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CORPORATIONS – constitution and replaceable rules – types of companies – construction of constitution – company incorporated for multiple occupancy living in a rural environment – dispute about members’ right to use common property for grazing cattle – constitution does not grant a right to graze cattle on common property to members – whether resolution of members passed in March 1999 is effective to withdraw permission to graze cattle on common property – whether resolution modifies class rights in contravention of procedure prescribed under the company’s constitution – whether company’s affairs conducted oppressively – application for winding up company adjourned so parties can modify their affairs on the basis of the Court’s judgment – HELD – resolution not effective to withdraw permission to graze cattle resolution is not a rule or regulation under memorandum of association clause 2(a)(iii) – no interference with class rights TORTS – trespass – trespass to land – defence of licence to enter property – whether defendants liable in trespass to the company for grazing their cattle on common property – HELD – defendants not liable in trespass as existing permission to graze cattle on common property not validly withdrawn by members resolution of March 1999 CONTRACTS – general contractual principles – whether company has breached contract with member by failing to issue lease to member in conformity with company’s constitution – HELD – no breach found MISLEADING AND DECEPTIVE CONDUCT – whether company misled members about the right to graze cattle on common property – HELD – no misleading or deceptive conduct found.

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Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2] [2011] NSWSC 1 (28 January 2011)

Last Updated: 9 March 2011

Case Title:
Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2]
Hearing Date(s):
9 September 2010
Decision Date:
28 January 2011
Jurisdiction:
Before:
Slattery J
Decision:
In conclusion, I have found that the 13 March 1999 resolution passed in general meeting did not create a valid rule or regulation under Currawinya’s memorandum of association clause 2(a)(iii). It was not effective in my view, to prevent the defendants from utilising the company’s common property by the grazing of cows pursuant to a licence to do so which they enjoyed. I have found that the company’s trespass claim fails. But I have also found that the 13 March 1999 resolution does not modify any rights to a class of shares of which the defendants are the sole members. Nor do the defendants’ contract claim, misrepresentation claim, or estoppel claim succeed. I have found that the defendants were not entitled to the lease to which they claim to be entitled. But on the other hand the company has not offered a lease to the defendants, or indeed any other shareholders in conformity with the company’s constitution. Nor did the company mislead the defendants about their right to graze cattle on Currawinya when they acquired their shares from Mr Bordet in 1986. 
The parties should provide submissions: as to the future course, if any, of the defendants’ claims under Corporations Act, ss 232 and 233; as to whether or not the proceedings should be mediated at this point and finally as to questions of costs. 
I direct the parties to bring in short minutes of order to give effect to these reasons.
Catchwords:
CORPORATIONS – constitution and replaceable rules – types of companies – construction of constitution – company incorporated for multiple occupancy living in a rural environment – dispute about members’ right to use common property for grazing cattle – constitution does not grant a right to graze cattle on common property to members – whether resolution of members passed in March 1999 is effective to withdraw permission to graze cattle on common property – whether resolution modifies class rights in contravention of procedure prescribed under the company’s constitution – whether company’s affairs conducted oppressively – application for winding up company adjourned so parties can modify their affairs on the basis of the Court’s judgment – HELD – resolution not effective to withdraw permission to graze cattle resolution is not a rule or regulation under memorandum of association clause 2(a)(iii) – no interference with class rightsTORTS – trespass – trespass to land – defence of licence to enter property – whether defendants liable in trespass to the company for grazing their cattle on common property – HELD – defendants not liable in trespass as existing permission to graze cattle on common property not validly withdrawn by members resolution of March 1999

CONTRACTS – general contractual principles – whether company has breached contract with member by failing to issue lease to member in conformity with company’s constitution – HELD – no breach found

MISLEADING AND DECEPTIVE CONDUCT – whether company misled members about the right to graze cattle on common property – HELD – no misleading or deceptive conduct found.

Legislation Cited:
Cases Cited:
Amalgamated Investment & Property Co Ltd (in liquidation) v Texas Commerce Bank Ltd [1982] QB 84
Barker v R (1983) 153 CLR 338
Canas Property Co Ltd v KL Television Services Ltd(1970) 2 QB 433
City Pacific Limited v Bacon (No 2) (2009) 178 FCR 82 
Clifton Securities Limited v Huntley [1948] 2 All ER 3
Cook v R & M Reurick Holdings Ltd [2004] NSWCA 268
Cumbrian Newspapers Group Ltd v Cumberland & Westmoreland Herald Newspaper & Printing Co Ltd[1987] Ch 1
Cummings v Macks [2000] FCA 55(2000) 96 FCR 345
Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666
Fink v Fink (1946) 24 CLR 127
Fischer v Easthaven Limited (1964) 80 WN (NSW) 1155
Grundt v Great Boulder Pty Ltd [1937] HCA 58;(1937) 59 CLR 641
Lidsale Nominees Pty Ltd v Elkharadly [1979] VicRp 10[1979] VR 84
Magill v Santina Pty Limited [1983] 1 NSWLR 517
Nevin v B and R Enclosures [2004] NSWCA 339
Progressive Mailing House Pty Ltd v Tabali Pty Ltd[1985] HCA 14(1985) 157 CLR 17
Re Broadway Motors Holdings Pty Limited (in liquidation) (1986) 6 NSWLR 45
Ryan v Edna May Junction Gold Mining Co NL[1916] HCA 37(1916) 21 CLR 487
Sommerhalder & Sommerhalder v Burjan & Feigl[1962] SASR 271
Thompson v Ward (1953) 2 QB 153
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7(1988) 164 CLR 387
Viviano v Natoli & Ors (1998) 43 NSWLR 695
Wilson v Meudon Pty Ltd [2005] NSWSC 448;(2006) ANZ ConvR 93
Yakamia Dairy Pty Ltd v Wood [1976] WAR 57
Texts Cited:
Category:
Principal judgment
Parties:
Currawinya Pty Limited (Plaintiff/Cross Defendant)
Jill Adam (First Defendant/First Cross Claimant)
Representation
– Counsel:
Counsel:
Mr G Elliott (Plaintiff/Cross Defendant)
Mr J Priestley (Defendant/Cross Defendant)
– Solicitors:
Solicitors:
Steve Bolt, Bolt Findlay Solicitors & Mediators (Plaintiff/Cross Defendant)
James Fuggle, Rummery Solicitors (Defendant/Cross Defendant)
File number(s):
09/484806/6350
Publication Restriction:

