Plaintiffs v Defendants

Supreme Court of Victoria|2014-12-16|Before: SIFRIS J

Aboriginal Lands Act 1970 ('the Act') - Whether quorum requirements contained in s 23(4) of the Act can be dispensed with under the general powers contained in s 27 of the Act, for regulating the affairs of the Framlingham Aboriginal Trust.

2 His Honour went on to declare that all seven positions on the Committee of Management of the Trust were vacant and appointed receivers to the Trust ('the Receivers') with directions that they conduct an Annual General Meeting ('AGM') of the Trust in order to appoint a new Committee of Management.

3 The Receivers endeavoured to convene an AGM in accordance with his Honour's order on 24 September 2014. However, the meeting did not in fact proceed on that date because the Receivers announced that the number of resident members present was less than the fifty per cent (50%) required by s 23(4) of the Act.

4 According to the Affidavit of Shayne Daley, the Solicitor for the plaintiffs, sworn 1 October 2014, seven out of the eight residential members entitled to attend the meeting and vote, made the deliberate decision not to attend, thereby denying the meeting a quorum.[3]

5 The failure to obtain a quorum clearly frustrated the implementation of the final orders of Robson J. Accordingly the matter came on for further hearing before me on 1 October 2014.[4] Concerned that the orders of the Court may be rendered nugatory, I fashioned orders the effect of which was to require the Receivers to again convene an AGM. The possible mischief of there again being no quorum for the meeting was addressed by a direction, that notice be given to members of the Trust in advance, that the AGM or meeting would take place even in the absence of a quorum. I said that "... even in the absence of a quorum ... consideration would be given to the making of appropriate orders". It was made clear that "appropriate orders" might include a declaration that the meeting and election of the Committee of Management, albeit without the necessary quorum, might be declared valid by the Court. These remarks were at my direction communicated to members.

6 Pursuant to the orders of the Court of 2 October 2014, the Receivers did convene a further meeting on 10 November 2014 ('the Meeting'). Again, the number of resident members present at the meeting did not satisfy the requirements of s 23(4) of the Act.

7 The plaintiffs submit that the Court has (and should in this case exercise) the power, both express (s 27 of the Act) and inherent or ancillary, to declare the Meeting a valid meeting notwithstanding the absence of a quorum and further should declare that those seven persons elected as the Committee of Management at that Meeting should be declared validly elected. I agree and propose to do so.

9 The application is opposed by the Second Defendant.

10 The critical issue is whether the Court has the power under s 27 of the Act (or otherwise) to declare the Meeting valid despite the absence of a quorum as specifically required by s 23(4) of the Act. In my opinion, for reasons that follow the Court does have power to declare the Meeting valid.[5]

11 The Framlingham Aboriginal Trust is a body corporate created by the Act. Its powers and functions depend upon and derive from the terms of the Act. Compared to legislation governing the operation of other bodies corporate the Act provides a fairly skeletal regime of regulation. There is, for example, no express power to wind up the affairs of the Trust.

12 Generally speaking the Act does not contemplate or provide for the consequences of non-compliance with its provisions (save to provide for "offences" under s 25).

13 An exception to the general rule seems to be s 23L(4) which, in the context of electing a Committee of Management at the end of a period of administration, deals with the situation where the seven members may not be elected at a general meeting called for that purpose. In that event the subsection simply provides that the 'Minister may direct the Administrator to convene and hold such further general meetings, in accordance with this Act, as are necessary until such time as the members of the Trust elects 7 persons to form a Committee of Management of that Trust'. In this context at least, the Act does not appear to contemplate the relaxation of or dispensation with procedural requirements for holding the general meeting. That said, it does not directly bear upon the question of what powers the Court has under s 27.

14 Section 23 regulates procedure at general meetings and for present purposes requires that '[t]he quorum for a general meeting shall be one-half of the persons entitled to vote at the meeting who are residents of the reserve on the date the meeting was called in accordance with section 22(4).' Generally, a member is required to attend and vote in person. There is no minimum attendance required and all that is required is that one-half of those that do attend in person are 'residents of the reserve'.

15 The Act does not expressly contemplate that the requirement for a quorum may be dispensed with or relaxed.

(1) A member of a Trust who complains that the affairs of the Trust are being conducted in a manner oppressive to one or more of the members (including himself or herself) may apply to the Supreme Court for an order under this section and, if the Court is of opinion that the affairs of the Trust are being so conducted and that it would be just and equitable to make an order under this section, the Court may make such order as the Court thinks fit whether for regulating the affairs of the Trust in future or for the purchase of the shares of any members by other members or by the Trust, or otherwise. [Emphasis added.]

