Whitlam v. Australian Securities & Investment Commission [2003] NSWCA 183

Whitlam v. Australian Securities & Investment Commission [2003] NSWCA 183 | Case summary | Zoe

Thursday 10 July 2003 WHITLAM V. AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION HEADNOTE FACTS The case involved allegations of breaches of the Corporations Law 1998 (the Law) by the appellant, the President of NRMA, in connection with the 1998 NRMA Annual General Meeting (AGM) and a board meeting of the NRMA Insurance Group Limited (NIGL) of 11 August 2000. The 1998 AGM The appellant, as chairman of the 1998 AGM, received proxy votes. According to the rules applicable to the meeting, a proxy vote would only constitute a valid vote if it had been signed. Mr Whitlam filled out but did not sign the poll paper with respect to 3,973 votes against resolution 6. Resolution 6, which the appellant supported, proposed amendments to the Articles of Association of NRMA concerning the remuneration of directors. However, following receipt of legal advice, the 3,973 votes were counted and the resolution was defeated. The primary judge held that the omission to sign the poll paper was a deliberate and premeditated action. He held that it constituted a failure to vote as required by s250A(4)(c) of the Law. Further, he held that this was a breach of the appellant's duty as a director, and amounted to breaches of ss 232(2) and 232(6) of the Law. The judge imposed a pecuniary penalty of $20,000, and ordered that the appellant be prohibited from managing a corporation for five years. Board Meeting of 11 August 2000 On 11 August 2000, the board of directors of NIGL considered whether it should approve a remuneration package for the appellant. Draft minutes of the meeting were prepared for circulation among the directors for board approval at its next meeting. At the trial, it was argued that the appellant caused certain revisions to be made to the draft, so that the minutes incorrectly indicated that the board had resolved to approve one recommendation relating to the appellant's remuneration package, whereas the meeting merely noted the topic for further consideration. The primary judge accepted that the appellant had altered the draft minutes and had thereby acted without due care and diligence in breach of s 180(1) of the Law. However, the primary judge held that the appellant had acted honestly, and relieved him of any liability for that breach. Appeal The appellant appealed against the findings of breaches of the Law. The respondent cross-appealed from so much of the trial judge's decision relating to the board meeting of 11 August 2000 as excused the appellant from being penalised for contravening of s 180(1) of the Law. HELD:

The primary judge was in error in finding that, in altering the draft minutes, the appellant acted without due care and diligence, and the evidence was not sufficient to support that finding.
The evidence was sufficient to support a possible finding that the appellant's failure to sign the poll paper was deliberate, but the primary judge's finding to that effect was vitiated by certain errors of fact.
By filling out and lodging the poll paper, albeit unsigned, the appellant did vote, and accordingly did not breach s 250A of the Corporations Law.
The primary judge was in error in finding that the appellant had acted to gain, directly or indirectly, an advantage for himself, and the evidence was not sufficient to support that finding; and accordingly the appellant did not breach s 232(6) of the Law.
In acting as a proxy for members, a director is not necessarily exercising a director's powers or discharging a director's duties, although there may be circumstances in which a director acting as proxy is discharging such duties.
Where a remedy is claimed in reliance on an allegation that what a director did was an exercise of a director's powers or a discharge (or otherwise subject to) a director's duties, then, unless the matter is obvious, the basis on which this is alleged must be made clear prior to the hearing, by allegation of material facts and/or clear specification of its legal basis. The only basis advanced by the respondent in this case was that the appellant became chairman and proxy through his position as director; and this was not sufficient.
There were possible bases which could possibly have supported a finding that the appellant was discharging his duties as a director when he dealt with the poll paper, but these bases were never advanced in any appropriate way by the respondent and have not been the subject of sufficient argument; and in those circumstances it would not be right for the court to consider and rule upon some new basis which it has itself formulated.
Accordingly, on the way the case was pleaded and presented, the appellant could not have been found in breach of s 232(2) of the Law.
There should not be a new trial, and the proceedings should be dismissed. **********

Thursday 10 July 2003 WHITLAM V. AUSTRALIAN SECURITES AND INVESTMENTS COMMISSION Judgment 1 THE COURT: The main factual issue in this case, namely whether or not the appellant's failure to sign a document was deliberate, is on the face of it a simple question. However, its resolution depended on consideration of a number of difficult and quite complex factual issues. Furthermore, the outcome of the case also depended on a difficult legal question concerning the function the appellant was performing when completing this document. The primary judge's decision was careful and comprehensive, but we consider that it contained three errors which vitiated his finding against the appellant on the main factual issue. Furthermore, because of the view we take on the legal question, we consider that the case brought against the appellant did not identify any basis on which it could be found that the appellant was relevantly exercising his powers as a director or discharging the duties of his office of director. The factual case against the appellant would have been sufficiently strong to justify the ordering of a new trial; but we consider that, by reason of our view on the legal question, a new trial on the case as brought by the respondent would fail. For that reason, our opinion is that the proceedings against the appellant should now be dismissed. 2 On 23 July 2002, in proceedings brought by the respondent (ASIC) against the appellant, Gzell J in the Equity Division made the following declaration and order: 1. The Court declares that: (a) By failing to sign the poll paper with respect to his appointment as proxy by 3,973 members of NRMA Limited (now called National Roads and Motorists' Association Limited) who instructed him to vote against resolution 6 at the annual general meeting held on 28 October 1998, Nicholas Richard Whitlam: (i) In contravention of s232(2) of the Corporations Law (Cth), failed to act honestly in the exercise of his powers and the discharge of his duties as an officer of NRMA Limited; (ii) In contravention of s232(6) of the Corporations Law (Cth), made improper use of his position as an officer of NRMA Limited to gain an advantage for himself and for other directors of that company; and (iii) Contravened s250A(4)(c) of the Corporations Law (Cth).

(b) By revising the draft minutes of the meeting of the board of directors of NRMA Insurance Group Limited (now called Insurance Australia Group Limited) held on 11 August 2000 relating to his remuneration package, by causing the revised minutes to be circulated to the other directors and by entertaining their adoption at the meeting of the board of directors held on 6 September 2000, Nicholas Richard Whitlam: (i) In contravention of s180(1) of the Corporations Act 2001 (Cth) failed to exercise his duties as a director with the degree of care and diligence that a reasonable person would exercise if he or she were a director of a corporation in the circumstances of NRMA Insurance Group Limited and occupied the office held by and had the same responsibilities within NRMA Insurance Group Limited as did Nicholas Richard Whitlam; but (ii) Acted honestly, nonetheless, and in all circumstances ought fairly to be excused for the contravention. 2. The court orders that Nicholas Richard Whitlam be relieved wholly (except as to costs) from any liability to which he might otherwise be subject or that might otherwise be imposed upon him because of the contravention referred to in paragraph 1(b)(i) above. 3 On 21 August 2002, Gzell J made the following further orders: The Court orders that: 1. Pursuant to section 1317EA (3) (a) of the Corporations Law (1998), as incorporated pursuant to section 1401 of the Corporations Act (2001), the Defendant, Nicholas Richard Whitlam, be prohibited from managing a corporation for a period of five (5) years. 2. Pursuant to section 1317EA (3) (b) of the Corporations Law 1998 as incorporated pursuant to section 1401 of the Corporations Act [2001], the Defendant, Nicholas Richard Whitlam, pay to the Commonwealth of Australia a pecuniary penalty of an amount of twenty thousand dollars ($20,000). 3. The remainder of the Originating Process filed on 6 September 2001 be dismissed. 4. There be no order as to costs. 4 The appellant appeals against Order 1 made on 23 July and Orders 1-4 made on 21 August 2002. The respondent cross-appeals against Order 2 made on 23 July. 5 The appellant has also applied for leave to appeal, in case this Court should take the view that leave is necessary.

1998 ANNUAL GENERAL MEETING 7 First, we will outline the events relevant to the declaration 1(a) made on 23 July 2002, concerning what is referred to as "Resolution 6" put at the Annual General Meeting of NRMA Limited (NRMA) on 28 October 1998. 8 Resolution 6 proposed amendments to the Articles of Association of NRMA concerning the remuneration of directors, and it was supported by the appellant. A similar resolution had been put at the previous Annual General Meeting, and had narrowly failed to achieve the necessary 75% vote. Article 31 of NRMA's Articles of Association entitled the President of NRMA to take the chair at each meeting of members. The appellant was a director and also the President of NRMA, and he took the chair at both the 1997 and 1998 Annual General Meetings. 9 Deloitte Touche Tohmatsu (Deloitte) held a contract with NRMA to provide returning officer services to the company. Nicholas Peter Hullah was the partner responsible for carrying out these duties. One of the tasks performed by Mr. Hullah's staff was to prepare documents to be used by proxy holders in order to cast votes. The practice prior to the 1998 meeting had been to prepare a sheet of paper for each resolution, containing the resolution number and the name of the proxy, and contained on the left-hand side the number of votes directed in favour, directed against, and not directed, and the total number of votes. The proxy would then record on the right-hand side of the paper the number of votes actually cast in favour, the number of votes cast against and the total number of votes. The proxy was also required to insert his or her surname, initials, membership number, postal address and signature. 10 Article 47 of NRMA's Articles of Association required an instrument appointing a proxy to be deposited at the registered offices of the company not less than 47 hours before the time for the meeting. The 1998 Annual General Meeting was to be held on Wednesday 28 October at 9am. 11 On Friday 23 October 1998 at 5.48pm, Mr. Hullah sent a report to Lisa Storrs, one of the assistant secretaries of NRMA, concerning proxies received to that time. In relation to Resolution 6, it stated that 14,272 members had lodged instruments appointing proxies, of which 4,162 directed their proxy to vote against the resolution. The fax noted "25%: 3,568", thus drawing attention to the fact that the "No" vote was in excess of 25% of these proxy votes, and indicating that it was unlikely that the 75% necessary to pass the resolution would be achieved. 12 The time for lodging the instruments appointing proxies expired at 10am on Monday 26 October. Some time later, there was a telephone conversation between Mr. Hullah and the appellant. There is a dispute as to its terms, but it was common ground that the appellant raised the question whether Mr. Hullah could prepare separate sheets to be used by him as proxy holder in respect of proxies directed to the chairman, with one sheet for votes directed in favour, a separate sheet for votes directed against, and a third sheet for undirected votes. According to the appellant, he requested that this be done in that conversation. According to Mr. Hullah's evidence in the proceedings, the appellant enquired about the possibility of separating the proxy votes on 26 October, but requested that it be done during a second conversation on 27 October. 13 On 27 October, Anne Mackenzie of Minter Ellison faxed to Mr. Hullah a copy of s.250A of the Corporations Law, ss.(4) of which made it mandatory for a proxy who is chairman of a meeting to vote on a poll and to vote in the way directed by the member giving the proxy. Mr. Hullah said he gave the appellant a copy of this section at the rehearsal of the Annual General Meeting on 27 October; but the appellant denied that this happened. 14 Also on 27 October, Mr. Hullah prepared a final report addressed to the chairman of the meeting on votes for which proxy holders were appointed, showing that, of the 15,165 such votes concerning Resolution 6, 4,429 were directed against the resolution, that is somewhat more than 29%. A copy of this report was placed in each of two envelopes, one addressed to the appellant at his office at 131 Macquarie Street, Sydney, and the other to the NRMA's Secretariat, and both were hand-delivered. 15 On the morning of the Annual General Meeting, the appellant picked up his poll papers at the meeting venue. As requested by the appellant, Mr. Hullah's staff had prepared three papers for each resolution in respect of proxies directed to the chairman, identified as such, except for the last resolution (Resolution 8), in respect of which there were no undirected votes, so that only two papers were prepared. They had also prepared the same number of papers for each resolution in respect of proxy forms with no effective nomination of the proxy (which went to the chairman by default), but only one paper for proxies directed to the appellant by name. Thus the appellant had seven papers for each of the first seven resolutions and five papers for the last resolution. 16 At the meeting, there was a deal of interruption and heckling, at least early on. The meeting was adjourned for order to be restored. There was then debate on the first five resolutions, following which the appellant directed that a poll be held on each of them. Dr. Gaye Morstyn, who was Group Secretary and General Counsel of the NRMA Group, gave instructions on how to complete poll cards and proxy poll papers for each of the resolutions with the aid of slides. Her instruction to proxy holders included an instruction to sign the poll paper, and a statement "If you don't sign the poll paper your proxy votes will be invalid". After votes were taken on the first five resolutions, there was debate on Resolutions 6 to 8, and again the appellant directed that a poll be held on each of them. Dr. Morstyn repeated the instructions previously given. 17 When the polls closed (recorded as 4.06pm) the appellant announced that the results would be posted in the NRMA office at 10am next morning, and in newspapers on Saturday 31 October 1998. The appellant then declared the meeting closed, subject to declaration of the polls. 18 In casting his votes as proxy, the appellant completed 54 poll papers, and signed all of them except the one for Resolution 6 concerning 3,973 votes directed against the resolution. The most significant factual issue in the case was whether, as alleged by the respondent, this omission was deliberate, or, as alleged by the appellant, it was an inadvertent mistake. 19 Shortly after 4pm on 28 October, during the counting of the votes, Mr. Hullah was given the unsigned poll paper, and he then had a conversation about it with the appellant. There is a conflict as to the terms of this conversation, but it is common ground that there was reference to the votes being invalid or not countable; and also that Mr. Hullah did not ask the appellant to sign or make any other suggestion as to what should be done, and the appellant did not offer to do anything about it. 20 The Annual General Meeting of NRMA Insurance Limited was scheduled to commence at 6.30pm on that day. After the conversation between the appellant and Mr. Hullah, the appellant went to Tattersalls Club to have a swim, and Mr. Hullah sought advice from Ms. Mackenzie and also Mark Standen, a partner of Minter Ellison. The advice then received was that the votes on the unsigned poll paper should not be counted. Subsequently, Mr. Hullah spoke to Dr. Morstyn, who told him not to declare the result because she was to seek further legal advice. 21 The appellant returned to the meeting room at about 5.30pm, and was approached by Dr. Morstyn; and they then had a discussion with Mr. Standen. It appears that Mr. Standen repeated his advice that the votes could not be counted, and the appellant indicated that this advice should be followed. This was conveyed to Mr. Hullah, and he concluded his report on this basis (at about 9pm). The report on Resolution 6 showed total votes cast of 11,262, with spoilt papers of 3,995, with only 456 proxy votes and 26 votes in person against. 22 Dr. Morstyn created a diary note shortly after her meeting with the appellant and Mr. Standen, as follows: FILE NOTE RE AGM 1998 - PROXY POLL ON RESOLUTION 6 The Returning Officer approached me at around 4.30 pm on 28.10.98 and informed me that the Chairman had forgotten to sign a number of proxies and that this would result in resolution 6 being recorded as carried, rather than not carried. He said that he had discussed the issue with Mark Standen and the Chairman. I then approached the Chairman and Mark Standen around 5.45 pm on 28.10.98 to discuss the matter.

