SECTION 249F AND POWER OF POSTPONEMENT
34 In respect of the issue of the Board's power to postpone the Proposed EGM, the parties referred to the interlocutory decision of Beach J in Pinnacle VRB Ltd v Ronay Investments Pty Ltd (2000) 35 ACSR 240; [2000] VSC 330 ('Pinnacle VRB'). In Pinnacle VRB, his Honour held that the power given to directors under the constitution to postpone the members' meeting was procedural in nature and did not affect the right of members to call a meeting under s 249F, nor did it modify that right. His Honour concluded (at [40]-[41]):
[40] The conclusion I have arrived at in the matter is that the power given to directors of a company to postpone a meeting for a period of not more than 21 days, albeit one called pursuant to s 249F of the [Corporations] Law, does not in any way affect the right of members to call such a meeting, nor does it modify that right.
[41] In my opinion article 12.5 could be said to be procedural in nature in that it simply gives the directors of a company the power to ensure that a general meeting of a company called by minority shareholders, as is clearly the situation in the present case, is held at a time and place convenient to the majority of the members of the company. Indeed, s 249R specifically provides that a meeting of a company's members must be held at a reasonable time and place. Of course, the power to postpone must be exercised bona fide, and for the benefit of the members not the benefit of the directors.
35 Accordingly, Beach J held that the board of directors' postponement was valid.
36 The decision of Beach J has been the subject of commentaries by Neil Pathak and Hugh Lauritsen in 'A Shareholder's Right to Call General Meetings - A Sharp Sword for the Disgruntled Shareholder or Just a Blunt Instrument?' (2005) 23 Company & Securities Law Journal 283, and by Michael Shand QC in 'The Postponement by the Directors of Meetings Convened by a Member under s 249F of the Corporations Law' (2001) 19 Company and Securities Law Journal 160.
37 Both commentaries considered that arguably the construction adopted by Beach J, and the subsequent decisions to which I will come, undermine the independence of the statutory right conferred on shareholders under s 249F, and the correctness of the decision of Beach J is not beyond doubt. Both views have been useful in my consideration of the construction and application of s 249F, as have the submissions of the parties. However, as apparent from the orders of the Court, I have followed these decisions after considering the matter myself.
38 It is useful to briefly outline these decisions. Justice Emmett in Central Exchange Ltd v Rivkin Financial Services Ltd (2004) 213 ALR 771; [2004] FCA 1546 followed the decision in Pinnacle VRB and effectively held that the directors' power in a company constitution to postpone a meeting does not abrogate from the right conferred by s 249F. The main contention before Emmett J was that, given the meeting convened under s 249F was of a different category to all other general meetings, none of the provisions in the company constitution regulating the conduct of general meetings applied. Instead, it was contended, that all the rules regulating the conduct of such meetings were to be found in the general law. His Honour rejected this submission and held that there was no reason why the provisions in the company constitution regarding, for example, the timing and content of notices should not apply to meetings called under s 249F. His Honour was not directly presented with the argument that only the provision for postponement derogated from the right conferred by s 249F (and not all of the procedural provisions of the company constitution).
39 Nevertheless, relevant to another issue before me, Emmett J did state at [33] that:
… the circumstances in which it will be proper for the board to postpone or change the place for a meeting called pursuant to s 249F, or to cancel such a meeting, will be limited and such powers must, of necessity, be exercised extremely sparingly so as not to frustrate the right conferred by s 249F. If the directors change the place, as well as the time, they must have some justification for doing so. The Directors cannot arbitrarily postpone or change the place for the meeting.
40 In Colbern Nominees Pty Ltd v Prime Minerals Ltd (2009) 74 ACSR 236; [2009] WASC 289 ('Colbern Nominees'), Le Miere J noted that Michael Shand QC's article doubted the correctness of the decision by Beach J in Pinnacle VRB. Although Le Miere J was referred by the parties to both the Pinnacle VRB and Central Exchange decisions, his Honour was not asked to decide (and did not decide) whether the postponement provision in the constitution applied to a meeting convened by members under s 249F.
