Wybenga v Mandandanji Limited

REASONS FOR JUDGMENT 1 The respondent company, Mandandanji Limited, is a company limited by guarantee. The company acts as the trustee of a charitable trust known as the Mandandanji Charitable Trust. That trust was established by the settlement of funds on the company by Mr Michael John Owens (Mr Owens) to hold and administer, in accordance with a trust deed dated 18 October 2010. The terms of that trust deed envisage that the company will administer not only the modest settled sum of $10 but also such further capital and income as may come to be held in accordance with the terms of the trust. 2 At present there is an exact alignment between the definition of "Mandandanji community" in clause 2.1 of the company's constitution, and the definition of that like term in clause 2.1 of the trust deed. In each case "Mandandanji community" is defined to mean: That group of persons entitled to be members of the claimant group described in the native title determination application (as may be amended from time to time) as filed in the Federal Court of Australia No QUD 366 of 2008. I shall refer to that particular application in the court mentioned in the definition as the native title application. 3 By a notice dated 7 July 2014, apparently sent to members, the company has given notice of a general meeting to be held at the Explorers Inn, Warrego Highway, Roma, Queensland at 10 am on 2 August 2014, in other words, tomorrow morning. Materially, there is a proposal contained in that notice of a general meeting, for the business of the meeting to include a consideration, and if thought fit, passage of, by special resolution, an amendment to the constitution of the company so as to amend clause 1.2 [sic], surely a reference to clause 2.1, of the constitution by deleting the definition of "Mandandanji community" and replacing it with the following definition: Mandandanji community means those persons who have a proven connection to one of the four apical ancestors described in the claimant group description of native title determination application 366 of 2008 on the day that the application was filed. 4 The notice also gives notice of an amendment also said to be to clause 1.2, again, surely clause 2.1 of the company's constitution, so as to delete the definition presently in that constitution of "claimant group" and insert another definition. At present in the company's constitution, "claimant group" is defined to mean: The members of the native title claim group described in the native title determination application (as may be amended from time to time) as filed in the Federal Court of Australian No QUD 366 of 2008. 5 The proposed amendment is that "claimant group" be defined in this way: Claimant group means those persons who have a proven connection to one of the four apical ancestors described in the claimant group description of native title determination application 366 of 2008 on the day that the application was filed. 6 One of the directors of the company is the applicant, Ms Vivien Wybenga (Ms Wybenga). By an application which has been filed today and heard with corresponding urgency as to some of the relief sought, Ms Wybenga seeks to restrain the holding of the general meeting at Roma tomorrow and, until further order, any adjournment of that meeting to consider the business which is set out in the notice of general meeting. A mark of the urgency of the application is that, as cast, the application lists all of the relief sought under the heading, "Interlocutory Relief". It is plain enough though that the substantive relief which is sought is that the Court declare that the notice of general meeting is invalid. 7 I shall deal shortly with the bases upon which it is submitted that at least prima facie a case as to invalidity has been established. It is first necessary to set out attempts which Ms Wybenga has made informally to resolve the controversy she has raised and also via her solicitors to draw the application heard today to the attention of the solicitors for the company and the company itself. 8 Up until Wednesday of this week, 30 July, the firm Ashurst was apparently acting on behalf of the company. It would seem on the material to hand that the notice of general meeting was drawn with the assistance of that firm. More recent contact by Ms Wybenga's solicitors with that firm has disclosed that Mr Owens, the same gentleman who is the settlor of the trust and a solicitor, is now the solicitor for the company, at least in respect of this proceeding. 9 The solicitors for Ms Wybenga have made what I consider to be herculean efforts to draw to Mr Owens' attention the application to be made today, together with the affidavit of Ms Wybenga, which is the principal affidavit relied upon. Those efforts were not in vain in this sense. Upon the application initially being made by Ms Wybenga's counsel prior to lunch today, I determined that it was in the interests of justice to adjourn the proceedings until after lunch so as to enable, if possible, Mr Owens to appear by telephone. That was on the basis that there had been some ability on the part of the solicitors for Ms Wybenga to have telephone communication with Mr Owens this morning. That adjournment led to Mr Owens endeavouring to make contact with the court and succeeding to the extent of phoning into the registry shortly after the adjourned hearing commenced. That satisfies me that Mr Owens was well aware of the application being heard today. As it transpired and for reasons that are not clear, Mr Owens proved unable to participate in the hearing via telephone conference facility, the existence of which was notified to him by those acting for Ms Wybenga. 