C & C Fisher Pty Ltd v Livadaras [2010] FCA 11 (21 January 2010)

Last Updated: 25 January 2010

FEDERAL COURT OF AUSTRALIA

C & C Fisher Pty Ltd v Livadaras [2010] FCA 11

Citation:	C & C Fisher Pty Ltd v Livadaras [2010] FCA 11
Parties:	C & C FISHER PTY LTD (ACN 123 285 370) AND AUSTRALIAN OLIVES LIMITED (ACN 078 885 042) v SPYRIDON LIVADARAS, HUNTLEY MANAGEMENT LIMITED (ACN 089 240 513) AND OTHERS
File number:	QUD 22 of 2009
Judge:	REEVES J
Date of judgment:	21 January 2010
Catchwords:	CORPORATIONS – Meeting of members of registered managed investment scheme – Responsible entity and associates cannot vote if have an interest in the resolution other than as a member – Associate is a person who acts or proposes to act in concert with the responsible entity CORPORATIONS – Decision by chairperson to exclude votes – Whether decision amenable to review – Whether chairperson acted in bad faith or made an error of law – Consideration of what is meant by ‘bad faith’ – Whether the chairperson acted impartially and without bias or prejudgment CORPORATIONS – Decision by chairperson to exclude votes – Whether decision amenable to review – Whether chairperson acted in bad faith or made an error of law – No separate obligation to act on reasonable grounds – Any decision made in good faith and according to law is final and conclusive – Irrationality and illogicality in fact-finding does not constitute an error of law – Judicial review of administrative decision-making not an apt analogy – Wednesbury unreasonableness limited to discretionary decisions
Legislation:	Corporations Act 2001 (Cth) ss 15, 601FB(1), 252B(1)(a), 253E, 253G, Part 1.2, Div 2, Part 2G.4, Part 5C.1, Part 5C.2 Migration Act 1958 (Cth)
Cases cited:	Australian Olives Ltd v Livadaras [2008] FCA 1407; (2008) 172 FCR 34 Southern Wine Corporation Pty Ltd (In Liq) v Perera (2006) 61 ACSR 40 Bank of Western Australia Ltd v Ocean Trawlers Pty Ltd (1995) 16 ACSR 501 City Pacific Limited v Bacon (No 2) [2009] FCA 772 Lewis v Green [1905] 2 Ch 340 Smart v Allen (1970) 91 WN(NSW) 241 Re Adams International Food Traders Pty Ltd (1988) 13 NSWLR 282 Link Agricultural Pty. Ltd. v Shanahan [1998] VSCA 3; [1999] 1 VR 466 NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 SCAS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 397 McLean Bros & Rigg Ltd v Grice [1906] HCA 1; (1906) 4 CLR 835 Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324; (1997) 151 ALR 505 Gamaethige v Minister for Immigration and Multicultural Affairs [2001] FCA 565; (2001) 109 FCR 424 Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 Byng v London Life Association Ltd. [1990] Ch 170 Re Telford Inns Pty Ltd (1985) 10 ACLR 312 ANZ Nominees Limited v Allied Resources Corporation Limited (1984) 2 ACLC 783 Perera v Reilly (2007) 59 ACSR 317 Minister for Immigration and Multicultural Affairs v Al-Miahi [2001] FCA 744; (2001) 65 ALD 141 Attorney-General (NSW) v Quin (1990) 170 CLR 1 Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 P Young, Declaratory Orders (2nd ed, 1984) M Aronson & Ors, Judicial Review of Administrative Action (4th ed, 2009)

Dates of hearing:	10, 11 and 12 June 2009
Date of last submissions:	7 and 8 September 2009
Place:	Brisbane
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	82
Solicitor for the Applicants:	McMahon Clarke Legal
Counsel for the Applicants:	Christopher Wilson
Solicitor for the Respondents:	Frenkel Partners
Counsel for the Respondents:	Martin Pirrie

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 22 of 2009
GENERAL DIVISION

IN THE MATTER OF AUSTRALIAN OLIVES PROJECT NO. 3 ARSN 091 051 437

BETWEEN:

C & C FISHER PTY LTD (ACN 123 285 370) First Applicant AUSTRALIAN OLIVES LIMITED (ACN 078 885 042) Second Applicant

AND:	SPYRIDON LIVADARAS First Respondent HUNTLEY MANAGEMENT LIMITED (ACN 089 240 513) Second Respondent AND OTHERS Respondents

JUDGE:	REEVES J
DATE OF ORDER:	21 JANUARY 2010
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The application filed on 16 January 2009 be dismissed.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 22 of 2009

IN THE MATTER OF AUSTRALIAN OLIVES PROJECT NO. 3 ARSN 091 051 437

BETWEEN:

C & C FISHER PTY LTD (ACN 123 285 370) First Applicant AUSTRALIAN OLIVES LIMITED (ACN 078 885 042) Second Applicant

AND:	SPYRIDON LIVADARAS First Respondent HUNTLEY MANAGEMENT LIMITED (ACN 089 240 513) Second Respondent AND OTHERS Respondents

JUDGE:	REEVES J
DATE:	21 JANUARY 2010
PLACE:	BRISBANE

REASONS FOR JUDGMENT

INTRODUCTION

1. On 12 December 2008, Mr Spyridon Livadaras, the first respondent, chaired a meeting of the members of the Australian Olives Project No. 3, a managed investment scheme (“the Scheme”), registered under the Corporations Act 2001 (Cth) (“the Act”). At that meeting, Mr Livadaras ruled that 70 votes submitted on behalf of C & C Fisher Pty Ltd, the first applicant, should not be admitted as valid votes. Following that ruling, resolutions were put to the meeting to remove Australian Olives Limited, the second applicant, as the responsible entity for the Scheme, and replace it with Huntley Management Limited, the second respondent. Mr Livadaras subsequently declared that those resolutions had been duly passed. If C & C Fisher’s 70 votes had been included in the vote, those resolutions would most probably have not been passed.
2. C & C Fisher and Australian Olives have commenced these proceedings seeking to challenge Mr Livadaras’ ruling at that meeting. In particular, they seek declarations that (in summary):
   • C & C Fisher is not an associate of Australian Olives Limited; and
   • the resolutions declared passed at the 12 December meeting were not validly passed and were defeated.
3. For convenience, wherever it is appropriate, I will refer to both applicants in these Reasons as C & C Fisher.
4. It is worth mentioning at the outset of these Reasons that many of the issues that arise in these proceedings were considered by Greenwood J in Australian Olives Ltd v Livadaras [2008] FCA 1407; (2008) 172 FCR 34 (“Livadaras”). That decision dealt with a similar ruling made by Mr Livadaras at a similar meeting held on 29 April 2008 in connection with a related management investment scheme: Australian Olives Project No 4.

