Re Donkey Wheel Ltd [2017] VSC 634 (8 November 2017)

1 This is an appeal against a decision of Associate Justice Randall of this Court delivered on 11 August 2017 (Reasons),[1] brought pursuant to r 77.06 of the Supreme Court (General Civil Procedure) Rules 2015.

2 The appeal is brought by a member of the respondent company Donkey Wheel Ltd (Donkey Wheel), Mark Jonathon Irving Brunner (Jon Brunner).

3 The proceeding below concerned two aspects of the governance arrangements of Donkey Wheel:

(a) whether a Ms Jane Tewson should be admitted as a member of Donkey Wheel; and

(b) whether the appellant, Jon Brunner, was a director of Donkey Wheel.

4 On 11 August 2017, his Honour declared, pursuant to s 1322(4)(a), that the admission of Ms Tewson as a member of Donkey Wheel was not invalid by reason of any contravention of a provision of the Corporations Act 2001 (Cth) (Corporations Act) or a provision of Donkey Wheel's constitution (the Constitution) (Order 1). He also declared that Jon Brunner ceased to be a director of Donkey Wheel with effect from 30 June 2010 (Order 2).

5 The appellant originally appealed Order 1 on eight grounds and Order 2 on one ground.

6 However, during the course of the hearing, the case was reframed such that grounds 4, 5 and 9 were formally abandoned.[2] It followed that Order 2 was no longer the subject of any challenge such that it was accepted that Jon Brunner ceased to be a director from 30 June 2010.

7 In relation to Order 1, Ms Tewson made application for membership on 21 September 2015. This was done in circumstances where a former member, Claire Brunner, had died shortly before (on 9 August 2015), but had signified an intention for Ms Tewson to succeed her in her will and otherwise. Despite this, the application was accepted to be in breach of the Constitution given that, as at 21 September 2015, it was not 'proposed' by a (person who was then a) member, nor signed by that member.

8 The associate judge was satisfied that an order should be made validating the admission of Ms Tewson. In so saying, he was also satisfied that 'no substantial injustice had been or is likely to be caused to any persons' for the purposes of s 1322(6)(c).

9 In his Revised Notice of Appeal dated 3 October 2017, the appellant challenged the 'substantial justice' finding on the following grounds:

1. In exercising his discretion pursuant to s 1322 of the Corporations Act and finding that no substantial injustice had been or was likely to be caused to any person, by the nomination and admission of Jane Tewson as a member of the Donkey Wheel Ltd (the Company) by the directors (the admission of Jane Tewson), the learned trial judge at first instance erred and his Honour's discretion miscarried in that his Honour:
   1. Failed to have any or sufficient regard to the prejudice caused to the sole member, Mark Jonathan Irving Brunner (Jon Brunner) in making order 1.

b. Failed to have any or any sufficient regard to the prejudice caused to the sole member of the Company in not making order 1.

c. Wrongly had regard (at paragraph 217 of the Judgment) to the interest of the Company in a commercial sense.

d. Wrongly regarded the admission of Jane Tewson as procedural rather than substantive.

1. The learned trial judge erred in finding against the evidence or against the weight of the evidence (at paragraph 214 of the Judgment) that pursuant to section 1322(6)(c) of the Act, the Company had discharged its onus and established that the admission of Jane Tewson, had not caused or may not cause substantial injustice to Jon Brunner.
2. The learned trial judge erred in determining that the admission of Jane Tewson was a procedural irregularity (as opposed to a substantive irregularity).

1. The learned trial judge at first instance failed to provide adequate reasons as to how no substantial injustice had been or was likely to be caused to the sole member of the company, Jon Brunner by the admission of Jane Tewson.
2. The learned trial judge at first instance exercised his discretion pursuant to section 1322 of the Act, to validate the admission of Jane Tewson, in a manner that was plainly wrong in the circumstances where the admission of Jane Tewson was substantive and where the Court pursuant to subsection 1322(6)(c) of the Act, was required before making an order to determine that no substantial injustice had been or was likely to be caused to any person and in circumstances where substantial injustice had been or was likely to be caused to Jon Brunner.
3. The learned trial judge erred and his discretion miscarried in not invalidating the admission of Jane Tewson, pursuant to s 1322(4)(a) of the Act.

