The New South Wales Henry George Foundation v Booth and OTHERS [2002] NSWSC 245 | Case summary

Counsel for the defendants points out, correctly, that these articles draw a distinction between voting by proxy and voting by attorney and treat them as different forms of exercising the right to vote. 6 Art 25 of the plaintiff's constitution is as follows: "The instrument appointing a proxy shall be in writing (in the common or usual form) under the hand of the appointor or of his attorney duly authorised in writing. A proxy must be a member of the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll." If this provision applies to the appointment of an attorney as well as to the appointment of a proxy, the powers of attorney in question were invalid for they did not appoint members of the plaintiff. 7 Art 26 provides that "where it is desired to afford members an opportunity of voting for or against a resolution" the instrument appointing the proxy shall be in a specified form or a form as near thereto as circumstances permit. Art 27 is as follows: "The instrument appointing a proxy and the power of attorney or other authority if any under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the Company or at such other place within the State as is specified for that purpose in the notice convening the meeting not less that forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or in the case of a poll not less than twenty-four hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid." If this requirement applied to the powers of attorney in question they were invalid as they were not lodged with the plaintiff by 2pm on Thursday 13 September 2001. 8 Art 28 of the plaintiff's constitution provides that a vote given in accordance with the terms of an instrument of proxy or attorney shall be valid notwithstanding the previous death or unsoundness of mind of the principal or the revocation of the instrument or authority under which it was executed if notice of such event has not been received at the registered office of the plaintiff before the commencement of the meeting. 9 In Harben v Philips (1883) 23 Ch D 14 at 35-36 Bowen LJ pointed out that there is no common law right on the part of a member of a corporation to vote by proxy. He went on to say that the proposition "that in many cases a man may do through another person what he may lawfully do himself" does not carry the argument very far because it amounts to "a man may do for another person all acts such as in their nature can properly be and are intended to be done by a delegate." One has to look elsewhere for the power of delegation. With respect to a statutory corporation, his Lordship said that one must look to the statute itself and the rules created under it. 10 In the United Kingdom before 1947 a member of a company had no right to vote by proxy except in so far as the articles of association gave such a right. Companies Act 1947 (UK), s 5 was re-enacted in Companies Act 1948 (UK). S 136(1) provided: "Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointed to attend and vote instead of a member of a private company shall also have the same right as the member to speak at the meeting: Provided that, unless the articles otherwise provide, - (a) this subsection shall not apply in the case of a company not having a share capital; and (b) a member of a private company shall not be entitled to appoint more that one proxy to attend on the same occasion; and (c) a proxy shall not be entitled to vote except on a poll." S 139 provided that a corporate shareholder could appoint a representative to act at any meeting of a company and the person so authorised should be entitled to exercise the same powers on behalf of the corporation represented as it could exercise if it were an individual shareholder. Table A, art 67 provided that on a poll votes might be given either personally or by proxy. Art 69 was in like terms to art 27 of the plaintiff's constitution. Art 74 was in similar terms to s 139. Similar provisions appeared in Table C. There was no mention of voting by attorney in the legislation. 11 The first occasion voting by attorney is mentioned, appears to be in the 1961 complementary legislation of the Australian States. Such a provision does not appear in the consolidated Companies Act 1985 (UK) or in The Companies (Alteration of Table A etc) Regulations 1984 (UK). Companies Act 1961 (NSW), Table A, Art 54 provided: "Subject to any rights or restrictions for the time being attached to any class or classes of shares, at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney and on a show of hands every person present who is a member or a representative of a member shall have one vote, and on a poll every member present in person or by proxy or by attorney or other duly authorised representative shall have one vote for each share he holds."