LEGISLATIVE SETTING

5. As I have already mentioned, the Scheme is a registered management investment scheme. It is registered under Part 5C.1 of the Act. As noted above, the Scheme is quite similar to the Australian Olives Project No 4 scheme. The structure and details of that Scheme, including the provisions of the relevant agreements and the constitution of the Scheme, are set out in Livadaras at [15] to [22]. Since that information is broadly applicable to this Scheme, I will not repeat it in these Reasons.
6. Until its removal by the resolutions described above, Australian Olives was the responsible entity for the Scheme. As such, it had responsibility under the Act for operating the Scheme and performing the functions conferred on it by the Scheme’s constitution and under the Act: see s 601FB(1) and Part 5C.2 of the Act generally.
7. Part 2G.4 of the Act contains a number of provisions governing the conduct of meetings of members of registered management investment schemes. Greenwood J has set out a helpful summary of those provisions in Livadaras at [64] to [66] so it is not necessary to include a similar summary in these Reasons. Section 253E of the Act prevents a responsible entity like Australian Olives and “its associates” from voting on a resolution at a meeting of the Scheme members if: “... they have an interest in the resolution ... other than as a member”. It has been held that the purpose of this provision is to remove the potential for a conflict of interest arising: see Southern Wine Corporation Pty Ltd (In Liq) v Perera (2006) 61 ACSR 40 (“Southern Wine”) at [21].
8. The expression “its associates” is defined in Part 1.2, Div 2 of the Act. In particular, s 15 provides that it includes a person with whom another person is acting in concert. The expression “acting in concert” has been held to mean an understanding between the parties as to a common purpose or object, which understanding should be consensual and there should be some adoption of it. However, it is not essential that the parties are committed to it, or bound to support it. The understanding can be informal, as well as unenforceable, and the parties may be free to withdraw from it, or act inconsistently with it, notwithstanding their adoption of it. And, the understanding may be proved by inference from the circumstances surrounding the impugned transaction and from what the parties have done, as well as by direct evidence: see Bank of Western Australia Ltd v Ocean Trawlers Pty Ltd (1995) 16 ACSR 501 at 524 to 525 per Owen J.
9. Finally, it is necessary to consider the words “interest in the resolution ... other than as a member”. In City Pacific Limited v Bacon (No 2) [2009] FCA 772, Dowsett J observed (at [28]) that s 253E of the Act “seems to assume that a responsible entity of a listed scheme will have an interest in both its removal and its replacement”. In Southern Wine, Steytler P (with whom McLure and Pullin JJA agreed) reviewed the legislative history and context of s 253E and observed it “... was designed to ensure that the responsible entity, in voting on a resolution, would not put its own interest, arising independently of its membership of the scheme, ahead of that of other members, to their potential detriment”: at [21].
10. From these authorities, it appears to be relatively clear that a responsible entity’s desire to remain in that position is the type of interest to which the conflict of interest proscription in s 253E is directed. It would follow, in my view, that if a member of a scheme reaches an understanding with the responsible entity of that scheme to assist that responsible entity to pursue its interest in remaining as responsible entity for the scheme, that member must necessarily have an interest other than as a member in any resolution which seeks to remove the responsible entity from that position. On the other hand, if, as the Court ultimately concluded in Southern Wine (see at [24]), the responsible entity and the member are genuinely acting in the pursuit of their own self-interest to, for example, maximise the return they receive from their interests in the scheme, that would not be an interest of the kind that s 253E proscribes. The determination of the precise nature of the relevant interest, in all the circumstances, is a question of fact.

THE ISSUES THAT ARISE

11. From this outline of the legislative setting, it might be thought that the critical question in this case is whether C & C Fisher and Australian Olives were acting in concert and, therefore, were associates within the terms of s 253E of the Act. However, as was explained by Greenwood J in Livadaras, the true questions in this case revolve around whether Mr Livadaras acted in bad faith, or made an error of law, in reaching the conclusion that he did about those issues and making the ruling at the 12 December meeting: see Livadaras at [70].
12. Indeed, in Livadaras, notwithstanding that his Honour concluded on all the evidence and submissions before him, after a trial of that issue, that Australian Olives and Tyrone O’Grady Pty Ltd (the equivalent party to C & C Fisher in this matter) were not acting in concert, and therefore were not associates (see Livadaras at [59]), he still proceeded to dismiss Australian Olives’ application because he concluded it had failed to establish that Mr Livadaras’ conclusion to the contrary was affected by bad faith, or involved an error of law: see Livadaras at [109] and [114].
13. It follows from this that the question whether, based on the evidence and submissions before me, I consider C & C Fisher is an associate of Australian Olives, is a question which is irrelevant to the true questions in dispute in this case. Instead, the true questions in dispute between the parties in this case are whether, based on the facts known, or reasonably available, to Mr Livadaras at the time of the 12 December meeting, his conclusions and ruling were made in good faith and according to law.
14. Having reached this conclusion, I consider I must dismiss C & C Fisher’s application for the first declaration that: C & C Fisher is not an associate of Australian Olives. I do so because I consider a declaration to that effect is not reasonably likely to resolve the true questions in dispute between the parties, or have any relevant bearing upon them: see Lewis v Green [1905] 2 Ch 340 at 344, Smart v Allen (1970) 91 WN(NSW) 241 at 246 to 249 and P Young, Declaratory Orders (2nd ed, 1984), pp 60 to 61.
15. However, I consider the second declaration sought by C & C Fisher does, in broad terms, raise the true issues in dispute between the parties. As noted above, they are whether Mr Livadaras’ conclusion and ruling that C & C Fisher was not entitled to cast the 70 votes at the 12 December meeting was either:
    • made in bad faith; or
    • made in good faith, but involving an error of law.
16. As to the second of these issues, C & C Fisher and Australian Olives have submitted that it involves a consideration of the reasonableness of Mr Livadaras’ ruling. I will consider whether that is so later in these Reasons.

FACTUAL BACKGROUND

17. Before addressing these issues, it is appropriate to set out some more details of the factual background to this dispute.

Mr Johnston of Australian Olives offers Mr Campbell Fisher of C & C Fisher a business opportunity

18. In about 2006, Mr Campbell Fisher, a director of C & C Fisher, first met Mr Anthony Johnston, a director of Australian Olives. This meeting occurred because their daughters were attending the same school and their wives both served on that school’s fundraising committee.
19. In early 2008 (this date was later changed in evidence to mid-2008), Mr Fisher became aware that Mr Johnston had an interest in some olive groves located at Yallamundi in New South Wales. This came about because Mr Johnston explained the ownership arrangements for the olive groves and suggested to Mr Fisher that they may present a business opportunity for him. In his explanation, Mr Johnston told Mr Fisher, among other things, that:
    • the olive groves were held in a number of managed investment schemes;
    • the olive trees had been affected by drought and were not yielding the forecast yields and, as a result, the investors in the schemes were complaining;
    • he had invested $20 million in the schemes and he needed to find a way to make them work;
    • the managed investment scheme structure was an expensive and unduly complex one;
    • they may be able to collapse the schemes and run the olive groves as an integrated agricultural operation; and
    • this was where the business opportunity lay.
20. As a result of this discussion, Mr Fisher expressed an interest in becoming involved and Mr Johnston referred him to Mr Simon Beddoe, Australian Olives’ Investment Relations Manager. In August 2008, Mr Fisher contacted Mr Beddoe and obtained from him a purchase interest form. He then had a meeting with Mr Blake Ammit, the Executive Director of Australian Olives, who provided him with a range of documentation in relation to the Australian Olives Project No. 3, ie, the Scheme.

C & C Fisher purchases 70 olive groves in the Scheme

21. On or about 20 August 2008, C & C Fisher entered into a Deed of Assignment with Australian Olives for the transfer to it of 70 olive groves in the Scheme. It was originally proposed in an exchange of emails between Mr Fisher and Mr Beddoe that C & C Fisher would pay $20 per grove (ie a total of $1,400). However, as a result of an error on Mr Beddoe’s part, the consideration for the transfer of the 70 groves was stated in the Deed of Assignment to be $140.
22. On 26 August 2008, Mr Beddoe sent an email to Mr Fisher acknowledging receipt of a copy of the signed documentation and advising that the original documentation was expected to arrive on the following day. That email also included the following statement: “You may not be aware the [sic that] a members meeting has been called in relation to Project 3 which has been set down for this Friday 29 August 2008. Please find a copy of the Notice calling the meeting, response from the Board of Australian Olives and a proxy to be completed and returned to this office. Alternatively you may wish to attend the meeting in person; the details are included in the Notice of meeting information”.