Telephone Conversation with Caithlin McCabe, 1 November 1998 I called Ms McCabe on I November to advise her of the general outline of the conversations that I had on the Friday evening with Mr Whitlam and Ms Morstyn. I asked Ms McCabe to prepare a file note of her recollections of the events which had occurred at the NRMA Annual General Meeting. 27 It appears that, at least by about 30 October or possibly 2 November, the appellant had become aware of a possible suggestion that his failure to sign the document may have been deliberate, and it also appears that the appellant said to various people, probably including Mr. Hullah, that if anybody suggested that he had acted deliberately, they should be prepared "to put their house on it". 28 On 2 November 1998, oral advice was taken from Richard Conti QC, to the effect that the chairman was justified in publishing an amended result showing that Resolution 6 had not been carried. A meeting of the Board to discuss the matter was arranged for 5 November 1998. Mr. Conti confirmed his advice in writing on 4 November 1998. This advice was accepted, and arrangements were made to alter the results previously announced and to give effect to the position that Resolution 6 had not been carried. 29 During November 1998, the appellant prepared a file note as follows: At about 5.30 pm on Wednesday 28 October, Gaye Morstyn approached me and asked me to meet with Mark Standen of Minter Ellison. She had become acquainted with the fact that I had inadvertently omitted to sign one of the proxy papers for Resolution 6 at the Limited AGM, as had Standen. The meeting was relatively brief, probably no more than five minutes, but I recall Standen's advice to be, certainly, that not counting these unsigned proxies was "an appropriate course of action". In giving this advice he reminded us that Gaye, as Secretary, had said on several occasions during the AGM that unsigned proxies could not be counted. Gaye, for her part, said "There may be legal challenge to such a course of action". My recollection is that each of us understood this to be the case, but that Standen's advice was unqualified and therefore I resolved that it was appropriate not to count the votes. 30 He prepared a further file note in December 1998, which contained the following: Shortly after the close of the Limited AGM on Wednesday 28 October, Nick HuIIah asked to speak to me. He walked me into the auditorium and produced from his suit jacket pocket one of the proxy forms for the NRMA Limited AGM. He pointed out that it was one of mine, that it related to Resolution 6 and covered nearly 4,000 proxies which had been directed to me as chairman to vote 'no' and that they had been completed correctly in all respects except one which was that the document was unsigned. It was not clear to me whether Hullah was asking me to sign it then or not. He certainly did not say anything or indicate that. He did say words to the effect that "you realise that an unsigned proxy cannot be counted". I confirmed that that was my understanding. I rhetorically asked what can I do. He did not reply. I remember then walking off muttering something like "You have just seen that AGM, which some people tried to make a farce. This place is becoming ungovernable. What can I do?"

The full meeting was informed that it was resolved to recommend to the Board that it pay a base fee of $70,000 to each non-executive director of the company with the Chairman to be paid three times that amount together with a continuing fee of $90,000 for his chairmanship of the IMA Board and that in recognition of the Chairman's specific responsibilities and on-going duties, that shareholders be asked to grant to the chairman 50% of any allocation to the Chief Executive Officer under the proposed employee share plan. 34 Graeme Phillip Blackett was one of the company secretaries of NRMA and NIGL in August 2000. One of his duties was to take notes and to prepare minutes of meetings of the boards of directors within the NRMA Group. The usual practice was for a member of his staff to prepare draft outline minutes in advance of the meeting based on the material in the board papers. Mr. Blackett then attended the meeting and took notes. After the meeting, he dictated the minutes using the outline and his notes. He would then circulate the draft minutes for correction and comment to the appellant, Mr. Dodd and Dr. Morstyn. After incorporation of any amendments suggested by these three, Mr. Blackett would send the final draft to the appellant for his final review. Once any additional changes by the appellant had been made, that version of the draft minutes was inserted in the board papers for the next meeting. 35 Mr. Blackett attended the meeting of the Board of Directors of NIGL on 11 August 2000. There were nine directors present at that meeting, and also several others in attendance, including Mr. Blackett and Dr. Morstyn. Mr. Blackett's handwritten notes noted that the meeting commenced at 9.03am. On pages 27-29 of the 30 pages of Mr. Blackett's handwritten notes, there appears the following: NRW then left the meeting @ 2.16pm. GC assumed chair. Chair's Remuneration 3 x base = 70K x 3 = $210K - Continues to get IMA fees (and then illegible) - Same committee fees as others Recommendation When option scheme in place, in principle perf rem of chair tied to perf rem of CEO, - Chair gets 50% of option scheme in place for the CEO, whatever is in place which must be agreed by the board. 36 At this point there is a marginal note "+ subject to a plan moving forward." The handwritten notes then continue: Final scheme to be brought back to the board for sign off. - board approves - fees - 3 x +IMA fees+ - an additional option scheme relating to retirement allowance Carried NRW returned @ 2.41pm

[10]

Further, the conduct of the defendant, in failing to vote against Resolution 6 in accordance with the instructions of the 3,973 members was intentional, or was recklessly indifferent to the rights of the 3,973 members, and thereby constituted a breach of his obligation pursuant to section 232(2) of the Corporations Law, 1998 (as taken to be included in the Corporations Act 2001 by section 1401 of that Act) to act honestly. Particulars (i) The defendant knew that a proposal to the same effect as Resolutions 6 and 7 had been defeated at the previous AGM in 1997 and had been Chairman of that meeting. (ii) Prior to the AGM the defendant was aware that the proxy votes received (including those of the 3,973 members) made it impossible or unlikely for Resolution 6 to succeed. (iii) Prior to the AGM, the defendant requested the Returning Officer to reconfigure the defendant's proxy poll papers in such a way as to facilitate what later occurred in relation to Resolution 6 by enabling the "No" votes to be invalidated by the omission of a signature on the poll paper, whilst preserving the integrity of the "Yes" votes which were on a separate poll paper which was signed. (iv) Prior to the AGM the Returning Officer informed the defendant about section 250A of the Corporations Law which required the proxy holder to vote in accordance with the instructions of those members who had entrusted their proxy to the defendant. (v) Prior to the voting on Resolution 6 the group company secretary, Ms. Morstyn, standing next to the defendant, informed all proxy holders of the importance of signing each poll paper held by them. This was also stated in the written instructions on how to vote, and on the poll paper itself. (vi) At the time of the AGM, the defendant was experienced as a director of public companies, as a chairman of general meetings and as a proxy holder and had occupied the office of President of NRMA since 5 December 1996. (vii) When the Returning Officer confronted the defendant with the unsigned poll paper after counting had commenced, the defendant did not offer to sign the document and correct the error. (viii) The plaintiff will also rely on statements made by the defendant on 28 October 1998 to Messrs. Hullah, Dempsey and Talbot.

232(11) This section has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person by reason of the person's office or employment in relation to a corporation and does not prevent the institution of any civil proceedings in respect of a breach of such a duty or in respect of such a liability. 47 Section 250A of the Law (being the same as the current s.250A of the Corporations Act 2001 (Cth) (the Act)) was as follows: 250A(1) An appointment of a proxy is valid if it is signed by the member of the company making the appointment and contains the following information: (a) the member's name and address; (b) the company's name; (c) the proxy's name or the name of the office held by the proxy; (d) the meetings at which the appointment may be used. An appointment may be a standing one. (2) If a company has a constitution, the constitution may provide that an appointment is valid even if it contains only some of the information required by subsection (1). (3) An undated appointment is taken to have been dated on the day it is given to the company. (4) An appointment may specify the way the proxy is to vote on a particular resolution. If it does: (a) the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way; and (b) if the proxy has 2 or more appointments that specify different ways to vote on the resolution---the proxy must not vote on a show of hands; and (c) if the proxy is the chair---the proxy must vote on a poll, and must vote that way; and (d) if the proxy is not the chair---the proxy need not vote on a poll, but if the proxy does so, the proxy must vote that way. If a proxy is also a member, this subsection does not affect the way that the person can cast any votes they hold as a member. (5) A person who contravenes subsection (4) is guilty of an offence, but only if their appointment as a proxy resulted from the company sending to members: (a) a list of persons willing to act as proxies; or (b) a proxy appointment form holding the person out as being willing to act as a proxy. (5A) An offence based on subsection (5) is an offence of strict liability. (6) An appointment does not have to be witnessed. (7) A later appointment revokes an earlier one if both appointments could not be validly exercised at the meeting. 48 As at August and September 2000, ss.180(1), 1317E and 1317S of the Law provided as follows (these being the same as current provisions of the Act): 180(1)A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

1317S(1) In this section: "eligible proceedings": (a) means proceedings for a contravention of a civil penalty provision (including proceedings under section 588M, 588W or 1317H); and (b) does not include proceedings for an offence (except so far as the proceedings relate to the question whether the court should make an order under section 588K or 1317H). (2) If: (a) eligible proceedings are brought against a person; and (b) in the proceedings it appears to the court that the person has, or may have, contravened a civil penalty provision but that: (i) the person has acted honestly; and (ii) having regard to all the circumstances of the case (including, where applicable, those connected with the person's appointment as an officer of a corporation or of a Part 5.7 body), the person ought fairly to be excused for the contravention; the court may relieve the person either wholly or partly from a liability to which the person would otherwise be subject, or that might otherwise be imposed on the person, because of the contravention. (3) In determining under subsection (2) whether a person ought fairly to be excused for a contravention of section 588G, the matters to which regard is to be had include, but are not limited to: (a) any action the person took with a view to appointing an administrator of the company or Part 5.7 body; and (b) when that action was taken; and (c) the results of that action. (4) If a person thinks that eligible proceedings will or may be begun against them, they may apply to the Court for relief. (5) On an application under subsection (4), the Court may grant relief under subsection (2) as if the eligible proceedings had been begun in the Court. (6) For the purposes of subsection (2) as applying for the purposes of a case tried by a judge with a jury: (a) a reference in that subsection to the court is a reference to the judge; and (b) the relief that may be granted includes withdrawing the case in whole or in part from the jury and directing judgment to be entered for the defendant on such terms as to costs as the judge thinks appropriate. (7) Nothing in this section limits, or is limited by, section 1318.

