director and appoint another in his place. The members have a choice, whether to proceed under s.227 (and subject themselves to the requirements of the section) or to proceed under Article 95 (and subject themselves to the requirements of the article): cf. Claremont Petroleum NL v. Indosuez Nominees Pty. Ltd. [1987] 1 Qd.R. 1 and Vision Nominees Pty. Ltd. & Anor. v. Pangea Resources Ltd. & Ors. (1988) 14 N.S.W.L.R. 38.

245. In effect, as the respondents contended, s.227 provides a procedure for the removal of a director (and implicitly for the appointment of a new one) which is additional to the procedure laid down in Article 95. Where the members choose to proceed under s.227, not Article 95, the requirements of Article 95 are not relevant: cf. Holmes v. Life Funds of Australia Ltd. [1971] 1 N.S.W.L.R. 860 at 862 per Street, J. Likewise, of course, if the members choose to proceed under Article 95, then the requirements of s.227 have no application and the company's board of directors does not have the right to pre-empt the members' choice of procedure.

248. The terms of s. 227(3)(b) and (9) imply that, under the Law, the members in general meeting retain the power to appoint a person in place of a director removed by them in accordance with the section. This reflects the position at common law that the company, constituted by the members in general meeting, retains an inherent power to appoint a director by ordinary resolution: cf. Worcester Corsetry Ltd. v. Witting [1936] Ch. 640; Barron v. Potter [1914] 1 Ch. 895; and Grant v. John Grant & Sons Pty. Ltd. [1950] HCA 54; (1950) 82 C.L.R. 1 at 22. Counsel for the appellant submitted that Pivot's articles of association operated so as to exclude this inherent power because, first, the articles, especially Articles 79, 93 and 95, dealt fully with the matter of a director's appointment and, secondly, Article 95 expressly dealt with the power of a general meeting to appoint a replacement director. For the reasons already stated, I reject the submission that Article 95 provides exhaustively for the appointment of a replacement director in the stead of one removed.

251. The other submission was that the power of the company, in general meeting, to appoint to the board was limited to the occasions specified in Articles 93 and 95 and, if a place on the board fell vacant and was not filled under either of these articles, it fell to the board, not the general meeting, to fill the place, as a casual vacancy under Article 79. Whilst it is convenient to confer power on the board to fill a casual vacancy, it by no means follows that the board is the only repository of the power to appoint when a vacancy arises: cf. Worcester Corsetry Ltd. v. Witting, supra, Kraus v. J.G. Lloyd Pty. Ltd. [1965] VicRp 35; [1965] V.R. 232 at 234 and Integrated Medical Technologies Ltd. v. Macel Nominees Pty. Ltd. & Anor. (1988) 13 A.C.L.R. 110. Article 93 confers power upon the company in general meeting to appoint to the board on the occasion specified by it, but it does not, as a matter of necessary implication, exclude the inherent power of the company in general meeting to appoint to the board when another occasion for appointment arises. Absent any express or necessary limitation in the articles upon the power of the company in general meeting to appoint a director, the company in general meeting must, it seems to me, retain such a power to appoint. The power is a usual concomitant of the relationship which exists between the members on the one hand and the company's directors on the other. As Bryson, J. said in Integrated Medical Technologies Ltd. v. Macel Nominees Pty. Ltd. & Anor. (1988) 13 A.C.L.R. 110, at 114 the directors are "the persons who are to have management and control of the business and affairs of the members in their incorporated capacity". For these reasons, I reject the submission that Pivot's articles of association exclude the power of the company in general meeting to appoint a director, or limit its exercise to the circumstance where no other repository of the power is able to exercise it.

254. The resolution for the appointment of McCallum upon the removal of McDougall, brought under s.227 and in exercise of the company's inherent power, did not, in my view, require a special majority. The judge below did not err in so concluding.

257. This is not, however, an end of the matter, because there is a question as to whether it was open to the judge below to declare that the resolution to appoint McCallum a director in the place of McDougall was passed as an ordinary resolution, with the result that McCallum was taken to have been appointed as a director on 15 December 1997. The requisitioning shareholders made it plain, by the terms of their notice of requisition, that they were requesting Pivot to give notice that resolutions for the removal of McDougall and the appointment of McCallum were to be moved as ordinary resolutions. The notice given by the board did not, however, conform to the request of the requisitioning shareholders, for it stated that the resolution for the appointment of McCallum was to be moved as a special resolution. As I have indicated, I agree with the judge's conclusion that the board was in error. It follows that the notice should have stated that the resolution was to be moved as an ordinary resolution in accordance with the requisitioning shareholders' request. Does the fact that the shareholders were told that McCallum's appointment required a special, not an ordinary, resolution prevent the Court from treating the resolution as an ordinary resolution sufficient to appoint McCallum? For the reasons appearing below, I think not.

