40 To the extent that it be necessary for me to do so, I would here express the view that I regarded Mr Yaqob Rajwan as a totally unsatisfactory and unreliable witness. Many of the questions which he was asked under cross-examination were responded to by statements that he could not remember or that he could not recall. For example, he said that he could not recall whether he had ever called a meeting of the company to ratify the appointment of the solicitors in the present proceedings. Since he was aware of the attitude of Mr Barel, at least to the extent that Mr Barel was declining to co-operate in the institution and prosecution of the present proceedings, an attempt at ratification might have been regarded as being of some relevance to Mr Rajwan. Mr Yaqob Rajwan also said, on 4 April, that he did not think at that time that there was an argument about the validity of the appointment of his father as a director. Where uncorroborated evidence of Mr Yaqob Rajwan is in conflict with evidence of Mr Barel, I prefer that of Mr Barel.
41 I have already referred to the evidence of Mr Vincent Russo, the accountant of the Plaintiff, and a former secretary of the Plaintiff. Mr Russo does not speak or read Hebrew. He said that he was able to communicate with Mr Baruch Rajwan in English and that on the occasions of such communication Mr Baruch Rajwan does not use an interpreter.
42 The Memorandum of Association and the Articles of Association of the Plaintiff (under its former name, Pronto Panel Beaters Pty Limited) were in evidence (Exhibit B). The Plaintiff is a company limited by shares, incorporated on 28 February 1997. The powers of the Plaintiff concerning appointment of directors are contained in articles 58 and 62. Article 58 is as follows,
The Director(s) or the Company in a General Meeting may at any time appoint any person to be a Director, either to fill a casual vacancy or as an addition to the Board.
43 In not dissimilar terms, article 62 provides that the directors or the company in a general meeting may at any time remove a director from office and appoint another person in his stead. There has been no suggestion in the instant case of removal of a director. The power of the company to appoint Mr Baruch Rajwan as a director must therefore be that contained in article 58.
44 By article 73, the quorum for a meeting of directors is two.
45 I have already recorded that up to the purported meeting on 28 August 2001 there were only two directors of the Plaintiff, being Mr Yaqob Rajwan and Mr Elie Barel. Since only one of those directors was present, the purported meeting lacked a quorum. In my conclusion the purported meeting of directors held on 28 August 2001 was not a meeting of directors of the Plaintiff. Further, the purported appointment at that meeting of Mr Baruch Rajwan as a director of the Plaintiff was of no effect.
46 It was submitted, however, on behalf of the Plaintiff that, as a general rule, a company in general meeting has power to appoint further directors in the exercise of its inherent power to direct the control of the company, and the Plaintiff points to the express preservation to the company in a general meeting of that power, by article 58.
47 It should be recognised, however, that the purported meeting held on 28 August 2001 purported to be a meeting of directors of the Plaintiff, not a general meeting of the company. Further, article 41 makes provision for a notice of a general meeting, and contemplates the giving of such a notice. I have already recorded that no notice of the meeting proposed by Mr Yaqob Rajwan for 28 August 2001 was given to Mr Barel, who as well as being a director is also a member and a shareholder in the Plaintiff.
48 The meeting which purported to be held on 28 August 2001 did not purport to be a general meeting of the company. But even if it had purported to be a general meeting, in my conclusion it was not such a general meeting, since no notice had been given to Mr Barel.
49 The circumstances surrounding the purported appointment of Mr Baruch Rajwan as a director of the Plaintiff are not such as would fall into the category of an otherwise valid appointment which suffers from some procedural defect, and which can be validated by, for example, the provisions of section 1322(2) and (3) of the Corporations Act. See, in this regard, the decision of the House of Lords in Morris v Kanssen [1946] AC 459, where Lord Simonds, at 471, pointed out that there is a vital distinction between (a) an appointment in which there is a defect, or, in other words, a defective appointment, and (b) no appointment at all. That decision was quoted with approval by the High Court of Australia in Grant v John Grant & Sons Pty Limited (1950) 82 CLR 1 at 34 per Williams J. Kitto J said, at 52,
The actual decision in Morris v Kanssen was that where a person assumes to act as a director without any purported appointment the section and article do not operate to validate his acts. But the passage quoted by my brother Williams from the speech of Lord Simonds, with which the whole House agreed, shows, I think, that the case justifies a broader proposition. The passage points out that the section and article relate only to the case where a slip has been made in appointing a director, and it draws a distinction between such a case and a case in which substantive provisions relating to an appointment have been ignored or overridden. The reason for the distinction is, I think, that a defect in an appointment can be said to exist only where some requirement has been neglected in exercising a power to make an appointment. The section and the article presuppose an appointment in fact made by a person or body having power to appoint, and they refer to a slip in the making of the particular appointment in question. It is therefore necessary to distinguish between the defective exercise of a power to appoint and the non-exercise or non-existence of such a power. The proposition which I think is justified by Morris v Kanssen is that where a person acts as a director, either without being appointed or in pursuance of a purported appointment made by a person or body not authorised to make an appointment, neither the section nor the article operates to validate his actions.
