Resolutions 1 and 2
109 Resolution 1 refers to Ms Germano being "removed from being a director and President". Resolution 2 refers to Ms Cucinotta being "removed from being a director and Vice President". Resolutions 1 and 2 each present as a composite resolution and do not purport to carry two separate proposals. These resolutions must be assessed against the framework of the VFF constitution.
110 As to the general principles concerning the construction of corporate constitutions, in Donaldson v Natural Springs Australia Limited [2015] FCA 498, I said at [148] to [150]:
There is little doubt (Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1 (Lion Nathan) at [28], [29], [46] to [59], [97] to [102], [122] to [124], [232], [233], [238], [244], [251] to [257] and Oil Basins Ltd v Bass Strait Oil Company (2012) 297 ALR 261; [2012] FCA 1122 at [32]) that:
• the Constitution should be read and construed as a whole;
• general principles of construction of commercial contracts (see generally Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]) are applicable to the Constitution; more particularly, the commerciality of a particular construction may tip the balance in its favour where it is implausible that the parties could be taken to have intended otherwise;
• the Constitution should not be construed narrowly or pedantically;
• words used should usually be given their natural and ordinary meaning;
• a construction of a provision which gives a congruent operation of the various applicable provisions of the Constitution should be preferred to another construction which does not; and
• extrinsic evidence may be adduced as an aid to construction, subject to a qualification that I will address in a moment, but only in the limited manner envisaged in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [35] to [41].
Moreover, a purposive interpretation, rather than a creative interpretation, of the Constitution should be given, so long as it is understood that this is an objective exercise bounded by such principles.
Notwithstanding the generality of the principles just expressed, in construing a Constitution "ordinarily primacy must be given to the objective intention discernible from the language in which the [C]onstitution is expressed rather than to other features of the surrounding matrix of fact in which its provisions may have been made" (HNA Irish Nominee Ltd v Kinghorn (2010) 78 ACSR 553; [2010] FCAFC 57 at [42]). This is because the range of surrounding circumstances available as aids to construction is a more unstable (or at least changeable) foundation than that available for construing contracts generally. Constitutions and replaceable rules can be amended at different times and in different circumstances. Further, the members are likely to change. Further, and more generally, a Constitution serves a public purpose; it is not merely an embodiment of a private bargain. Surrounding circumstances can be taken into account in construing the provisions of a Constitution, but restraint needs to be exercised (Lion Nathan at [55], [56], [59], [63], [102], [124], [226], [236], [254], [255] and [259]).
111 Now under the VFF constitution the President and Vice President do hold a separate elected office, only by virtue of which are they also directors. Holding the position of President and Vice President, they become directors and ex officio members of the Board (clause 10.1.1(a)).
112 Now the VFF constitution does not provide an express power for the members of the VFF to remove a President or Vice President by the passing of a resolution at an extraordinary general meeting.
113 Further, clause 25.1.1 provides:
Disqualification
25.1.1 The office of a Director, or a member of the Commodity Policy Council or any other committee or of The Federation shall be vacated:
(a) if they shall cease to be a Member of The Federation;
(b) if they shall become appointed as a full time salaried member of a statutory board or authority engaged in or concerned with Primary Production;
(c) if a resolution be passed by the governing body by whom they were elected that they shall be removed from office (a copy of such resolution shall be forwarded to the Chief Executive Officer);
(d) if by notice in writing to the Chief Executive Officer from the elected person; or
(e) if the elected position is no longer available as a result of a Commodity Group merging or dissolving.
114 On one interpretation, clause 25.1.1(c) does not provide for a power to remove from office the President or Vice President because it only allows a "Director" to be removed. That clause says nothing explicitly of the roles of President or Vice President.
115 Further, it is arguable that the members have no express power under the VFF constitution to strip the existing President and Vice President of their roles outside the election process in clause 10.2.
116 Now in my view resolutions 1 and 2, albeit infelicitously drafted, are valid.
117 Let me begin with considering whether each of resolutions 1 and 2 are a composite or two separate proposals.
118 The composite view is that by removal as a director, it follows that the holding of the office of President or Vice President by that person shall cease. On this view, the power of removal of a director can rely on s 203D and, given that the office of President and Vice President must also cease, it is not necessary to identify a separate source of power of the members in general meeting to remove the President and Vice President. Alternatively, if a person is removed from the office of President or Vice President, that person's ex officio membership of the board must cease. On the composite view of the resolutions, if it is within the power of the members in general meeting to remove Ms Germano and Ms Cucinotta either as director or as President and Vice President, the resolutions are valid.