260. Section 1322(2) of the Corporations Law provides that a proceeding under the Law is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. For the purposes of s.1322(2) of the Corporations Law, the motion for the appointment of McCallum and the poll constituted a proceeding under the Law: see s.1322(1)(a); Talbot v. NRMA Holdings Ltd. & Ors. (1996) 68 F.C.R. 590, at 593; Mamouney v. Soliman & Ors. (1992) 10 A.C.L.C. 1674; Re Broadway Motors Holdings Pty. Ltd. (In liq.) (1986) 6 N.S.W.L.R. 45, at 56; Scullion & Anor. v. Family Planning Association of Queensland (1985) 10 A.C.L.R. 249, at 255-6; also Australian Hydrocarbons NL v. Green & Ors. (1985) 3 A.C.L.C. 779, at 788. Pursuant to s.1322(1)(b)(ii) a "procedural irregularity" includes a reference to "a defect, irregularity or deficiency of notice or time". The notice sent to shareholders was defective or irregular in the sense that it described the resolution for the appointment of McCallum as a special resolution, whereas it should have described it as an ordinary resolution. There was, therefore, a procedural irregularity of the kind referred to in s.1322(2). The resolution for McCallum's appointment was moved as a special resolution, whereas it should have been moved as an ordinary resolution. This too was a procedural irregularity for the purposes of s.1322(2). By virtue of that provision, however, the proceeding is not to be invalidated unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court: cf. Re Broadway Motors Holdings Pty. Ltd. (In liq.) (1986) 6 N.S.W.L.R. 45, at 58.

263. The purpose of the notice sent to shareholders was to give sufficient information so as to enable the members to determine whether or not to attend the Annual General Meeting and to provide such information within the time fixed in order that they might arrange their affairs so as to attend the meeting if they so wished: cf. Ryan v. Edna May Junction Gold Mining Co. (No Liability) [1916] HCA 37; (1916) 21 C.L.R. 487, at 496 per Barton, J. and 500 per Isaacs, J. and Vawdon v. South Sydney Junior RL Club [1975-1976] C.L.C. 40-248 at 28,500. Save for the reference to the resolution as a special, not an ordinary, resolution, the notice informed members in terms of the content of the resolution: contrast Australian Hydrocarbons NL v. Green & Ors. (1985) 3 A.C.L.C. 779 at 788 and Baillie v. Oriental Telephone and Electrics Co. Ltd. [1915] 1 Ch. 503, at 515. The terms of the resolution specified in the notice were the same as the terms of the resolution put to the meeting: contrast Re Moorgate Mercantile Holdings Ltd. [1980] 1 W.L.R. 227. I do not think that it has been shown that the result might have been different if proper notice had been given: cf. Mamouney v. Soliman & Ors (1992) 10 A.C.L.C. 1674, at 1681. Resolutions 7 and 8 which respectively concerned the removal of McDougall and the appointment of McCallum in his place were advanced by the requisitioning shareholders as part and parcel of achieving the one objective. There was no defect in relation to Resolution 7 which was specified in the notice as an ordinary resolution and put to the meeting as such. Resolution 7 was passed by a majority of 72% of the members eligible and voting. Resolution 8 was supported by 73.2% of the members eligible and voting and the chairman would have declared it passed had he not been proceeding on the erroneous basis that Resolution 8 required a special majority. I am unable to infer from this that the defect or irregularity in the notice for Resolution 8 (or the fact that the Resolution was put to the meeting as a special resolution) may have so affected the vote that proper notice (and moving for an ordinary resolution) may have led to a different result. In the circumstances of the case, I am not persuaded that there has been or may be any substantial injustice caused by the defect or irregularity in the notice. Accordingly, Resolution 8 is to be treated as a valid resolution and, by virtue of it, McCallum took the place of McDougall on the board of directors of Pivot.

266. For these reasons, I would dismiss the appeal.

270. I agree that the applications by Link Agricultural Pty. Ltd. for an extension of time and for leave should be granted. I agree that the appeal should be dismissed for the reasons stated by Kenny, J.A.