Federal Court of Australia

Hest Pty Ltd v Sweetman Renewables Ltd [2022] FCA 337

ORDERS

THE COURT DECLARES THAT:

1.    At the meeting of members of the respondent on 14 March 2022:

(a)    resolutions to remove each of the second to fourth respondents as directors of the first respondent were validly passed such that they ceased to hold office on 14 March 2022; and

(b)    resolutions to appoint each of John Forder, Martin Kennedy, Kenneth MacMillan and Yianni Chapley as directors of Sweetman Renewables Ltd ACN 646 172 385 were validly passed such that they commenced to hold office on 14 March 2022.

THE COURT ORDERS THAT:

2.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

1    On 30 March 2022, I made orders providing for the short service of, among other things, an originating application seeking relief in terms of declarations that: (a) at a meeting of members of Sweetman Renewables Ltd (company) on 14 March 2022 (meeting), resolutions to remove three directors of the company were validly passed, such that they ceased to hold office from the time of the resolution; and (b) resolutions to appoint four directors of the company were validly passed such that the new directors commenced to hold office from the time of the meeting.

2    The matter returned before me today for the purposes of case management, or for the hearing of the application for declaratory relief. Shortly before I came on the bench, my Associate received a copy of proposed short minutes of order that indicated it was with the consent of all parties (including all respondents), that declarations in the terms sought ought to be made.

3    Counsel for the applicant, Mr Bender, was of course cognisant of the circumstances in which it is appropriate to make what might be described as consent declarations or declarations based on admissions. In Williams v Powell [1894] WN (Eng) 141, Kekewich J noted that a declaration was a judicial act and ought not to be made merely on admissions of counsel or by consent, but only if the court was satisfied by evidence.

4    The circumstances in which it is appropriate for the Court to exercise the power it has under s 21(1) of the Federal Court of Australia Act 1976 (Cth) to make binding declarations of right in civil proceedings, and the origins of that power, were traced by the Full Court in Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56; (2012) 201 FCR 378 (see 381–385 [9]–[21] per Greenwood, Logan and Yates JJ). That judgment addressed the question of whether the Court was prevented from granting proposed declaratory relief when it had the consent of both parties, on the basis that there was no proper contradictor. It is well established, both in the United Kingdom and in this country, that a declaration usually cannot be made in the absence of a contradictor. This was considered by the High Court in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, in which Gibbs J observed (at 437–438) that a requirement for there to be a contradictor should “in general” be satisfied before the discretion is exercised. But as Bromwich J observed in Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 4) [2016] FCA 867; (2016) 120 IPR 133 (at 148–149 [79]–[83]), the requirement that there be a contradictor is not as onerous as it may at first appear.

5    As the Full Court explained in MSY Technology (at 382 [14]), there is a difference between having an interest to oppose the granting of declaratory relief and, having that interest, choosing whether or not to oppose the granting of that relief. The requirement for there to be a contradictor is met if there is a party before the Court, who has an interest to oppose the declaratory relief sought. This proceeding was regularly commenced by joining all necessary parties. It is clear that there are persons before the Court, in particular, the company and the existing directors who were the subject of the resolution at the meeting, who would have an interest to oppose the relief but, for reasons that will become obvious, have decided that there is no basis to oppose the relief. Of course, once the requirement of a contradictor is met, which I consider is met in this case, two further questions arise.

6    The first is whether the discretion to grant declaratory relief should be exercised in all the circumstances of the case; in particular, whether the Court is satisfied that there is some utility in making the declaration sought – a concept that is foundational to the granting of declaratory relief. The second is the distinct question of whether the Court, in granting the declaration, is licitly exercising Chapter III judicial power, which is dependent upon the existence of a “matter” (to use that word in its constitutional sense); that is, a justiciable controversy in respect of rights, duties, liabilities or obligations. As French J observed in IMF (Australia) Ltd v Sons Of Gwalia Ltd (Administrator Appointed) ACN 008 994 287 [2004] FCA 1390; (2004) 211 ALR 231 (at 243 [43]): “the availability of declaratory relief is confined by the boundaries of judicial power”.

7    As to the first of these questions, I consider that there is some utility in the granting of relief. The books and records of the company are currently erroneous. Exhibit A on the hearing before me is a calculation prepared by the solicitors for the applicant detailing the fact that, in accordance with Cl 6.9(a) of the Constitution of the company, the relevant resolutions were passed because the number of votes cast in favour of the resolution exceeded those cast against the resolution. Although the accurate result of the votes cast at the meeting does not now appear to be disputed, there is a need for the books and records of the company to reflect the true position. As counsel for the respondents explained, there is apparently a gap in the ability of instructions to be given to make the necessary amendments to the books and records of the company.

8    In a sense, the above consideration of discretion informs the resolution of the second question. Although there is no ongoing dispute in a practical sense, there was a real and abiding controversy, which necessitated the commencement of the proceeding, and there remains the necessity to regularise the true position (including giving certainty between the parties as to who can provide instructions in order for the books and records of the company to be corrected). Accordingly, I do not believe that I am straying beyond the licit boundaries of the exercise of judicial power in granting the declaration.

9    It follows for these reasons that I am persuaded that the declaration sought ought to be made. The parties have agreed between themselves that there should be no order as to costs.

Associate:

Dated:    5 April 2022

SCHEDULE OF PARTIES