10 There was, though, only mobile telephone contact with Mr Owens. It may well be that the difficulty lies in Mr Owens being unable, for whatever reason, to utilise a landline for communication. I am, though, quite satisfied that he was aware of the proceeding and further, that he possessed telecommunication facilities. It was quite possible for him, I should at least infer, to have engaged someone in Brisbane to attend as a matter of urgency. That, as it transpired, is not a course that came to pass. Nonetheless, I am quite satisfied that, in the particular circumstances prevailing, an opportunity to be heard has been extended. 11 That said, Mr Preston of Counsel, who appeared for Ms Wybenga, was scrupulous in his observance of responsibilities which he conceived fell on him, even if strictly this was not an ex parte proceeding, but rather one made on notice. 12 What then is the nature of the controversy which Ms Wybenga has raised? The application itself is not specific as to the basis upon which the invalidity declaration is said to be grounded. That emerged by consideration of an outline which was prepared in writing and then enlarged upon in oral submissions and upon a consideration of Ms Wybenga's affidavit and the terms of the trust deed. The latter became exhibit 1. 13 To understand the basis upon which the notice is said to be invalid, one needs also to have the following facts. The notice has been sent out under cover of a document which highlights the time and place of the general meeting and some associated administrative arrangements and also, on the reverse side it states the following under the heading "Mandandanji People Meeting Rules of Conduct": This is an extremely important meeting for the Mandandanji People. There is a lot of business that needs to be dealt with to improve the Company Constitutions for the benefit of ALL Mandandanji people. 14 In the notice of general meeting itself and under the heading, "Special Resolutions to Amend the Constitution of the Company", it is stated: This meeting is being held to discuss and vote on amendments to the constitution of the Company. These amendments are proposed in order to make sure that the constitutions of each of the Company and its subsidiaries (Mandandanji Cultural Heritage Services Pty Limited, Mandandanji Enterprises Pty Ltd) are consistent and also accurately and effectively meet the aims of the Members. 15 Quite what the aims of the members are is not stated, either in the notice of the meeting or in the covering sheet. Nonetheless, insofar as one might regard the aims of the members as congruent with the objects of the company, the objects of the company as stated in clause 3.1 of the constitution provide that the company is established so as, inter alia: (a) to advance charitable purposes for the benefit of the Mandandanji community; … (g) to act as trustee of any trust the purpose of which is to distribute money, property or benefits to entities whose primary purposes relate to matters set out in clause 3.1. 16 The trust as settled by Mr Owens is one which would fall within the terms of clause 3.1(g) of the objects. The term repeated throughout the objects of the company is Mandandanji community. Thus any amendment of the definition of Mandandanji community will impact upon the objects of the company and, for that matter, wherever else Mandandanji community appears in the company constitution. 17 What is submitted on behalf of Ms Wybenga is that this notice is one which at least prima facie manifests a breach of fiduciary duty on the part of the board which resolved to call the meeting and further, that it is at least misleading as to the nature of the business to be conducted at the meeting. 18 There is a very particular history to this afternoon's application. That history is to be found not just in the native title application itself, but also in a series of judgments delivered by Rares J at an interlocutory stage in proceedings in respect of the native title application. Those judgments are Weribone on behalf of the Mandandanji People v State of Queensland [2013] FCA 255, Weribone on behalf of the Mandandanji People v State of Queensland (No 2) (2013) 302 ALR 64, [2013] FCA 485, Weribone on behalf of the Mandandanji People v State of Queensland (No 3) [2013] FCA 662, and Weribone on behalf of the Mandandanji People v State of Queensland (No 4) [2013] FCA 758. What these disclose, and this is a fact relied upon by Ms Wybenga, is that there is in those native title proceedings a lively controversy indeed as to whether the extent of the native title claim group is as stated in the native title application, or whether that particular native title claim group includes within it the descendants of another apical ancestor, namely Dolly Clark. As originally filed and to the present, the native title application describes the native title claim group as the biological descendants of the following people: Nellie Edwards Weribone Jack Senior Combarngo Bill Mary Weribone 19 The Court's earlier interlocutory orders in the native title proceedings were designed to preserve a position in respect of the benefits of such native title rights and interests as might ultimately come to be determined to be held by the native title holders as determined by the Court. That determination has yet to occur. Whether or not the native title claim group is as originally cast or includes descendants of Dolly Clark is yet to be determined. In Weribone on behalf of the Mandandanji