Extraordinary resolution to remove Australian Olives as the responsible entity

23. The enclosed notice of meeting described the business of the members meeting as including the election of a chairperson and the consideration of two extraordinary resolutions as follows:

Extraordinary Resolution 1 – Removal of Current Responsible Entity

Subject to Extraordinary Resolution 2 being passed, that the current responsible entity of the project, Australian Olives Limited ACN 078 885 042 be removed as responsible entity of the Project.

Extraordinary Resolution 2 – Appointment of New Responsible Entity

That Huntley Management Limited ACN 089 240 513 be appointed as the new responsible entity of the Project.

24. Not surprisingly, there was some history to this notice of meeting. It had its genesis in a letter Mr Jeff Elson, a member of the Scheme, sent to all of the other members in late June 2008, seeking their support to call a meeting of the members of the Scheme to consider a resolution to remove Australian Olives as the responsible entity for the Scheme and replace it with Huntley Management. In his letter, Mr Elson complained that the investors in the Scheme had only received around $1,000 per grove against a projected income of around $6,500 per grove. At the same time, he pointed out that Australian Olives had returned a net profit of $2,536,455 in the year ended 30 June 2007 and, in addition, its associated companies had received $1,859,947 for water charges and other substantial amounts for management fees. He also pointed out that Huntley Management had taken over Projects 5 and 6 and discovered that around 35 per cent of the olive trees in Project 5, and around 63 per cent of those in Project 6, were dead or non-commercial trees.
25. On 3 July 2008, Australian Olives sent a letter in response, signed by Mr Blake Ammit. In that letter, Mr Ammit set out, what he considered to be, the relevant background to the matter. Among other things, he alleged that a company called Stantins Accounting and Financial Planning Group (“Stantins”) had sold the majority of the grove interests in Projects 5 and 6 to their client base and, according to Mr Ammit, had played a role which had been “detrimental to the efficient running of the AOL projects”. Mr Ammit alleged that Stantins had their own reasons for wanting to change the responsible entity for the Scheme. He concluded his letter by asking members to disregard the letter from Mr Elson.
26. At this juncture, it is relevant to mention that Mr Livadaras was, and is, a principal of Stantins and he is employed in that firm as a Certified Practising Accountant.
27. Under s 252B(1)(a) of the Act, the responsible entity of a scheme must call a meeting of the scheme’s members to consider and vote on a proposed extraordinary resolution, if members with at least 5 per cent of the votes that may be cast on that resolution, make a request for such a meeting. By early August 2008, Mr Elson had obviously been able to meet this prerequisite because the notice of meeting referred to above had attached to it a list of members of the Scheme that were said, in total, to represent approximately 32 per cent of the votes that may be cast at a meeting of the members of the Scheme.

Ruling made and extraordinary resolutions passed at 12 December meeting

28. Mr Fisher attended the meeting on 29 August 2008. After a lengthy discussion that meeting was adjourned to 28 November 2008 so that both Australian Olives and Huntley Management could provide further information to the members as to their proposals for the future conduct of the Scheme. Then, on 28 November 2008, the meeting was further adjourned for two weeks to 12 December 2008. Mr Fisher was unable to attend the adjourned meeting held on 28 November 2008, or the further adjourned meeting held on 12 December 2008. Accordingly, he appointed Australian Olives as a proxy to attend on behalf of C & C Fisher. Mr Beddoe and Mr Shaw, the solicitor for Australian Olives, attended the 12 December meeting on behalf of Australian Olives.
29. The meeting of 12 December was recorded and a transcript of that recording was in evidence before me. That transcript records that, at the beginning of the meeting, Mr Livadaras nominated himself for election as Chairman of the meeting and he was elected unopposed. The transcript also records that Mr Livadaras adjourned the meeting for a short period just before he made his ruling, to obtain advice from Ms Dahnia Mithiran of Piper Alderman, solicitors, who he had arranged to be present to advise him.
30. By the time of the meeting of 12 December, Australian Olives had already been removed as the responsible entity for Australian Olives Projects numbered 1, 2, 4, 5 and 6. Some of these removals were challenged in Court, including the proceedings before Greenwood J in relation to Project 4, ie, Livadaras. Greenwood J delivered his decision in Livadaras on 15 September 2008. I mention these matters because by the time of the 12 December meeting, all of those closely involved were obviously well aware of the decision in Livadaras insofar as it set out the principles in relation to Mr Livadaras’ role as Chairman of such a meeting. So much is clear from the transcript of the 12 December meeting because the Livadaras decision is mentioned frequently by various of those present.
31. According to the transcript of the 12 December meeting, Mr Livadaras began by stating that the purpose of the meeting was to consider two extraordinary resolutions. He then asked a number of questions of Mr Beddoe and Mr Shaw about who was financial and eligible to vote at the meeting and what the total number of eligible votes was. In response to the latter question, he was told 780. Mr Livadaras then raised the issue of the transfer of the 70 groves from Australian Olives to C & C Fisher on 20 August 2008. He asked whether that had been done pursuant to a transfer deed. Mr Beddoe told him that it had been and that the transfer deed had been stamped by the Queensland State Revenue Office. Thereafter, the following exchange occurred between Mr Livadaras and Mr Beddoe, or, on some points, Mr Shaw, about what payments C & C Fisher had made for the transfer (the irrelevant parts have been excluded):

CHAIR: Would you refer to your eligible paid up members list and confirm that C & C Fisher was a paid up member and eligible to vote?
Mr BEDDOE: To the best of my knowledge yes. I will just have to check. Yes, they are.
CHAIR: When you say “Yes, they are” he has actually physically paid the money into your account based on Nathan’s [Shaw] definition of who is eligible and financial?
Mr BEDDOE: From our records we have no outstanding funds due from that investor.
...
CHAIR: He has actually physically either transferred cash into your account or he has given you a cheque which was subsequently cleared before today’s meeting?
Mr BEDDOE: I am not aware of how, or why or what manner an investor has paid. Our records show that he has nothing currently outstanding.
CHAIR: The reason I am concerned is because it is a rather large holding that AOL [Australian Olives] transferred to C & C Fisher just before the meeting. I might adjourn the meeting for a few minutes to give you an opportunity to contact your office to confirm that he has either physically transferred the management fees to you by cash or by cheque and that cheque was cleared.
Mr BEDDOE: He had no current fees outstanding at the previous adjourned meeting. He has no current fees outstanding at the meeting prior to that.
...
CHAIR: So he has taken over the groves on 20 [August] which is sometime after the transaction was actually completed so would it be fair to assume that he would have been liable for management fees on or after that date for the next 12 months as is every other member? What I need you to confirm for me is that he has actually physically paid those fees because if he has not paid those fees and you can’t come back with confirmation as chairman it is going to be very difficult for me to allow those groves as being eligible. We will need to exclude him out of the eligibility list.
...
Mr SHAW: I think we can see what we can do in terms of contacting the office and finding out exactly what has gone on. It may well be that Simon [Beddoe] is told “we can’t confirm that right now”. Prima facie on the records that Simon has there is nothing outstanding. You can see the column there.
...
CHAIR: From our point of view it should be fairly straight forward now if Simon contacts the office what the office needs to confirm is whether on or sometime just after 20 August but before 28 August which is the first meeting, it is really those eight days, that C & C Fisher did in fact pay their dues and did so either by cash or cleared cheque.
...
CHAIR: ... I need confirmation on the fact that C & C Fisher Pty Ltd was paid up as at 28 August because you identified them as paid up, financial, and eligible to vote at the meeting on 20 August.
Mr SHAW: Okay.
Mr SHAW: We can try to confirm that but really what is relevant is whether they are paid up now.
CHAIR: Firstly, if he was paid up at that meeting, and secondly, if he is paid up as of today. In other words, has there been a physical transfer of cash or a cheque that has been cleared prior to today to make him eligible to vote.