10 The essence of the complaint therefore was that his Honour had erred in failing to take into account alleged substantial prejudice suffered by Jon Brunner and/or had otherwise erred in making a finding that no substantial injustice would flow to him.[3] During the course of the hearing, the case was also reframed such that the following complaints were further particularised:[4]

• First, that the associate judge had failed to take into account Jon Brunner's personal right to have the Constitution complied with;

• Second, that a wrong finding of fact was made at paragraph 211 of the Reasons;

• Third, that there was a failure to take into account that there was no other member to be considered in the event that a validating order was not made;

• Fourth, that there were errors at paragraphs 214-6 of the Reasons, specifically:

o that the associate judge should not have criticised Jon Brunner for wanting to seek control (in paragraph 214);

o that (contrary to paragraph 215) there was nothing in the Constitution which prevented sole membership in any one person.

11 It was also submitted that the inescapable conclusion was that the associate judge had made a business judgment on the basis that it was best for the company not to have Jon Brunner as a single member.[5]

12 Finally, it was submitted that the associate judge had misclassified the matter as a 'procedural matter' at paragraph 187 of the Reasons. However, this was pursued only insofar as it 'interacted' with the finding on substantial injustice.[6]

13 Donkey Wheel is a company limited by guarantee that serves as the trustee of two charitable trusts: the Donkey Wheel Charitable Trust and the Donkey Wheel Fund. The trusts were settled by the late John Henry Kilian Brunner (John Brunner Senior) in May and October 2004.

14 Clause 2 of the Constitution identifies the company's object as follows:

The company is established for the public charitable object of accepting appointment as, and acting as, trustee of Donkey Wheel Fund and any other charitable trust.

15 Pursuant to cl 4.1 of the Donkey Wheel Fund deed of trust, the Trustee was to apply the fund 'solely for the purpose of providing money, property or benefits to or for Eligible Charities, or for the establishment of Eligible Charities, as the Trustee decides'.

16 Donkey Wheel's activities include philanthropic gifting and 'impact investing', whereby it seeks opportunities to invest in organisations and projects that generate both financial and social returns. Donkey Wheel's first investment was the purchase of a property at 673 Bourke St, known as 'Donkey Wheel House', in 2008. Various charitable institutions are tenants of this building.

17 The current directors of Donkey Wheel are Colin Duthie, Elizabeth Jennings and David Piggott. The directors are independent of the Brunner family and were recruited to the Board on the basis of their experience and skills. For example, Ms Jennings is the Chief Financial Officer of Victorian Legal Aid and was formerly the head of strategic finance at World Vision. The directors are not remunerated for the work they perform as directors.

18 The original members of Donkey Wheel were the three children of John Brunner Senior: Claire Brunner, Nicholas Brunner and the appellant. Nicholas Brunner ceased to be a member on 21 July 2014 after suffering a serious brain injury in a kite-surfing accident and Claire Brunner - described as the 'driving force' behind Donkey Wheel - ceased to be a member on her death from cancer on 9 August 2015.

19 It follows that in the period between 9 August 2015 and 22 September 2015 (the date of the appointment of Ms Tewson, below), Jon Brunner was the sole member.

20 Claire Brunner's express wish was that her friend, Ms Tewson, should succeed her as a member of Donkey Wheel. That intention is recorded in Ms Brunner's will, which she signed on 17 September 2013 and which records:

I GIVE my [sic] all of my shares in Donkey Wheel Limited to Jane Tewson of 35 Cressy Street, Malvern.

21 On 22 December 2014, Ms Brunner also made a codicil to her will. That codicil relevantly set out:

1. I make the following bequest in addition to those already contained in my Will:

(a) to my friend JANE TEWSON the sum of $100,000 in recognition of her having agreed to become a shareholder of Donkey Wheel Limited.