People v State of Queensland (No 3) [2013] FCA 662 at [16], Rares J remarked: The position of uncertainty as to the correct anthropological analysis of who the correct members of the native title claim group are still remains to be resolved at a final hearing of these proceedings. It is clear that the meeting held on 25 May 2013 was acutely conscious of this anthropological dispute, particularly having regard to the voting on the resolutions concerning whether Dolly Clark's descendants should be included in the description of the claim group, and whether there should be a change in the boundaries, the subject of the present application under s 225 of the Act. Those are matters which remain controversial and outstanding. Nonetheless, the meeting clearly desired to constitute a replacement applicant that would be capable of prosecuting the application for a determination of native title in the Court, and to make decisions concerning that matter. So much is clear from the involvement of virtually the whole of the meeting on each of the numerous resolutions with which it dealt. 20 The controversy to which his Honour refers is still extant. The native title application is next before the Court (Rares J) on 27 October this year. 21 In Deveraux Holdings Pty Ltd v Pelsart Resources NL (1985) 4 ACLC 12 at 14 Young J observed: There is an equitable principle that it is the fiduciary duty of directors not to mislead the corporators who are to consider whether to pass a resolution by providing them with material, that is other than substantially full and true and this is especially so where the directors themselves may benefit from the passing of a resolution. In considering this equitable rule one does not adopt the legalistic approach of a 19th century examiner of titles searching for a base fee nor does one approach the question in what counsel aptly described as a nit-picking way, but one asks what effect will the information provided have on the ordinary shareholder who scans or reads the document quickly, not as a lawyer, but as an ordinary man or woman in commerce or as an ordinary investor. One asks, viewed in such a way will the information fully and fairly inform and instruct the shareholder about the matter upon which he or she will have to vote. 22 In the context of the present case, one might adapt Young J's observations, with which I respectfully agree, by stating that one must look to the information provided for the effect that it would have on an ordinary person who is or may be held to be a member of the native title claim group. As to that, there is some evidence from Ms Wybenga in her affidavit. She states that members within the Mandandanji People do not have access to a copy of the current constitution of the company. This constitution, she states, must be obtained through a website portal by logging in as a member of the Mandandanji People. She also states that she had a telephone discussion with Mr Leslie Weribone, inferentially, the same gentleman who is the first named of those who collectively comprise the applicant in the native title application, in which Mr Weribone said to her words to the effect that he could not understand what the proposed amendments to the constitution meant because he does not know how to use a computer, does not own a computer and does not have a hard copy of the constitution. Ms Wybenga further states that she has had a telephone conversation with a Mr Bruce Weribone in which he told her also that he did not have a copy of the constitution referred to the items on the agenda for the meeting, was not given one when he became a member of the company, and did not know how to obtain a current version of it. Mr Bruce Weribone's surname and his membership of the company, as deposed to by Ms Wybenga, is surely not coincidental. I state that because apart from Mr Leslie Weribone being a member of the applicant, a Mr Wayne Weribone is also, as the native title application as presently amended states, a member of the applicant. 23 Ms Wybenga further states that she is aware, from her own knowledge, that Mandandanji community members have differing levels of computer literacy and access to computers. 24 The change proposed to the definition of Mandandanji community will have the effect, if passed, of misaligning it with the definition of Mandandanji community in the trust, of which the company is corporate trustee. Quite how such an amendment might be regarded as for the benefit of "ALL" the Mandandanji, while the composition of the Mandandanji is presently an unresolved controversy in this Court, and a considerable controversy at that, is elusive to say the least. 25 Ms Wybenga also deposes to not having been a participant, though she was a director, in the meeting of the board which resolved to call the general meeting. She states that she was not consulted by the firm Ashurst, which apparently drew the notice on the board's instructions, or any member of the board, about the resolutions; nor was she invited to participate in any meetings or discussions with Ashurst about the resolutions at all. 26 Prima facie, the evidence discloses a situation where what might prove to be, to use a Scots term, one particular sept of the clan is trying to usurp the control of a company which is charged with the administration of a charitable trust for the benefit of all of the clan. It is evident from the succession of orders made by Rares J and the reasons for those that his Honour was very concerned indeed to ensure that whatever benefits came to the native title holders, as determined by the Court, were held and used for the benefit of all such persons. 