32. After some further discussion, Mr Livadaras adjourned the meeting to allow Mr Beddoe and Mr Shaw to make the inquiries referred to above. Shortly after the meeting resumed, Mr Shaw outlined the results of those inquiries as follows:

MR SHAW: I confirm I spoke to Blake [Ammit] very briefly. He was not available for a long time. As the meeting would know he has made his apology for this meeting. I also spoke to Shane Dwyer. The position with Mr Ammit wasn’t particularly helpful for the meeting because he wasn’t aware of the individual circumstances of the transfer from AOL to C & C Fisher. But he did confirm that if there was any deal in terms of a reduced rate of management fees or a deal where C & C Fisher didn’t have to pay a management fee that he would have had to approve it and he would have known. He is not aware of any and he said categorically to me that there is not one and there is no such deal.
I spoke with Shane Dwyer who incidentally was also not aware of any such deal and said there wasn’t one. Simon Biddoe [sic Beddoe] is here and he is not aware of such a deal but in the ordinary course he may not be aware if there was one.
Having spoken to Shane there hasn’t, as far as he is aware, been a payment by C & C Fisher since the transfer over on 20 August. The reason for this is that project 3 management fees are billed annually in advance. With these particularly [sic] groves, the management fees were billed in March and May 2008 because they were sourced from a number of different allocations when AOL took title to the groves those management fees fell due in March and May 2008.
As such the groves themselves are fully paid until March and May 2009, prior to C & C Fisher taking a transfer of those groves. ...

33. Mr Livadaras then sought some clarification of the information Mr Shaw had provided as follows:

CHAIR: Thanks for that Nathan. I have a couple of other issues and difficulties. The one issue I do have is that this transfer occurred some seven or eight days before the first meeting was convened. In fact, it was effected sometime after the members called the meeting. My concern is in respect of section 15 of the Corporations Act which addresses the issue of associates and acting in concert. This issue was addressed in a recent court case with project 4 where there were similar circumstances where AOL had transferred some groves which represented a large proportion of the vote.
Just for clarity purposes I guess the issue is that had AOL turned up at this meeting holding those groves, those groves would have been discounted and excluded from the pool. On that basis, and you confirmed it, the resolutions would have carried, that is excluding those 70-odd groves. Is that correct, Simon?
Mr BEDDOE: Yes on my numbers that would be correct.
CHAIR: That is the first difficulty I have. I am struggling to come to terms with in terms of nature of the transaction and how it occurred.
Mr SHAW: Would you like me to address it?
CHAIR: Just let me conclude. The other issue is whether this member is financial. My concern is that we are not sure whether, I mean, you say that AOL had effectively paid the management fees on these groves whilst it held them and then, in fact, they were actually paid up to sometime in March, April and May 2009. We do not really have any proof apart from Blake saying to you “I don’t remember”, “I’m not aware” words along those lines of any arrangement being put in place. I think you said that Shane Dwyer cannot categorically confirm one way or another.
Mr SHAW: Can I clarify that? Shane did tell me that he was aware and he checked the accounts and the groves are fully paid up by AOL. I can explain that in more detail.
CHAIR: Sure, could you explain that?
Mr SHAW: The issue was that AOL held the groves before 20 August or thereabouts so the payment would most likely have been, as Shane told me, not a physical payment because AOL would have been extracting money from its own account and putting it into its own account. So it would have been done by a book adjustment. But it does not make much sense, in AOL’s view, to extract money from its own account and deposit it again merely for the purpose of showing that monies were paid. It was simply a book adjustment.
CHAIR: Did Mr Fisher reimburse AOL for the management fees it had paid on his behalf?
Mr SHAW: He didn’t paying [sic] anything on their behalf because the groves were AOL’s.
CHAIR: That is what I am saying: Did Mr Fisher reimburse AOL? Because I have got Mr Fisher taking possession on 20 August and AOL had paid the management fees from March and May 2008.
Mr SHAW: C & C Fisher, the company, paid AOL for the groves and how they worked out–
CHAIR: Do you know what they paid? Are you aware Simon of the nature of that transaction?
Mr BEDDOE: Not 100 per cent.
Mr SHAW: It isn’t relevant anyway, though, is it?
CHAIR: It is because arguably if AOL has done a book entry which in a way allows Fisher to have a gratia period of not having to pay any management fees until March, April and May 2009 that in itself in a way is a deal, albeit done internally.
Mr SHAW: It was done in March or May 2008 when the fees became due. At that stage there is no suggestion that any offer was on the table by C & C Fisher to purchase the groves.

34. There was then some discussion about what had happened with Project 4 involving the company, Tyrone O’Grady Pty Ltd, ie Livadaras. Mr Livadaras then summarised his concerns in the following terms:

CHAIR: The difficulty I have, and I will take advice having heard your objections, is that it would appear to me that AOL, having received a notice of meeting, then transferred these groves to C & C Fisher which would now allow C & C Fisher to vote and obviously Fisher has voted against the resolutions, and has voted to retain AOL, whereas had AOL retained the groves up until the date of this meeting and to this day they would have been excluded from the overall pool of eligible pool.

35. And, a little later:

CHAIR: The concern I have got is not an associate member, the concern I have got is that they were acting in concert because a meeting was called, a notice of meeting was distributed by members. Upon receipt of the notice of meeting–and this is my interpretation–AOL transferred these groves which at an earlier meeting they would not have been entitled to vote upon to a member who eventually voted against the proposed removal and voted for AOL to stay on. That is the difficulty I am having.
Then of course the fact that this member has a bonus period because of the fact of the AOL internal adjustment, as you said before, not requiring the entity to pay any management fees.
Mr SHAW: It is not a bonus period. It is the same way as if there had been any transfer of groves that were fully paid. It would be unreasonable. It would be double dipping by AOL to then go and bill C & C Fisher for the management fees for the rest of the year. They would have been getting paid twice.
CHAIR: Would there have been an adjustment?
Mr SHAW: The full amount of the fees would have been owing from--
CHAIR: So AOL got a credit for what they had paid in respect of–sorry to interrupt you–when they transferred the groves to C & C Fisher on 20 August did AOL issue the credit from Fisher for the management fees that AOL had adjusted for the 12 months?
Mr SHAW: They received consideration, as I understand it, for the transfer.
CHAIR: Do you know what that consideration was?
Mr SHAW: No, we don’t. It is not relevant. There is no point in it being stated. ...

36. Mr Shaw went on to claim that there was no evidence before Mr Livadaras that Australian Olives and C & C Fisher were associates or that they were acting in concert. He concluded by saying:

You point to one thing, the timing of the transfer. There is nothing before the meeting today to suggest when arrangements were entered into and when C & C Fisher first contacted AOL in relation to the purchase of the groves. I am happy to say I don’t know when that is and I am sure Simon doesn’t know when it was either.

37. Mr Livadaras then adjourned the meeting and took advice from Ms Mithiran. However, immediately before the adjournment, Mr Shaw mentioned a part of the decision of Greenwood J in Livadaras as follows:

Mr SHAW: One comment AOL would have about that, particularly given Justice Greenwood’s comments in his judgement, is why would you not then raise the issue with the member directly? Perhaps I can ask have you raised the issue with the member directly? His details in terms of address are on the register of members, aren’t they? This issue could have been raised with the member directly beforehand. Firstly, you haven’t said either way whether you have or have not so we would ask that you do that and then confirm why you haven’t. We are happy if you do that after the adjournment if you like.