41 In Carpathian Resources Ltd v Highmoor Business Corporation [2010] FCA 1294 ('Carpathian') at [33]-[36], Barker J adopted the approach taken by Emmett J in Central Exchange (while also referring to the decision in Pinnacle VRB) and said that the powers created by the constitution of a company may continue to operate in relation to a meeting called under s 249F of the Act. Again, his Honour was not called upon to give consideration to the argument that can be put forward in favour of the proposition that the power to postpone derogates from the members' statutory right to call and arrange to hold a meeting under s 249F.
42 In the interlocutory decision of Mishme Enterprises Pty Ltd v Nticed Pty Ltd [2013] VSC 187 at [12] ('Mishme'), Ferguson J (as her Honour then was) similarly followed Central Exchange and held that "there is no doubt that the directors have power under … the constitution to postpone a general meeting under s 249F". In Mishme, it appears that no contention had been made by the convening members that the power of postponement derogated from the members' statutory right under s 249F and therefore this issue was not directly considered by the Court.
43 In these circumstances, I have considered the issue afresh, although respecting the decisions made in previous cases by experienced commercial judges. An examination of s 249F of the Act, and the right it confers upon shareholders to "call, and arrange to hold, a general meeting" becomes necessary to determine whether s 249F prevents a postponement by the Board pursuant to a company's constitution.
44 As has been said many times, it is both permissible and necessary to examine context at the same time as considering the text of legislation. Understanding the text in its statutory, historical or legal context may suggest a meaning that a mere textual analysis does not. A summary of the proper approach was conveniently stated in Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2017] FCAFC 159 (Middleton, Beach and Moshinsky JJ) at [377]-[378] as follows:
377 We have reached this conclusion through an orthodox application of the principles of statutory construction. These principles of statutory construction require a consideration of the statutory text, context and purpose: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[71]; Commissioner of Taxation (Cth) v Consolidated Media Holdings Ltd ('Consolidated Media Holdings') (2012) 250 CLR 503 at [39]; Thiess v Collector of Customs ('Thiess') (2014) 250 CLR 664 at [22]-[23]; Military Rehabilitation and Compensation Commission v May (2016) 257 CLR 468 at [10]; North Australian Aboriginal Justice Agency Ltd v Northern Territory (2015) 256 CLR 569 at [11]. Statutory construction must begin and end with the statutory text: Thiess at [22] (quoting Consolidated Media Holdings at [39]). But as Gageler J observed in SZTAL v Minister for Immigration and Border Protection ('SZTAL') [2017] HCA 34 at [37]:
But the statutory text from beginning to end is construed in context, and an understanding of context has utility "if, and in so far as, it assists in fixing the meaning of the statutory text".
378 Similarly, Kiefel CJ and Nettle and Gordon JJ observed in SZTAL at [14]:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if it's ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
(Footnotes omitted)
45 This approach was also recently adopted in Australian Competition and Consumer Commission v Yazaki Corporation (2018) 357 ALR 55; [2018] FCAFC 73 (Allsop CJ, Middleton and Robertson JJ).
46 Focussing on the text, it was submitted by the Applicants that the language contained in s 249F referring to a right to call and arrange to hold a meeting is a continuing right, one which subsists all the way up to, the very least, the commencement of the meeting. It covers all of the continuing things that need to be done to make sure that the meeting can effectively take place.
47 The important issue is the extent of the statutory right enshrined in s 249F. The wording of s 249F suggests only that the shareholders have a right to call and to arrange to hold a meeting. The concept of arranging will involve those things needed for the holding of the meeting (at the relevant shareholders' expense (s 249F(1)).
48 Section 249F(2) provides that the meeting is to be called in the same way as far as possible in which meetings of the company may be called. Once the meeting is held, in the normal course it would be conducted by the chair of the existing board, according to the normal procedures applicable to a general meeting of shareholders. The provisions of the constitution of the company or the general law dealing with such matters as adjournments, quorum, voting and proxies will apply to the meeting.