A similar provision appeared in Table B, art 37. The Act, however, made no mention of voting by attorney. S 141(1) provided: "Subject to subsection (2), a member of a company entitled to attend and vote at a meeting of the company, or at a meeting of any class of members of the company, shall be entitled to appoint- (a) in the case of a company not having a share capital- another member or, where the articles so provide, another person (whether a member or not); or (b) in any other case- not more than two other persons (whether members or not), as his proxy or proxies to attend and vote instead of the member at the meeting and a proxy appointed to attend and vote instead of a member shall also have the same right as the member to speak at the meeting, but unless the articles otherwise provide a proxy shall not be entitled to vote expect on a poll." 12 A similar position arose under the uniform legislation of 1981. (See, for example, Companies (New South Wales) Code, s 245, Table A, art 49, Table B, art 33). 13 The present position is that Corporations Act 2001 (Cth), Pt 2G.2, Div 6 applies to proxies and body corporate representatives. It says nothing about a member voting by attorney. S 249X(1), which is a mandatory rule for public companies, provides that a member of a company who is entitled to attend and cast a vote at a meeting of the company's members may appoint a person as the member's proxy to attend and vote for the member at the meeting. As a company limited by guarantee, the plaintiff is a public company (s 112(1)). S 250D(1)(a) provides that a body corporate may appoint an individual as a representative to exercise all or any of the powers of the body corporate at meetings of a company's members. Since the Table A and Table B concept has been replaced by replaceable rules in the Corporations Act, there is no longer any mention of voting by attorney in the current legislation. 14 Counsel for the defendants submitted that the absence of mention of voting by attorney in the current legislation was logical because provision was made for powers of attorney in other legislation and, in particular, the Conveyancing Act 1919. The question is not, however, whether an attorney was properly appointed. The question is whether the attorney was entitled to attend the meeting on Saturday 15 September 2001 and to vote at that meeting. In the absence of a common law rule that one may vote by attorney, one has to find statutory authority for it, not in the general law, but in the law relating to corporations. As Bowen LJ said in Harben at 35-36 it is not to the point that one may appoint a delegate to act in many situations. A shareholder may only vote through a delegate if the legislation or rules made under it so provide. That, in my view, means legislation relating to corporations. 15 There is no authority in point that counsel or I have been able to discover. That is not surprising so far as the United Kingdom is concerned as voting by attorney has never been a feature of its legislation. The point does not appear to have arisen in the 40 years that reference to voting by attorney has been contained in the model articles of association of Tables A and B. 16 In my view, Corporations Act 2001 (Cth), Pt 2G.2, Div 6 prescribes the ways in which a shareholder may be represented at a meeting of a company's members. It does not simply describe some of the delegates who may act for a shareholder. It is not to be implied that other forms of shareholder representation are permissible. It gives statutory force to the permitted methods of representation: by proxy and, in the case of a corporate shareholder, by individual representative. 17 We are not here concerned with corporate representation because the constitution of the plaintiff only provides for individual membership. Art 6 provides that to qualify for membership, an applicant must have completed a course of study in political science approved by the directors and must, in the opinion of the directors, be a person who accepts and is in sympathy with the teachings and economic principles of Henry George. He was the 19th century economist (1839-1897) whose fundamental remedy for poverty was a single tax on the unimproved value of land and the abolition of all taxes that fall on industry and thrift. 18 Corporations Act, s 250A(1) identifies the circumstances in which an appointment of a proxy is valid. It must be signed by the member making the appointment and it must contain the member's name and address, the company's name, the proxy's name or the name of the office held by the proxy and the meetings at which the appointment may be used. S 250B(1) identifies when an appointment of a proxy is effective. It must be lodged with the company at least 48 hours before the meeting as must the authority under which the appointment is signed or a certified copy of the authority if the appointment is signed by the appointor's attorney. Ss 250A(2) and 250B(5) contain provision for the amendment of these requirements by the constitution of a company. That does not mean, however, that the constitution may make provision for a different form of shareholder representation that does not comply with ss 250A(1) and 250B(1) as validly altered by a company's constitution in terms of ss 250A(2) and 250B(5). 