38. Soon after the meeting resumed, Mr Livadaras made his ruling as follows:

CHAIR: We will turn our attention to C & C Fisher Pty Ltd. I have taken your comments on board, Nathan [Shaw], and I have consulted with Dahnia [Mithiran]. I requested proof of payment. We allowed you sometime to do that. I haven’t been provided with any physical proof of payment. I haven’t been provided with any proof with respect to the adjustment that you referred to. In my capacity as Chair I am required to act in good faith in terms of determining whether I should allow these votes to be admitted or not.
The difficulty that I am having is that I cannot merely accept Blake’s [Ammit] word or Shane’s [Dwyer] word based on your discussions with them. I also have a problem with, if I could use a colloquial term, the smell test in terms of this transaction and the timing of this transaction. It was not offered to other members. The timing appears to suggest to me that AOL and C & C Fisher were acting in concert and they entered into this transaction in a sense to allow C & C Fisher to vote on these 70 groves that AOL had which ordinarily would have been taken out of the overall pool. Under section 253 AOL would not have been able to vote.
In light of all of that, and being conscious of the fact that I have to act in good faith, in particular based on the fact that the members position and their ability to vote, I am not going to allow, I am not going to admit these votes for C & C Fisher. Simon, would you give me the tally excluding those? Just confirm the number of groves that Mr Fisher holds?

39. It is apparent from this ruling that Mr Livadaras essentially relied upon two matters. First, the failure of the Australian Olives’ representative to provide physical proof of payment by C & C Fisher for the 70 groves, or, more significantly, for any adjustment of the management fees for the 70 groves. And, secondly, the timing of the transfer of the 70 groves from Australian Olives to C & C Fisher just prior to the first meeting on 28 August 2008.
40. The vote was then taken on the two extraordinary resolutions and Mr Livadaras declared that both had been passed.
41. Following that, Mr Shaw made a lengthy statement in which he outlined Australian Olives’ views in relation to the Livadaras decision and the interpretation of s 253E of the Act.

BAD FAITH

Contentions

42. The first issue that arises in relation to the ruling made by Mr Livadaras is whether or not it was made in bad faith. Relevantly to this issue, Mr Livadaras stated in his affidavit filed in these proceedings, among other things:

42.1 that he denied he had any personal financial interest in Australian Olives being removed as the responsible entity and replaced with Huntley Management;
42.2 that he denied he used the position of Chairman of the 12 December meeting to push and advance any collateral agenda and/or to influence the outcome of the meeting; and.
42.3 that neither he, nor any associate of his, or any client of any accountancy practice in which he was involved, had any grove interests in the Scheme.

43. For their part, C & C Fisher submitted that the chairperson of a meeting is required to act impartially, to act honestly and without an ulterior motive, referring to Re Adams International Food Traders Pty Ltd (1988) 13 NSWLR 282 at 283; Link Agricultural Pty. Ltd. v Shanahan [1998] VSCA 3; [1999] 1 VR 466 (“Link Agricultural”) at 480 to 482 and Livadaras at [69]. C & C Fisher relied upon the following matters to found the allegation of bad faith against Mr Livadaras (in summary):

43.1 that he failed to disclose the legal advice he had received during the 12 December meeting;
43.2 that he seemed fixated on the C & C Fisher votes and to be determined to conclude that they were invalid and that he kept changing his line of attack during the meeting;
43.3 that he had an ulterior motive to ensure that the resolution was passed and Australian Olives was removed as the responsible entity for the Scheme;
43.4 that he misinformed the meeting when he stated that a concerned investor had contacted him about the C & C Fisher votes “just prior to the meeting”;
43.5 that he attended the meeting as a representative of Mr Elson and nominated himself as the Chairman of the meeting with a predetermined plan to defeat the C & C Fisher votes;
43.6 that despite it being suggested that he contact Mr Campbell Fisher during the 12 December meeting, he failed to do so;
43.7 that he would not accept the statements made by the Australian Olives representatives at the 12 December meeting that there were no management fees outstanding in relation to the C & C Fisher groves because Australian Olives had paid them months before; and
43.8 that he took no steps prior to the 12 December meeting to put C & C Fisher or Australian Olives on notice of the issues he intended to raise at the meeting.

44. It will be noted that, consistent with Mr Livadaras’ denials (in [42.1] and [42.3] above), C & C Fisher have not alleged that Mr Livadaras had any direct or indirect financial interests in the Scheme. Instead, they have limited their allegations to Mr Livadaras’ conduct during the 12 December meeting, or, in [43.8], in the lead up to that meeting.

What is bad faith?

45. The concept of “bad faith” has been considered extensively in numerous decisions under the Migration Act 1958 (Cth). Whilst there are some unique features of the jurisprudence under that Act, in my view, the principles that have been expressed there in relation to “bad faith” apply equally in the context of this matter. In summary, those principles are that: “bad faith” is a serious allegation involving a lack of an honest or genuine attempt to undertake the task at hand. It includes the exercise of a power knowingly for an improper purpose. It involves personal fault on the part of the decision-maker going beyond error of fact or law. It must therefore be clearly identified and proved: see, for example, NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 at [107] to [108] and SCAS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 397 at [19].