GROUNDS OF APPEAL 52 The appellant relies on the following grounds of appeal: PART I - DRAFT MINUTES 1. His Honour erred in finding that by revising the draft minutes of the board meeting of NRMA Insurance Limited ("NIGL") on 11 August 2000 relating to his remuneration package, by causing the draft minutes to be circulated to the other directors and by entertaining their adoption at the board meeting of 6 September 2000, the Appellant did not exercise the degree of care and diligence that a reasonable person in the position of the Appellant would exercise and that the Appellant was in breach of section 180(1) of the Corporations Act 2001. 2. His Honour erred in failing to consider whether ASIC had established, and in failing to find that ASIC had not established, that the initial draft of the minutes merely recorded that the directors had "noted" a "proposal" in terms of the fourth item of the Appellant's remuneration package and that the Appellant had caused the initial draft to be revised to record something different to the initial draft, namely that the fourth item had been approved, in circumstances where those allegations were central to ASIC's case and where the Appellant had done no more than perfect the intention of the author of the initial draft. 3. His Honour erred in failing to consider whether ASIC had established, and in failing to find that ASIC had not established, an allegation central to its case namely that the Appellant had "no reasonable basis for believing that the revised minutes faithfully and accurately recorded the proceedings and resolutions of the meeting of directors held on 11 August 2000" or alternatively was recklessly indifferent to that matter: (a) in the circumstances referred to in ground 2 above; or (b) where the Appellant relied on the absence of response to the revisions by Mr Blackett and Dr Morstyn despite the fact that unbeknown to the Appellant, those persons had not considered the revisions. 4. His Honour erred in finding that Dr Morstyn's evidence that she had looked at the revisions was unsatisfactory particularly having regard to the absence of any challenge to that evidence and the fact that she was called to prove that those very revisions were made by the Appellant. 5. His Honour erred in relying on the evidence of Mr Cousins of a conversation with the Appellant as to what had been agreed at the 11 August 2000 meeting as establishing a contravention: (a) when that was not the subject of any pleading; (b) when the evidence did not establish to the requisite degree of cogency or at all the fact or terms or time or context of the conversation; (c) when Mr Cousins could not recall whether he spoke to the Appellant at all about that matter before the 6 September 2000 meeting; (d) when there was no evidence or basis for a sufficiently cogent inference that any such conversation occurred before the 6 September 2000 meeting, even more so that it occurred before the Appellant caused the minutes to be revised on or before 4 September 2000; (e) in failing to apply section 140 of the Evidence Act or the Briginshaw test at all or correctly. 6. His Honour erred in finding as a matter of fact that the fourth item of the Appellant's remuneration had not been approved on 11 August 2000 and in particular. (a) in failing to take into account, or failing to give reasons for not so doing, the evidence of Dr Morstyn to the effect that it had been so approved; (b) in failing to take into account the oral evidence of Mr Blackett that the fourth remuneration item had been approved; (c) in treating the factual contest as one between the evidence of Mr Cousins and "an interpretation " of Mr Blackett's notes in circumstances where Mr Blackett had confirmed the accuracy of that interpretation and there was no suggestion that that interpretation was incorrect; (d) in determining the matter on the inexact basis of "demeanour", particularly in circumstances where no credit issue arose in respect of any of Mr Cousins, Mr Blackett or Dr Morstyn; (e) in treating Mr Cousins' evidence as reliable or sufficiently reliable having regard to its inconsistency with two sets of contemporaneous notes, the imprecision of his evidence and his own concessions that he may have been in error and that his recollection may have been coloured by subsequent events; (f) in failing to apply section 140 of the Evidence Act or the Briginshaw test at all or correctly. 7. His Honour erred in failing to take an overall view of the matter taking into account the evidence of the Appellant's good character, the improbability of the Appellant engaging in the conduct and having regard to the gravity of the allegation and the potential consequences of the finding. 8. His Honour erred in making findings which were unnecessary and inappropriate in the circumstances namely a finding of (a) dishonesty in regard to the Appellant's denial of the conversation with Mr Cousins; (b) a finding that the Appellant had acted arrogantly or assessing that arrogance was part of his character. 9. His Honour erred in failing to use or in misusing his advantage as a trial judge. 10. His Honour erred in rejecting the Appellant's oral testimony that each of the directors other than Mr Cousins had provided information more or less justifying the revised minutes where: (a) the substance of the Appellant's evidence was that no director had disabused him of his understanding that the remuneration package had been approved in principle; and (b) ASIC called no director other than Mr Cousins and despite itspositive pleading that no director informed the Appellant that the fourth item had been approved. 11. His Honour erred in finding that even if there had been a conversation with Mr Cousins before the revisions the Appellant acted unreasonably, in particular, having regard to: (a) the fact that his revised minutes accorded with the notes and draft minutes of the designated contemporaneous notetaker Mr Blackett; (b) the fact that the revisions were clearly underlined; (c) the fact that it was a matter on which the board had to agree in any event; (d) the fact that any check of the Cousins information with Mr Blackett or Dr Morstyn would have confirmed the accuracy of the revised minutes. 12. His Honour erred in finding that the conduct alleged and as found was capable of constituting or did constitute a contravention of section 180 of the Act as a matter of law. 13. His Honour erred in making a declaration of contravention in respect of the minutes allegation having granted relief against any liability in respect of the contravention and in failing to interpret "liability" in section 1317S of the Act as comprehending a liability to a declaration under section 1317EA(1) and hence overriding the terms of section 1317EA(1). 14. Alternatively, his Honour erred in failing to adopt the same approach to "liability" in section 1401 and finding that there was no jurisdiction to hear and determine the allegation in relation to the proxy issue.

Deliberate Failure to Sign 16. His Honour erred in finding that the Appellant had deliberately failed to sign the poll paper and in finding that that was part of a premeditated plan: (a) when neither proposition was put to him in cross examination; (b) without addressing what any such deliberate failure or premeditated plan involved; (c) without taking account of, or giving reasons for not taking account of, the inconsistency with an intention not to sign and the lodgment (sic) by the Appellant of the poll paper in the ballot box; (d) without taking account of, or giving reasons for not taking account of, the fact that any premeditated plan of not signing could only succeed if the failure was discovered; (e) in relying on the Appellant's failure to make a prompt assertion of mistake upon discovery of the unsigned poll paper without considering its inconsistency with a premeditated plan to assert mistake on discovery; (f) without taking account of, or giving reasons for not taking account of, the fact that on discovery of the unsigned poll paper the Appellant neither instructed nor urged the returning officer not to count the votes or seek further advice and that that was inconsistent with any alleged premeditated plan; (g) without taking account of, or giving reasons for not taking account of, the fact that a mere intention not to sign could not exist without some wider intention or plan and the fact that any such plan being dependent on discovery could not rationally succeed or further the interests of the Appellant; (h) without finding that the request to split the poll papers was not made for the genuine reason that it would avoid calculation errors; (I) without taking account of, or giving reasons for not taking account of, the fact that the request to split the poll papers extended to all of the resolutions for the NRMA annual general meeting and for all of the resolutions for the NIGL general meeting which was to take place on the same day; (j) without taking account of, or giving reasons for not taking account of, the calculation error which the Appellant made at the NRMA general meeting on the poll paper which was not split, contrary to his instructions; (k) without taking account of, or giving reasons for not taking account of, the many errors made by other directors in poll papers in 1997 meetings and in the 1998 meeting, including three instances of an omission to sign a poll paper in 1997; (I) without taking account of, or giving reasons for not taking account of, the fact that the Appellant took no steps to keep secret the request to split the poll papers.

28 October 1998 Hullah Conversation 23. His Honour erred in finding that when Mr Hullah approached the Appellant with the unsigned poll paper, Mr Hullah said: "This poll paper is not signed. Was this a deliberate action on your part? " and the Appellant responded: "I realize this makes the vote invalid. I'm acting in the best interests of the organization. You can see that this place is ungovernable". 24. Having found that after speaking to the Appellant, Mr Hullah told Dr Morstyn that the Appellant had 'forgotten" to sign the poll paper (which contradicted any statement by Mr Whitlam implying foreknowledge), his Honour erred in finding that the statement did not reflect his state of mind on a basis which was not supported by any evidence, was contradicted by Mr Hullah's own evidence and was contradicted by evidence to which his Honour did not refer to the effect that Mr Hullah had said the same thing to Mr Standen. 25. His Honour erred in failing to find that Mr Hullah's evidence as to the conversation with the Appellant was insufficiently reliable to form a basis for a sufficiently cogent inference to be drawn from the actual words used and the sequence in which they were used having regard in particular to: (a) the fact and terms of the Appellant's file note of December 1998; (b) the time at which and the circumstances in which Mr Hullah's file note was prepared; (c) the concession made by Mr Hullah in cross examination and not referred to by his Honour that it was possible that it was he who said: "Do you realise that makes this invalid" and the Appellant either agreed or effectively repeated what Mr Hullah had said by saying: "I realise it makes it invalid"; (d) the concession made by Mr Hullah in cross examination and not referred to by his Honour that it was possible that the Appellant had said "What can I do?"; (e) the fact that it was not put to the Appellant that he did not say: "What can I do? "; (f) the concession by Mr Hullah, to which his Honour did not refer, that a related part of the file note could be construed as painting a less favourable picture of the Appellant than was the case. 26. His Honour erred in treating as a basis for not accepting the Appellant's version of the conversation that it did not advantage a case of inadvertent omission and as a basis for preferring Mr Hullah's version of the conversation that it was more congruent with intentional conduct on the part of the Appellant. 27. His Honour erred in finding that even if that version of the conversation were correct, that statement of the Appellant implied foreknowledge.

26-27 October 1998 Hullah Conversations 31. His Honour erred in finding that the Appellant asked Mr Hullah on 26 October 1998 in what circumstances proxyholders could fail to acquit their responsibilities and was told that a proxyholder could miscount the number of votes and might fail to sign a proxy paper, and, in particular: (a) without taking into account, or giving reasons for not taking into account, Mr Hullah's failure to mention the conversation to Mr Tyers or in treating as an explanation for that failure, evidence in re-examination directed to a different omission; (b) without taking into account, or giving reasons for not taking into account, the fact that when asked in his section 19 examination whether anything other than the poll paper split matter was discussed in his conversation with the Appellant, the only matter suggested by Mr Hullah was that he advised the Appellant of the change in law requiring proxies to be voted and made no mention of a conversation with the Appellant about avoiding responsibilities; (c) without taking into account, or giving reasons for not taking into account, the fact that Mr Hullah said at the section 19 examination and in response to Mr Tyers that he was aware of the change to the legislation requiring a chairman to vote proxy votes before he spoke to Ms McKenzie on 27 October 1998 and that he had raised the matter of the chairman's obligation with the Appellant on 26 October 1998 and the impact on that conversation on such evidence; (d) in reasoning that there must have been an unusual conversation which concerned Mr Hullah sufficiently to warrant calling Ms McKenzie and receiving legal advice which comprised or included the legal obligation to vote the proxies in circumstances where Mr Hullah's statement at his section 19 and to Mr Tyers was that he contacted Ms McKenzie to confirm his understanding of the new legislation which he had informed the Appellant about on 26 October 1998 and to get a copy of the relevant section because his copy of the Act was out of date; (e) in failing to consider whether Mr Hullah incorrectly recalled the explanation for the split poll papers being that the Appellant "wanted to make sure that he properly acquitted his responsibilities as a proxy holder by not miscounting" as a discussion about acquitting responsibilities; (f) in failing to appreciate and take into account the inconsistency of the file note with the conversation to which Mr Hullah deposed being one which commenced with the provision of numbers of proxy vote information; (g) without taking into account, or giving reasons for not taking into account, the fact that the terms of the file note indicate that the conversation occurred on 27 October 1998 and the significance of that fact in terms of the sequence of conversation portrayed by Mr Hullah. 32. His Honour erred in finding that a conversation occurred on 27 October 1998 in circumstances where the conversation on that date to which Mr Hullah deposed could not have taken place in those terms and in circumstances where his Honour did not and could not make a finding as to what was said in the conversation and in making consequential findings as to the reliability of Mr Hullah's evidence as to his conversation with Ms McKenzie. 33. His Honour erred in finding as reliable Mr Hullah's recollection of delivering a copy of section 250A to the Appellant in circumstances where that recollection was dependent on hearsay evidence of a conversation with Ms McCabe which had only been admitted as going to his state of mind.

