Dykyj v Logan and District Services Club Incorporated [2009] QSC 108

SUPREME COURT OF QUEENSLAND CITATION: Dykyj v Logan and District Services Club Incorporated [2009] QSC 108 PARTIES: JAROSLAV GERALD DYKYJ (applicant) v LOGAN AND DISTRICT SERVICES CLUB INCORPORATED (respondent) FILE NO/S: BS4180 of 2009 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: 11 May 2009 DELIVERED AT: Brisbane HEARING DATE: 8 May 2009 JUDGE: Chief Justice ORDER: 1. There will be a declaration that the special resolution purportedly carried at the Annual General Meeting of the respondent on 5 November 2008 to amend its Constitution is invalid. 2. That the respondent pay the applicant’s costs of and incidental to the application, to be assessed on the standard basis. CATCHWORDS: ASSOCIATIONS AND CLUBS – GENERAL MATTERS – MEETINGS – Association subject to Associations Incorporation Act 1981 (Qld) – validity of purported special resolution to adopt a new constitution – inadequacy of notice of meeting – improper rejection of proxies – whether irregularities should be rectified by remedial orders Associations Incorporation Act 1981 (Qld) s 3, s 133 Re Vassallo (2001) 1 Qd R 91, cited COUNSEL: D A Skennar for the applicant M Trim for the respondent SOLICITORS: Forbes Dowling for the applicant McCullough Robertson for the respondent -- 1 of 6 -- 2 Introduction [1] CHIEF JUSTICE: An annual general meeting of the respondent, Logan and District Services Club Inc, held on 5 November 2008, purported to carry a special resolution “to amend the Constitution by it (sic) being repealed and replaced with a constitution in the terms proposed”. The applicant is a member of the respondent club. He seeks a declaration that the resolution is invalid. [2] Under the previously applicable Constitution of the respondent, it might be amended only by special resolution (cl 27). Because of s 3(4) of the Associations Incorporation Act 1981 (Qld), such a resolution must be passed by a three-quarters majority. The minutes of the meeting show that it passed by a majority of 123 to 32. The applicant contends that he was wrongly denied the right to exercise 56 proxy votes, which he would have exercised by voting against the motion. If so, the requisite three-quarters majority would not have been achieved, as was common ground before me. Validity of rejection of proxies [3] The proxy forms had been collected from the Club by the members in person, but lodged by the applicant himself at the Club premises. A staff member rejected them. [4] Clause 25.2 of the respondent’s Constitution provides: “A proxy will be valid if: (a) The Member completes and lodges the proxy in the form approved by the Board with the Secretary not later than 24 hours before the time for the holding of the general meeting…” The applicant lodged the proxies within that timeframe. [5] Mr Trim, who appeared for the respondent, submitted that the Constitution required the member granting the proxy to lodge the form in person with the secretary. Ms Skennar, who appeared for the applicant, submitted that it sufficed for the member granting the proxy to lodge it either in person or by an agent, in this case the applicant. [6] In the absence of an expressed requirement that the proxy form be lodged by the member in person, I do not consider that clause 25.2 (a) should be construed so as to exclude lodgement by an agent. Considerations of convenience are not irrelevant to the interpretation of such a provision, and in this case, to require 56 individual members not only to collect their proxy forms in person, but to return them in person as well, would give rise to a considerable degree of inconvenience. The member’s right to cast a vote by proxy is established at the time of the issue of the -- 2 of 6 -- 3 proxy form to the member in person. It would seem unreasonable to require, then, that the signed and witnessed form may only be lodged by a further visit to the Club by the member in person. [7] These considerations support the conclusion that in the absence of an express requirement for lodgement by the member in person, the possibility of lodgement by an agent has not been excluded. [8] Mr Trim then referred to clause 25.3 of the Constitution, which provides that “any issue of validity of a proxy will be determined by the chairperson of the meeting acting on the advice of the Returning Officer.” The minutes of the meeting include this section: “Jerry Dykyj asked the chair clarification on proxies that were delivered by himself personally were not accepted (sic). Chair responded complaint will need to be put in writing. Chair then asked Jay Deeb for advice. Jay Deeb responded that it is the Chairman’s ruling.” That was not a ruling by the Chairperson on the validity of the rejected proxies. All the Chairperson said was that any complaint about the rejection of the proxies “will need to be put in writing”. Mr Deeb then described that as “the Chairman’s ruling”. I do not consider the Chairperson made a determination under cl 25.3 of the Constitution. [9] Mr Trim also referred to clause 16 of the Constitution which provides: “Except as otherwise provided by this Constitution and subject to resolutions of the Voting Members, the Board has:- … (b) the authority to interpret the meaning or application of any part of this Constitution (including any matter relating to the Club) on which this Constitution is silent or ambiguous.” [10] There is no evidence that in rejecting the proffered proxies, the staff member was acting with the authority of the Board, or that the Board made any ruling as to the validity of the proxies, their having been delivered by the members through their agent (the applicant). [11] My conclusion is that the proxies were wrongly rejected. Sufficiency of notice of meeting [12] The applicant also challenges the validity of the notice of meeting. [13] The notice read in relation to the business of the meeting: -- 3 of 6 -- 4 “That the Constitution be amended by being repealed and replaced with a Constitution in the terms proposed (subject to any amendments of those terms approved by the meeting prior to the resolution being passed which in the opinion of the Board are minor in nature).”