Case: Howard v Mechtler (1999) 30 ACSR 434
Outcome: cited
first question is whether I am here concerned with a "proceeding" as defined in s 1322(1). Counsel for the BT defendants submit that the decision in Howard v Mechtler (1999) 30 ACSR 434 is authority for the proposition that a meeting or resolution passed at a meeting is such a proceeding. In that case Austin J certainly treated a meeting as being a proceeding for the purposes s 1322. However, I doubt whether, in declaring that the relevant resolution was ineffective by virtue of failure to comply with the equivalent of what is now s 201E , his Honour was acting pursuant to s 1322. Austin J raised that ground of invalidity after argument and received written submissions concerning it. His Honour's reasons suggest that he was declaring invalidity upon the basis of his construction of the relevant section rather than exercising a discretion to invalidate an otherwise valid resolution. The BT defendants also point out that in Cordiant Communications Australia Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 55 ACSR 185 at [87], Palmer J observed: There is no doubt that the passing of a special resolution of a shareholders meeting is a "proceeding" under the Corporations Act for the purposes of s 1322. Apart from the plaintiffs' own assertions (which may be taken to be also on behalf of Contra Proferentum), there is no reason to believe that anybody would have voted differently had the two matters been voted upon separately. Nobody attending at the meeting, other than City Pacific and Contra Proferentum, opposed the proposal being considered and adopted in accordance with the notice of meeting. It is common ground that City Pacific and Contra Proferentum had insufficient votes to change the outcome. The plaintiffs bear the onus of establishing injustice for the purpose of s 1322(2). See Howard v Mechtler (1999) 30 ACSR 434 at 441. The plaintiffs have not satisfied that onus. Section 1322(4) Section 1322(4) will be engaged only if the purported resolution is invalid. The section authorizes the Court to make an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken under the Act, or in relation to a corporation, is not invalid by reason of any contravention of a provision of the Act, or a provision of the constitution of a corporation. There is no reference to an act "in relation to" a scheme or a provision of the constitution of a scheme. However the purported resolution was clearly "under" the Act. It has not been suggested that any relief sought in connection with the purported resolution is beyond the power conferred by s 1322(4). In order that the Court may make an order pursuant to s 1322(4)(a) it must be satisfied as to one of the three following matters: In every case the Court must also be satisfied that no substantial injustice has been, or is likely to be, caused to any person. Presumably, the conferment of power to validate an act, matter, thing or proceeding which is "essentially of a procedural nature" supplements the power conferred by s 1322(2) to rectify a procedural irregularity, and therefore applies to a situation in which s 1322(2) would not operate. As I understand the BT defendants, they submit that it is just and equitable that an order be made validating any invalidity, and that no substantial injustice has been, or is likely to be, caused to any person.