22 Further, the associate judge found that Ms Brunner had told the directors and the CEO on a number of occasions that she wanted Ms Tewson to take over her membership of Donkey Wheel.

23 Ms Tewson has had an extensive 35-year career in the not-for-profit sector. For example, she has been a trustee of a number of UK-based charitable foundations, including Oxfam, and she founded 'Red Nose Day'. Amongst other awards and recognition, she was awarded a CBE (Commander of the Order of the British Empire) for services to innovation and charity.

24 On 9 August 2015, Ms Brunner died. Pursuant to cl 10(a) of the Constitution, she thereby ceased to be a member.

25 During Ms Brunner's life, the directors believed that Ms Brunner's membership would automatically pass to Ms Tewson on her death. However, following her death, the directors obtained formal legal advice about how to give effect to Ms Brunner's wish that Ms Tewson would succeed her as a member of Donkey Wheel.

26 Clause 9 of the Constitution governs the admission of new members. Clause 9(b) relevantly provides:

Every applicant for membership of the company (except the initial members) must be proposed by another member. The application for membership must be:

(1) made in writing and signed by the applicant and his or her proposer; and

(2) in the form prescribed by the directors.

27 On 10 September 2015, Colin Duthie, the Chairman of Donkey Wheel, prepared an application for membership form to be completed by Ms Tewson.

28 Ms Tewson completed the application for membership form which is dated 21 September 2015. It is common ground that it was not signed by a proposer who was a member of the company at the time.

29 On 21 September 2015, Mr Duthie sent an email to the directors attaching resolutions for the admission of Ms Tewson as a member of Donkey Wheel. Attached to that email was Ms Tewson's application for membership, which referred to the relevant extract from Ms Brunner's will.

30 All of the directors voted in favour of the resolutions. The resolutions record that the Board:

(a) prescribed a form for the purposes of cl 9(b)(2) of the Constitution;

(b) resolved to accept Ms Tewson's application for membership;

(c) directed the Secretary to enter Ms Tewson's name onto the Register of Members with effect from 22 September 2015; and

(d) resolved that the Secretary enter Ms Tewson's name into the Register of Members.

31 In accepting Ms Tewson's application for membership, the Board also noted:

Under the Constitution it is given discretion as to the form in which an application may be made. It is exercising its discretion to give effect to what it believes is the intention of Ms Brunner to propose Ms Tewson as a member. Ms Brunner was a member at the time she proposed Ms Tewson.

32 As indicated already, it was accepted that Jon Brunner ceased to be a director of Donkey Wheel on 30 June 2010. Moreover, he did not have involvement in the affairs of the Company as a director from July 2010 and did not attend any board meetings from that time.

33 He also did not have involvement as a member from mid-2010 until after Ms Brunner's death (a period of some five years). As the Reasons record, 'he did not interest himself as a member from July 2010 up until after the death of Claire Brunner'.[8] Further, it was not until the transmission of 14 September 2015 that any issue relating to Donkey Wheel was raised by Jon Brunner's solicitor.

34 On 14 September 2015, Jon Brunner's solicitor wrote to one of the directors of Donkey Wheel, Mr Michael Witt, as follows:

The other matter which ought to be attended to without delay, and which ought to be uncontroversial, is Donkey Wheel. Jon had thought that he remained a director (albeit that he was not attending board meetings) but I see from a search that he is not. Could you please make arrangements for his reappoint to the Board and also provide me (on Jon's behalf) with all necessary Board papers in order that he can get up to speed [sic].

35 On 4 January 2016, the appellant then served a notice on Donkey Wheel pursuant to s 249D of the Corporations Act seeking the removal of the existing directors and the appointment of himself and his solicitor, Mr McNab, as directors.

36 On 29 March 2016, a general meeting of the company was held where the resolutions were not carried. Jon Brunner's proxy, Mr McNab, also voted against the resolution that the appellant be appointed a director.