119 But on the view of the resolutions as carrying two separate proposals, if one proposal is within the power of the members in general meeting and the other is not, the valid part of the proposed resolution can be severed and put to the members in general meeting.
120 I agree with Mr Weidemann that on either the composite or separate view of resolutions 1 and 2, they are valid.
121 The right of members to vote on the removal of a person from the office of President and/or Vice President derives from either the VFF constitution or a residual or implied right under the general law.
122 Now the VFF constitution does not provide for the direct election of board members by the VFF in general meeting, but it does so provide for the direct election of the President and Vice President by voting members. Further, the VFF constitution does not provide an express power for the members of the VFF to remove a President or Vice President by the passing of a resolution at an extraordinary general meeting.
123 But the VFF constitution makes it clear that the office of President and the office of Vice President are indivisible from the directorships held by the persons occupying these offices. Clause 10.1.1(a), in providing for the composition of the board, includes the President and Vice President as "ex-officio" members. So, any voting member can become President or Vice President, and once elected by voting members of the VFF the electees become members of the board. Further, as clause 10.2.5 provides that the President and Vice President are also directors of the board, clause 10.1.1(a) avoids a situation whereby a newly elected President or Vice President cannot serve because they are not also a director. In this sense then, a person's status as a President or Vice President cannot be separated from their status as a director.
124 Further, other provisions of the VFF constitution governing the office of President and Vice President are dependent on provisions relating to directors. For example, the term of office for the President and Vice President is not provided for other than qua directors. Further, the VFF constitution provides that the President shall act as the chairperson of the board and in his or her absence the Vice President shall act as chairperson of the board.
125 Further, if this all be so, then clause 25.1.1(c) on a broad reading may be utilised to remove the President and Vice President as directors and so also causing them to lose that officer status.
126 Further, the power of voting members to remove from office the President and Vice President is also concomitant to the power of election provided by clause 10.2.1. This is a necessary implication in order to lend efficacy to the principle of accountability to the voting members in whom the power of election is reposed.
127 Further, under s 203D(1)(a), a public company may by resolution remove a director from office despite anything in the company's constitution. Section 203D empowers members to remove directors so as to ensure that members retain ultimate control of the company and to prevent directors from becoming entrenched in their positions (see Allied Mining & Processing Ltd v Boldbow Pty Ltd (2002) 26 WAR 335 at [52] per Roberts-Smith J).
128 So, s 203D can provide an additional source of power to that given under a constitution to remove a director.
129 In State Street Australia Ltd (in its capacity as trustee for Retail Employees Superannuation Pty Ltd) v Retirement Villages Group Management Pty Ltd (2016) 113 ACSR 483 at [16] to [22], I said:
REST has relied on the decision of Bryson AJ in Scottish & Colonial Ltd v Australian Power and Gas Co Ltd (2007) 65 ACSR 313; [2007] NSWSC 1266 (Scottish & Colonial) to assert that the provisions of s 203D provide the only mechanism by which the director of a public company can be forcibly removed to the exclusion of any mechanism in a company's constitution. I do not agree and do not propose to follow that decision. In my view, although s 203D(1) is mandatory in the sense that it overrides a company's constitution to the extent of any inconsistency, it does not provide an exhaustive codification of the mechanism for removal. Before turning to Scottish & Colonial and the other authorities, it is appropriate to directly address the text and context of s 203D.
First, the language of s 203D(1) uses the phrase "[a] public company may …". The word "may" is empowering. Significantly, the phrase is not "may only …". The text suggests that s 203D(1) provides a mechanism rather than the mechanism.
Second, the phrase is "… may by resolution remove a director from office despite anything in … the company's constitution …". The words "despite anything" clearly indicate that s 203D(1) operates to in effect override a mechanism in a company's constitution that might operate inconsistently and might otherwise prevent a director from being removed by an ordinary resolution of shareholders. But s 203D(1) does not purport to be exhaustive or to be an exclusive codification for the mechanism available to remove a director of a public company. The words "despite anything" operate to override a constitution to the extent of any inconsistency only. Nothing more can be read into the words "despite anything …".
Third, nothing turns on the point that s 203D is not a replaceable rule. True it is that it cannot be displaced by a company's constitution. As I have said, it operates of its terms to override any otherwise inconsistent provision in a constitution. But that is a different thing from saying that it provides an exhaustive codification. It is there as a default mechanism rather than the mechanism.