Consideration of C & C Fisher’s allegations of bad faith

46. It is appropriate to begin my consideration of C & C Fisher’s allegations of bad faith by noting that Mr Livadaras’ role as Chairman of the 12 December meeting relevantly included a requirement for him to hear the contentions of fact going to the questions he had to decide and to decide those issues impartially taking into account those facts and any facts known to him at the time: see McLean Bros & Rigg Ltd v Grice [1906] HCA 1; (1906) 4 CLR 835 (“McLean Bros”) at 860 per Barton J and Livadaras at [68].
47. The requirement of impartiality obviously dictates an absence of bias or prejudgment. Some of C & C Fisher’s allegations against Mr Livadaras are to the effect he was biased, or more specifically, he had prejudged the issues he had to determine at the meeting: see [43.2], [43.3] and [43.5] above. To establish these allegations of bias, or prejudgment, against Mr Livadaras, C & C Fisher will need to show that Mr Livadaras had, and maintained, a closed mind on the question of the validity of the C & C Fisher votes, or that he was unable or unwilling to decide that question impartially: see Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324; (1997) 151 ALR 505 at 555 per Burchett J and Gamaethige v Minister for Immigration and Multicultural Affairs [2001] FCA 565; (2001) 109 FCR 424 (“Gamaethige”) at 442 to 443 per Stone J (with whom Hill J agreed).
48. It will not be sufficient for C & C Fisher to show that Mr Livadaras held views about the desirability of removing Australian Olives as the responsible entity for the Scheme: see Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568 at 576 per Dawson J and Gamaethige at 443 per Stone J. This point is important because, on the evidence before me, I find that Mr Livadaras probably did hold the view that it was in the best interests of the members of the Scheme that Australian Olives be removed as the responsible entity for the Scheme. However, I consider that C & C Fisher must go much further than this and show, for example, that Mr Livadaras was not willing to receive relevant information about the validity of the C & C Fisher votes, or was not willing to listen to arguments on that question, or demonstrated by his conduct that he was not open to be persuaded to a contrary view.
49. Turning then to C & C Fisher’s specific allegations of bad faith, I consider there is a short answer to the first allegation (in [43.1] above) that Mr Livadaras failed to disclose the legal advice he received at the 12 December meeting. That is: that there is no evidence that anyone at the 12 December meeting asked Mr Livadaras to disclose that legal advice. Since it was not the sort of information that a chairperson of a meeting would ordinarily volunteer to disclose, I do not consider that Mr Livadaras can be criticised for failing to disclose it, if he was not asked to. It follows that I do not see how its non-disclosure can possibly support a conclusion of bad faith on Mr Livadaras’ part.
50. I also do not consider the allegations (in [43.2] above): that Mr Livadaras seemed fixated on the C & C Fisher votes; that he was determined to conclude that they were invalid; and that he kept changing his line of attack, support a conclusion that Mr Livadaras acted in bad faith. As Chairman of the meeting Mr Livadaras had to determine whether or not C & C Fisher was entitled to cast its 70 votes. This was, without doubt, the most controversial issue to be determined at the meeting. It is, therefore, not surprising that Mr Livadaras was focused on, or even fixated by, this issue. Provided that his fixation, or determination, does not support a conclusion he was biased, or had prejudged this issue (as to which see [51] to [55] below), I do not consider these allegations support a conclusion of bad faith on Mr Livadaras’ part.
51. As to allegations (in [43.2], [43.3] and [43.5] above) to the effect that Mr Livadaras was biased, or that he prejudged the issues he had to determine at the 12 December meeting, first, it is to be noted that C & C Fisher have not expressly identified what “ulterior motive” Mr Livadaras had in wishing to have Australian Olives removed as the responsible entity for the Scheme. As I have already noted above (see at [44]), C & C Fisher have not alleged that Mr Livadaras was pursuing some direct or indirect financial motive. Further, I do not consider the view he held that it was in the best interests of the members of the Scheme that Australian Olives be removed as the responsible entity for the Scheme constitutes an ulterior motive, in any relevant sense.
52. More importantly, I do not consider that a fair reading of the transcript of the 12 December meeting shows that Mr Livadaras demonstrated bias, or prejudgment, in the discharge of his role as Chairman of that meeting. Among other things, that transcript shows that Mr Livadaras sought further information from Mr Beddoe and Mr Shaw about the payments C & C Fisher made for the 70 groves and what adjustments, if any, had been made between C & C Fisher and Australian Olives for the pre-paid management fees: see above at [31]. It also shows that Mr Livadaras expressed concerns about the vagueness of the information that was provided to him in response and offered an opportunity for it to be clarified: see above at [33] and [35]. Mr Shaw’s ultimate response to that opportunity was to claim those concerns were not relevant: see above at [35]. It is also apparent from the transcript that Mr Livadaras stated his tentative views about the nature of the relationship between C & C Fisher and Australian Olives and that he listened to the arguments put by Mr Shaw and others in response before he made his ruling: see above at [34] to [38]. By way of contrast, there is no evidence in the transcript that Mr Livadaras was not willing to receive relevant information about the validity of the C & C Fisher votes, or was not willing to listen to arguments on that question, or was not open to be persuaded to a contrary view. I therefore consider the transcript shows Mr Livadaras diligently and impartially discharged his role as the Chairman of the meeting. It is worth interpolating that in many respects Mr Livadaras was discharging a role that is not too dissimilar to the inquisitorial role of the Refugee Review Tribunal, the diligent discharge of which the High Court has cautioned should not be too readily taken as evidence of apprehended bias: see Re Refugee Review Tribunal; Ex parte H [2001] HCA 28; (2001) 179 ALR 425 at [30].
53. As to the specific allegation (in [43.7] above) that Mr Livadaras would not accept the statements made to him by Mr Beddoe and Mr Shaw about the payment of the management fees, I do not consider Mr Livadaras was under any obligation to accept those statements at face value. Mr Livadaras made it quite clear at the meeting that he was particularly interested in the precise nature of the arrangements made between Australian Olives and C & C Fisher about the payment of, or adjustment for, the management fees for the 70 groves purchased by C & C Fisher: see above at [31], [33] and [35]. It is quite understandable that he was interested in those matters because the evidence before me (matters which must have been well known to all those at the meeting) shows that the annual management fee payable for a grove was between $1,800 and $2,000. This means that the total annual management fees that were paid or payable for the 70 C & C Fisher groves, were between $126,000 and $140,000. Given that C & C Fisher purchased the 70 groves in August 2008 for $1,400 (mistakenly reduced to $140) and the management fees were paid by Australian Olives in the previous March and May, commercial reality would suggest an adjustment of at least $70,000, and as much as $100,000 (depending on whether it is calculated from March or May and at the lower or higher rate) may have been in order.
54. Mr Shaw told Mr Livadaras that no deal had been done about the management fees and that no payment had been made by way of adjustment for those fees: see above at [32] to [35]. When clarification was sought on these issues, Mr Shaw ultimately chose to question the relevance of Mr Livadaras’ concerns, rather than attempt to provide clarification: see above at [35]. Faced with the contradiction in, and vagueness of, these statements and the reluctance to provide the clarification sought, I consider Mr Livadaras was quite entitled not to accept what the Australian Olives representatives told him at the 12 December meeting and instead to conclude that he was not satisfied that C & C Fisher had paid the management fees in question, whether directly, or by way of adjustment (see at [38] above). Moreover, while he clearly came to a different conclusion about this issue to that urged upon him by the Australian Olives’ representatives, provided that conclusion was open to him on the facts known to him, as I consider it was, his reaching that conclusion in those circumstances could not be said to demonstrate bias or prejudgment.
55. For these reasons, I do not consider that C & C Fisher have made out the allegations that Mr Livadaras was biased, or demonstrated any prejudgment, of the issues he had to determine at the 12 December meeting.
56. As to the allegation (at [43.4] above) that Mr Livadaras misled the meeting when he said he had a discussion with a concerned investor “just prior to the meeting”, I fail to see how this has any bearing on the question whether he discharged his role as the Chairman of the meeting in bad faith, viz, dishonestly, or knowingly for an improper purpose. I should add that Mr Livadaras denied this allegation on oath in his evidence before me. I would put in the same category C & C Fisher’s allegations (although not specifically set out in [43] above) that Mr Livadaras believed that the C & C Fisher votes would be cast against the extraordinary resolutions, that Mr Livadaras was concerned to know whether the deed of assignment had been stamped, and that Mr Livadaras said in evidence that he wanted documentary proof that C & C Fisher had paid for its 70 groves, yet he did not ask for that kind of proof at the 12 December meeting.
57. C & C Fisher also allege (at [43.6] above) that bad faith can be inferred from the fact that Mr Livadaras did not contact Mr Fisher and ask him about the issues of concern to him, even though it was suggested at the meeting that he should do so. The first thing to be said about this allegation is that there is no evidence that Mr Fisher was readily contactable on the day of the meeting. Nor is there any evidence that Mr Livadaras, or anyone else, knew how or where to contact him. Apparently Mr Shaw, who made the suggestion, did not know where, or how, he might be contacted because the transcript records him saying at the meeting, immediately after he made the suggestion: “His details in terms of address are on the register of members, aren’t they?”: see above at [37]. In any event, there is no evidence before me to suggest that, even if he had been contacted, Mr Fisher would have been able, or willing, to shed any more light on the issues of concern to Mr Livadaras than the two representatives of Australian Olives who were present at the meeting.
58. Finally, there is a number of responses to the allegation (at 43.8 above) that Mr Livadaras took no steps to put Australian Olives, or C & C Fisher, on notice as to the issues he intended to raise at the 12 December meeting. First, there is the obvious response that Mr Livadaras was not to know, until he attended the meeting, that he would be elected as its Chairman. Secondly, and more importantly, all of the members of the Scheme, including Australian Olives and C & C Fisher, had received the notice of the meeting, which set out the extraordinary resolutions to be considered at the meeting. Moreover, this was the third adjourned meeting held to consider those resolutions and it is apparent from the transcript of the 12 December meeting that those who attended were well aware that the entitlement of C & C Fisher to cast its 70 votes was to be the central issue at the meeting. This is borne out by the fact that Mr Shaw, Australian Olives’ solicitor, was sufficiently prepared that he was able to address the meeting at length about the legal issues involved with the C & C Fisher votes, including matters such as what the terms “associates” and “acting in concert” meant in the construction of s 253E of the Act. Further, there was quite a deal of discussion by Mr Shaw and others at the meeting about the reasons of Greenwood J on the similar issues in Livadaras.