19 There is public benefit in the requirement of lodgement of appointments shortly before the meeting. As Walker J said in Campbell v The Australian Mutual Provident Society (1906) 7 SR (NSW) 99 at 120 to fix a short time before the meeting for the production of proxies, so that the investigation of voting power might be completed, thus enabling the meeting to proceed to the business before it, is a wise and reasonable arrangement. (See, also, Armstrong v Landmark Corporation Ltd [1967] 1 NSWR 13 at 14). 20 The absence of reference to voting by attorney in the Corporations Act does not mean that articles such as those of the plaintiff are necessarily invalid. The question is whether, for the purpose of the legislation, voting by attorney is encompassed within the provisions dealing with voting by proxy. 21 In Totally & Permanently Incapacitated Veterans' Association v Gadd (1998) 28 ACSR 549 at 557 Young J drew attention to Monmouthshire Canal Navigation Co v Kendall (1821) 4 B & Ald 453 at 458 (106 ER 1003 at 1005) where counsel said that the word "proxy" is an abbreviation of the word "procuracy." The word is not recognised in Dr Samuel Johnson's "A Dictionary of the English Language" W Strahan, London, 1755. The Oxford English Dictionary's second, and now obsolete, meaning is a document empowering a person to act as the representative of another; a proxy, a letter of attorney. In In re English, Scottish and Australian Chartered Bank [1893] 3 Ch 385 at 409 Lindley LJ described the word "proxy" as meaning some agent properly appointed. In my view the word "proxy" in the Corporations Act is sufficiently broad to include an attorney. 22 In my view, articles such as those of the plaintiff, providing for voting by proxy and voting by attorney must be construed to comply with Corporations Act ss 250A and 250B or else must be struck down as invalid. Art 26 of the plaintiff's constitution contains a form for the appointment of a proxy requiring the name and address of the appointor, the name of the company, the name and address of the proxy and an identification of meetings at which the appointment may be used. The form must be signed by the appointor. In my view the powers of attorney in this case satisfy the requirements of art 26. 23 Art 27 of the plaintiff's constitution follows Companies Act 1948 (UK), Table A, art 69 which is now Table A art 62. A shareholder may vote by attorney if the attorney appoints a proxy and the power of attorney and instrument of appointment are lodged with the company in the time prescribed. The practice in the United Kingdom appears to be that a power of attorney will authorise the attorney to appoint proxies. "Palmer's Company Precedents" 17th ed, Vol 1, f 502 at 960-961 is a power of attorney appointing an individual: "….. to be my attorney, and in my name and on my behalf to vote at any general meeting of the members or of any class of members of the above-named Company [which may be held before the … day of ………., 19…] and at all or any adjournments thereof and whenever he shall deem expedient to demand or join in demanding a poll, and at which I shall not be present in person or by proxy appointed under my own hand; and I authorise my said attorney, at his discretion to appoint from time to time any one or more proxies for any of the above purposes and to revoke any such appointment made by him…" 24 In my view, art 27 of the plaintiff's constitution should be construed as extending both to voting by proxy and voting by attorney. An attorney may lodge his power of attorney as the appropriate appointment of him or her as representative of the shareholder if the instrument complies with art 26. Alternatively, the attorney, if authorised, may appoint a proxy and lodge both the appointment and his or her power of attorney. In either case the representative of the shareholder will constitute the presence of the shareholder by proxy or attorney for the purposes of art 23 and his or her vote will constitute a vote by the shareholder by proxy or attorney for the purposes of arts 24 and 28. 25 If I be wrong in this view and the plaintiff's constitution cannot be so construed and purports to provide for shareholder representation by attorney without the requirements as to form of appointment and lodgement, I am of the view that to that extent the articles are invalid as infringing the Corporations Act ss 250A and 250B. 26 I do not regard the history of the introduction of the concept of voting by attorney to Tables A and B of the 1961 legislation of the Australian States or its continuation in the uniform legislation of 1981 as altering the above analysis. The Companies Act 1961 (NSW), Table A, art 60 (Table B, art 43) prescribed the form of the instrument of appointment of a proxy and art 61 (Table B, art 44) required lodgement of the instrument of appointment 48 hours before the meeting. Companies (New South Wales) Code, Table A, arts 54, 55, Table B, arts 38, 39 contained similar provisions. I do not regard the articles referring to voting by attorney (1961 Table A, art 54, Table B, art 37, 1981 Table A, art 49, Table B, art 33) as intended to provide an alternative form of representation to which the provisions as to form and lodgement of instruments of appointment did not apply. For the reasons set forth above I am of the view that the expression "instrument appointing a proxy" in the latter provisions applies equally to a power of attorney as it does to an appointment of a proxy. 