Fourth, it is true that s 203D does not contain the predecessor subsection (s 227(11) of the Corporations Law) which said "Nothing in the preceding provisions of this section … derogates from any power to remove a director that may exist apart from this section". But nothing can be read from the absence in s 203D of the predecessor subsection. Such a subsection was unnecessary given the plain text of s 203D(1). Further, the explanatory memorandum to the Corporate Law Economic Reform Program Bill 1998 which explained the changes from the prior s 227 of the Corporations Law provides no support for the position that there was any intention to make any change by the deletion of that prior subsection. The explanatory memorandum was replete with the phrase that "The draft provisions will rewrite without substantial change the existing provisions of the Law about Officers (Part 3.2) …". Part 3.2 is now Ch 2D. There were some significant changes identified in the explanatory memorandum, but not in relation to the point under discussion. Now I accept that such a general statement, which encompassed numerous statutory provisions, carries little weight because of its generality and breadth. Nevertheless what is important to note is that there was no express statement in the explanatory memorandum to support the suggestion that any change was intended by the deletion of the earlier subsection.
Fifth, it has been said that s 203D can be distinguished from its predecessor provision in terms of its construction because, inter alia, it confers new rights which the predecessor provision did not contain. That may be so at one level, but I do not consider that to be a relevant distinction in the present context. The provisions of subss (2)-(6) all refer to "the director" and "the resolution" thereby referring back to the mechanism in subs (1). Further, subs (7) refers to "a director removed under this section". It is apparent that all other rights are attached to and triggered by the utilisation of the mechanism under subs (1) only. But that still does not answer the construction question as to whether subs (1) is the only method for removal. Can it be said that the legislature intended to confer the right in subs (4) in all cases? The text does not so indicate. It is only indicated where subs (1) has been triggered and not otherwise. Moreover, there is no suggestion in the explanatory memorandum to suggest a broader and comprehensive scope.
Sixth, the proviso in subs (1) cannot be separated from the principal operative provision such that the proviso could be said to be mandatory in all cases, but the operative provision not. The proviso refers to "the director" and "the resolution". The use of the definite article in each case is a reference back to the operative provision and the circumstance under which it has been invoked. In other words, if the operative provision has not been invoked to remove a director because another mechanism, say under the constitution, has been used for removal (assuming the construction I have found as to the operative part), then the proviso does not apply. But if the operative provision has been invoked, then the proviso may operate. In other words, the operative part and the proviso are coupled. One could only argue that the proviso could be decoupled if the text of the proviso had said "a director" and "a resolution". But it does not. Accordingly, the proviso cannot separately be said to be mandatory in all cases where the operative provision was not.
130 And consistently with this, in Allied Mining at [56] it was also said:
What this means is that the constitution of a public company cannot displace or modify s 203D. A constitutional article which provides for an alternative means of removing a director does not in my view displace or modify s 203D. It still remains to fulfil its legislative function, namely, to ensure that despite the provisions of the constitution the shareholders will always retain the ultimate right to remove directors.
131 So, it is not correct to say that a President or Vice President, by virtue of holding such an office, cannot be removed as directors. Their positions are inextricably linked to their directorships, which may be taken away by the members under s 203D, which operates despite the VFF constitution. In both form and substance, the President and Vice President are directors for the purposes of s 203D.
132 Moreover, if the VFF constitution had stated that a President or Vice President cannot be removed by members, then any such clause would have no operation by reason of s 203D as it would be inconsistent with the Act (see also clause 34 of the VFF constitution). Further, any such implied term to the effect that the President or Vice-President could not be removed by members would be equally problematic.
133 Accordingly, if a resolution is passed to remove a director in accordance with the statutory power to do so, and the director so removed also happens to be the President or Vice President, then the director so removed will also cease to be President or Vice President respectively.
134 And this plain reading is also not only consistent with s 203D, but in fact facilitates the purpose of s 203D. To suggest that a director who is a President or Vice President cannot be removed because they occupy this office is not tenable. On the VFF's construction, this would mean that one class of director mandated by the VFF constitution (President and Vice President) are not answerable to voting members. This would be paradoxical, as they hold their directorships by virtue of election to the office of President and Vice President.
135 For these reasons, a resolution to remove a person as a director and as President or Vice President is not invalid. So, resolutions 1 and 2 are valid.