50 In the instant case, in my conclusion, the purported appointment by Mr Yaqob Rajwan of Mr Baruch Rajwan as a director cannot be categorised as a defective exercise of a power validly reposing in Yaqob Rajwan to effect such an appointment. It must properly be categorised as being no appointment at all, since Mr Yaqob Rajwan had no power to make such an appointment.
51 The purported appointment is not saved by the provisions of section 1322 of the Corporations Act (relating to procedural irregularity or the accidental omission to give notice of a meeting).
52 It was further submitted on behalf of the Plaintiff that, whatever defects may have existed in the appointment of Baruch Rajwan as at 28 August 2001, after that date he had at all times acted as a director, and that, in consequence, he comes within the statutory definition of director in section 9 of the Corporations Act, where, relevantly, director is defined to mean,
(b) unless the contrary intention appears, a person who is not validly appointed as a director if:
(i) they act in the position of a director; or
(ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes.
53 The legislative history of that definition is set forth in the judgment of Aickin J in Corporate Affairs Commission v Drysdale (1978) 141 CLR 236.
54 Even if the submission of the Plaintiff that Mr Baruch Rajwan has acted as a de facto director of the Plaintiff be accepted, the effect of section 9 is not to appoint him a director for all relevant purposes, but merely to impose upon him the duties, obligations, and liabilities of a director.
55 The approach of Mr Baruch Rajwan to his involvement in the Plaintiff company was manifest by his statement under cross-examination, "Me and my son have the decision: sixty-six percent. We can do whatever we like with the company."
56 The Plaintiff, in the alternative, sought to rely on section 201M of the Corporations Act, with the effect, so it was submitted, that, despite any invalidity in Mr Baruch Rajwan's appointment, the retainer by him and Mr Yaqob Rajwan of Massey Bailey must be treated as effective.
57 It was acknowledged on behalf of the Plaintiff that section 201M is directed to the internal affairs of the company, as between the company and its members. In the instant case, of course, the question of the retainer of Massey Bailey impacts upon the Defendant, who is not a member of the company. I am not persuaded that the purported retainer by a single director of the Plaintiff can, in the circumstances of the instant case, be treated as a retainer by the Plaintiff. (The relevant circumstance include the fact that the only other director was not aware of this purported retainer before the solicitors were retained, and when he did become aware, he actively opposed the proceedings which the solicitors had instituted.)
58 The Plaintiff further relied upon what was described as the implied authority of Mr Yaqob Rajwan to engage Massey Bailey as solicitors for the company. It must be appreciated that, in the light of the attitude of Mr Barel to the conduct by Yaqob Rajwan and Baruch Rajwan in respect to the Botany development project, the practicalities of the situation do not support the existence of any such implied authority.
59 Since I have already expressed my conclusions, firstly, that Mr Baruch Rajwan was not validly appointed a director of the Plaintiff; and, secondly, that, in consequence, the purported retainer of Massey Bailey by Mr Yaqob Rajwan and Mr Baruch Rajwan did not constitute a retainer of that firm by the Plaintiff, it is not necessary for me to express a concluded view concerning the submission made on behalf of the Plaintiff in respect to what was described as "an informal decision by directors as constituting a resolution of the directors". My preliminary view, however, is that I am in agreement with the submission on behalf of the Plaintiff that a minute in writing of a resolution to such effect is not essential to the retainer of a solicitor by a company (although, of course, for evidentiary purposes, such a minute would usually be desirable).