JUDGMENT

1 HIS HONOUR : This is my second judgment in these proceedings. In the first judgment given on 2 August 2010 ( Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666) , I identified nine questions arising on the Amended Statement of Claim, which the parties had asked the Court to determine. I determined four of those questions in the first judgment. In doing so I reached conclusions about the construction of the memorandum and articles of association of Currawinya Pty Ltd (“Currawinya”) that did not correspond with the position taken by either party in their submissions. My first judgment indicated a concern that neither party would have entirely anticipated the conclusions reached up to that point in the first judgment. There was a consequent risk of subsequent issues being decided on a basis, to which neither party had had a chance to respond. In order to ensure complete procedural fairness, in relation to the remaining five issues, I gave a further opportunity to the parties to adjust their submissions in light of the findings made in relation to questions one to four.
2 Both Currawinya and the defendants took the opportunity to file supplementary submissions on the remaining issues. Those submissions were principally directed to question five of the remaining questions, which relate to the validity of Currawinya’s resolution of 13 March 1999. The parties’ supplementary submissions were received between 30 August 2010 and 3 September 2010.
3 This judgment first deals with the five questions remaining for determination. It then deals with another six issues raised by the claims for relief on the defendants’ cross claim. The five remaining questions are numbered here as they were in the original judgment. They are:

(5) Do the defendants have a defence to the company’s action for trespass because the defendants have a right (under a lease or through the company’s constitution) to graze cattle, which licence has not been validly withdrawn by the company?

(6) Is the company unable to maintain an action for trespass to the common land because the company is no longer in possession of the common land?

(7) Do the defendants have an answer to the company’s claim for trespass by reason of the company’s issue of invoices to the defendants after the company withdrew permission to shareholders to run cattle on the common land?

(8) In the event that trespass is established, is the company precluded from claiming any more than nominal damages from the defendants by reason of clause 2 (a) of the constitution?

(9) In the event that trespass is established what is the applicable market rate for agistment, which may be claimed by the company, and upon what number of cattle should agistment be calculated?

4 This judgment uses the same terminology as the first judgment. For convenience it here reproduces the background information about the course of the disputes involving Currawinya and about the proceedings that were set out in paragraphs [3] to [17] of the first judgment: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666, [3] to [17]:

“3. Although the dispute between Ms Adam, Mr Bickmore and the company extends as far back as the conception of Currawinya as a corporate entity in 1986, a reasonably uncontroversial account of the events leading to this litigation is possible.4. A proposal for the purchase of Currawinya’s land to accommodate multiple occupancy rural living emerged in the mid 1970s. Mr Murray Slavin, a local solicitor, first purchased the land in 1976 with such a scheme in mind. His original idea was to hold the land on trust for others. His concept was that the persons who contributed moneys to the acquisition of the land would be entitled to a home site on it. The early arrangements were relatively unstructured but in 1986 Mr Slavin transferred the land to Currawinya. That same year the company adopted its current constitution in the form of a memorandum and articles of association. In 1986 the share in Currawinya now held by Ms Adam and Mr Bickmore was issued to a Mr Bordet. Ms Adam and Mr Bickmore acquired the share from him soon afterwards and have held it ever since.

5. Each share in Currawinya entitles the shareholder to a designated area of approximately 20 acres (8 hectares) for that shareholder’s exclusive use as a living area. It was contemplated that each shareholder would construct a homestead on this designated area. The 25 shares in Currawinya are all issued to shareholders who exercise entitlements exclusively to occupy and use these designated areas on the property. Their exclusive use of such designated areas accounts for the occupation of approximately 500 acres of Currawinya’s total land area. Currawinya’s constitution also allows its shareholders, according to its terms, to “occupy the balance of the land not set aside and designated for sole occupation by a member”. Shareholders use this common property for their general recreational purposes. But Ms Adam also grazes cattle on the common property. Other shareholders attempted but failed to stop this use of common property. Their efforts to deter Ms Adam from grazing her cattle on common property have occasioned other disputes between the parties that have also surfaced in this litigation.

6. When Currawinya was incorporated in 1986 a number of shareholders did graze cattle on common property. Ms Adam and Mr Bickmore argue that it can be inferred in part from this history that all shareholders have been entitled to graze cattle on common property from an early time. The company’s pleadings concede that persons other than Ms Adam and Mr Bickmore did graze cattle on the common property between 1986 and approximately 1999. Ms Adam and Mr Bickmore also say that grazing occurred prior to this date.

7. In 1999 conflicts between Currawinya’s shareholders about cattle grazing on common property came to a head. The issue had been brewing for some time. Until November 1997 shareholders who grazed cattle on common property did so without paying agistment fees to the company. On 29 November 1997 the company first resolved in a general meeting to set agistment fees for the grazing of cattle on common property. But the mood was generally changing against the grazing of cattle on Currawinya’s common property. A further general meeting on 4 October 1998 considered but adjourned a motion “that the right to graze cattle on Currawinya be rescinded”. The adjourned motion was debated again at a general meeting on 13 March 1999, when it was resolved in slightly different terms that “permission” to graze cattle on the land was “rescinded”. The assumption behind this resolution, which is now challenged by Ms Adam and Mr Bickmore, was that “permission” was required to graze cattle on common property. Their principal contention in these proceedings is that: Currawinya’s constitution (and specifically clause 2(a)(i) of its memorandum of association) directly confers a right on them to graze cattle on common property; that no permission was ever required from the company for this use of common property; and, that therefore the company could not withdraw permission for this use.

8. After the March 1999 resolution all shareholders other than Ms Adam removed their cattle from the common area of Currawinya. Ms Adam and Mr Bickmore maintained at that time and until the trial in late 2009 that until March 1999 they, together with other shareholders, were exercising their rights as shareholders to use common property. Ms Adam and Mr Bickmore contended that their entitlement to graze cattle on the common land continued and was not validly terminated by the resolution of the general meeting on 13 March 1999.

9. These proceedings comprise two actions being heard together although no separate issues are raised in the second action. Currawinya first commenced proceedings against Ms Adam and Mr Bickmore (proceedings 6350 of 2006) for relief including: a declaration that Ms Adam and Mr Bickmore are not entitled as shareholders or otherwise to graze cattle and other livestock on common property without the company’s permission; for orders restraining them from grazing cattle on common property; and claiming damages.