PART III - PENALTY 42. His Honour erred in determining to impose a 5 year banning order over and above the pecuniary penalty. 43. The combination of a 5 year banning order over and above the pecuniary penalty was excessive. 44. His Honour erred in taking into account as a relevant matter, absence of contrition in circumstances where contrition is merely a matter which can mitigate what would otherwise be the penalty. 45. His Honour erred in finding that there was a likelihood of repetition of the impugned conduct. 53 The respondent relies on the following grounds in its cross-appeal: 1. His Honour erred in finding that by revising the draft minutes of the board meeting of NRMA Insurance Limited (NIGL) on 11 August 2000 relating to his remuneration package, by causing the draft minutes to be circulated to the other directors and by entertaining their adoption at the board meeting of 6 September 2000, the cross respondent acted honestly. 2. His Honour should have held, on the facts found, that the cross respondent's conduct was not honest, in that he: (a) had no reasonable basis for believing that the revised minutes faithfully and accurately recorded the proceedings and resolutions of the meeting of directors held on 11 August 2000 relating to his remuneration package; (b) alternatively, was recklessly indifferent as to whether or not the revised minutes faithfully and accurately recorded the proceedings and resolutions of the meeting of directors held on 11 August 2000 relating to his remuneration package. 54 There are many overlapping issues of fact and law that have been raised, and many of them involve difficult questions concerning the circumstances in which and the extent to which an appeal court may re-visit factual issues decided by a primary judge. We will deal with the various issues in the following order. 55 First we will consider what we see as the principal alleged errors which could possibly vitiate factual findings against the appellant. The most important of these concern the appellant's motive in relation to the failure to sign the proxy sheet, the need for an explanation in response to what Mr. Hullah said to him after the meeting, the conversation or conversations of 26 and/or 27 October 1998 and the appellant's knowledge of how the proxies were running, the appellant's conversations with directors following the board meeting of 11 August 2000, the limitations on Mr. Cousins' evidence concerning his conversation with the appellant, and the finding of dishonesty concerning the appellant's evidence about any such conversation. 56 Next, we will consider the effect, if any, of these alleged errors on the primary judge's ultimate findings, both on the proxy matter and the minutes matter. 57 Third, we will consider a question of law as to whether, even on the respondent's case, there was any breach of s.250A of the Law. 58 Fourth, we will consider whether the alleged deliberate failure to sign the proxy paper was a breach of the appellant's duty as a director of NRMA. This will involve looking at the matter as a matter of substance, and also in the light of the way the case was pleaded and conducted. 59 Finally, we will deal briefly with two questions of law which, on the findings we make on the other matters do not arise, namely the nature of the appellant's duty in relation to the draft minutes and the question whether the primary judge was obliged to make a declaration of breach of s.180(1) of the Law.

At the time of the meeting, the NRMA group was well advanced in its takeover of SGIO Insurance Limited ("SGIO"). It was proposed at that time that SGIO would become a wholly owned subsidiary within the NRMA group. At the time of the meeting I believed that that was a practical certainty. I also believed that it was highly likely that I would serve as a member of that board when the takeover was complete. SGIO became a wholly owned subsidiary of NIGL and I became a member of the board. I received fees of $52,500 for the financial year ended 30 June 1999 and $105,000 for the financial year ended 30 June 2000. I believed as at the date of the October 1998 AGM that fees such as that would not be available to NRMA board directors if resolution 6 was passed. Those fees were fees in my capacity as a director, not, for example, for serving on any committees of SGIO. As at the date of the meeting, I understood that if resolutions 6 and 7 were passed, it was proposed that my fees would increase by $30,000 per annum from 1 December 1998 to $135,000 per annum (F13). This would have amounted to $17,500 for the balance of the year ended 30 June 1999 (compared to the extra $52,500 in fact received from SGIO) and $30,000 for the full year ended 30 June 2000 (compared to the extra $105,000 in fact received from SGIO). 64 In fact, SGIO became a wholly owned subsidiary of the NRMA Group on the third business day after the 1998 Annual General Meeting; and the appellant became a director of SGIO on 21 December 1998. The appellant did in fact earn more fees by reason of the resolution not being passed than he would have if it had been passed. 65 The appellant was cross-examined on this matter before the primary judge in two stages, the second of which was as follows: PEMBROKE: Q. Mr Whitlam, your two file notes which you have annexed to your affidavit were made in November and December respectively, weren't they? A. As I recall. Q. The long file note was made in mid-December for the purpose of submission to Mr Tyers, wasn't it? A. I believe so. Q. And the short file note was made some time in November, you think early November? A. Yes, that's right. Q. Do you agree that the long file note was sent by you to Mr Tyers on or about 16 December? A. I am not sure of the exact date but it - it would have been in December because his - I don't - I don't know the exact date. Q. Are you prepared to agree it is mid-December? A. Yes, I think that's likely. Q. And you knew that Mr Tyers would be interested to hear from you in relation to any matter relevant to his attempt to find out what happened and why it happened? A. I think he asked me. I think he had said that. I think he had approached me. Q. And you knew that he wanted to know from you any information which you could provide to him as to what had happened and why it had happened? A. Yes. Q. And you had an opportunity in speaking to him and in providing to him a written explanation in your file note to say that you had no motive for deliberately omitting to sign the poll paper which was not signed, didn't you? A. I guess I had an opportunity, yes. Q. And you did not avail yourself of any such opportunity, did you? A. I would have to familiarise myself with the file note. If it omits that, then that is an omission. Q. You had an opportunity when you were interviewed by John Lyons on the Channel Nine Business Sunday programme on 6 March 2001 to explain, if it were the case, that you had no motive to deliberately omit to sign the poll paper which was unsigned, didn't you? A. I don't recall his giving me such an opportunity, no. Q. You knew that the -- A. I knew I had no motive. Q. You knew that the interview was an occasion in which you were provided with the opportunity of explaining your role in relation to the unsigned poll paper, didn't you? OBJECTION. BANNON: If my friend is going to put a specific question which was asked, that is one thing. To say that -- HIS HONOUR: He can set the context, Mr Bannon. PEMBROKE: Q. You knew that in the course of that interview, and don't worry about any particular questions that may have been asked, you had an opportunity to say to the world, the people who watched that programme, that you had no motive, didn't you? A. I don't believe I was asked any specific question that allowed me to give that answer. I do recall a number of questions I was asked. Those questions were substituted with new questions in the interview. Q. So do you say -- A. As it was broadcast, all over Australia. Q. Do you say to his Honour that you wanted to tell Mr Lyons and to the viewers but were frustrated because he didn't ask a question which enabled to you tell him? OBJECTION. BANNON: That is not a fair summary of what the witness has said. PEMBROKE: I think it is, your Honour. QUESTION ALLOWED. WITNESS: No. PEMBROKE: Q. You didn't mention a word in that interview about any motive or lack of motive, did you? A. I mentioned many, many words, most of them excised. It is a disgraceful report, that. Defamatory in the extreme. Disgraceful. Q. Mr Whitlam, you know that Channel Nine have produced a full, uncut, unedited version of that interview, don't you? A. I would welcome that published everywhere. Q. You know that in the course of the full, uncut, unedited version of the interview, you did not say one word to suggest to Mr Lyons that you had no motive, did you? A. I do not recall that but if that is an omission, it is an omission. Q. You had an opportunity -- A. But as you know, I had no motive. Q. You had an opportunity to tell ASIC before these proceedings were commenced that you had no motive, didn't you? OBJECTION. PEMBROKE: I can ask the question, your Honour. OBJECTION. HIS HONOUR: The basis, Mr Bannon? BANNON: What opportunities is my learned friend referring to? HIS HONOUR: He has asked him whether he had an opportunity. BANNON: But your Honour knows the legislation in relation to section 19 examinations and the extent to which they can be used or not used. Section 68(3), the ASIC Act. HIS HONOUR: Yes, Mr Pembroke, how do you get around section 68 (3)? PEMBROKE: The section prevents a statement made by a witness at an examination being admissible against him. I have not sought to make admissible against him any statement he made and I will not be trying to. I am well aware of my obligations, your Honour. HIS HONOUR: I think that you should establish for a start that the question that you were asking was in relation to an examination under the Act and then you may ask him whether something was not said during that examination, but you may not use or put to him anything that was said during that examination. PEMBROKE: No, I do not intend to do that, your Honour. BANNON: Attempting to prove that something wasn't said in an examination would be proving the content of the examination. HIS HONOUR: I do not think it will. It specifically will not relate to any statement that was made during the record of interview. If the witness says, "Yes", then that is the end of Mr Pembroke's entitlement to cross-examine on the issue but he may ask whether there was no statement made during the course of that interview by the witness in relation to other matters. BANNON: Your Honour, the provision says the statement is not admissible in evidence against the person. That comprehends the proposition that you cannot prove what was said in the statement. You cannot do it indirectly by asking questions of the witness of what he said. Proving the statement includes what was said and not said. But, your Honour, that would mean that one could always lead evidence to show, even from ASIC, to say that something wasn't said and get around section 68(3). HIS HONOUR: It doesn't get around section 68(3) because it specifically does not seek to adduce the statement or a portion of it. It is seeking to establish that an area of investigation was not covered during the examination. BANNON: Perhaps my submission is to establish that something wasn't covered in an area of examination is proving part of what was covered. The proof of a negative involves proving necessarily part of what was covered and, in my submission, my learned friend is about to transgress 68(3). HIS HONOUR: I hear your submission. I overrule it, Mr Bannon. Mr Pembroke, I will allow you to ascertain whether a particular matter was not covered during the interview. PEMBROKE: Q. Do you agree with me that the suggestion which you have now made in your affidavit that you had no motive was not put by you to ASIC when you were examined by that body? A. Yes. Yes, your Honour. BANNON: Can I just say - I am, in a sense, cavilling with your Honour's ruling but now how am I supposed to re-examine? Am I supposed to show there wasn't an appropriate question for that to be answered? And how do I do that by tendering that statement? I am put in an impossible position by what my friend has just done. 66 In his judgment, the primary judge said this: Until he swore his affidavit in these proceedings, the defendant had not suggested to anyone that he was better off with the failure of resolution 6 and therefore lacked a motive in having it passed. His only explanation for his failure to raise the issue earlier was that it was an omission. The stance that he lacked a motive conflicts with his support of resolution 6 both before and at the annual general meeting. The basis for his contention is the fees in fact drawn by him because of his position on the board of SGIO. The possibility of a takeover of SGIO did not arise until September 1998 and there was no guarantee that it would be successful. The defendant agreed that the SGIO might not become a wholly-owned subsidiary. If it did not, there was doubt as to his position on the board and doubt as to the level of fees that he might draw. I find this evidence to be a recent reconstruction on the defendant's part that reflects badly on his credit. The defendant's public position was support for resolution 6. If it was passed the directors collectively, and he individually, stood to gain an increase in fees upon the passing of resolution 7. I find that the defendant had a motive to have resolution 6 passed. 67 In our opinion, there is a serious confusion in that paragraph of the primary judge's judgment, contributed to by the questions and answers in the cross-examination. In this cross-examination, the word "motive" is plainly used in the sense of "motive of personal gain"; and the appellant's denial of that motive does not in the slightest conflict with his consistent and open support of Resolution 6. 68 His affidavit evidence was that he supported this resolution as improving transparency in relation to the determination of directors' fees and in enhancing the control over those fees by NRMA members; and he was not cross-examined so as to challenge that assertion. This view was entirely consistent with what was set out in the explanations in the notice of meeting, set out above, which was represented as being the view of the directors including the appellant. Similarly, the notice of meeting represented as being the view of the directors, including the appellant, that the passage of this resolution would not cause the directors to receive more remuneration than they currently received. It can be said, of course, that if Resolution 6 passed with the requisite 75% majority, it was virtually certain that Resolution 7 would be passed with a simple majority, and this would effect a substantial increase in directors' fees. However, when the equivalent resolutions were defeated at the 1997 Annual General Meeting, with the second resolution imposing an increase of total directors' fees from $617,000.00 to $665,000.00, the same increase was effected subsequently through the existing processes for increasing directors' fees, which did not require approval of the general meeting. Furthermore, as noted in the explanatory notes for the 1998 meeting, the existing amount approved for payment in respect of ordinary services on all boards of the NRMA Group was $763,000.00, not $665,000.00. It can also be said that the increase proposed for the 1998 Annual General Meeting, of a further $190,000.00, was a more substantial increase than that proposed for the 1997 Annual General Meeting, and gave a figure substantially in excess even of the $763,000.00 then currently approved. However, even without taking into account the SGIO matter, the monetary advantage to the appellant from the passage of Resolutions 6 and 7 was not a very large one. 69 In our opinion, there are accordingly two significant errors in the paragraph to which we have referred, which gave rise to the finding that the appellant's evidence was "a recent reconstruction … that reflects badly on his credit". First, there is a plain error in the suggestion that the stance that he lacked a motive (meaning here, motive for personal gain) conflicted with his support of Resolution 6, when that support was entirely explicable by the reasons given in the notice of meeting for support of the resolution by all the directors. Second, the limited extent of any monetary gain to directors was also pointed out in the notice of meeting, and, although there is no indication of any reference to the SGIO matter prior to the swearing of the appellant's affidavit for the purpose of these proceedings, that is really no more than a striking illustration of the consideration already referred to in the notice of meeting that the effect of the passage of Resolution 6 would be to prevent directors being paid for ordinary work on other boards within the Group without the approval of NRMA members. Accordingly, we see no justification for the conclusion that this was a recent reconstruction reflecting badly on the appellant's credit.