(2) Any person (whether a member of a Trust or not) who is aggrieved by anything which the Trust has done or failed to do in contravention of this Act may apply to the Supreme Court for an order under this section and, if the Court is of the opinion that the Trust has contravened this Act and that the person aggrieved suffered injustice on that account, the Court may make such order as appears to the Court to be necessary to give proper relief to the person aggrieved

17 Section 3 requires a register of residents to be prepared. Section 12 provides that the Trust shall be divided into shares. Section 12(6) provides for a register of members and s 14(2) provides for very restricted rights of transfer of such shares. There are 19 members and 8 resident members.

18 The orders of Robson J, made on 20 August 2014, were predicated on the basis that the Court's jurisdiction to make orders under ss 27(1) and (2) of the Act had been enlivened.[6] It is clear enough that the failure to satisfy the quorum requirements of s 23(4) of the Act is frustrating the proper and effective implementation of the Court's final orders. This has already occurred on two separate occasions and there is presently no reason to think it may not occur again.

19 Robson J clearly formed the requisite opinion on which the discretion conferred by s 27 is predicated because he said, at [189]-[190] of his reasons for judgment of 6 August 2014:

Under s 27(1) the Court may make such order as the Court thinks fit for regulating the affairs of the Trust in the future or for the purchase of the shares of any member by other members or by the Trust or otherwise. Under s 27(2) the Court may make such order as appears to the Court to be necessary to give proper relief to the person aggrieved by the contravention of the Act.
In my opinion the proper way to rectify the injustice caused to the plaintiffs by the way the defendants held the annual general meeting in December 2013 is to hold fresh elections. The plaintiffs have sought orders that an election be held for all seven positions on the committee, at an annual general meeting to be conducted by an officer of the Department of Aboriginal Affairs to be nominated by the secretary of the Department. I consider that this is an appropriate course.[7]

20 Section 27 was the power expressly relied upon by Robson J to make the declarations and orders of 20 August 2014. Indeed it is the sole repository of express power to deal with and relieve against oppression and noncompliance with the Act at the suit of Trust members. However, the question is whether it extends to noncompliance with the quorum provisions specifically set out in s 23(4) of the Act. In my view it does.

21 It would be extraordinary if, having exercised the wide discretion in the way Robson J did, the Court's orders could be stultified or rendered nugatory because it lacked the power to dispense, in respect of a meeting which it has ordered, with a quorum based on a minimum number of resident members, not members generally.

22 Section 27(1) provides the Court with a broad and unfettered discretion to 'make such orders as the Court thinks fit'. The words which follow are not, in any relevant sense, words of limitation. As a remedial provision, they should be given a liberal interpretation.[8]

23 The description of the discretion conferred by s 27(1) is not exhaustive. There are no limitations on the orders that a Court may grant, other than the Court's own discretion to make orders as it thinks fit. By way of example, the section contemplates orders:

(a) whether for regulating the affairs of the Trust in future; or

(b) for the purchase of the shares of any members by other members or by the Trust; or

24 Section 27(2) also empowers the Court to make such order as appears to be necessary to relieve against injustice brought about by an act or omission of the Trust in contravention of the Act.

25 Because Robson J formed the view that the power to grant relief under both sections was engaged, he addressed the mischief of what he declared to be an invalid AGM and an invalid election of the Committee of Management by ordering that there be a fresh AGM and fresh elections. Clearly this is what he regarded as an order '... necessary to give proper relief to the person aggrieved'.

26 But for the unforeseen and intentional action of a group of resident members in declining to attend the substituted AGM ordered by the Court, the Plaintiff would indeed have been afforded 'proper relief'.

27 The remedy agitated for by the plaintiffs is that effectively the quorum requirements for an AGM be dispensed with so that the orders of Robson J may be given effect.

28 Although the Act is silent on the question of any such dispensation, it is necessary if 'proper relief' is to be afforded to the plaintiffs.

29 The power (s 27) to give 'proper relief' to the aggrieved person is couched in such broad and unrestricted terms so as to authorise, in my opinion, an order dispensing with the need for a quorum in appropriate circumstances. In this case these circumstances exist. 'Proper relief' in the form suggested is necessary to enable the Trust to continue to operate.[9]

30 As submitted by Senior Counsel for OAAV, there is no warrant for reading s 27 as if the words:

(a) "... the Court may make such order as the Court thinks fit ..." and

(b) "...the Court may make such order as appears to the Court to be necessary to give proper relief to the person aggrieved"

were, ... qualified by the words "... so long as such orders do not contravene any provision of this Act".