Conclusion

59. In conclusion on this aspect, whether they are taken separately or together, I consider none of these matters supports C & C Fisher’s serious allegation of bad faith against Mr Livadaras. This is so because none of them provides any support for the conclusion that Mr Livadaras acted with any lack of honesty, or knowingly exercised his power as the Chairman of the meeting for an improper purpose. At the highest for C & C Fisher, these matters suggest that Mr Livadaras held a view that it was in the best interests of the members of the Scheme that Australian Olives be replaced as the responsible entity. However, there is no indication from a fair reading of the transcript of the 12 December meeting, to suggest he pursued that view at the meeting in such a manner that a conclusion of bad faith can be drawn against him. For these reasons, I find that C & C Fisher have failed to establish this aspect of their challenge to Mr Livadaras’ ruling.

ERROR OF LAW

Introduction

60. The second issue that arises in relation to the ruling made by Mr Livadaras at the 12 December meeting is, even if it was made in good faith, whether it involved some error of law. On this issue, C & C Fisher do not appear to have identified a specific error of law made by Mr Livadaras, in making his ruling, but instead they have relied upon a somewhat imprecise set of submissions to the effect that Mr Livadaras acted unreasonably in making the ruling and thereby committed an error of law. They may have taken this approach because they were aware of the conclusion Greenwood J reached in Livadaras that the similar ruling made in that case involved conclusions of fact, rather than any questions of law: see Livadaras at [109]. If they did, as my reasons below will show, I consider C & C Fisher are essentially attempting to use this claim of unreasonableness to seek a review of Mr Livadaras’ factual conclusions under the guise of an error of law.

Contentions

61. In their written submissions, C & C Fisher submitted that the chairperson of a meeting, such as the 12 December meeting, is obligated to act reasonably, which means, so they submitted, that he or she is not to act capriciously, referring to Livadaras at [69] and [70]. They also referred to the administrative law authorities reviewed by Greenwood J in Livadaras at [74] to [75] and appeared to submit that a chairperson of a meeting would commit an error of law if he or she acted irrationally. Finally, C & C Fisher submitted that “the question whether there is evidence [sic any evidence] of a fact is a question of law and whether an inference can be drawn from facts is also a question of law”, referring to Livadaras at [76].
62. In their oral submissions, C & C Fisher appeared to limit themselves to a reliance on the decision of the English Court of Appeal in Byng v London Life Association Ltd. [1990] Ch 170 (“Byng”). Greenwood J summarised the effect of that decision in Livadaras as follows (at [71]):

The applicant contends that an error of law might well arise by reference to the analogue of supervisory review of administrative decision-making. In Byng v London Life Association Ltd ..., the Court of Appeal applying Wednesbury principles held that a chair exercising powers as chair at a meeting of members of a public company would fall into error of law if the chair, on facts which he knew or ought to have known, failed to take into account all relevant factors, took into account irrelevant factors or reached a conclusion which no reasonable chair properly directing himself or herself to the chair’s duties could have reached. (emphasis added)

63. By reference to that decision, they made three submissions. First, that Mr Livadaras had failed to take into account the following relevant matters:
    • what he was told by the Australian Olives representatives at the meeting that C & C Fisher interests had been paid for; and
    • that he was told by the Australian Olives representatives at the meeting that the management fees had been paid and the next lot of fees were not due until 2009 and that there was no deal in place in relation to the management fees.
64. Secondly, they submitted that Mr Livadaras took into account the following irrelevant matters:
    • whether the members’ register was updated after the deed of assignment was stamped; and
    • that C & C Fisher had indicated it intended to vote against the resolution for the removal of Australian Olives.
65. Thirdly, and finally, C & C Fisher submitted that the combined effect of the relevant and irrelevant factors identified above led to the conclusion that Mr Livadaras had made a ruling when no reasonable chairperson, properly directing himself or herself, could have made it in the circumstances.

Consideration on error of law and unreasonableness

No specific error of law identified

66. As I have already observed above, C & C Fisher have not identified any specific error of law that Mr Livadaras made in making his ruling. Furthermore, while they made a general submission that the question whether there is any evidence of a fact is a question of law, they have not identified, or provided any particulars of, any fact that they say was unsupported by any evidence. They also made a general submission that the question whether an inference can be drawn from a fact is a question of law, but again they have not identified, or provided any particulars of, any inference that they say was wrongly drawn from a fact such that it involved an error of law.

Instead, C & C Fisher rely on unreasonableness

67. Instead of identifying one of these kinds of errors of law, C & C Fisher appear to have relied upon three separate kinds of unreasonableness on Mr Livadaras’ part to allege that he committed an error of law in making the ruling. They are:

67.1 that he acted unreasonably, capriciously and irrationally in making the ruling.

67.2 relying upon Byng, that he acted unreasonably in making the ruling by failing to take into account relevant considerations and taking into account irrelevant considerations.

67.3 again, relying upon Byng, that his ruling was unreasonable in the Wednesbury sense.

68. In relation to the first kind of unreasonableness above [67.1], C & C Fisher relied upon paras [74] to [75] of Livadaras where Greenwood J has reviewed various authorities dealing with the principles relating to judicial review of administrative decisions. C & C Fisher also appear to rely upon a separate allegation that there were no reasonable grounds for the ruling. I will deal with this separate allegation first.

No separate obligation to act on reasonable grounds

69. The separate obligation to act on reasonable grounds appears to be based on a statement Greenwood J made in Livadaras at the conclusion of his summary of the principles flowing from his review of the authorities on a chairperson’s role, where his Honour said (Livadaras at [70]): “A good faith exercise of the power in the determination of facts upon which an exercise of the power rests does not give rise to an error of law. The chair must however act reasonably” (emphasis added). This statement, in turn, appears to be based upon the decision of McLelland J in Re Triden Contractors Ltd (1992) 30 NSWLR 615 which Greenwood J mentions in the immediately preceding paragraph of Livadaras: at [69]. There, Greenwood J sets out the following quote from Triden (at 616): “... the chairman must act in good faith, in accordance with any relevant law [ie, no error of law], and on reasonable grounds”. In Triden, after making this statement, McLelland J went on to add (at 616 to 617) that: “If there is insufficient material available to him to enable him properly to make such a determination in a particular case then he should not purport to do so. However if he does do so the court will treat his determination as correct unless it is shown that it was not made in good faith, or that there were no reasonable grounds to support it, or that on the evidence before the court the determination was incorrect in point of substance ...” (emphasis added).
70. In my respectful view, there is a number of aspects of this ruling that present difficulties. First, all of the other decisions dealing with this issue appear to hold that a chairperson’s decision can only be reviewed for bad faith, or error of law: see the review of those decisions in Livadaras at [67] to [68] and also Link Agricultural at [39] to [42]. Secondly, so far as I can see, neither of the two authorities referred to by McLelland J used the expression “reasonable grounds”, or anything similar: McLean Bros & Rigg Ltd v Grice [1906] HCA 1; (1906) 4 CLR 835 and Re Telford Inns Pty Ltd (1985) 10 ACLR 312. Thirdly, the reference to “insufficient material” is curious because it suggests that a court could review the merits of a chairman’s decision. As I have observed below (see at [76]), such a review is generally not permitted in the judicial review of administrative decisions and I consider there is all the more reason for concluding that it should not be permitted in a court’s review of a chairperson’s ruling at a meeting such as the one in this case. Finally, even if one were to apply authorities on the judicial review of administrative decisions, this requirement for reasonable grounds appears to run contrary to the restrictions the High Court has put on unreasonableness, irrationality, or illogicality as grounds for the review of administrative decisions: see the authorities reviewed in Livadaras at [74] to [76] and the discussion in M Aronson & Ors, Judicial Review of Administrative Action (4th ed, 2009) (“Aronson”) at 4.410 to 4.425, 5.75 and 6.175 to 6.215.
71. Fortunately, I do not consider I need to resolve these difficulties because I consider Triden is distinguishable for a couple of reasons. First, Triden was a case dealing with an application to approve a scheme of arrangement following a meeting of creditors that had been ordered by the Court. The present case does not involve a creditors’ meeting and, more importantly, the 12 December meeting was not ordered by a court. Secondly, the ruling in this case is affected by the provisions of s 253G of the Act. It provides as follows:

A challenge to a right to vote at a meeting of members of a registered scheme:

(a) may only be made at the meeting; and
(b) must be determined by the chair, whose decision is final.