I refer to paragraph 44 of Mr Hullah's affidavit. I make the following comments on that paragraph: (a) Mr Hullah did not say to me words to the effect of "Was this a deliberate action on your part". If he had said that, I would have been offended and I would have recalled him saying those words. I do not recall taking offence to my exchange with Mr Hullah on that day; (b) I did not say to Mr Hullah words to the effect of "I realise that this makes the vote invalid"; and (c) I did not say to Mr Hullah words to the effect of "I am acting in the best interests of the organisation". It is possible that after referring to people making a farce of the AGM, I described them as not acting in the best interests of the organisation, although I do not specifically recall saying so. It was certainly my view at the time that such people were not acting in the best interests of the organisation. 74 We have already set out in [30] above the appellant's note written in December 1998. 75 In a s.19 examination on 2 May 2001, Mr. Hullah gave the following evidence: MR D'COTTA: Q. When you approached Mr Whitlam at that time, to the best of your recollection, what were your words to him? A. I don't recall exactly what I would. I believe I said something to the effect of, "This is the form. Do you see that it's not signed? Are you aware it's not signed?". Q. Did you ask him whether he meant to sign it or not? A. I did not ask him whether he meant to sign it, whether he had intentionally not signed it. MR CONSTABLE: Q. You've told us that his response wasn't satisfactory and that you were concerned. Can you just explain what you meant by that? A. I was concerned that it could be construed from his response that he had intentionally not signed it. That is to my mind a construction which one could put upon his words. MR MICHALSKI: Q. Mr Hullah, did you respond to him in any way? A. I did not ask him to sign it because in my mind that would not have been a proper thing to do, the poll having closed. In my understanding, you could not do that. Poll closed, it was finished. No, it would be wrong of me to - I can think what I might have said, but I'm not sure what I said, so I think to conjecture as to exactly what I said wouldn't be right. MR CONSTABLE: Q. Can you give us the basic effect of what you said? A. Well, basic effect - I mean, my belief is that I would have said, "You realise that this makes this invalid", but I don't - I know I showed it to him; I know he made those responses. I don't know that I exactly - specifically what I said, and so I think it's wrong for me to, under these circumstances, suggest to you what I did say. I don't recall. 76 There was extensive cross-examination of Mr. Hullah on this conversation. He explained his s.19 evidence that he did not ask the appellant whether he had intentionally not signed the paper by saying he did not then refer to his note. The most significant relevant concessions obtained from him were the following. To a question: Would you agree when you wrote the words, "Asked if this was a deliberate action on his behalf", you were intending to record the import of what may have been said and in fact what may have been said was something like, "Are you aware it's not signed?"

119 The findings of fact that I have made as set out above have been made bearing this imprimatur in mind. I am persuaded and find as facts that that the defendant did ask Mr Hullah on 26 October 1998 in what circumstances proxy holders could fail to acquit their responsibilities and was told that a proxy holder could miscount the number of votes, might leave the meeting prior to the poll being called and might fail to sign a proxy paper. It is common ground that the defendant was provided with up to three poll papers with respect to members' appointments of him as proxy in his capacity as chairman of the meeting. It is common ground that he failed to sign the poll paper with respect to members directing him to vote against resolution 6. I find that the defendant filled out that poll paper for resolution 6 at a time when the meeting was quiet and that he displayed no inconvenience in completing his tasks. I am satisfied that the poll paper in question was one of the earliest the defendant filled out with respect to resolution 6. I find that Mr Hullah in confronting the defendant with his unsigned poll paper said words to the effect: "This poll paper is not signed. Was this a deliberate action on your part?" to which I find the defendant responded in words to the effect: "I realise this makes the vote invalid. I'm acting in the best interest of the organisation. You can see that this place is ungovernable". I find that this statement to Mr Hullah implies foreknowledge. I find that there was no reaction by the defendant consistent with innocence. I find that on 30 October 2002 the defendant said to Mr Hullah words to the effect that if he suggested the failure to sign the poll paper was a deliberate act he should be prepared "to put his house on it". I find that this attempt to silence Mr Hullah is consistent with guilt. I infer from my findings of fact that the defendant deliberately failed to sign the poll paper in question. Mr Hullah had no reason to manufacture his file note or his evidence. I have found his evidence reliable having considered the criticisms of the defence. 80 The "imprimatur" referred to at the beginning of par.[119] is a reference to the Briginshaw standard of proof in relation to allegations of serious misconduct. 81 There were three main criticisms of this aspect of the primary judge's reasons: first, there was alleged to be inconsistency between par.[111] and par.[119] concerning what Mr. Hullah said; second, there was alleged circularity, in that the primary judge relied on the absence of an appropriate reaction by the appellant, this itself being dependent on accepting Mr. Hullah's version and rejecting that of the appellant; and thirdly, there was said to be a misunderstanding of the significance of Mr. Hullah saying "You realise that makes this invalid". 82 On the first matter, inconsistency could be avoided if the question "Are you aware it's not signed" is taken to amount to words to the effect "This poll paper is not signed. Was this a deliberate action on your part?" However, in our opinion the two expressions are very different indeed. The latter is highly confrontational, with a direct and explicit suggestion of conscious wrong-doing. The former could be taken as suggesting conscious wrong-doing, in that the only way that the appellant could, before the conversation, have been aware that the paper was not signed, was if he was aware of this when it left his possession. But if someone were not on the lookout for a suggestion of wrong-doing, the former words could be taken simply as an expression used to draw attention to the fact that the paper was not signed. That is, any suggestion of conscious wrong-doing is quite indirect, and could be overlooked. The same cannot be said of the other form of words. So in our opinion, there is inconsistency between the two paragraphs, in that the former expression is not to the effect of the latter. 83 We would not regard this inconsistency by itself as an error which could justify appellate intervention. However, it could lend some support to the second criticism. 84 In considering which version of the conversation to prefer, the primary judge said (in the third sentence of par.[92]) "There is … no assertion of mistake which one would expect from a person who had inadvertently failed to sign the document". In our opinion, no such assertion could be expected from an honest person, unless that person appreciated that it was being suggested that the failure was deliberate. On the appellant's version, no such suggestion was made. As noted on the inconsistency point, even on Mr. Hullah's evidence, it can be said that no such suggestion was explicitly made. Thus, in so far as the primary judge relied on failure to protest innocence in preferring Mr. Hullah's evidence, the reasoning was circular; and even on what we see as the true effect of Mr. Hullah's evidence, it has little weight. (All this is quite apart from the submission for the appellant that, if the appellant were carrying out a deliberate plan, as the respondent suggested, one would rather expect him to be ready with a protestation of innocence: that submission carries some weight, but would not of itself justify appellate intervention). 85 This consideration does not detract from other aspects of the appellant's reaction commented on adversely by the primary judge, in particular, the lack of any expression of surprise or concern, or the lack of any real pursuit of the question of what could or should be done, including the seeking of authoritative legal advice. The question "What can I do?" in the appellant's version might be considered as not indicating a careful or serious addressing of the significant problem which his own failure to sign had caused given its then understood effect. However, the primary judge's comments in pars.[94], [111] and [119] suggest that it was the lack of explanation and protestation of innocence which was the aspect of the response which carried most weight with him; and in our opinion there was circularity in that reliance. 86 The third matter relates to an argument for the appellant that, if Mr. Hullah said to the appellant "You realise that makes this invalid", any reference to invalidity by the appellant must have been in response to this suggestion. That is, it is not in the least plausible that, in response to the appellant saying "I realise that makes the vote invalid", Mr. Hullah would have said "You realise that makes this invalid". If Mr. Hullah did say those words, then any reference by the appellant to invalidity must have been of the nature of concurrence with those words and not, as Mr. Hullah suggested, volunteered out of the blue as a non-responsive answer to another question from Mr. Hullah. Paragraph [114] suggests that the primary judge may not have understood this submission. Of itself, we would think this insufficient for appellate intervention. 87 However, in our opinion the circularity point could possibly justify that intervention; and the other two matters could support a view that the primary judge's reasoning on the content and significance of this important conversation was flawed.

Conversation(s) of 26 and/or 27 October and Knowledge of Proxies 88 There were very detailed criticisms of the primary judge's findings in relation to these matters. In our opinion the most substantial criticisms pointed to claimed inconsistencies in the evidence on these matters led on behalf of the respondent, which, it was submitted, were not adequately addressed by the primary judge. 89 First, in the document prepared by Mr. Hullah a few days after the meeting, Mr. Hullah refers to only one conversation on these days, namely a conversation after he sent a proxy report to the appellant on 27 October. In the report prepared by Mr. Tyers, signed as correct by Mr. Hullah on 23 February 1999, Mr. Hullah said there were two conversations, both on 26 October. In his evidence in the proceedings, Mr. Hullah said there was one conversation on 26 October, in which the appellant asked for information concerning proxies and raised the question of splitting the proxy papers, and a second conversation on 27 October, when the appellant actually asked for the separate proxy papers to be prepared. 90 Next, in a file note prepared by Ms. McCabe, an employee of Deloitte, Ms. McCabe recorded being directed on the night of 26 October to prepare separate proxy papers, this being consistent with the version recounted in Mr. Tyers' report but inconsistent with both other versions given by Mr. Hullah. 91 According to Mr. Tyers' report, and in his s.19 examination, Mr. Hullah said that he knew of the requirements of s.250A of the Law when he spoke to the appellant about the splitting of the proxy papers, and that he contacted Ms. Mackenzie only because he did not have an up-to-date copy of the legislation. On the other hand, in his file note and in his evidence in the proceedings, he said he did not know about s.250A until he contacted Ms. Mackenzie. The former version is inconsistent, and the latter consistent, with Mr. Hullah's evidence, accepted by the primary judge, that he contacted the appellant again after receiving a copy of s.250A from Ms. Mackenzie, in order to tell him of its requirements. 92 Next, in his cross-examination in the proceedings, Mr. Hullah said he sought advice from Ms. Mackenzie as to the propriety of splitting the proxy papers. This evidence was inconsistent with his affidavit and with his file note, in that they indicated he had advised the appellant that he considered there was nothing wrong with splitting the poll papers prior to his conversation with Ms. Mackenzie. 93 Finally, Mr. Hullah originally thought that he had sent a copy of s.250A to the appellant by fax, but his memory was assisted by a conversation with Ms. McCabe who told him he had handed a copy to the appellant at the rehearsal for the Annual General Meeting on 27 October. No facsimile sent to the appellant was produced, this matter was not dealt with in Ms. McCabe's file note, and Ms. McCabe was not called to give evidence. Accordingly, it was submitted, Mr. Hullah's evidence to the effect that a copy of s.250A was transmitted somehow to the appellant was worthless. Furthermore, since as noted earlier, the account given by Mr. Hullah according to Mr. Tyers' report and in his s.19 examination would provide no reason to contact the appellant after receiving s.250A, it was submitted that the primary judge should not have found that s.250A was drawn to the appellant's attention. 94 There is force in these submissions. However, in our opinion the substance of these submissions was addressed by the primary judge and we see no appellable error in the way they were addressed. It is not to the point that these matters may have caused another judge to place less reliance on Mr. Hullah's account of the conversations than did the primary judge. However, these considerations may be relevant to the question of what this Court should do, if other appellable errors are found which justify setting aside the findings of the primary judge. 95 It was also submitted for the appellant that the primary judge was in error in disbelieving the appellant's evidence that he did not know that the proxy figures provided prior to the meeting showed that Resolution 6 was certain to be defeated. This matter was dealt with in pars.[84]-[90], as follows: 84 So far as the other issue is concerned, there are a number of other respects in which I found the defendant's evidence unsatisfactory. The clear inference from the note by Lisa Storrs to the defendant on the facsimile sent to him at 7.05 pm on Friday 23 October 1998 is that he and Ms Storrs had spoken and he was expecting the progressive results of the proxy count. The defendant was evasive about this issue in cross-examination. He agreed that the note implied that Ms Storrs had discussed with him the fact that the reports had been received from Mr Hullah. He did not recall having such a conversation. He did not know if the facsimile was received by his machine. He had no idea whether he was waiting for the facsimile. He did not accept that he read the facsimile when received nor whether he read it subsequently. Again belligerence intruded. He had no recollection whatsoever of awaiting the information on the Friday night. He was asked: Q: Would you listen carefully to the question. You wanted to know the up to date proxy count on the Friday night, didn't you? A: No, I don't know that to be true. I knew the general trend of the proxies. That's what I knew. That was the knowledge I had at that time.