(sic) [14] Section 3(2) of the Associations Incorporation Act 1981 (Qld) provides that “[t]he notice must state the terms of the proposed special resolution”. [15] The terms of the actually proposed special resolution were not simply that the existing Constitution be replaced by another, but that it be replaced by another particular constitution. The notice of meeting spoke of replacing the existing constitution with a constitution in “the terms proposed”, but without identifying them. The purpose of a notice of meeting is to alert the recipient to what is proposed, so that the recipient may consider the matter, including forming a view whether or not to attend. That is particularly important where a special resolution is in question. [16] The matter may be tested by looking at the special resolution purportedly passed, which was in these terms: “To amend the Constitution by it (sic) being repealed and replaced with a Constitution in the terms proposed.” Those “terms proposed” were before that meeting. It was clear to that meeting what particular amendments were under consideration, and upon which the members ultimately voted. They must be taken, then, to form part of the resolution. They were “terms” of the resolution. Because of s 3(2) of the Act, they should therefore have been stated in the notice of meeting. Ordinarily, that would be done by annexing the form of the proposed amendment, or draft new constitution, to the notice of meeting. [17] I conclude that the notice of the proposed special resolution did not comply with s 3(2) of the Associations’ Incorporation Act 1981 (Qld) because it did not “state the terms” of that resolution. Whether a remedial order should be made [18] In these circumstances, the respondent sought a remedial order under s 133(3), to rectify the irregularities. Sub-section (1) provides that “no proceeding under this Act” shall be invalidated by any irregularity etc, “unless the court is of opinion that substantial injustice has been or may be caused thereby which cannot be remedied by an order of the court”. [19] There is clear basis for the exercise of discretion in these circumstances. Compare Re Vassallo (2001) 1 Qd R 91. -- 4 of 6 -- 5 [20] Mr Trim urged these considerations, as warranting a remedial order: “(a) The breaches or defects are not substantial or serious. In the case of the notice, several words have been omitted and in the case of proxies, those who held them could still have lodged their proxies or voted by attending the AGM. (b) The Constitution has been adopted by a Special Resolution, meaning that it was approved by at least ¾’s of the members present at the AGM… (c) The new Constitution does not in any way reduce the rights or entitlements of any Ordinary Member of the Club or of any other member of the Club… (d) The new Constitution has been a benefit to the Club and subsequent to its adoption, the membership of the Club has increased markedly… (e) There is no evidence of any detriment or injustice to any member by the making of such a remedial order.” [21] On the other hand, 56 members were effectively denied their votes, amounting to 26 per cent of those interested enough to have their votes cast in person or by proxy. Also, the uninformative notice of meeting may have meant that others who did not attend simply failed to appreciate the significance of what was proposed. [22] The new Constitution wrought an arguably substantial change to the complexion of the Club, by removing the requirement for club members to be members of the RSL, creating a new class of members, social members. That apparently lay at the root of the opposition to the proposal. Other not insignificant changes were involved. [23] A change of that proportion especially, fell to be considered at a properly constituted meeting. I do not consider it sufficient to respond that the proposal had been considered at an earlier meeting some months before, or was being generally discussed among the members. [24] I mention a further point made by Mr Trim, that the members whose proxies were rejected could have taken the trouble to attend the meeting in person. There is a speculative flavour to that submission, however, because one does not know the reason why those members preferred to cast their vote by proxy. They may, for example, have been out of Brisbane at the time of the meeting. [25] In the context of irregularities of this proportion, and in circumstances where the consequence of recommitting the matter properly should not surpass inconvenience, such as the burden of the cost of conducting a new meeting, I am satisfied that the relevant “substantial injustice” in this case, in terms of s 133(1) of the Act, has been suffered by those denied their vote by the rejection of the proxies, and those denied adequate information about the proposal, because of the uninformative notice of meeting. -- 5 of 6 -- 6 Orders [26] I order as follows: 1. there will be a declaration that the special resolution purportedly carried at the Annual General Meeting of the respondent on 5 November 2008 to amend its Constitution is invalid; 2. that the respondent pay the applicant’s costs of and incidental to the application, to be assessed on the standard basis. [27] (I record that it was common ground that costs should follow the event.) -- 6 of 6 --