10. Ms Adam and Mr Bickmore have cross-claimed seeking relief, on the basis that they are successful in their primary contention that their rights to graze cattle on the common land were not validly rescinded in March 1999. Upon the cross claim they contend that the majority of Currawinya’s shareholders invalidly attempted to terminate rights attaching to their share in the company. The cross claim seeks: a declaration that the company’s purported cancellation of their right to graze cattle on Currawinya’s common property is void; that the company is estopped from denying their entitlement to graze cattle on common property; a declaration that the company is not entitled to charge a fee for grazing cattle on common property; for orders restraining the company from acting contrary to these declarations and alternatively for the winding up of Currawinya under Corporations Act (Cth) 2001, ss 232 and 233 on the basis that its affairs have been conducted in a manner which is oppressive to, unfairly prejudicial to, or unfairly discriminatory against Ms Adam and Mr Bickmore.

11. Although they are defendants and cross- claimants in proceedings 6350 of 2006, Ms Adam and Mr Bickmore commenced supplementary proceedings (numbered 4840 of 2009) for the winding up of Currawinya, seeking the same relief as was sought on the cross claim. The Court was told that these supplementary proceedings were commenced in order to provide a vehicle for the advertising of the proposed winding up of Currawinya. Due to their subsidiary nature these supplementary proceedings did not feature in the parties arguments. For convenience therefore throughout the rest of these reasons Ms Adam and Mr Bickmore will be described together as “the defendants”. Currawinya Pty Limited is described either as “Currawinya” or “the company” in these reasons.

12. The first group of issues to be determined arises from Currawinya’s claim and relates to the validity of the resolution in the general meeting on 13 March 1999 and the consequences of its validity or invalidity. These issues include: the nature of Ms Adam and Mr Bickmore’s entitlements to graze cattle; whether those entitlements were validly terminated on 13 March 1999; whether in grazing cattle on common property subsequent to 13 March 1999 Ms Adam is trespassing and is liable to pay mesne profits and damages; and whether or not the company’s claim against Ms Adam and Mr Bickmore is maintainable in these proceedings by reason of theAgricultural Tenancies Act 1990 (NSW).

13. But the case also involves a second group of issues raised in the defendants’ cross claim and related to the company’s actions towards the defendants after the passage of the 13 March 1999 resolution. These actions are the source of the defendants’ contention of action in a manner oppressive of and unfairly prejudicial to them said to attract relief under Corporations Act 2001ss 232 and233. The alleged oppressive conduct of which the defendants complain is not merely the passage of the 13 March 1999 resolution. But the allegedly oppressive conduct lies within a relatively narrow time period.

14. The first quarter of 2005 was as important as the first quarter of 1999 in the dispute between the company and the defendants about grazing cattle on Currawinya’s land. In the first quarter of that year Currawinya issued an invoice for agistment and other fees in a substantial sum to the defendants and then at a general meeting purported to forfeit their shares for non-payment of moneys said to be due on the invoice.

15. The invoice of 17 January 2005 was in the following terms:

INVOICE J17

17th January 2005

To:

G. Bickmore

14 Queen Elizabeth St

Coriki NSW 2471

9th January 2005 – Loss of potential income @ $25,000.00 per year x 5 years – $125,000.00

9th January 2005 – Legal Costs to date relating to cattle grazing over 5 years – $8,500.00

9th January 2005 – Loss of pasture due to J. Adam & R. Konicanin grazing their private cattle heard (sic) on Currawinya Pty Ltd common land without approval over 5 years – $39,500.00

9th January 2005 – Expenses incurred in the removal of Caveats placed by J. Adam & R. Konicanin over the titles of Currawinya Pty Ltd – $500.00

9th January 2005 – Administration Expenses in relation to the cattle issue over 5 years – $2,500.00

TOTAL: $176,000.00

PAYMENT IS NOW DUE ‘

16. This invoice was not paid. The company in general meeting acted on the non-payment in early March 2005. A motion moved “from the floor” of the general meeting of the company on 9 March, 2005, to the following effect: –‘The meeting adjourned at 1.35pm to 1.40pm.

The members then put a motion from the floor as follows.

(MOTION GBI) From the Floor

That the members instruct the Secretary to sell share 15 on which the Company has a lien in the following manner;

That the area currently used as share 15 home site be returned to common land & new home site chosen by the successful purchaser.

That a $5,000.00 deposit be paid & the Transfer be dealt with & sent for stamping & the Companies details be updated with the new shareholder.

That the Balance of $30,000.00 be paid on the 1 st of July 05, that failure to pay the balance of $30,000.00 on the 1 st of July 05 will see the share forfeited & the deposit lost.

The members accept Tony & Narelle Stalone, Fran & Andy Ware, Mac Greer, Iain Worrall, Janet Dunn or Wayne Gleeson as the new shareholder & acceptance is dependant on the 1 st of these people paying the required $5,000.00 deposit.’

17. The motion was passed. Seventeen votes were recorded in favour and one vote against, with one abstention. Ms Adam voted against the motion. The company then purported to act on the forfeiture of the defendants share, although their occupation of their designated area and their grazing of cattle on the common property continued. The defendants alleged that this forfeiture was an act of oppression. They also relied upon other alleged oppressive conduct, identified later in these reasons.”

Currawinya’s Constitution

5 The provisions of the memorandum of association of Currawinya’s constitution that are either in contest or referred to in argument in these proceedings are also set out in my first judgment: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666, at [21] and [22]. The relevant provisions are memorandum clauses 2(a), (b), (c), (d), (k), (l), (m), (s), (t), (u), (v) and 4. For convenience they are also reproduced here, together with the introduction to them recorded in paragraphs [21] and [22] of my first judgment:

21. The defendants submit that the right they claim to graze cows on common property arises directly from clause 2 (a)(i) of the memorandum of association of Currawinya’s constitution. Clause 2 of the memorandum of association identifies the objects for which the company is established. Somewhat unusually for companies of this type Currawinya’s memorandum of association does not anywhere identify the precise area of land to be occupied by reason of the holding of a particular share in Currawinya. For understandable reasons with such a large property as Currawinya and when in 1986 not all members had selected part of the land for their homesteads, the scheme of the memorandum was constructed flexibly. It allowed each shareholder later to identify, by a process of designation, the particular homestead land that the shareholder wished to occupy. The part of clause 2(a) in contest in the parties’ arguments about the construction of clause 2(a)(i) includes this scheme of designation and is set out below:-

