The decision in Armstrong v Landmark Corporation Ltd
38 The above analysis is broadly reflected in the decision of Street J in Armstrong v Landmark Corporation Ltd [1967] 1 NSWR 13, a decision made before the enactment of the current statutory provisions concerned with the procedure to be followed in relation to voting by proxy. In that case, a shareholder and director of Landmark applied for a mandatory injunction directing Landmark to produce for his inspection all proxies lodged with Landmark for use at the annual general meeting of Landmark. In granting the relief sought, ultimately on terms that the entitlement to inspect not be exercised until after the meeting (so that auditors could be left in peace to undertake their task of scrutinising the proxies before the meeting), Street J reasoned:
… Under these articles a shareholder is given a right, now recognized by statute but having no existence in the eyes of the common law, to appoint a proxy to represent him and to vote in his name at general meetings. A condition of the casting of this vote through a proxy is that the instrument be lodged in accordance with the requirements of the article. A vote cast by a proxy, in circumstances where the instrument has not been lodged as required by the article, is an invalid vote and all of the members of the company are entitled to have such invalid votes excluded from being counted when motions are placed before a meeting.
In my view each shareholder of the company is entitled to have the articles faithfully observed in relation, in particular, to the regulation of the rights to cast votes at meetings, whether those rights be conditioned upon the lodgment of instruments or upon the payments of calls or otherwise. Being rights inherent in individual shareholders of a company, it appears to me to fall properly within the province of any director of a company to interest himself in the question of whether those rights are being recognized or are being repudiated; and as an aspect of a director investigating and considering questions of this nature it appears to me that the decisions upon which Mr. Staff relies require that I should hold that an individual director has the right to inspect such documents as may cast light directly upon the observance or otherwise by the company and its officers of the individual rights of shareholders.
I am accordingly of the view that the plaintiff, as a director of the company, does have a right to inspect the instruments of proxy lodged in respect of a meeting to be held on Friday next. But the recognition of this right does not necessarily carry with it a right to have such inspection forthwith. The instruments will in the ordinary course, I have no doubt, require to be examined by the secretary or the auditors or some other employee of the company in reference, inter alia, to the signatures affixed to them. Doubtful instruments will then, in the ordinary course, require to be referred to the person who will be occupying the chair at the meeting for his decision upon the validity or otherwise of the instruments. These processes must not be interfered with by an inspection such as is now sought by an individual director of the company.
39 Significantly, the interest of the director in being able to inspect the proxy documents is derivative. It is because of the preservation of the voting rights of individual shareholders and the role of a director in protecting the exercise of those rights and ensuring that the company observes those rights that the director has such an interest. There is no separate and direct interest of the company itself in being able to influence the provision of proxies by shareholders.
40 In Bisan Ltd v Cellante [2002] VSC 430, Dodds-Streeton J considered issues bearing upon whether particular shareholders had validly called and arranged a general meeting under s 249F which allows members with at least 5% of the votes that may be cast at a general meeting to call such a meeting. An issue arose as to whether the provision in the notice concerning proxies conformed to s 250B. In dealing with that aspect, her Honour observed at [41]:
The statutory requirement that the proxy appointments be returned to the company at least 48 hours before the meeting would appear to reflect the purpose of ensuring that the directors may exercise their entitlement, and fulfil any obligation, to inspect and assess the proxy appointments. The result of the proxy votes can then be announced to the meeting. An orderly and efficient meeting is facilitated.
(citations omitted)
41 Reference was made by her Honour to the decision in Armstrong v Landmark Corporation Ltd. However, the decision by Street J was to the effect that the task of considering the validity of doubtful proxies fell to the chairman of the general meeting. It was because the directors were not considered to have a direct involvement in that process that the application was brought for Mr Armstrong as director to have access. If it were the case that the proxies were company documents then there would have been no need for the application. The distinction was not one of importance for the purposes of the resolution of the issues in Bisan Ltd v Cellante. However, for reasons I have given, proxy documents are not provided to the company for the purpose of any deliberation by the company through its directors as to the validity of the proxies. The arbiter of the validity of the proxies is the chairman of the meeting (who may or may not be the chairman of the company and who, in any case, acts in a different capacity).
42 Therefore, having regard to the separate legal personality of a company and the distinct and separate rights that remain with its members, I have considerable doubts as to whether proxies delivered to the company in accordance with the statutory provisions for shareholders to vote by way of proxy at a meeting of members comprise part of the books of the company. When received by the company they are taken into its possession. However, they are not part of the records of the company. They are received for the purpose of the meeting of members and it is for the chairman of that meeting to adjudicate upon whether they are valid. Steps taken by way of preparation to assist that adjudication are not a basis upon which the company or the directors may treat the proxy documents as if they are documents available for their use. Nor do they make the documents part of the books of the company.