37 An appeal from an associate judge is to be conducted by way of rehearing (rather than de novo). Accordingly in the absence of further evidence or a change in the law, the appellant is ordinarily required to show 'error' on the part of the associate judge before appellate power may be exercised.[9]

38 In Robinson Helicopter Company Inc v McDermott,[10] the High Court stated that a court conducting an appeal by way of rehearing must conduct a 'real review' of both the evidence given at first instance and the judge's reasons to determine whether an error has been made in fact or law. If it is determined that the judge has made an error in fact, the Court is required to make its own findings of fact and formulate its own reasoning based on those findings. However, the findings of fact from the first instance should not be interfered with unless they are 'demonstrated to be wrong by "incontrovertible facts or uncontested testimony", or they are "glaringly improbable" or "contrary to compelling inferences"'.[11]

39 Both parties further accepted that, given that a discretion was involved, the principles in House v The King were applicable as follows:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.[12]

40 The associate judge first sets out the provisions of s 1322 of the Corporations Act which relevantly provide:

(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;

...

(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.

41 The associate judge then comprehensively dealt with the background in this case which has already been summarised above, but which also included evidence of the adverse corporate history of Jon Brunner.

42 His Honour then considered the issue of whether Jon Brunner had resigned as a director. His Honour accepted that he did do so. In so saying, his Honour also made adverse credit findings against Jon Brunner.

43 The associate judge went on to deal with the question of the appointment of Ms Tewson. Firstly, he rejected a submission to the effect that no validating order was necessary. He then went on to make an order under s 1322(4)(a). In so doing he found that each of the matters in s 1322(6) were met (even though only one needs to be satisfied).

44 His Honour then found that no substantial injustice was caused to any person. In doing so, he cited various authorities on the question of the term 'substantial injustice', and continued:

1. Pursuant to clause 9 of the constitution of Donkey Wheel the directors were charged with the responsibility of resolving to accept applicants to membership of Donkey Wheel. At the time of the resolutions to admit for membership, Jon Brunner had not concerned himself with, or taken any interest in, the affairs of Donkey Wheel. He was not a director. He had not attended any meetings of Donkey Wheel since July 2010. In those circumstances I determine that any argument that his 'personal right' to have Jane Tewson admitted as a member in the prescribed manner is fatuous in the circumstances.
2. On that basis I determine that no 'substantial injustice' will flow from the making of the order.
3. If however, a balancing exercising of all the circumstances is required, I would come to the same conclusion. The grounds principally relied upon apart from his 'personal right' is that:

(a) not being the sole member of Donkey Wheel, meetings of members would be subject to the casting vote of the Chairman of the Board; and

(b) his purported disenfranchisement prevents him from fostering his children to continue with the Brunner family tradition of charitable work.

1. As to the first ground, it seems to me that what the real complaint is that he saw the unfortunate death of Claire Brunner as an opportunity to seize complete control of Donkey Wheel. That inescapable inference is corroborated by the resolutions he sought in the notice of meeting which would have, if passed, removed the existing board of Donkey Wheel and replaced it with himself and his solicitor.
2. Further, the prejudice to Donkey Wheel would be substantial if the resolution was not ratified. Non-ratification would deprive Donkey Wheel of 'membership' and leave the same as the 'alter ego' of Jon Brunner. The constitution of Donkey Wheel provides for what I would loosely describe as 'safeguards'. Deadlocks between the members are resolved by the casting vote of the Chairman of the meeting who is a Board member. The Constitution confers the power to conduct the affairs of Donkey Wheel upon the Board. It is inescapable that the various provisions of the constitution would be rendered nugatory if the same was in the sole control of any particular person.
3. The second ground is easily disposed of, in that any impediment to such fostering, does not arise as a direct consequence of the resolution to admit Jane Tewson to membership. Jon Brunner will continue to enjoy all of the rights conferred on members pursuant to the Constitution. The passing of the resolution to admit Jane Tewson to membership does not impinge upon those rights.
4. I refrain from comparing the obvious suitability of Jane Tewson as a member with the lack of corporate governance displayed by Jon Brunner. Such comparison may impinge upon the concept of consideration of the interests of Donkey Wheel in a 'commercial sense' or involve the exercise of a 'business judgment', which Palmer J opined was impermissible.