27 It follows from what I have said that since the powers of attorney in question were not lodged at the registered office of the plaintiff by 2pm on Thursday 13 September 2001, there was a contravention of Corporations Act, s 250B and art 27 of the plaintiff's constitution and the first, second and fifth defendants and Messrs Pavic and Spain were not entitled to attend the meeting on Saturday 15 September 2001 or to vote at that meeting. 28 Following my announcement on the preliminary point that I so ruled, counsel for the defendants announced that the second defendant had withdrawn his instructions and as to the other defendants they did not wish to continue with the proceedings save as to the cross-claim and the question of costs. Having heard argument, I indicated that I would order the defendants to pay the plaintiff's costs. I also indicated that I would stand the cross-claim over to the registrar. I gave leave to counsel for the defendants to withdraw. 29 The second defendant than submitted that there had been no valid meeting on Saturday 15 September 2001 at which directors including Mr Gilchrist were appointed. 30 On the material before me read by the defendants, Mr Pavic, shortly after 2pm on Saturday 15 September 2001, called upon the company chairman to open the meeting and announced that the chairman was on the premises but had failed or refused to open the meeting. He then assumed the chair for the purpose of appointing a chairman. He called for nominations. The first defendant was nominated. Mr Pavic put the motion to the meeting and declared it carried. The first defendant assumed the chair and appointed Mr Pavic as temporary secretary to assist him and Mr Spain as minutes secretary. 31 On the defendants' case these events occurred before 2.15pm for it is asserted that at that time Don Ford stood up and called for Mr Gilchrist to chair the meeting. This was ignored. At about 2.20pm Mr Gilchrist entered the meeting room with a number of police officers. There followed argument between the rival groups, the police officer in charge finally announcing that the only way to resolve the matter was for all persons present to leave the premises. The first defendant then announced that the police required everyone to leave the building and that he was adjourning the meeting to the Silks Club at 202-204 Pitt Street at 2.45pm. 32 The respective factions continued to speak on the footpath for about 10 minutes. On the defendants' evidence, at about 2.40pm about 10 people walked down Pitt Street to the Silks Club. They were unaware that the remaining members of the plaintiff re-entered the building at about 2.45pm when Mr Gilchrist sought legal advice. A meeting opened at 3.30pm and proceeded with the business on the notice of annual general meeting. The minutes of that meeting record 10 persons present holding valid proxies for 15 other persons. At that meeting Donald Ford, Anthony Furniss, Neil Gilchrist, Bernard Rooney, James Rooney, John Smiley and John Young were elected directors. 33 The second defendant's points are that the meeting was invalid because art 17 of the plaintiff's constitution provides that if within half an hour from the time appointed for the meeting a quorum of members is not present, the meeting shall stand adjourned to the same day in the following week at the same time and place and, apart from the donees of the powers of attorney, approximately five members of the plaintiff were disenfranchised by the convening of the meeting at 3.30pm on Saturday 15 September 2001 without their knowledge. 34 Art 18 of the plaintiff's constitution provides that the chairman of the board of directors shall preside at every general meeting of the company or if there is no such chairman or if he is not present within 15 minutes after the time appointed for holding the meeting or is unwilling to act, the members present shall elect one of their number to be chairman of the meeting. In my view the first defendant was not validly appointed chairman of the annual general meeting of the plaintiff. Mr Gilchrist was entitled to chair the meeting unless and until at 2.15pm he was not present. The first defendant purported appointment before 2.15pm had no effect and, in consequence, he lacked the ability to adjourn the meeting to the Silks Club. 35 Art 16 of the plaintiff's constitution provides that a quorum for a general meeting is 12 members present in person, including a person attending as a proxy. Counsel for the plaintiff points out that at 2.30pm a quorum was present. Some 10 people departed for the Silks Club and some 10 persons holding 15 proxies attended the meeting at 3.30pm. While it is regrettable that some five persons may have been disenfranchised, that event stems not from the failure on the part of the then directors of the plaintiff but rather from the actions of the donees of the powers of attorney. I was informed by counsel for the plaintiff that since 15 September 2001 another general meeting of the plaintiff has been