‘2. The objects for which the Company is established are:(a) To purchase and develop all those pieces or parcels of land situated in the County of Buller being the land comprised in Certificates of Title Volume 9865 Folio 22, Volume 2627 Folio 35, Volume 4969 Folio 177, Volume 15271 Folio 107, Volume 15280 Folio 41, Volume 14950 Folio 179 and Conditional Purchase 1973/53 Casino (hereinafter called “the land”) on a multiple occupancy basis for the sole use and benefit of the members of the Company without attempting to make any profits or other gains for the Company, it being understood that all expenses for development of the land (excluding erection of buildings), maintenance of the improvements upon the land (excluding private access roads, private dwellings and other improvements effected on any part of the land subject to Proprietary Leases), rates and taxes on the land together with reasonable reserve for such purposes shall be paid by the members of the Company in proportion to their shareholdings.

(i) In order to carry out the object and purpose of the Company specified in this memorandum, areas of the land up to 8 hectares designated by the Company shall be leased to members of the Company together with the right for each such member in common with the other members to occupy the balance of the land not set aside and designated for sole occupation by a member under leases in such form and for such term as shall be prescribed by the Company, which leases shall entitle the members of the Company to the use and occupancy of the respective areas of the land during the term thereof. All such leases are hereinafter called “Proprietary Leases”.

(ii) Subject to and in accordance with the provisions of this memorandum, a member owning the requisite share shall be entitled, and solely by reason of his ownership of the said share in the Company, to use and occupy for dwelling, agricultural, grazing or such other purposes as may be approved by the special consent of members the area of land designated by the Company to the share held by such member in such form and for such term or terms as shall be prescribed by the Company and by or in accordance with this memorandum, but each such lease shall entitle the member and the Lessee therein referred to to the use and occupancy of the designated area during the term or terms thereof and for so long as the Lessee observes the conditions thereof and makes the payments therein or by or under this memorandum prescribed.

(iii) The designated areas of the land area are to be assigned and leases thereto executed in accordance with the reservations made by the members at the time they make application for a share in the Company. All rights of use and occupation shall be subject to the further provisions of this memorandum and to such rules and regulations as the Company may from time to time prescribe for the conduct of the land and the affairs of the Company, provided however that all rules and regulations shall affect all leases uniformly.

(iv) All Proprietary Leases shall be subordinate to such mortgage or mortgages as may be registered in the appropriate public registry at the time of issue of such lease, or to such other mortgage or mortgages as may from time to time be duly authorised and executed by the Company and so registered provided that nothing herein contained shall authorise the Company to grant any mortgage or mortgages over the Land without the consent of eighty per cent of the members attending a duly convened general meeting in person or by proxy of the members.

(v) Any Lessee or member of the Company wishing to sub-let his designated area of the land shall submit in writing an Application so to do to the Company together with the name and address of the prospective sub-lessee, accompanied by suitable references, and the said Application shall be ruled upon by the Company within fourteen (14) days. In case the said Application is declined, there shall be no appeal from the decision of the Company, unless there shall have been a previous Application declined. If a previous Application has been declined by the Company the Lessee shall have the right to appeal to the members as hereinafter provided. Notwithstanding anything herein contained, the Company or the members as the case may be shall decline any application for sub-letting in the case where if such sub-letting were permitted the number of non-unit holding adults residing on the Land would exceed one third of all adults residing thereon.

(vi)(1) The Company shall, on 1 st July in each year or so near thereto as may be practicable, cause to be prepared a budget covering the itemised estimated income of the Company from all sources and the estimated cost of constructing, maintaining and operating the land during the ensuing twelve month period, including all expenses for taxes, interest on mortgage indebtedness and all other maintenance and operating expenses for such ensuing accounting period including construction and maintenance of roadworks, dams, provision of light, water and all other common services and amenities provided by the Company, costs of repairs and replacements plus any deficit for or in respect of the previous year plus reasonable reserves for such purposes and with the aid of such budget and such other data as it may deem proper the Company shall levy an assessment against each Lessee for his proportionate share of such estimated net cost of maintaining and operating the land for the ensuing twelve month period. Each Lessee shall be assessed with that proportion of such total estimated net cost which the share that he owns in the Company bears to the total number of its issued shares. Such total estimated net cost for any year and the assessments payable by Lessees on account thereof may be adjusted by the Company from time to time as hereinafter provided.

(2) The Company in such budget or assessment may raise and create any reasonable contingency or other reserve or surplus fund and expenses for any purpose of the Company.

(3) The Company may from time to time up to the close of the said twelve month period for which a budget has been estimated and an assessment made, increase or diminish the amount previously budgeted and assessed for such year, and for that purpose may waive, discharge, increase or diminish any annual instalment of an assessment due or thereafter to become due in such period.

(4) Except for the purpose of correcting any arithmetical or other error relating solely to the particular Proprietary Lease every such adjustment shall be made against or in favour of all members and Proprietary Lessees in the same proportion as is hereinbefore provided.

(5) The Company may include in the said budget an assessment for any such period of any liabilities or items of expenses which accrued or became payable in a previous accounting period or which might have been included in the budget and assessment for a previous accounting period but were not included therein.

(6) The Company may budget for and assess any particular item or items by a separate assessment or assessments which shall be payable in the same manner and time as the assessment and instalment hereinbefore referred to.

(7) All annual assessments shall be due and payable to the Company annually in advance unless specifically otherwise provided by the Company.

(8) The powers and authority to determine and establish the amount of and to require payment of the above assessments (whether by way of rent under any Proprietary Lease or otherwise) shall be possessed only by the Company.

(9) The total amount payable in any one accounting period by any member and Lessee shall not without the consent of eighty per cent of the members attending a duly convened general meeting in person or by proxy exceed the sum of $300-00.

(vii) All annual assessments shall be due and payable in advance on the first day of the month of August, in each year without further notice, and shall be paid to the Company at such place or places as the Company shall from time to time nominate.’