45 The concept of 'substantial injustice' has been the subject of recent consideration by the High Court.

46 In Weinstock v Beck (Weinstock),[13] a person whose appointment as a director had lapsed purported to exercise a power granted to a continuing director to appoint an additional director. At issue was whether there was a 'contravention' of the constitution for the purposes of s 1322(4)(a). The High Court held that there was and that s 1322(4) authorised the making of a validation order.

47 In so doing, French CJ considered the concept of 'substantial injustice' and endorsed the comments of Bowen CJ in Re Compaction Systems Pty Ltd & the Companies Act,[14] as follows:

the word 'injustice' in this provision requires the Court to consider any real, and not merely insubstantial or theoretical, prejudice ... it is insufficient to show that there may be some prejudice to a member if, on a consideration of the whole matter, the overwhelming weight of justice, as it were, is in favour of making the order.[15]

48 His Honour stated that this general approach (applied in the context of a predecessor provision, s 366(3) of the Companies Act 1961) remained valid. Further, that the 'remedial scope' of s 1322(4) was no less than that of s 366(3) in so far as the latter authorised orders which would override the effects of provisions of a company's constitution.

49 French CJ also went on to observe that the provision is to be 'construed broadly and applied pragmatically, principally by reference to considerations of substance rather than those of form'.[16]

Whether Jon Brunner's right to have Constitution complied with taken into account

50 In written submissions it was alleged that his Honour erred in considering that Jon Brunner's personal right to have Jane Brunner admitted was 'fatuous'.

51 In oral submissions it was submitted that his personal right to have the Constitution complied with was a fundamental right which was not lost by reason of his non-involvement.

52 It is true that Jon Brunner had a 'personal right' to have the Constitution complied with.[17] However, the short answer to the complaint is that this personal right was clearly taken into account. Thus, there is explicit reference to Jon Brunner's 'personal right' to have Ms Tewson admitted as a member in the prescribed manner (at paragraph 211). The Reasons also again make reference to this 'personal right' in paragraph 213.

53 The complaint (as actually framed) is therefore without substance.

54 In reality, the ground amounts to a complaint about the manner in which the issue was dealt with. However, as highlighted above, after acknowledging Jon Brunner's right, the associate judge effectively downplayed its significance in this case given his lack of interest over many years. Although others may come to a different view, it was open for the associate judge to allocate the appropriate weight to the right as he chose and no error is substantiated.

55 This challenge concerned itself with the second sentence of paragraph 211 above that 'at the time of the resolutions' Jon Brunner had not concerned himself with, or taken any interest, in the affairs of Donkey Wheel. This was said to be an error given it ignored the email of 14 September 2015 cited above.

56 First, the email itself was cited in various parts of the Reasons.[18] This demonstrates that the associate judge was clearly aware of it. This is also corroborated by the (correct) statement in a number of parts of the Reasons to the effect that Jon Brunner had no interest until after the death of Ms Brunner.[19]

57 Second, a fair reading of the Reasons suggests that his Honour saw showing 'concern and interest in the affairs of Donkey Wheel' as equivalent to 'participating in' those affairs. The associate judge had already (earlier in his Reasons at paragraph 160) made a finding that Jon Brunner did not seek to 'participate' in the affairs of Donkey Wheel until the requisition for the general meeting at the beginning of 2016. This finding (which was not challenged) was expressly made notwithstanding the solicitor's email transmission of September 2015.

58 Finally, even if there is some error by reason of the omission of the explicit reference to the September email in paragraph 211, I accept the submission of the respondent that it was 'de minimis' in circumstances where it was not suggested that Jon Brunner had otherwise taken any interest in the affairs of Donkey Wheel over the course of some five years (since 2010). Such an omission does not constitute an error within the principles cited earlier.

60 In written submissions, the appellant alleged that his Honour failed to have regard to the prejudice to members if the order was not made. Thus, given no prejudice was suffered to any member if the order was not made (given there was only one member), his Honour erred in failing to take this into account.