27 It might well be thought, and this is a view I reach prima facie, that this particular meeting is subversive of at least the spirit of orders earlier made by the court, albeit orders not presently extant. Again, prima facie, there is a misleading quality in the covering note in its recitation, as I have observed, of amendments said to be for the benefit of "ALL". 28 The directors of the company have a very particular fiduciary duty when one is seized with the background to this case, which is intimately associated with the native title claim in the native title application. This company and the trust which it administers are designed to compliment that particular native title application. So much is evident from the very deliberate reference in the definition of "Mandandanji community", in both the company's constitution and the trust. 29 As was put aptly on behalf of Ms Wybenga by Mr Preston, the present definition of "Mandandanji community" is designed expressly to accommodate such amendments as may be made to the native title claim group by the Court, in light of the evidence which is heard in the case, and which proves persuasive as to conclusions reached by the Court, as to the composition of the native title claim group. 30 There is, in my view, prima facie, much mischief in these proposed amendments to the definition. It would be, against the wider history of this matter to which I have referred, undesirable, to say the least, to permit this meeting to occur tomorrow. Further, it would be undesirable, until the merits of the invalidity application have been heard and determined by the court, to permit any adjournment of the meeting to consider that business. 31 There is a question as to whether or not there ought to be an undertaking as to damages. That subject was one expressly raised by Mr Preston (as apparently it had been by Mr Owens in earlier telephone conversation with his solicitors), and quite properly raised, given Mr Owens' absence. As to that, Rares J considered a like question in Weribone on behalf of the Mandandanji People v State of Queensland [2013] FCA 255 at [79]. 32 This case also, as with that one, is decided against a background where: There was a serious issue as to who were the native title claim group that would be found, at trial, entitled to a determination of native title and the rights and interests, including the benefit of agreements already made in respect of those rights and interests. 33 I do not propose to recite at length the very helpful discussion by Rares J in that case of the question of whether or not an undertaking as to damages ought to be required. It is, in my view, applicable by analogy. 34 Given that the end to which this application is brought, which is the preservation of a status quo designed exactly to correspond with an exercise of this Court's jurisdiction, and to prevent a misalignment as between the terms of the company's constitution and the terms of the trust the company administers, my view is that there ought not to be a requirement for an undertaking as to damages to be given. 35 There are other observations which I wish to make as the result of an examination of the material concerning the holding of this meeting and the wider background. 36 Firstly, Mr Owens' situation as a solicitor for the company is one upon which he ought to reflect, given the role that the company plays in relation to the administration of a trust of which he is the settlor. Particularly, that is so where the intent of the meeting is, as I have observed, apparently to cause a misalignment as between the definition of Mandandanji community in the company's constitution and the trust which he settled on that company. Even more particularly, that is so where the apparent intent of the amendment is, as I have observed, and it is but a prima facie observation, to place the control of the company in the hands of a particular sept of the Mandandanji, as that native title claim group may ultimately come to be determined by the Court. 37 The other observation that I would make is that, there does come a time in the governance, or rather, lack of governance, in terms of the objects of the company, where there is an impossibility in the orderly conduct of the affairs of a company such that there is a public interest in the appointment of a provisional liquidator with a view to the winding up of the company. I say nothing further on that subject, because there is no such application and I am by no means persuaded that that point has been reached. 38 Nonetheless, there are serious questions upon which all members of the Mandandanji people, or those who think they are members of the Mandandanji, need to reflect in terms of whether they will continue to be permitted to administer this particular company (and thereby also the subsidiary companies) themselves and thereby the trust or whether they have proved themselves collectively incapable of governing the company in accordance with its objects and rules to the extent where it is necessary for external administration to occur with all of the very significant expense that that will entail. 39 For these reasons and being persuaded that a prima facie case is established and that the balance of convenience favours the granting of the relief concerned, I propose to enjoin the holding of the meeting tomorrow and to grant ancillary relief. That relief will admit of the case management of the present case by Rares J in conjunction with the native title application. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.