22. The parties have also referred to other parts of clause 2 and to clause 4 of the memorandum of association to support their competing constructions of clause 2(a)(i). It is convenient to set these other provisions out here. They are the following:-

(b) To create a community with an economically viable lifestyle.(c) To establish a community structure with work programs for communal participation and provision for individual freedom and privacy within that structure.

(d) To encourage experimentation and development of alternative methods of energy, technology, agriculture and gardening, based on harmony and balance with the environment, as a working community aspiring towards self sufficiency.

(k) To borrow or raise money in such manner as the Company may think fit and to arrange the same or the repayment or performance of any debt, liability, contract, guarantee or other engagement incurred or to be incurred or entered into by the Company in any way PROVIDED HOWEVER that the Company shall have no power to mortgage, charge or grant any security over any of the assets or undertaking of the Company on any account whatsoever except with the consent of 80% of the members attending a duly convened general meeting by person or by proxy.

(l) To make, draw, accept, endorse, discount, execute and issue promissory notes, bills of exchange, bills of lading and other negotiable or transferable instruments PROVIDED HOWEVER that the Company shall have no power to mortgage, charge or grant any security over any of the assets or undertaking of the Company on any account whatsoever except with the consent of 80% of the members attending a duly convened general meeting by person or by proxy.

(m) In furtherance of the objects of the Company to sell, work, improve, manage, develop, exchange, lease, license, dispose of, turn to account or otherwise deal with all or any part of the property and rights of the Company PROVIDED HOWEVER that the Company shall have no power to see transfer or otherwise dispose of the land except with the unanimous consent of all members.

….

(s) To carry on any other business whatsoever which eighty per cent of the members attending a duly convened general meeting in person or by proxy think is capable of being conveniently or profitably carried on by the Company or which in their opinion is calculated either directly or indirectly to enhance the value of or render profitable any of the Company’s property and rights.

(t) To acquire and undertake the whole or any part of the business, property and liabilities of any person or company carrying on any business whatsoever which eighty per cent of the members attending a duly convened general meeting in person or by proxy may think fit.

(u) To apply for purchase or otherwise acquire any patents, patent rights, inventions, copyrights, designs, trade marks, formulae, designs, secret processes, technical information, franchises and other rights, privileges and concessions and to use, exercise, develop or otherwise turn to account the property rights or information so acquired.

(v) To invest and deal with the money of the Company in such manner as eighty per cent of the members attending a duly convened general meeting in person or by proxy may think fit.

4. memorandum 2(a), (k) (1) and (m) and this Clause of the memorandum of Association of the Company shall not be altered, modified or deleted except with the unanimous consent of all members.’

6 The defendants’ principal contention is that the company gave them a right to graze cattle on common property under the terms of clause 2(a)(i) of the memorandum of association itself. I rejected that argument in my answers to questions (1) and (2) in the first judgment.
7 I have found that a right to graze cattle on common property is not found in memorandum clause 2(a)(i): Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [76]. But I also found that although clauses 2(a)(i) and (iii) do not contemplate that shareholders will be able to dwell upon or conduct agricultural or grazing activity on Currawinya’s common property, nevertheless there is no prohibition in Currawinya’s constitution against these activities being conducted on common property: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [71] and [72]. I found that if such activities are to be conducted on common property then rules or regulation would need to be passed to permit and regulate them: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [71].
8 In the first judgment I also examined the basis of the defendants’ present rights to use Currawinya’s common property. I explained that in conformity with Glass JA’s analysis in Magill v Santina Pty Limited [1983] 1 NSWLR 517 at 525D; (1983) 8 ACLR 289 that in the absence of the issue of a lease to them that the defendants: have a contractual entitlement to the occupation of their designated home site area as exclusive licensees of the company; and a supplementary non exclusive licence to occupy common property; but that these licences are revocable for breach of a rule or regulation conforming with clause 2(a)(iii). This was explained in paragraphs [49] to [54] of my first judgment:

“[49] What then in the absence of a lease is the member’s clause 2(a)(ii) right to the member’s designated area? It is as Glass JA explained in Magill v Santina Pty Ltd (1983) 1 NSWLR 517 at 525D a contractual entitlement to the occupation of the shareholder’s own designated area as an exclusive licensee from the company. The scope of a member’s permissible activity upon the designated area whilst the member uses and occupies under such a contractual licence would be no wider than the scope of activity which could be granted under the lease in waiting, namely for “dwelling, agricultural, grazing or such other purposes as may be approved by the special consent of members”.[50] We now turn to Currawinya’s common property. A key to understanding the operation of clause 2(a)(i) with respect to common property is to see that the words ” together with the right of each such member in common with the other members to occupy the balance of the land” [emphasis added] introduce and describe the grant of a right of occupation of common property that is contemplated to be included with the company’s lease to the member of the member’s designated area. The right of each member (enjoyed in common with other members) “to occupy the balance of the land” arises when a designated area is actually leased to the member and not before. Clause 2(a)(i) does not use the language of immediate grant of a right for each member with others to occupy the common area.

[51] The lease of the member’s designated area offered by the company in conformity with clause 2(a)(i) should also contain each member’s right in common with other members to occupy the common area. Clause 2(a)(i) only refers to a right to occupy common property ” in common with other members” which could be no more than a non-exclusive licence. To comply with clause 2(a)(i) the lease offered by the company should offer such a licence. If it does not, the member is entitled to insist on having the lease conform to the terms of the agreement recorded in clause 2(a)(i) of Currawinya’s constitution and for a licence of common property to be added. But the licence to be so added must follow the language of clause 2(a)(i) and be a right only “in common with other members to occupy the balance of the land”. In whatever form the company leases the designated area to a member, the supplementary rights that come with that lease are measured by the terms of clause 2(a)(i). In one sense clause 2(a)(i) really only goes a little further than the common law in that member’s right to occupy at least part of the common property would be an implied accommodation to the interest in land conveyed with the lease of the designated area to allow access to that designated area: Dowse v Wynyard Holdings Ltd[1962] NSWR 252.

[52] But the defendants have an exclusive licence of their designated area, not a lease. What right to common property accompanies their exclusive licence? They have from the company a licence to occupy common property, which is supplementary to their exclusive licence to use and occupy their designated area. It can be no more extensive than a licence that clause 2(a)(i) contemplates might accompany a lease to a member of a designated area. Being a licence it is revocable but its revocation is governed by the constitution. This leads to a consideration of memorandum clause 2(a)(iii).