I deny that I made suggestions as to changes to the draft minutes which I knew did not reflect the events the subject of the minutes. That section of the minutes which related to a part of the 11 August 1998 board meeting in which I was absent necessarily had to be considered by those who were present during that part of the meeting. I would have regarded it as irrational behaviour on my part deliberately to attempt to get other directors to agree to something which I knew had not been agreed. Such conduct could only have portrayed me in a poor light. 99 There was the following cross-examination on this matter: PEMBROKE: Q. What is it that you relied upon in mid-August 2000 to enable you to make the changes which appear on K68? A. Well, I had the draft minutes of the board committee of the 10th of August. Q. Which set out what the board committee's recommendations were to the board? A. But they were wrong and they were settled on the 31st of August, the Friday, and they were settled by the board committee on the Friday the 31st. The - the board papers went out either that Friday or the Saturday morning and I saw them that weekend and Ms Morstyn and I had a conversation that weekend with respect to the fact that the board committee minutes had been sent out in draft in error and that the board committee minutes which had been settled on the Friday should have been sent out, so it was, on that weekend, certainly clear in my mind what the board committee had decided on the 10th of August and, indeed, the decision that they made on 10 August which they recommended to the board the following day was made in my presence, although the discussion that led to that decision was made in my absence, so I was quite clear what had been recommended to the board. The minutes of the board committee which had made that recommendation had been settled only on the Friday the 31st of August. Q. My question was directed to the moment in time you say about two weeks after the 11 August board meeting when you first made the red handwritten alterations to the draft minutes which are reflected in the underlined revisions on page K68? A. Yes. Q. What I asked you was what information did you rely on for the purpose of making those revisions? A. Information that had been conveyed to me by directors, I think all but one director, as to the nature of the discussion that had taken place in my absence and nobody disabused me of my understanding that the recommendations of the board committee were agreed or on track. Q. I think you said all but one director? A. Yes. PEMBROKE: Q. May we take it that's Ms Keating? A. You may take it Ms Keating, I didn't speak to Ms Keating. Q. So you say to his Honour that you relied upon an explanation to you by Mr Astbury? A. I believe I had conversations with each of those directors at times between the board meeting of 11 August and the board meeting of 6 September and of course in many cases we met in committee. None of them disabused me of my understanding that the remuneration as recommended by the board committee had either been approved or was on track. Q. Let me just be clear, that means Mr Astbury, Mrs Callaghan, Mr Cousins, Mr Dodd, Mrs Easson, Mr Hamilton and Mr Stanwell, is that right? A. Yes, that's right. Q. How is it, what were the circumstances in which they failed to disabuse you? Did you till them what you understood had happened? A. No, they told me and, and typically they told me - you left out Mr Ross I think - typically they told me of Miss Keating's antics in my absence. But none of them disabused me of my understanding. Q. So each of the persons that I mentioned to you, and you add Mr Ross, told you certain information which you felt justified you in making the revisions to the draft minutes; is that right? A. Yes, each of them to a more or less extent. Q. Was there a separate conversation with each of those directors? A. I do not recall individual conversations on this matter. I did have conversations with each of those directors at some stage in that period, it was a very busy period. This particular matter was not a matter of great currency but we spoke on the matters of the new board quite often. Q. And you deny, do you, that Mr Cousins explicitly told you that the performance remuneration package was not approved by the board? A. Yes, that's right. HIS HONOUR: Q. When you say "Yes, that's right", do you deny? A. I deny - there was no - sorry - there was no complete proposal. It was only in outline form. It is something that would need to be developed, not just with respect to my proposed package but with respect to the chief executive and the top executives, and indeed for the directors because there was a directors' package. It was to be developed. My understanding was that it was approved in principle. PEMBROKE: Q. I'm obliged to put to you that your evidence that each of Messrs Astbury, Callaghan, Cousins, Dodd, Easson, Hamilton, Keating - not Keating - Stanwell and Ross gave you information on the basis of which you felt justified to make the provisions at K68 is quite false evidence? A. Well, you're wrong. 100 There was also the following re-examination: Q. Where you said this morning, in relation to K46 which was Mr Blackett's draft of the minutes of the 11 August board meeting? A. Yes, may I look? HIS HONOUR: Yes. BANNON: Q. Certainly? A. Yes. Q. You said in an answer this morning that you thought that that draft was wrong? A. Well, as a matter of semantics. Q. When you say "a matter of semantics", what do you mean by that? A. I mean that when I saw the wording in the four points it indicates that each of those four points had been approved, which was my understanding of the situation. But that the term "noted" seemed inappropriate. 101 The primary judge's finding on this matter are set out in pars.[72] and [73] of his judgment, as follows: 72 In accordance with my directions, the defendant's affidavit was not sworn until after the close of the plaintiff's case. In it the defendant said that it was likely that shortly after the board meeting of 11 August 2000 he had an informal discussion with one or more directors about what had been agreed in his absence. He said that he did not recall a specific discussion about the matter with Mr Cousins and he had no recollection of being told that any of the elements of his remuneration package recommended by the board committee had not been approved. In cross-examination, the defendant agreed that in making his revisions to the minutes of the meeting of 11 August 2000 he did not rely upon information given to him by Dr Morstyn or Mr Blackett. When asked on what basis he made the amendments to the discussion of his remuneration package he said he had spoken with each of the directors with the exception of Ms Keating between the two board meetings. He said he had discussions with Mr Astbury, Mrs Callaghan, Mr Cousins, Mr Dodd, Mrs Easson, Mr Hamilton and Mr Stanwell. The defendant added Mr Ross although he gave an apology for the 11 August 2000 meeting. The defendant said that each of these persons to a more or less extent gave him information which justified his making the revisions in the minutes. He denied that Mr Cousins explicitly told him that the performance remuneration package was not approved by the Board.

73 The defendant's affidavit was carefully prepared. Mr Pembroke SC who with Mr Stack appeared for the plaintiff, submitted that it was crafted to within an inch of its life. There is no mention of information conveyed by each of the directors and in the affidavit the defendant said that he could not recall a conversation with Mr Cousins. The defendant gave the evidence of his discussions with each of the directors belligerently as he did with a deal of the evidence given in cross-examination. That evidence represents a significant departure from an affidavit prepared in circumstances in which it can be expected that every aspect of the matter favourable to the defence would be covered. Having observed the defendant give this evidence, I find the assertion that each of the directors, including Mr Cousins, provided information justifying the amendments made to the minutes by the defendant to be incredible and I reject it. 102 It was submitted for the respondent that the cross-examination that we have set out was something of a watershed in the case, because it was so clear that the appellant was giving entirely different evidence from that in his affidavit and that the evidence he was giving was not to be believed. That view was apparently adopted by the primary judge. 103 However, we do not consider that is a fair understanding of the appellant's evidence. In his affidavit he indicated that, to the best of his recollection, he relied principally on the form of the draft minutes, and on the form of the recommendation of the Board Committee that had gone to the Board Meeting. However, it also appeared from the affidavit that the fact that he had conversations with one or more directors shortly after the meeting, and that there was nothing in these conversations to disabuse him of the view that the committee recommendations had been adopted, played a role at least to the extent of not suggesting that there was anything untoward in the impression that he got from the other material. 104 The original question in the passage of cross-examination was "What was it that you relied on?"; and that question would have been apt to bring an answer that included the appellant's reliance on the form of the draft minutes themselves. However, the question was then changed to the question "What information did you rely on?", a question that was apt to direct attention to information received from sources outside the draft minutes themselves. In our opinion, it was not surprising that, in answer to a question apt to direct attention to what information had been received from other sources, the appellant referred to conversations with the other directors. In these answers, there was no attempt to construct anything of the nature of positive information or assurance, the effect of them being merely that there had been discussion concerning the Board Meeting and nothing to disabuse the appellant of his view as to what had happened. 105 It could be said that there were still significant differences from the affidavit. First, the affidavit refers to "one or more directors" whereas the evidence in cross-examination referred to all but one of the directors. However, the affidavit was referring to a conversation or conversations "shortly after the meeting", whereas the oral evidence was referring to conversations between the two meetings. It is certainly not unbelievable that the appellant would have had conversations with all but one of the other directors between the two meetings, which to greater or lesser extent touched on what happened at the Board Meeting of 11 August. It is also not surprising that, in circumstances where the appellant's principal reliance was on the form of the draft minutes themselves and the recommendation that had come from the Board Committee, in his affidavit he focused only on such conversation or conversations as may have occurred shortly after the meeting. 106 Another suggested inconsistency was that in the affidavit the appellant said that he did not recall any specific discussion on the matter with Mr. Cousins; whereas in his oral evidence he said that he had discussions with all directors but one, including Mr. Cousins. There is no inconsistency between a lack of recall of a specific discussion with Mr. Cousins on whether or not the Board had resolved to approve the fourth point, and an assertion that some time between the two meetings there was a discussion with Mr. Cousins which touched on the Board Meeting of 11 August and in which Mr. Cousins said nothing to disabuse him of the view that the fourth matter had been approved by the Board. 107 In our opinion, what was said in re-examination tended to confirm that, as stated in the affidavit, the appellant placed primary reliance on the form of the minutes themselves. 108 In our opinion, there are accordingly two errors in par.[72]. First, the primary judge treated the reference to conversations with the directors as being in answer to being asked "on what basis he made the amendments to the discussion of his remuneration package". In fact, as we have shown, it was in answer to a different question, namely what information had he relied on. The second error is the assertion in the second-last sentence that the appellant had said "that each of these persons to a more or less extent gave him information which justified his making the revisions in the minutes". That is a literal reading of one answer to one question; but in our opinion, a fair reading of the whole piece of cross-examination is as we have indicated, namely, that he had conversations with the directors which touched on what happened at the meeting, and none of them disabused him of the view that the whole of the Committee's recommendation had been passed. 109 Having regard to those errors, and to our own assessment of the appellant's affidavit and oral evidence, in our opinion the primary judge was in error in finding the evidence given by the appellant on this matter to be "incredible".

Sufficiency of Mr. Cousins' Evidence 110 Mr. Cousins gave evidence that, after the 11 August meeting, he told the appellant that the fourth point had not been accepted by the Board, and the primary judge, in pars.[71] and [77] of his judgment, accepted that this conversation took place between the two board meetings and in fact before the appellant made the alterations to the minutes. 111 For the appellant, it was submitted that there was error in these findings. 112 First, it was pointed out that Mr. Cousins could not say whether it was him or Mr. Hamilton who was deputised to speak to the appellant shortly after the meeting. Mr. Hamilton was not called to give evidence. The note made by Ms. Bardsley of Mr. Hamilton's comment at the next Board Meeting suggested he would have said that the fourth point was accepted, or at worst for the appellant, the note was equivocal on this matter. It was submitted that the view that Mr. Hamilton would have said that the fourth point was accepted was further supported by the evidence of Mr. Blackett, supported by his own contemporary notes, that it was in fact accepted at the 11 August meeting; and by the evidence of Dr. Morstyn that the appellant's alterations to the draft "happily accorded" with her recollection. It was pointed out for the appellant that the only evidence to the contrary was that of Mr. Cousins: no other director present at the time was called. Accordingly, it was submitted, the primary judge could not find that Mr. Cousins was the person deputised to speak to the appellant after the meeting, or that the person deputised to speak to the appellant after the meeting would have done other than advise the appellant that the fourth point had been accepted. 113 Accordingly, it was submitted, at best the respondent could rely on some other conversation between Mr. Cousins and the appellant, at a time Mr. Cousins was wholly unable to identify and which he could only assume occurred between the two meetings. Even if one could draw the inference that the conversation did take place between the two meetings, it was submitted, there was no basis for saying that it took place before the appellant made the alterations on 4 September. 114 In our opinion, these submissions are sound. In so far as the primary judge, in holding that the appellant acted negligently in altering the minutes on 4 September, relied on a finding that he had been informed by Mr. Cousins that the fourth point had not been accepted, he was in error. He did make a finding that the appellant had been informed of this by Mr. Cousins before he made the alterations, but he gave no reasons for holding that this conversation took place before the minutes were altered on 4 September, as opposed to merely taking place between the two meetings, that is, before 6 September. We see no basis for finding that this conversation took place before 4 September. It is true that the primary judge also found that the appellant acted negligently in causing the altered minutes to be circulated and in entertaining their adoption on 6 September. However, there was no attention directed to what was actually done by the appellant at the meeting on 6 September which amounted to the entertaining of the adoption of these minutes, and in our opinion this cannot be supported as a separate finding independent of the finding concerning the alteration of the minutes.