49 There is no doubt that the timing of a meeting can be of significance and importance to members. There is also no doubt that the legislature, in introducing s 249F (and ss 249D and 249E) enhanced members' rights, and was a significant departure from previous legislative provisions dealing with the convening of meetings. In this sense, the provisions are to be read in a way beneficial to the conferring of rights on members.
50 However, s 249F does not extend to conferring the right to otherwise hold or conduct the meeting. In other words, s 249F gives members a right to call a meeting and facilitate its holding, that is to say, a right to initiate a process that is subject in all other respects to the constitution of the company and the Act. Section 249F refers to the calling of a meeting, not the holding a meeting. The inclusion of the words "arrange to hold" reflects a preliminary course of conduct in preparation for a future event, namely the holding and conducting the meeting itself.
51 The statutory language contemplates some form of postponement, it being accepted that once the meeting commences it is subject to being adjourned or and may be subject to being postponed. Section 249F can be contrasted to the language of holding or conducting the meeting as opposed to 'call and arrange to hold'. Section 1319 (in giving power to the Court with respect to meetings ordered by the Court) refers to giving directions with respect to "the convening, holding or conduct of the meeting" where the Court under s 249G orders a meeting of the company's members be called.
52 Even without control of the meeting, the right to initiate and arrange to hold a meeting is an important and useful right in itself. This right upon being exercised will enable the members the opportunity to call upon all eligible members to vote on a particular issue at the time and place nominated by them, but subject to a lawful postponement of that meeting.
53 Apart from the text of s 259F, the Applicants referred to the broader statutory context to support the argument that the Board cannot postpone a meeting called under s 249F. It was observed that s 249F can be contrasted with s 249D, where members have the power to requisition a general meeting but can only do so on the basis that the company retains power over the arrangements for the holding of the meeting (s 249E). Section 249D is also constrained by certain statutory time limits in which the company must hold the meeting. Section 249F contains no such time limits, although the Convening Shareholders are subject to the requirement under s 249R that the meeting is to be held at a reasonable time and place.
54 I should also mention that the Applicants referred to the Explanatory Memorandum to the Company Law Review Bill 1997 (Cth). It was therein stated that s 249F gives members an independent power to call members meetings, with more specifically paragraph 10.22 stating that a "company will no longer be able to displace its members' right to call a general meeting themselves by adopting a contrary provision to the constitution". I do not need to return to this Explanatory Memorandum: it provides no further guidance in determining the issue of construction, that issue being to determine exactly what is encompassed by the members' right which cannot be displaced by the constitution.
55 It is important to recall that, in general, the right to postpone or adjourn a meeting properly convened vests in the meeting itself. In some instances, the chair may have the power to adjourn the meeting. However, it has been well recognised that directors have the power to postpone a meeting of the company properly called or convened if the constitution authorises them to do so: see eg Colbern Nominees and Smith v Paringa Mines Ltd [1906] 2 Ch 193.
56 Where the company constitution has given the directors a power to postpone, one would expect any abrogation or modification of this power would be expressly introduced by the legislature. The legislature has not taken away expressly the power given to directors under the constitution to postpone a meeting of the company. Of course, the directors in so exercising a power conferred on them by the company constitution must act for a proper purpose and in good faith in exercising their power of the postponement.
57 The fact that the legislature has permitted the members to call a meeting under s 249F and not avail themselves of s 249D, and for a proper purpose (s 249Q) and at a reasonable time and place (s 249R) does not indicate one way or the other the co-existence of the power to postpone by the Board, or the ambit of the scope of s 249F. As with the calling of all meetings, the obligation of proper purpose and reasonableness of time and place is a relevant consideration in the minds of those calling the meeting. Section 249D is an option for members to use, depending on their objectives and whether they are prepared to pay for the meeting. Section 249D does not give control to the shareholders over the initial timing and location of the meeting, but directors must call and hold the meeting within a prescribed time. Even with a power of postponement given to the board, s 249F allows shareholders to send out a notice of meeting, arrange the venue and time, and bring the issue which is sought to be agitated to a head. As I have indicated, this in itself is an important and useful option given to shareholders.
58 In my view, the Board of CellOS had the power to postpone the Proposed EGM.