72. In ANZ Nominees Limited v Allied Resources Corporation Limited (1984) 2 ACLC 783, O’Bryan J reviewed the authorities on similar provisions of various articles of association and statutory provisions and concluded that, while such a provision did not prevent a member of a company challenging a chairperson’s ruling in a court, any challenge would be limited to a decision that “... was plainly wrong in law and operated to deprive a member of voting rights” and any decision made in good faith and according to law was final and conclusive: see at 789. In Perera v Reilly (2006) 59 ACSR 317, Murray J reached a similar conclusion at [45].
73. For these reasons, I do not consider Triden provides C & C Fisher with supporting authority for their submission that there was a separate obligation on Mr Livadaras to act on reasonable grounds in making his ruling. It necessarily follows that I consider Mr Livadaras’ ruling can only be reviewed on the bases that it was not made in good faith and according to law.
74. Apart from this separate obligation to act on reasonable grounds, C & C Fisher claim that Mr Livadaras committed an error of law by acting unreasonably, capriciously and irrationally in making his ruling: see [67.1] above. In this respect, it is important to recall that C & C Fisher have not pointed to any particular fact that was not supported by evidence, or any inference that was not reasonably open on the facts: see [66] above. Absent such matters, illogicality or irrationality in fact-finding does not constitute an error of law: see Minister for Immigration and Multicultural Affairs v Al-Miahi [2001] FCA 744; (2001) 65 ALD 141 at [34] and Livadaras at [74] to [76]. I therefore do not consider C & C Fisher can rely upon an allegation of irrationality or illogicality in any of the conclusions of fact Mr Livadaras drew in making his ruling. I should add that this conclusion is not intended to indicate that Mr Livadaras did make any such errors.

Both judicial review principles and Byng do not apply

75. As to the other kinds of unreasonableness relied upon by C & C Fisher (at [67.2] and [67.3] above), I do not consider the analogue of judicial review of administrative decision-making, by reference to Byng, is apt. My reasons for thinking that are these. First, apart from Byng, none of the other authorities Greenwood J referred to in Livadaras appear to draw the same analogy. I also note that Greenwood J did not expressly adopt it in Livadaras, but instead proceeded to review the authorities as “if” it might apply and demonstrated that, even in the judicial review context, the circumstances in which unreasonableness could constitute an error of law are extremely limited: see Livadaras at [72] to [76]. In other words, I consider C & C Fisher have misinterpreted what Greenwood J said in Livadaras. I also note that Kenny JA appeared to leave open the question whether English decisions such as Byng applied in Australia in these circumstances: see Link Agricultural at [42].
76. Secondly, even if the analogy of judicial review of administrative decision-making is apt, it is well-established on Australian authority that such judicial review is limited to declaring and enforcing the law and it does not extend to reviewing the findings of fact or the merits of administrative action: see Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35 to 36 per Brennan J, Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355 to 356 per Mason CJ and Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 (“S20/2002”) at [114] per Kirby J. If that constraint applies to the review of public administrative decisions, I would have thought that it would apply with even more force to the review of a ruling made by a chairperson of a private meeting such as this, albeit one conducted within a specific statutory framework.
77. Finally, even if the analogy with the judicial review of administrative decision-making is apt, I do not consider English decisions on this area of the law, particularly those dealing with Wednesbury reasonableness, apply in Australia. Byng is, of course, such a decision. This is so because the courts in Australia and in England have differed in their approach to Wednesbury unreasonableness. In general, the English courts have taken a more relaxed approach, whereas the Australian courts have continued a much more restrictive approach: see the discussion in Aronson (above) at 6.175 and 6.195 and see further [79] below.
78. For these reasons, I do not consider Byng is good authority in Australia, insofar as it appears to apply, by analogy, the principles governing the judicial review of administrative action, to the review of the decisions of a chairperson of a meeting such as the one in this case. It necessarily follows that I reject C & C Fisher’s submissions seeking to challenge Mr Livadaras’ ruling on the grounds of unreasonableness, applying judicial review principles based on the ruling in Byng.

Even if Byng did apply, no failure occurred

79. However, even if Byng did apply to this case, I do not consider C & C Fisher can make out their claims that Mr Livadaras should have taken into account certain relevant factors, but did not, or did take into account certain irrelevant factors, but should not have ([67.2] above). This is so because, in relation to the former, for the reasons expressed in [53] to [54] above, I consider Mr Livadaras was quite entitled not to accept what he was told by the Australian Olives representatives at the 12 December meeting and reach a different conclusion on those issues. As to the latter, assuming that the two factors identified were irrelevant, I do not consider that the transcript of the meeting shows that Mr Livadaras took either of them into account as dispositive matters in making his ruling. Certainly, neither of those matters was mentioned by Mr Livadaras when he made his ruling.

Even if Byng did apply, Wednesbury unreasonableness does not

80. Furthermore, even if Byng did apply to this case, I do not consider Wednesbury unreasonableness of the kind identified by C & C Fisher applies to the ruling made by Mr Livadaras ([67.3] above). This is so because Mr Livadaras’ ruling at the 12 December meeting was not a discretionary decision. Instead, it was a decision dealing with C & C Fisher’s substantive rights to vote at that meeting. This distinction is important because the High Court has held that Wednesbury unreasonableness of the kind identified by C & C Fisher only applies to an administrative decision-maker’s discretionary decisions: see Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at 626 per Gleeson CJ and McHugh J and at 649 per Gummow J and S20/2002 at [20] per Gleeson CJ, [67] to [73] per McHugh and Gummow JJ and [142] per Kirby J. If that is so in relation to an administrative decision-maker, I consider it must be all the more so in relation to the chairperson of a meeting such as the 12 December meeting.

Conclusion on error of law and unreasonableness

81. For these reasons, I do not consider that C & C Fisher have made out their challenge to Mr Livadaras’ ruling on the ground that, even if it was made in good faith, it involved some error of law. This is so because they have not identified any specific error of law he made in making the ruling and they have failed to establish that his ruling was affected by unreasonableness in any relevant sense and was, therefore, not made according to law. Instead, their complaints are essentially directed to the factual conclusion Mr Livadaras drew and even if Mr Livadaras made an error in drawing those conclusions, for the reasons I have given above, that does not constitute an error of law.

CONCLUSION

82. In conclusion, I do not consider that C & C Fisher have made out their claims that Mr Livadaras’ ruling was made in bad faith, or involved an error of law. It follows that I do not consider they are entitled to the second declaration: that the resolutions passed at the 12 December meeting were not validly passed and were defeated. Since I have already concluded that I should dismiss C & C Fisher’s application for the first declaration (see at [14] above), it necessarily follows that I should order that the whole of C & C Fisher’s application be dismissed.
    

I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.

Associate:
Dated: 21 January 2010