61 In oral submissions, it was submitted that if the order was not made there would be no prejudice to any member (given only one member was relevant). The complaint appeared to be that the associate judge ought to have explicitly highlighted that there were no other members (beyond Jon Brunner) to consider in the event that an order was not made.

62 It is implicit in the Reasons that the associate judge was acutely aware that there were no other members affected apart from Jon Brunner.[20] There is no error in a mere failure to explicitly recite this fact in paragraphs 211-17, particularly in circumstances where Jon Brunner was the only person raising a claim of substantial injustice.

63 The complaint also appears to suffer from the flaw that only the interests of members were to be considered. This is clearly wrong given the associate judge was able to consider whether, on a consideration of the 'whole matter' the overwhelming weight of justice was in favour of the order.[21]

64 In written submissions Jon Brunner criticised the observation of his Honour (in response to the first 'ground' of substantial injustice) that 'it seems to me that what the real complaint is that he saw the unfortunate death of Claire Brunner as an opportunity to seize complete control of Donkey Wheel'. It was alleged that the finding about control was plainly wrong.

65 In oral submissions the point was put somewhat differently. Thus it was submitted that the associate judge wrongly imputed a 'nefarious purpose' to what was entirely permissible. This amounted to the taking into account of an irrelevant consideration.

66 The finding relating to control was made in response to the submission that there was substantial injustice to Jon Brunner given meetings of the members would become subject to the casting vote of the Chairman.[22]

67 The associate judge sought to identify the real complaint made by this submission as being one based on a desire to seize complete control. This was clearly open to the associate judge in circumstances where, as highlighted in the Reasons, Jon Brunner had sought to remove the existing board of Donkey Wheel and replace it with himself and his solicitor. Further, in circumstances where adverse credit findings had been made.

68 Insofar as complaint is made about the implied criticism, the associate judge was effectively choosing to downplay the relevance of a desire for 'control' in terms of substantial injustice. In the context of a charitable organisation, the associate judge was entitled to consider that any 'lessening' of control did not give rise to a substantial injustice. As highlighted already, Donkey Wheel was to be run solely for the purpose of providing money to appropriate charities. Membership in this case therefore carried responsibility and certainly involved no financial benefit. It was open for the associate judge to thereby discount control in circumstances wherein an additional member would actually share the burden of such a responsibility.

Constitution (paragraph 215 Reasons)

69 In written submissions the appellant criticised the remarks at paragraph 215 and highlighted that the Constitution allows for the existence of a single member. It was also submitted that there was nothing to suggest provisions in the Constitution would be 'nugatory'.

70 In oral submissions it was submitted that the associate judge wrongly took into account that ratification should be made to avoid there being only one member in circumstances where there was no problem with a single member under the Constitution.

71 Finally it was submitted that the inescapable conclusion was that the associate judge had made a business judgment on the basis that it was best for the company not to have Jon Brunner as a single member. This was impermissible on the basis of certain comments of Palmer J in Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (Cordiant Communications).[23]

72 The associate judge suggests that non-ratification would deprive the company of membership and leave it as the 'alter ego' of Jon Brunner. His Honour also makes reference to the provision in the Constitution that deadlocks between members are resolved by the casting vote of the Chairman (who is a member) and suggests that various provisions of the Constitution would be rendered nugatory if the same was in the sole control of any one person. This appears to form the basis of his overriding 'further' finding that the prejudice to Donkey Wheel would be substantial if the resolution was not ratified.

73 However, there would be no 'deadlock' to be concerned about if there was only one member and it is unclear what other provisions of the Constitution would be rendered nugatory.

74 There is also no explicit prohibition in the Constitution against there being a single member. Rather, cl 11.6(i) explicitly allows for the position which is to pertain 'if the company has only one member'. There is also no minimum number of members prescribed.[24] Finally, although a quorum at a general meeting generally consists of two members, the members are permitted to fix a different number - which might be one (see cl 11.3(b)).

75 The basis for the 'further' conclusion that there would be substantial prejudice to Donkey Wheel is therefore unclear.