31 If s 27 is not legitimately a source of a power to dispense with quorum requirements, the functioning of the Trust could indeed be held to ransom by the concerted efforts of a sufficient number of resident members. This is a powerful reason in favour of not reading down the wide scope of the section. It would have been easy for the draftsperson to have inserted the words 'subject to this Act the Court may make such order etc. ...' Again reference is made to s 23L(4) where, in default of appointment of a seven person Committee of Management, the Minister may direct the Administrator to convene and hold such further meetings, 'in accordance with this Act', as are necessary until such time as the members of the Trust elect seven persons to form a Committee of Management of that Trust.

32 Clearly enough an AGM or a general meeting is an important decision-making forum of the Trust. In order to ensure effective community participation in the decision-making of the Trust there is a quorum requirement. The present form of s 23(4) was introduced by 2004 amendment which changed the quorum requirement from one-half of all Trust members to one-half of the persons entitled to vote at the meeting who are 'residents of the reserve on the date the Meeting was called ...'. The change was introduced because general meetings were not being held due to nonresident members being unable or unwilling to travel from their place of residence to the appointed meeting place as well as to encourage resident participation.

33 The attendance register for the AGM records a total number of shares with voting rights as 7200 held by eighteen persons, including 100 shares registered in the name of Geoff Clark which have vested in his trustee in bankruptcy who has previously indicated that he does not intend to exercise the voting rights attaching to those shares. 3500 votes were cast at the meeting by eight members.

34 The reason for the change in the quorum requirement may be relevant to the assessment as to whether s 27 confers power to dispense with the quorum requirement. Because the reason is simply a machinery type provision to enable meetings to proceed with minimum inconvenience and not a provision designed to entrench any rights of resident members it is more easily dispensed with. However, even if this was not the case, I would still dispense with the quorum requirement.

35 In the area of Corporations law, where quorum requirements are abused Courts have the power to and have made appropriate orders.[10]

36 The power under s 27 to dispense with or alter the quorum provisions in s 23(4) of the Act is a discretionary power.

37 In terms of the Meeting it is worth noting that 8 of the total 18 members entitled to vote attended but only 1 was a "resident". As pointed out earlier, in the secondreading speech of the 2004 amending legislation it is stated '... the bill amends the procedure for general meetings of a trust to make it easier to hold valid meetings and at the same time to increase the participation of resident members of the trust.'[11]

38 A number of factors suggest it would be appropriate to exercise the discretion to waive compliance with the quorum requirements of s 23(4). In circumstances where the terms of its orders are being frustrated the Court has power to ensure that its processes are not abused and to enhance the administration of justice. This power would extend to revisiting the power to grant relief already enlivened by the findings of Robson J (or indeed exercising a fresh power) to ensure orders are made which will be effectual in delivering the intended relief.

39 Moreover, where a party has been formally forewarned by the Court of the possible validity of an inquorate meeting, and elects not to attend, a claim that there is any injustice in validating an inquorate meeting, or that there is an affront to the principle of community participation, is hard to sustain.

40 It is not necessary to deal with the inherent power of the Court or the Court's supervisory jurisdiction over trusts, and I do not propose to do so.

41 For these reasons, the Plaintiffs are entitled to the relief they seek. I will hear from the parties as to the precise form of declarations and orders and costs as well as the termination of the receivership.

[1] I gratefully adopt the summary of facts and background provided by Senior Counsel for the Office of Aboriginal Affairs Victoria ('OAAV').

[2] Clark v Framlingham Aboriginal Trust [2014] VSC 367 (6 August 2014).

[3] An article in The Warrnambool Standard newspaper (see Peter Collins, 'Divided they fall', Warrnambool Standard, (Melbourne, Victoria) 25 September 2014, as Exhibit SD-4 to the said Affidavit) quoted the Second Defendant in this proceeding, Geoffrey (Possum) Clark-Ugle, as saying that a majority of the resident shareholders decided not to attend the AGM to deny that meeting a quorum. The statement has not been contradicted by any of the nonattending residents.

[4] Robson J was and remains on leave at the date of the hearing and this judgment.

[5] No issue was raised in relation to the ability of this Court to hear the Plaintiffs' application, in this proceeding, which was heard and determined by Robson J.

[6] [2014] VSC 367 especially at [178] to [188].

[7] Clark v Framlingham Aboriginal Trust [2014] VSC 367 (6 August 2014).

[8] Re Pembury Pty Ltd [1993] 1 Qd R 125, 126-127 (Byrne J).

[9] It matters not whether the Court is exercising a fresh discretion under s 27 or giving effect ('proper relief') to the declarations and orders made by Robson J.

[10] See HAJ Ford, RP Austin and IM Ramsay, Ford's Principles of Corporations Law, vol 1 (at service 107) [7.500].

[11] Victoria, Parliamentary Debates, Legislative Assembly, 26 August 2004, 197-200 (Mr Thwaites).

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