requisitioned and held. 36 In my opinion art 17 of the plaintiff's constitution did not operate to stand the annual general meeting over to Saturday 22 September 2001 at 2pm. If it did and if the failure to convene the annual general meeting before 3.30pm constituted contravention of the Corporations Act or a provision of the plaintiff's constitution, I am of the view that the same constituted procedural irregularities and no substantial injustice has been caused thereby. Further, I am satisfied that the members of the plaintiff who attended the meeting at 3.30pm on Saturday 15 September 2001 acted honestly and it is just and equitable that, if necessary, an order be made under Corporations Act s 1322(4)(a) that the annual general meeting of the plaintiff held at 3.30pm on 15 September 2001 was not invalid by reason of any contravention of a provision of the Act or a provision of the plaintiff's constitution. 37 The donees of the powers of attorney in question were not members of the plaintiff. Art 25 of the plaintiff's constitution provides that a proxy must be a member of the company. I was invited to declare invalidity on this basis as well. Corporations Act, s 249X is, however, a mandatory rule for public companies. It provides that a member is entitled to appoint a person as proxy. It does not say a member. As a company limited by guarantee, the plaintiff is a public company. As this matter was not raised in argument before me I invited the parties to present written submissions to me on the issue. 38 The solicitors for the plaintiff submit that Corporations Act, s 249X merely establishes a right to vote by proxy leaving it to the constitution of a company to determine who the proxies may be. Reference was made to Fast Scout Ltd v Bergel & ors [2001] WASC 343 at para 38 as the only case referring to the provision. It mentions the provision as the statutory right of a member of a public company which cannot be removed or varied by a company's constitution. It does not deal directly with the question whether a company's constitution may define a class capable of being proxies to the exclusion of other persons, although its brief message is against that proposition. I was also referred to the explanatory memorandum which accompanied Company Law Review Bill 1997 by which the provision was introduced. Contrary to the plaintiff's submission it suggests that s 249X was meant to allow the limitation of proxies to members only with respect to proprietary companies. It states: "10.52 The proxy provisions will be streamlined to make it easier to appoint a proxy and less likely that the appointment will be invalid. 10.53 As under the current law, a member of a public company will be able to appoint a proxy. Members of a proprietary company will also be able to appoint a proxy. However, proprietary companies will be able to displace the rule, because closely-held proprietary companies may wish to allow only members to be present at meetings and vote in person (Bill s 249X(1))." 39 As I have already said, the right to vote by proxy must find its base in a provision in the Corporations Act. S 249X is that provision. It provides that a "person" may be appointed as a proxy. That is a word of general import. It is not limited to members of a company. An article in a constitution of a public company which requires a proxy to be a member of the company restricts the right granted by the statute and is, in my view, invalid. As counsel for the first and third to sixth defendants points out if the plaintiff's contention is correct, a public company's constitution could define an eligible proxy as a person approved by the directors or a person born on 1 January. It is not to be presumed that the legislature intended to delegate to a company the right to define by its constitution an eligible class of proxy. The second defendant also provided me with written submissions which I have taken into account. 40 My view is enforced by the historical analysis set out above. Companies Act 1948 (UK), s 136 (1) entitled a member of a company to appoint "another person (whether a member or not) as his proxy." The word "person" was clearly of general import extending beyond members of the company in question. Companies Act 1961 (NSW), s 141 (1) provided that a member of a company not having a share capital might appoint another member as his proxy or, where the articles so provided, another person (whether a member or not). Again the word "person" extended beyond members of the company. A similar provision appeared in Companies (NSW) Code, s 245. The legislative history makes it plain, in my view, that the word "person" in provisions entitling a member of a company to appoint a proxy extended beyond members of the company and was a word of general import. 41 I decline to declare invalidity of the powers of attorney on the basis that the donees of the powers were not members of the plaintiff. 42 I have already ordered that the cross-claim and the plaintiff's claim to damages be stood over to the registrar. 43 I make the following orders:

The New South Wales Henry George Foundation v Booth and OTHERS

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Judgment (17 paragraphs)

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