76 Nevertheless, in circumstances where the associate judge was otherwise satisfied that no substantial injustice would flow at all to Jon Brunner from the making of the order, it was unnecessary for the associate judge to further find substantial injustice to Donkey Wheel.

77 Any inaccuracies contained in paragraph 215 are thereby immaterial.

78 I am also unable to find that commercial or business matters were in reality motivating the associate judge's decision. To the contrary, they are expressly disavowed in paragraph 217.

79 In such circumstances it is unnecessary to consider a submission of the respondent that, given this was a charitable organisation, the associate judge was, in any event, entitled to consider the suitability of Ms Tewson and, further, the appellant's history of mismanaging corporations.

80 In written and oral submissions it was alleged that there was prejudice given, as sole member, Jon Brunner alone was entitled to propose other members. Complaint was therefore made that in paragraph 216 the associate judge failed to take into account that, given the addition of Ms Tewson, Jon Brunner was no longer the only person able to nominate other members.

81 However, this matter was not pressed strongly, nor could it be. Thus, it was not challenged that the submission dealt with by the associate judge was that Jon Brunner's purported 'disenfranchisement' prevented him from fostering his children to continue charitable work.

82 In this context, as correctly observed by the associate judge, the admission of Ms Tewson did not impinge on his ongoing rights to nominate other members, including members of his family. There is otherwise nothing in the Constitution which suggests that members could only be members of the Brunner family.

84 In written submissions, the appellant criticised the finding of the associate judge that the matter to be validated was essentially of a procedural nature for the purposes of s 1322. He relied on the decision in Cordiant Communications which determined that what was a procedural irregularity would be ascertained by determining what was the 'thing to be done'. If the irregularity changed the substance of the thing to be done, the irregularity would be substantive; if it merely departed from the prescribed manner in which the thing was to be done, it would be procedural.[25]

85 The appellant submitted that the 'thing to be done' was not (as found by the associate judge) the admission of Ms Tewson to membership. Rather, it was in reality the admission of Ms Tewson 'on the nomination of members' and approval of the Board.

86 In oral submissions it was clarified that the complaint was pursued, not in its own right, but only insofar as it interacted with the issue of substantial injustice.[26]

87 In oral submissions it was also said that the 'thing to be done' was the admission of Ms Tewson on the nomination of the member or members, and then approval of the directors; otherwise the 'thing' could be done by anyone.

88 The short answer to this point is that there is nothing to suggest that the 'procedural irregularity' finding formed any part of the reasoning process concerning substantial injustice. The issue is dealt with in a completely different part of the Reasons.[27]

89 Indeed, the Court is permitted to validate even if the irregularity was substantive given, as the associate judge correctly observes,[28] the provision explicitly provides that only one of the three sub-paragraphs in s 1322(6)(a) needs to be satisfied.[29] Given the finding of 'honesty'[30] and that the order was 'just and equitable',[31] it was unnecessary to find that the matter was essentially procedural.

90 Cordiant Communications was also concerned with a situation wherein there was a wrongful denial of a shareholder's statutory right to vote at a meeting. In finding that the 'thing to be done' was the admission of those entitled to vote, Palmer J emphasised that if something occurs which results in a denial of the right to vote, there was a substantive irregularity.[32] This can be immediately distinguished from the present position wherein Jon Brunner merely had a right to nominate himself (and certainly no right to stop the nomination by another member). Such a right is not interfered with by reason of the admission of Ms Tewson.

91 Finally, even if the 'thing to be done' is characterised as the admission of a member on the nomination of a member (as the appellant suggests), the defect would be characterised as a mere irregularity which departs from the prescribed manner in which the thing is to be done without changing the substance of the thing (i.e. by allowing the nomination to be by way of will rather than by way of contemporaneous signature).

93 The grounds also included an allegation that the associate judge had failed to provide adequate reasons as to how no substantial injustice had been caused to Jon Brunner (at ground 6). However, this was not pursued strongly - nor could it be. Rather, contrary to the suggestion of the appellant, the associate judge set out full details of his reasoning process, particularly when understood in the context of the Reasons as a whole.