Finding of Dishonesty 115 The primary judge found that the appellant was guilty of dishonesty in denying that he had a conversation with Mr. Cousins in which Mr. Cousins told him that the fourth point had not been accepted. To a considerable extent, in our opinion, this was based on his view that the appellant had given incredible evidence on his conversations with directors, and in our opinion the error in that view vitiates the finding of dishonesty. 116 A finding of dishonesty in a witness is one that should be made sparingly and carefully. In Smith v. NSW Bar Association (1992) 176 CLR 256 at 271-2, Deane J said this: There are many circumstances in which a trial judge - and the Court of Appeal in the present case was effectively sitting as a court of first instance - is required to consider whether a party or a witness has been deliberately untruthful in the course of giving evidence before it. An obvious example of such a case is where there is a direct conflict of evidence and it is apparent that there is no real possibility of honest mistake. Unless it be truly necessary for the purpose of disposing of the particular case, however, a specific finding that a party or witness has deliberately given false evidence should ordinarily not be made. Ordinarily, a party or other witness will not be concerned or entitled to set out to establish that, if his or her oral evidence is ultimately found to be mistaken, the mistake was an honest one. As a consequence, material which serves only to establish that a party or other witness subjectively believes that his or her evidence is correct is likely to be inadmissible in the proceedings in which the evidence is given. And there is good reason for that. The length, cost and hazards of litigation would be intolerably increased if each party or other witness was required not only to deal with the issues before the particular court but also to anticipate the ultimate rejection of his or her evidence and seek to establish that, notwithstanding that it was mistaken, it was honestly given. 117 This particular finding of dishonesty was one which had no relevance to the question concerning the minutes; but it could be relevant to the proxy question, to which we will return. Furthermore, the finding of dishonesty did require application of the Briginshaw standard of proof. The classic statement on that matter from Briginshaw v. Briginshaw (1938) 60 CLR 336, at 361-1, is as follows: But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency. 118 In our opinion, the conclusion of dishonesty in this case was based on inexact proof, indefinite testimony and indirect inferences. 119 Although Mr. Cousins was very firm in his evidence that he had told the appellant that the fourth point had not been approved, he had no recollection whether this was done in circumstances where he was the person deputised to convey to the appellant what had happened at the meeting, or in some other conversation. He had no recollection as to the circumstances of the conversation, what exactly was said, what other matters were discussed, or when it happened. In our opinion, the principle in Briginshaw calls attention to the requirement that a party seeking a finding of serious misconduct produce adequate material to enable a court to reach a comfortable satisfaction on such a serious matter. Although this is not the same as the obligation of the Crown to call available evidence in a criminal prosecution, we think it is fair to say that a person seeking such a finding does need to be diligent in calling available evidence, so that the court is not left to rely on uncertain inferences: cf. the article Hodgson "The Scales of Justice: Probability and Proof in Legal Fact Finding" (1995) 69 ALJ 731, particularly at 739-740. In the circumstances of this case, if the respondent were seeking to make out a case that the appellant was given good reason to believe that the fourth point had not been accepted, we would have expected that at least Mr. Hamilton would have been called, if his evidence in any way supported its case. 120 Furthermore, this was a situation where the possibility of misunderstanding and misremembering was high. Even the original proposal recommended by the Board Committee was conditional on determination and acceptance of a plan for the CEO, and acceptance by shareholders. The addition of the words "in principle" would have made the acceptance even less definitive. Whether what happened at the Board Meeting was non-approval, or approval in principle, or approval in principle of a watered-down proposal, the matter was such as likely to be susceptible to different interpretations. If what happened was adoption in principle rather than outright adoption, that could be interpreted as non-acceptance; and accepting that Mr. Cousins did discuss it with the appellant, such discussion could well have been in terms conveying refusal to adopt outright but nevertheless not clearly inconsistent with adoption in principle. 121 In our opinion, therefore, the finding that the appellant gave dishonest evidence on this matter is unsupportable.

Minutes Allegation 124 We will deal first with the question of alteration of the minutes. 125 In our opinion, the errors we have identified in the finding that, prior to the alteration of the draft on 4 September, there was a conversation with Mr. Cousins sufficient to bring to the appellant's notice that Mr. Cousins believed that the fourth point had not been accepted, and in the finding that the appellant was dishonest in his evidence concerning such alleged conversation, are sufficient to vitiate the finding that the appellant acted without appropriate care and diligence. Furthermore, in our opinion that finding cannot, as a matter of fact, be supported on the evidence in this case. 126 The amendments made by the appellant were supported by the recommendation of the Board Committee and also the form of the draft minutes themselves. The draft minutes did not distinguish between what happened to each of the four points, and it is clear that the first three points were in fact adopted. According to the original draft, what happened to the fourth point was that it was "noted" "in principle". That conjunction hardly makes sense: while one might expect that such a proposal would be noted, or adopted in principle, or adopted, one would not expect that it would be noted in principle. The view that the fourth point was in fact adopted in principle was supported by evidence from Mr. Blackett, Mr. Blackett's notes, and evidence from Dr. Morstyn. It is probable, and in accordance with the appellant's evidence, that he had conversations with a number of directors, but none were called apart from Mr. Cousins and there is no evidence that any, other than Mr. Cousins, said anything inconsistent with this view. Mr. Cousins was vague in the ways previously discussed, and the possibility of misunderstanding was substantial. Furthermore, what was being done by the alterations was merely to put the minutes in a form appropriate for the Board to consider, and which would be seen by Mr. Blackett and/or Dr. Morstyn before they went out. The primary judge found that the appellant had not acted dishonestly in making the alterations, and in our opinion there is no substance in the respondent's challenge to this finding in its cross-appeal. 127 In those circumstances, in our opinion this Court should substitute a finding that the allegation of failure to exercise the appropriate care and diligence with respect to the appellant's alteration to the draft minutes was not made out. We note that, in any event, the primary judge took the view that this allegation by the respondent was trivial and should not have been brought to court. He effectively ordered the costs of the hearing of this allegation against the respondent. In our opinion it would plainly be inappropriate to send this issue back for re-trial. 128 Having regard to the views we have expressed, there is no occasion to further consider the respondent's cross-appeal.

Proxy Allegation 129 Turning to the proxy allegation, three of the errors we have identified are relevant to the finding that the appellant's failure to sign was deliberate: first, the finding that he had a motive of personal gain and that his suggestion to the contrary was a recent reconstruction; second, circularity in the reasoning concerning the lack of explanation and or protestation of innocence in the conversation with Mr. Hullah just after the meeting; and third, the finding of dishonesty concerning the appellant's evidence on the minutes question, the only relevance of which, in our opinion, could be its impact on the appellant's credibility on the proxy allegation matter. 130 The question then is whether these errors are sufficient to vitiate the primary judge's ultimate finding that the failure to sign was deliberate. 131 The primary judge found Mr. Hullah to be an impressive witness. He was an independent professional. His evidence was substantially supported by a nearly contemporaneous note. If his evidence was accepted in substance, it strongly supported the primary judge's ultimate finding, in the following ways. 132 First, Mr. Hullah's evidence was to the effect that the appellant enquired, at the time he was requesting the splitting of the poll papers, how a proxy holder might fail to acquit his responsibilities, and was told that one way was if the proxy paper was not signed; and this evidence was denied by the appellant. Second, it was common ground that the appellant asked for the proxy poll papers to be split, and his explanation that he wished to avoid having to add undirected to directed votes could be considered questionable, especially in the light of Mr. Hullah's evidence that the appellant said that the papers relating to proxies directed to him by name need not be split. Third, Mr. Hullah's evidence was to the effect that Mr. Hullah drew the appellant's attention to s.250A of the Law, and this also was denied by the appellant. Fourth, the appellant expressed no concern and no real interest in remedying the situation when he was told of his failure to sign. 133 On the other hand, there is force in the contention that any plan of the appellant to get Resolution 6 carried by failing to sign a proxy paper was highly irrational: it could only succeed if the failure to sign was noticed and acted upon, and questions were then likely to be raised whether this was done deliberately, especially in view of the alleged discussions with Mr. Hullah, in which case serious damage to the reputation and standing of the appellant was likely. On the other hand, the primary judge's finding that the appellant was an arrogant person, which in our opinion was one open for the primary judge to make, could be relevant here: conceivably, it might not occur to such a person that his actions would be questioned or challenged. 134 Thus, in our opinion, there was strong evidence supporting the primary judge's ultimate finding. Also, there were strong considerations against it, including the appellant's own evidence and considerations associated with the serious risk to his reputation and standing. It was submitted on behalf of the appellant that the primary judge did not properly take these matters into account, or properly take the Briginshaw standard into account. In the absence of the errors we have identified, we would not consider these submissions sufficient to justify setting aside the findings. 135 However, in our opinion the three errors we have identified were errors on important matters which appear to have substantially influenced the primary judge in his ultimate finding; and we do not think that such a serious finding, based partly on these errors, can be permitted to stand. 136 As regards the course now to be taken, while in our view the evidence called by the respondent would be insufficient to support a finding beyond reasonable doubt that the failure to sign was deliberate, that evidence could support such a finding on the balance of probabilities, to the Briginshaw standard. However, we do not think this Court could now assess the material itself and make a finding against the appellant without seeing and hearing witnesses: although demeanour is sometimes overrated as a factor in the assessment of evidence, we do not think it would be appropriate for this Court to attempt to determine such a question of fact on the record of evidence taken before the primary judge. Similarly, we do not think this Court could make a finding in favour of the appellant, particularly where there were other witnesses whose evidence was not relied on by the primary judge but could be accepted and relied on by another judge. 137 Accordingly, but for the legal questions to which we will come, we would have ordered a new trial on the proxy issue. 138 We would add however that, having regard particularly to the considerations set out in pars.[68] and [69], the evidence was not sufficient to support a finding, on the Briginshaw standard, that the appellant's support of Resolution 6 was in order to gain an advantage for himself, and not becaue he (along with the other directors) believed it to be in the best interests of NRMA, in placing control of directors' fees for other companies in the Group, as well as NRMA itself, into the hands of NRMA members.

SECTION 250A 139 The primary judge found that the appellant contravened s.250A. Counsel for the appellant made submissions of law to the effect that, even if the appellant deliberately failed to sign the poll paper with the intention that the vote not be counted, nevertheless what he did do, by filling out the poll paper and submitting it, actually amounted in fact and law to voting. If the appellant did vote, then he could not have contravened the requirement of s.250A that he vote. 140 Those submissions have some support from the case of Link, referred to earlier. In that case, pursuant to a power to determine the conduct and procedures of a meeting, given by the Articles of the company to the chairman, the chairman adopted rules for the conduct of a poll of members, according to which any question arising in relation to the poll was to be referred to the chairman whose decision was to be final and conclusive. Also pursuant to this power, the chairman determined when a particular poll closed. One proxy inadvertently failed to put a proxy voting card in the ballot box before the close of the poll, and the chairman ruled that the votes not be counted. The Victorian Court of Appeal held that this ruling was invalid, because it did not facilitate the purpose of the power conferred on the chairman, which was to be exercised in good faith for the purpose of ascertaining the will of the majority of eligible voters. 141 Turning to the present case, the Articles of Association of NRMA contained the following relevant provisions in Article 31 and Article 46: 31. The President, or in the President's absence the Deputy-President, shall be entitled to take the chair at each meeting of members. If neither of those persons is present within 15 minutes after the time appointed for holding such meeting, or neither of them is willing to take the chair, the Directors present may choose one of their number as a chairman and if no Director present is willing to take the chair the members present shall choose one of their number to be chairman of the meeting.

The chairman of any meeting of members shall be the sole judge of the validity of every vote tendered at such meeting and the chairman's determination shall be final and conclusive. 142 There was a contract between NRMA and Deloitte, which authorised Deloitte to make rules for voting. One of those rules specified that a proxy holder poll paper was invalid if not signed. 143 Mr. Pembroke SC for the respondent submitted that, because the appellant had not voted in accordance with the rules, and because the appellant had ruled that the votes not be counted, the appellant had not voted. 144 In our opinion, the question must be whether what the appellant did, in filling out the form with the votes cast, his own initials, surname and address, and submitting the form in purported performance of the voting procedures, amounted in law to voting. If it did, in our opinion he could not be in actual breach of s.250A. It is plain that, after advice was received from Mr. Conti QC, the appellant ruled that the votes were valid, and they were accepted as such. We note that, in so far as the appellant initially ruled to the contrary, it was on the basis of incorrect legal advice; and it has not been contended that this ruling was conclusive or that it precluded the later contrary ruling. Although this matter was not examined, it does appear that any such contention would be contrary to Link. Cf. also Industrial Equity Ltd. v. New Redhead Estate & Coal Co. Ltd. [1969] 1 NSWR 565. 145 Looking at what was done, in our opinion it was sufficient, considered objectively, and despite non-compliance with the rules made by Deloitte, to manifest an intention to vote the proxies. That manifest intention was in fact given effect to. In those circumstances, in our opinion the appellant did vote, and thus cannot be in breach of s.250A. 146 There was no submission, either before the primary judge or before this Court, that it would have been appropriate to make a declaration that the appellant attempted to breach s.250A, so it is not necessary to consider that question. 147 In these circumstances, it would not be appropriate to order a new trial on the question of whether there was a breach of s.250A, and to that extent the claim of the respondent should be dismissed.