[53] Clause 2(a)(iii) commences with the issue of the assignment of designated areas but proceeds to a provision which covers “all rights of use and occupation” which are said to be subject to “such rules and regulations as the Company may from time to timeprescribe for the conduct of the land and the affairs of the company , provided however that all rules and regulations shall affect all leases uniformly” [emphasis added]. Clause 2(a)(iii) is drawn in wide enough terms to empower the company to make rules and regulations that govern both a member’s use of the member’s designated area and a member’s occupation of common property. Provided it observes the requirement to “affect all leases uniformly” the company may prescribe rules and regulations about a licence of common property embedded in a lease of designated property. Those rules and regulations may, for example, provide that a lease of designated property may be terminated or an embedded licence of common property may be revoked for breaches of certain rules or regulations. Equally those rules and regulations may apply to supplementary licences of common property before a lease is executed. Importantly for the defendant’s arguments in my view such licences are in the nature of permissions, which are revocable for breach of rules and regulations commonly applicable to all members, which make clear that revocation will be a consequence of breach of the rule or regulation.

[54] The exclusive contractual licence of a designated area that the company grants to a member before a lease to the member is executed is ancillary to the later grant of a lease to the member. In my view the company could not revoke the exclusive licence of an individual member (or the member’s supplementary licence of common property) merely so as to prejudice the member’s capacity later to take up a lease. But the company may revoke such licences for breach of an appropriately expressed rule or regulation conforming with clause 2(a)(iii).”

9 In the first judgment I also rejected the argument that the 13 March 1999 resolution was a resolution to which memorandum of association clause 4 applied: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666, paragraphs [73] to [78] . I found in answer to question (2) that it was not necessary for the 13 March 1999 resolution to be passed unanimously as would be required by clause 4. My reason for reaching that conclusion was that a resolution to prohibit the grazing of cattle on common property is not a resolution to alter or modify memorandum clause 2(a), because memorandum clause 2(a) does not contain a right to graze cattle. My reasoning to this conclusion was set out in paragraphs [73] to [78] of my first judgment:

“73 This question throws up issues as to the construction of Clause 4 of the constitution. Clause 4 is set out earlier in these reasons. The clause is an entrenching provision in the constitution. It restricts the freedom of members to alter the constitution in a way that may alter the fundamental operations of the company or that might entrench upon minority rights.74 The issue in the construction of Clause 4 is whether or not the 1999 resolution to withdraw permission to graze cattle on common land involved any alteration to clause 2 (a) of the constitution. The resolution at the general meeting of the members of Currawinya on 13 March 1999 was “that the shareholders permission to graze cattle on Currawinya Pty Limited common land be rescinded at this general meeting”. The company says that this resolution does not alter clause 2 of the constitution and that accordingly unanimous consent is not required by clause 4 for the decision. The company’s argument was that any right to graze cattle on common property arises not from the constitution but by virtue of a lease that is yet to be executed between the company and the defendants at some future time or under rules and regulations authorised by clause 2(a)(iii).

75 Against this the defendants say that the 13 March 1999 resolution prohibiting the defendants from grazing cattle on common property “is an alteration or modification of clause 2(a) because it alters or modifies the right to occupy the common land bestowed by that clause and which had been enjoyed by the defendants up to the time of the purported rescission of 13 March 1999” (defendants’ closing submissions paragraph 37).

76 The defendant’s contention about this question fails due to my finding on question (1) that memorandum clause 2(a)(i) does not confer an irrevocable right upon members to graze cattle on common property. Clause 4 is an entrenching provision but it does not entrench a right to graze cattle on common property. Such a right is not found in the terms of memorandum clause 2(a)(i). Prior to the execution of a lease over their designated property the defendants only have an exclusive licence from the company to their designated area and a supplementary licence to use common property in common with other members subject to rules and regulations made by the company under memorandum clause 2(a)(iii). That licence might include, as it did for a long period, a liberty to graze cattle. The resolution on 13 March 1999 purported to vary the defendants’ licence to graze cattle on Currawinya’s common property. It did not either in form or in substance purport to amend memorandum clause 2(a). Even after the passage of the 13 March 1999 resolution the defendants still have an exclusive licence to their designated area and a supplementary licence to occupy common property. Furthermore they still have the rights to apply for lease of the designated area in conformity with memorandum clause 2(a)(i) and subject to their doing equity by paying all levies due by them to the company.

77 The defendants also criticise company resolutions to impose agistment fees as also being contrary to clause 4. Not only is there no entitlement in memorandum clause 2(a)(i) for the defendants to graze cattle on common property, there is no entitlement to do so free of the payment of agistment fees.

78 It was not necessary for the resolution in general meeting of 13 March 1999 to be passed unanimously. It was not a resolution to which clause 4 applied. As I explain below there were other problems with this resolution.”

10 The parties’ submissions invite analysis of Currawinya’s corporate records over an unusually lengthy time period. Currawinya was first purchased in 1976. Its current constitution was adopted in 1986. The parties have adduced evidence and offered submissions about corporate documents, correspondence, general meetings and directors’ meetings throughout the thirty-five years since 1976. The issues joined between the parties present questions issues about the meaning and effect of these documents and what exactly occurred at many of these meetings.
11 It is neither necessary nor desirable for the Court to resolve all of these disputes. Only a few of therm are critical to determining the matters in issue. Balancing economy and justice the approach that I have taken in these reasons is to determine only those factual disputes that are essential for deciding whether or not to grant the relief sought in the Amended Statement of Claim or on the Cross Claim. Sieving out essential from inessential material over a thirty-five year period has taken some time. The fact that only a fraction of the factual material that the parties have put before the Court is reproduced in this judgment is not a criticism of the diligence of counsel and solicitors on both sides. The Court has been much assisted by their thorough preparation of evidence and submissions. But these reasons are long enough already.
12 I now deal with the five remaining questions and then the issues that arise on the Cross Claim.