95 More particularly, I am not satisfied that his Honour:

• erred in failing to take into account whether Jon Brunner suffered substantive prejudice and/or erred in making the finding that no substantial injustice would flow to him;

• wrongly had regard to the interests of the company in a business sense;

• made any error in regarding the admission of Ms Tewson as procedural which affected his finding on substantial injustice.

96 The result is that the appeal must be dismissed.

97 It is unnecessary to go further. However, given both parties accepted that if, contrary to the above, some error was established, the Court would be entitled to re-consider the question of 'substantial injustice' for itself, it is appropriate that I briefly express my views on this issue.[33]

98 I would not be satisfied that any substantial injustice would flow to Jon Brunner by reason of the admission of Ms Tewson despite the non-compliance with the Constitution. I accept that, as a member, he had a personal right to have the Constitution complied with. However, as highlighted by French CJ, the remedial scope of s 1322 is such that it may authorise orders which override provisions in a Constitution.

99 Insofar as Jon Brunner otherwise alleges injustice by reason of a 'dilution' of his membership (or control), I give this matter little weight. Rather, for reasons given already, the sole membership of a charitable organisation involves no pecuniary benefit but rather carries heavy responsibilities.

100 Moreover, having regard to considerations of 'substance rather than those of form', I consider that Ms Tewson was essentially 'proposed by another member' as contemplated by the Constitution given Ms Brunner clearly 'proposed' Ms Tewson immediately prior to her death while she was still a member.

101 Overall, then, and having regard to the weight of justice, I would not be satisfied that any substantial injustice has been or is likely to be caused to Jon Brunner or any other person.

• The appellant is to pay the respondent's costs of the appeal to be taxed on a standard basis in default of agreement.[34]

[1] IMO Donkey Wheel Limited [2017] VSC 462.

[2] Transcript of Proceedings (12 October 2017) 46.

[3] And see grounds 1(a), 1(b), 2, 6, 7, 8.

[4] Transcript of Proceedings (12 October 2017) 44-5.

[6] See ground 1(d), 3, 7; Transcript of Proceedings (12 October 2017) 46.

[7] This is largely taken from unchallenged findings in the Reasons.

[9] Oswal v Carson [2013] VSC 355, [11] citing Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194, 203-4 [14].

[10] Robinson Helicopter Company Inc v McDermott [2016] HCA 22; (2016) 331 ALR 550, 558-9 [43].

[12] [1936] HCA 40; (1936) 55 CLR 499, 504-5.

[13] [2013] HCA 14; (2013) 251 CLR 396.

[14] [1976] 2 NSWLR 477, 493.

[17] Andrews v Queensland Racing Ltd [2009] QSC 338; (2009) 74 ACSR 538, 552 [79].

[18] For example, at Reasons [34], [116] and [160].

[19] For example, at ibid [116], [150(g)], [194].

[20] See, for example, ibid [6], [84]-[85], [95], [214]-[215].

[21] Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396, 405 [11]. Such consideration may include any prejudice to others, including to creditors or the company itself: Re Compaction Systems & the Companies Act [1976] 2 NSWLR 477, 493.

[23] [2005] NSWSC 1005; (2005) 194 FLR 322, 343 [86].

[24] This may be compared with the position as to directors in cl 12.1.

[25] [2005] NSWSC 1005; (2005) 194 FLR 322, 346.

[26] Transcript of Proceedings (12 October 2017) 46.

[29] See also Weinstock [2013] HCA 14; (2013) 251 CLR 396, 403 [10].

[32] It should be noted that his Honour's analysis was also made in the context of determining 'procedural

irregularities' for the purposes of s 1322(2), and not for the purposes of s 1322(4).

[33] I have generally perused the entire Appeal book in so doing, as the parties invited me to do in email correspondence from counsel for the appellant on 13 October 2017, although no particular pages were highlighted.

[34] The appellant accepted that it was appropriate for costs to follow the event: Transcript of Proceedings (12 October 2017) 78.