152 There was a controversy which does not arise under the Corporations Act 2001 (Cth), s 181(1), as to whether or not s 232(2) of the Corporations Law (Cth) required a consciousness that what was being done was not in the interests of the company (Marchesi v Barnes [1970] VR 434) or, whether the provision was breached where a director exercised powers in a subjectively honest way but for a purpose which the court determined was an improper one (Australian Growth Resources Corp Pty Ltd v Van Reesema (1988) 13 ACLR 261). On my findings, the defendant asserted when confronted with the unsigned poll paper by Mr Hullah that he was acting in the best interests of the organisation. I am not bound to accept that assertion of the defendant and I reject it. I have found that the defendant deliberately omitted to sign the poll paper. He had the deliberate intent to disenfranchise the members who had appointed him proxy and required him to vote against resolution 6 and he was seeking, deliberately, to over-ride the intent of the members of NRMA which he knew to be against the passing of resolution 6 as a special resolution. He had the necessary consciousness that what he was doing was not in the interests of NRMA and his action was deliberate conduct in disregard of that knowledge sufficient to bring him within the Marchesi principle. I reject the submission that the conduct of the defendant was not within the scope of his office as a director of NRMA for the purpose of s 232(2). 149 In order for the respondent to prove a breach of s.232 in the proxy matter, it had to show that the alleged dishonesty of the appellant was in the exercise of his powers or the discharge of the duties of his office of director (s.232(2)) or that he made improper use of his position as a director to gain an advantage to himself or another, or to cause detriment to NRMA (s.232(6)). It was not alleged, nor in our opinion could it be, that he was an officer of NRMA in his capacity as chairman, as distinct from his capacity as director. 150 The primary judge was correct to say that a director does not cease to be a director because he or she chairs a meeting of members; and indeed the circumstance that a director is acting as chairman or in any other role does not necessarily mean that he or she is not at the same time exercising a director's powers or discharging a director's duties. But he or she might not be doing so: not everything a director does that affects his or her company is an exercise of a director's powers or a discharge of (or even governed by) a director's duties. 151 In particular, in our opinion the primary judge was wrong to make the general assertion that "The failure of any director appointed as proxy to vote in accordance with the instructions of the member appointing him or her is in breach of duty qua director". 152 A director who accepts appointment as a proxy will, as agent for the member who made the appointment, have the fiduciary duties of an agent towards the member as principal. If the member has directed the director as proxy to vote in a particular way, then generally those fiduciary duties will require the director as proxy to do so, although there may be some exceptions to this. In addition, the director is subject to statutory requirements, such as those of s.250A that we have considered, but only in his or her capacity as proxy, not as a director. Further, these duties and requirements are not duties owed to the company: the fiduciary duties are owed to the particular member who appointed the director as proxy, and the statutory requirements do not appear to give rise to any duty owed to any legal entity other than that member and/or the State. 153 Indeed, if the member directs the proxy/director to vote in a way that the director believes is not in the interests of the company, the director will generally, as the member's fiduciary, be obliged to vote in that way; and generally, this will not be in breach of the director's duties to the company. Even in voting their own shares, directors do not generally owe a duty to act in the interests of the company. In North-West Transportation Co. Ltd. v. Beatty (1887) 12 App.Cas. 589, the Privy Council found to be legitimate the narrow approval by shareholders of a contract between a director/shareholder and the company to buy a boat from him, in circumstances where most of the votes cast in favour of the resolution were those of the director/shareholder himself. The Court found that all shareholders, including a majority shareholder, are entitled to vote in the manner they wish, provided it is not unfair, improper, illegal, fraudulent or oppressive towards those shareholders opposing the resolution: see Ford, Principles of Corporations Law, 11th Ed. at 548. As there noted, that decision has not been departed from in Australia, although there may be circumstances in which a director/shareholder may come under a fiduciary duty to other shareholders (see Brunninghausen v. Glavanics (1999) 46 NSWLR 538), and there have been some statutory qualifications to the principle. 154 But the general principle is that directors voting their own shares can vote in their own interests, and are not bound by their duty as directors to act in the interests of the company as a whole. In our opinion, the position must be similar in relation to a director voting as proxy on the instructions of other shareholders, in the sense that the director can (and as a fiduciary should) vote as directed by those shareholders, and in doing so is not subject to a duty as director requiring that he or she vote in accordance with what he or she believes is in the best interests of the company. Thus, although there may be circumstances in which a director acting as proxy is discharging a director's duties, this is not necessarily the case. 155 In some circumstances, it may be obvious that what a director does is an exercise of a director's powers or a discharge of (or otherwise subject to) a director's duties; for example, where a director does something as part of the management of a company's commercial operations. However, for the reasons given in pars[152]-[154], in this case it was not obvious; and where this is so, in our opinion, if a remedy is claimed in reliance on an allegation that what a director did was an exercise of a director's powers or a discharge of (or otherwise subject to) a director's duties, then to avoid surprise the basis on which this is alleged must be made clear prior to the hearing. Generally this should be done in the Statement of Claim, by allegation of material facts said to make good the claim and/or by clear specification of its legal basis: see Supreme Court Rules Pt.15 rr.7, 13; Kirby v. Sanderson Motors Pty. Limited (2001) 54 NSWLR 135 at [19]-[21]. 156 The Statement of Claim in this case identified the relevant duties merely as duties as a director under and in terms of s.232, and duties as a director and chairman/proxy holder under s.250A; and it pleaded that the appellant's failure to vote in accordance with the instructions of the proxy givers was in breach of those provisions, in particular (in relation to s.232) in failing to act honestly in the exercise of his powers or discharge of the duties of his officer, and in making improper use of his position as director to gain an advantage to himself. It did not in any way specify why the appellant owed duties in relation to the proxies, not merely to the proxy givers, but also to the company; or otherwise suggest why his duties in respect of the proxies were duties owed as a director. 157 In relation to the allegation of breach of s.232(6), the pleading was adequate to support a claim that the appellant had used his position as a director to acquire proxies, and then failed to vote those proxies so as to gain a personal advantage; and that therefore he was in breach of s.232(6). However, to complete a finding of breach of s.232(6), it would be necessary to make the finding that this action was done "to gain, directly or indirectly, an advantage for himself". We have already indicated our view that, on the evidence in this case, a finding could not be made on the Briginshaw standard that the appellant's purpose in failing to sign was to gain a personal advantage, as opposed to advancing what he, along with the other directors, supported as being in the interests of the company. In our opinion, a finding of breach of s.232(6) was not open on the evidence; and so it would not be appropriate to order a new trial on this issue. 158 As regards s.232(2), the primary judge found that, because the appellant became chairman and proxy through his office as director, he was as a director subject to the duties he had as chairman and proxy, including the obligation to vote as directed. It appears from the Statement of Claim, the submissions to the primary judge, and the judgment, that this was the only positive basis advanced for the finding that the relevant conduct of the appellant was in exercise of his powers or discharge of his duties as a director. 159 In our opinion, the finding of breach of s.232(2) is unsupportable on that basis. Certainly, the appellant was not, when he was dealing with the poll paper and omitting to sign it, exercising his powers as a director: the question then was whether he was discharging his duties as a director. In our opinion, the mere circumstance that there was a causal connection between the appellant's position as a director and his appointment as proxy is not of itself sufficient to make his dealing with the poll paper a discharge of the duties of his office as director. Unless there was some further element involved, his duty in relation to the voting of proxy votes was to the proxy givers, not to the company; and it was not a director's duty. 160 At the beginning of the second day of the hearing of the appeal, the Court raised with Counsel the possibility that the appellant had a duty as a director to the company to make an appropriate contribution to the proper running of the Annual General Meeting, and in particular to the carrying out of voting procedures, and a duty not to subvert those procedures; and that a deliberate attempt to subvert those procedures would be a breach of that duty as a director. Viewed in that way, while the appellant certainly had a duty as a fiduciary to the proxy givers to act in accordance with their directions, he may also possibly have had a duty to the company, in so far as he was a director having some control over the voting procedures, not to subvert those procedures. If so, both duties would have required him to vote as directed. 161 It could also possibly be argued that, in a large company like NRMA, one of the roles of a director is to serve the company by being available to represent, at general meetings, members who are unable to attend. When a director does so, particularly where the company has held out to members that the director will act as their proxy, it could be argued that the director then has the dual roles of agent for the particular members and director serving the company. In those cases where a member gives no direction how to vote, it may be the case that the director must cast the vote bona fide in the interests of the company, so that there would be no difficulty in seeing this as an exercise of director's duties. Where the member does give a direction how to vote, the director's duty as agent for the member would generally require that this direction be followed, even if the director does not think it in the interests of the company; but it could possibly be argued that this does not mean that the casting of the vote is not a discharge of director's duties, because the director has a duty to serve the company by acting faithfully as proxy (so that the company fulfils what it has held out to members), which displaces any duty as director to consider how the vote itself would affect the interests of the company. 162 We express no view as to whether either of the possibilities raised in pars.[160] and [161] is correct: there has not been sufficient argument to enable us to do so. 163 In response to the Court's suggestion referred to in par.[160], it was submitted for the respondent that this approach was within the case as pleaded and contested, and the respondent made no application to amend or even to put on a Notice of Contention. On the other hand, it was submitted for the appellant that it was not, and that an amendment would be required, had not been sought, and would not be granted: the approach suggested would raise novel questions which would require considerable research, and could also raise factual issues that have not been addressed. 164 In our opinion, a finding of breach of s.232(2) was not open on the way the case was put by the respondent. This was a charge of serious misconduct, and as such had to be formulated with precision. Neither of the two possibilities we have raised was canvassed in the case, either in the pleadings or during the twelve-day hearing before the primary judge. Even now, they have not been advanced by the respondent, either in a Notice of Contention or in any other appropriate way. In relation to them, natural justice has not been afforded to the appellant. It would not in those circumstances be right for this Court to consider and rule upon some new basis which it has itself formulated, such as these two possibilities. 165 In those circumstances, our conclusion must be that, even if the appellant had been found to have deliberately failed to sign the poll paper, this could not, on the way the case was pleaded and conducted, have been found to be a breach of s.232(2). Accordingly, we do not think it would be appropriate to order a new trial on this issue.

CONCLUSION 169 It follows from what we have said that, in our opinion, the appeal should be allowed with costs, the decision and orders of the primary judge should be set aside, and the proceedings should be dismissed with costs. We do not think an application for leave to appeal was necessary, and we would propose to dismiss that application, with no order as to costs. 170 The result is not entirely satisfactory. On the one hand, we are not able to find that the appellant did not deliberately fail to sign the poll paper. On the other hand, the effect of dismissing the proceedings is to rule out the possibility that the appellant will, by reason of the subject events, be subject to being precluded from being a director of a corporation or corporations; and this could be considered as not being in the public interest in circumstances where the question of whether or not the failure to sign was deliberate has not been properly determined. 171 However, the following considerations are relevant. 1. We have found, in the appellant's favour, that he was not shown to have breached his duty as director by reason of the alterations to the draft minutes. 2. We have also found that he was not in breach of s.250A of the Law, because he did in fact vote. 3. We have found in the appellant's favour that he was not shown to have been motivated by considerations of personal gain in his support of Resolution 6. 4. The appellant would in fact have received less remuneration if Resolution 6 had been passed. 5. The appellant's failure to sign the poll paper did not result in the relevant proxy votes not being counted. 6. The deliberate conduct alleged against the appellant could not have been effectual unless the failure to sign was noticed: that is, not only was no object of financial gain or actual financial gain established, but also concealment of the failure would have been impossible or self-defeating. 7. The evidence would not have been sufficient to establish guilt on the standard applied to criminal charges. 8. Although proceedings such as these are meant, inter alia, to protect the public from persons unfit to act as directors, they are adversary proceedings, and natural justice requires that charges of serious misconduct be precisely formulated. 9. The conduct alleged against the appellant was serious, but it was not shown to have been conduct in his capacity as a director; and in any event the allegation was not in our opinion such as would justify further proceedings against the appellant, in which the respect in which he was alleged to have been exercising his powers as a director, or discharging the duties of his office of director, would for the first time be precisely formulated by the respondent (after 12 days of hearing at first instance and 4 days of hearing on appeal). 172 In our opinion, the following orders should be made: 1. Appeal allowed with costs, and cross-appeal dismissed with costs. 2. Orders of primary judge set aside. 3. In lieu thereof, proceedings dismissed with costs. 4. Application for leave to appeal dismissed, with no order as to costs. **********

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