5 A Defence to the Company’s Trespass Claim?

Introduction

13 In the Amended Statement of Claim the company seeks: a declaration that the defendants are not entitled as shareholders to graze cattle or other livestock on common property “without the permission of the plaintiff”; an injunction restraining the defendants from grazing cattle or other livestock on common property; and, mesne profits for the defendants’ alleged trespass on common property. The Court’s answers to questions (1) and (2) have decided that Currawinya’s constitution does not itself give the defendants an express entitlement to graze cattle on Currawinya’s common property. But the answers to questions (1) and (2) also show that there is no express prohibition in Currawinya’s constitution against the grazing of cattle or other livestock on common property. Such activity on common property could be authorised and governed by “rules and regulations” made in accordance with clause 2(a)(iii) of Currawinya’s memorandum of association. The question of whether the defendants have a present entitlement to graze cattle on Currawinya’s common property is not to be decided solely from Currawinya’s constitution.
14 Rather the defendants say, relying upon findings in my first judgment Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [7] and [66], that the company long permitted cattle grazing on common property until a resolution passed in general meeting on 13 March 1999 purported to revoke that long standing permission. The defendants submit: that the 13 March 1999 resolution was legally ineffective; that the company’s permission to graze cattle on common property stands; and that as a result the company’s continuing permission to graze cattle is their defence to the company ‘s claim for trespass.
15 In response the company says: that the 13 March 1999 resolution was effective to revoke permission to the defendants to graze cattle on common property; that even if it were ineffective for that purpose that a number of other alternative events were sufficient to revoke all permission to shareholders to graze cattle on common areas; and that the defendants’ cattle are trespassing on common property. These are the issues for determination under question (5).
16 Both sides argued the case on the basis that the company had an action for trespass at common law against a shareholder grazing cattle on common property without permission. The parties did not undertake an analysis of all the ingredients of this cause of action in the circumstances before the Court. The case throws up some curious problems. The old common law action for cattle trespass was abolished by the Animals Act 1977s 4(1). But many of the acts of Ms Adam and her employees in relation to the cattle may arguably be trespass despite the abolition. So the issue before the court survives the abolition of the tort.
17 Whatever its rights in trespass, the plaintiff company also seeks an injunction restraining the defendants from grazing cattle on common property, contrary to the defendants’ revoked licence. It is not necessary for the Court to decide exactly which ingredients of an action for trespass are made out and which are not because the defendants’ defence that they hold an existing licence succeeds. The Court decides in this section that the 13 March 1999 resolution was ineffective to prohibit the defendants from exercising their contractual licence to use Currawinya’s common property by grazing cattle in those common property and that therefore their licence to do so continued. No action for trespass succeeds against the defendants for grazing cattle. Nor will the defendants be enjoined from grazing cattle on Currawinya’s common property. The company is capable of passing “rules and regulations” under clause 2(a)(iii) of the memorandum of association prohibiting the grazing of cattle on common property, provided the precise requirements of clause 2(a)(iii) are met. But it had not done so before these proceedings were heard. It is necessary first to consider the parties’ arguments about the 13 March 1999 resolution.

The 13 March 1999 Resolution

18 Motions 12 and 13 of the general meeting of Currawinya’s members held on 13 March 1999 appear in the minutes of the company as having resolved:

“Motion 12) that the shareholders’ permission to graze cattle on Currawinya Pty Limited common land be rescinded at this general meeting.Villis/Worrall Carried: For 8 Against 4

Motion 13) that the cattle owners be required to move cattle [from] common land by 2 August 1999

