Case: Direct Acceptance Corporation Ltd (1987) 5 ACLC 1037
Outcome: cited
In the course of considering an entitlement asserted by a member or a member's proxy as to particular subject matter giving rise to a ruling, facts may need to be considered by the chair. Those facts may be relevant matters known by the chair by reason of circumstances surrounding the calling of a meeting or facts learnt in the course of the meeting or a combination of fact-finding circumstances. Some such facts, in another context, have been described as 'emergent questions, questions of fact that have to be decided then and there' ( McLean Bros. &amp; Rigg Ltd v Grice [1906] HCA 1 ; (1906) 4 CLR 835 at 860 per Barton J). A chair engaged in the conduct of a meeting is not in a position to undertake a 'voir dire' as to emergent factual contentions. He or she must hear the contentions of fact going to the question and decide the immediate question. A chair is not required to act judicially in deciding these questions before him or her. The chair is required to act 'bona fide' ( Corpique (No. 20) v Eastcourt (1989) 15 ACLR 586 at 596 per Cohen J) or at least in a way that is not 'neglectful' ( Corpique , per Cohen J at 596). On a question of whether the chair of a meeting of relevant members of a corporation, convened to consider a scheme of arrangement, had given members sufficient opportunity to debate the merits of the scheme, McLelland J, in Direct Acceptance Corporation Ltd (1987) 5 ACLC 1037 at 1041, said, 'However, on such a matter as this, the chairman as a matter of law has a wide discretion with which the court will not interfere unless the exercise of that discretion can be shown to be invalid, e.g. on the ground that it was exercised in bad faith' . In Fast Scout Ltd v Bergel &amp; Ors (2001) 40 ACSR 376 , Templeman J considered, in the context of a ruling relating to the validity of proxies, that 'generally, a chairman's decision will be amenable to review by the court if he makes an error of law' . Assuming the chair has exercised the jurisdiction conferred upon him by the meeting and the relevant instruments in good faith, the notion that his or her decision will be amenable to review on a ground of error of law although supported by established authority is more recently supported by a decision of the Court of Appeal of Victoria in Link Agricultural Pty Ltd v Shanahan &amp; Ors [1998] VSCA 3 ; (1998) 28 ACSR 498. Kenny JA with whom Batt JA and Buchanan J agreed, accepted that the powers exercisable by the chair are not unfettered and 'broadly speaking' the powers could not be exercised 'unlawfully' to deprive members of their votes (Kenny JA at 511). The decision taken by the chair to refuse Shanahan extra time to lodge his 'proxy holder card' after a particular deadline with the result that proxy voters lost the benefit of their right to vote, failed a test of legality [my term] because the chair's decision was not taken for the purpose of the power conferred by the Act (Kenny JA at pp 512 and 513). Kenny JA put the test in these terms, 'Whether or not there was error in the chairman's ruling depends on whether it was made in good faith and for [the] purpose. The ruling will be invalid if made in bad faith or for an ulterior or impermissible purpose' (Kenny JA at p 511). In Perera v Reilly (2006) 59 ACSR 317 , Murray J considered the intersection between s 253G of the Act and the approach to supervisory review of decisions of a chair of the meeting and said this: [45] The provision is designed to facilitate the despatch of corporate business by decisions taken at meetings. In that context, it has often been held that such a provision will operate as a privative provision, rendering the decision not amenable to judicial review if the power is exercised bona fide, albeit mistakenly ... at least in cases where there has been no error of law.