Villis/Worrall Carried: For 8 Against 4 “

19 Both motions were proposed by Mr Terrence Villis and seconded by Mr Bruce Worrall and were carried by 8 votes to 4. Motion 13 gave almost five months notice to the shareholders affected of the requirement for removal. These resolutions are described collectively throughout this judgment as “the 13 March 1999 resolution”.
20 Ms Adam immediately contested this decision. She declined to remove the cattle that she was running on Currawinya on 13 March 1999. At the next general meeting of the company, on 29 May 1999, together with Mr Bickmore, Ms Liehne and Mr S Gould, she proposed a number of motions: to temporarily rescind Motion 13 of the 13 March 1999 general meeting; to agist cattle on Currawinya so as to reduce the company’s then external indebtedness; to reinstate the company’s own herd of cattle so as to generate income for the company; and finally a Motion “that leases be issued to shareholders forthwith; such leases to state the rights of shareholders to use the land not taken up by other shareholders, and their responsibilities in caring for such spaces, in the best interests of the company. Note that ‘lease’ means ‘a right of occupancy'”. All of these Motions were either lost or they lapsed. As the analysis below shows, Ms Adam’s response to the 13 March 1999 resolution when she called for the issue of a lease defining her rights to use common property, correctly identified a defect in the company’s chosen approach to regulating shareholder use of common property.
21 The defendants argue that the form of the 13 March 1999 resolution did not create a rule or regulation for the conduct of the company’s land. It was, the defendant says, ineffective to modify the defendants’ existing supplementary contractual licence (that is, the contractual licence supplementary to the defendants’ exclusive licence to their designated home site area) and ineffective to prevent them from grazing cattle, because only a rule or regulation conforming with clause 2(a)(iii) can do that.
22 The defendants’ argument is valid. The 13 March 1999 resolution is not a rule or regulation made under clause 2(a)(iii). The defendant’s analysis is correct that only a rule or regulation made under clause 2 (a)(iii) is capable of prescribing/modifying a shareholders’ entitlement for the conduct of Currawinya’s common property, and indeed its designated areas. This is so for several reasons.
23 First, the company argues that a resolution of Currawainya’s members in general meeting is sufficient itself to grant or revoke a licence to shareholders to use the common property in particular ways.
24 This is not how clause 2(a)(iii) works. Rather it creates a formal and comprehensive, rule making system for all persons having an interest in Currawinya’s land.
25 It is comprehensive. It applies as clause 2(a)(iii) says to “all rights of use and occupation”. The rules and regulations so prescribed are for the conduct of “the land”, which expression is defined to include all Currawinya’s freehold titles, whether designated home site areas or common property.
26 It creates a formal rule making system. The system is to be distinguished from mere majority votes at general meetings. This distinction exists because the system of “rules and regulations” has the object of prescribing standards “for the conduct of the land” and “the affairs of the company”. The articles of association already made detailed provision for proceedings at general meetings of shareholders in articles 10 to 25 including the taking of votes at such meetings. These articles deal with the meeting and voting procedures for the wide range of possible subjects that Currawinya’s members may consider in general meeting. But the “rules and regulations” under memorandum clause 2(a)(iii) deal with a special subset of those subjects.
27 The rules and regulations must be “prescribed”, because like legislation they set general standards of conduct and do not, for example, merely govern a particular member, a particular event, or a particular property. The company must clearly state that it is prescribing a “rule and regulation” under clause 2(a)(iii) to distinguish what it is doing from passing ordinary resolutions in general meeting.
28 This is not just pointless legal formality. Clause 2(a)(iii) requires such formality because once prescribed the “rules and regulations” alter the substance of the property interests held by shareholders, not just as members, but as the company’s lessees. The rules and regulations relate to the leases to members. When prescribed “all rules and regulations shall affect all leases uniformly”. Clause 2(a)(iii)’s first sentence is the source of the company’s obligation to grant a lease to a member of a member’s designated area. The balance of the clause deals with limits on those leasehold rights. Clause 2(a)(iii) calls for the company in general meeting to make a statement of which resolutions of general meetings are “prescribed” and which do not. The company’s proprietary Leaseholders should be given a set of the “prescribed” rules and regulations as they exist from time to time. Otherwise members would not be in a position to know exactly how each rule or regulation will “affect” their leasehold interest. It also must be clear from “rules and regulations” how they “affect” leases. For example, does contravention of a rule result in a particular sanction, lease revocation, licence revocation or something else? These things must be made clear. The “affect” on leases should be evident from the form of lease too. The property interests of all members should enjoy this same protection.
29 This is a matter of considerable practical importance. Members issued with proprietary leases under clause 2(a)(i) may wish to borrow funds to develop their designated home site areas. A leasehold interest which may be registered on title or protected by caveat provides a form of security for such borrowings. Leaseholders and lenders need to be able to readily identify all the “prescribed” rules and regulations that “affect” a lease. It is to be expected that these prescribed rules and regulations would be maintained as a composite set of rules and regulations accessible by leaseholders and lenders in one place or more appropriately served on them, and able to be amended by the company from time to time. These characteristics are inherent in my view, in the idea of “rules and regulations” as a form of in house legislation for the company.
30 Unfortunately Currawinya does not maintain such a composite prescribed set of rules and regulations. Some attempts were made during the 1990’s to collect the more significant resolutions passed in general meeting but nothing was tendered in evidence resembling a set of prescribed rules and regulations. This exposes practical difficulties in Currawinya’s position. The company argues that Motion 12 at Currawinya’s 13 March 2011 general meeting is effective as a clause 2(a)(iii) rule or regulation, or is a sufficient basis for the defendants’ cattle to be held to be trespassing on common property. But Motion 12 is expressed in the form of a revocation of an existing permission, “that the shareholders’ permission to graze cattle on Currawinya Pty Limited common land be rescinded at this general meeting”. The Motion does not identify the original permission it is purporting to revoke. It is impossible to know from the form of Motion 12 alone whether or not the revocation is precisely co-extensive with the original grant of a licence to graze. One of the debates in these proceedings has been how and when the company first permitted shareholders to graze cattle on Currawinya’s common property and on what terms. Evidence about this subject exists but it is unsatisfactory and strongly contested. If the company had kept one composite set of prescribed rules and regulations, Motion 12 of 13 March 1999 would have been readily expressed as a whole or partial repeal of an existing rule allowing the grazing of cattle on common property. Instead the defendants rightly question in final submissions what is the “permission” being rescinded.
31 Moreover, shareholders/leaseholders cannot reasonably be expected to comb through the twenty five years of resolutions of general meetings to ascertain which resolutions might be classed as prescribing a rule or regulation and then to ascertain whether those resolutions have been wholly or partially revoked. There is additional difficulty in executing such a task. Some of the company’s resolutions are conditional and it is impossible on the face of the resolution to work out whether the condition has been fulfilled, for example the resolution “that poison not be used on Currawinya communal land without prior approval of a general meeting” (General Meeting 24 July 1999). Some of the company’s resolutions authorise particular conduct by individual members or by the company’s agents on common property. But in doing so they implicitly prevent all other shareholders from using common property in a manner that is inconsistent with the conduct being authorised by the resolution. For example the resolution, “that T. Villis be permitted to plant the riparian zone of the Cataract and Clarence Rivers with indigenous tree and plant species” (General Meeting on 27 February 2000) presumably would prevent any shareholder from interfering with the plantings or damaging them once they were in place. If this resolution were a rule or regulation its impact on other shareholders is uncertain. Clause 2(a)(iii) is designed to bring some rational order into the management of Currawinya’s designated areas and its common property. Order is needed. In 1999, there were five general meetings of the company held respectively on 13 March 1999, 29 May 1999, 24 July 1999, 3 October 1999 and 20 November 1999. Between 15 and 25 resolutions were considered at each of these meetings. Several general meetings were held in most subsequent years. Compliance with clause 2(a)(iii), operating as described in these reasons, enables shareholders readily to comprehend how their property rights were being affected.
32 But there are some limitations on what rules and regulations may be prescribed by the company under memorandum clause 2(a)(iii). Clause 2(a)(iii) prescribes “rules and regulations” as being one of two sources of power constraining or enlarging members’ rights of use and occupation of Currawinya’s land. The other identified source of power in clause 2(a)(iii) is the memorandum of association itself, which expressly permits designated areas to be “used and occupied” by members “for dwelling, agricultural, grazing or such other purposes as may be approved by the special consent of members”. Clause 2(a)(iii) would not authorise the prescription of rules and regulations that entrenched upon an individual member’s freedom to dwell upon, or conduct agricultural or grazing activities up on the members’ own designated area. The memorandum limits the rules and regulations that may be prescribed for common property. There would be other implied limitations. The company could not, for example, make a rule or regulation that so limited the use of common property so as to impede an individual member’s vehicular access to his or her designated area.
33 How does clause 2(a)(iii) apply in the absence of the company issuing a lease to the defendants? I leave aside for a moment the dispute about whether the defendants have refused to accept a lease of the designated area offered to them or whether the company has not offered them a lease at all. The defendants do not yet have a lease. Clause 2(a)(iii) contemplates that all rules and regulations “shall affect all leases uniformly”. It assumes that such a lease will have been executed. But the provision is expressed broadly enough to govern the defendant’s existing contractual rights to a lease of their designated area and their supplementary licence of common property, as “all rights of use and occupation” are subject to “such rules and regulations”. Thus, if the company were now to pass an appropriately expressed rule or regulation it could modify the defendants’ capacity to graze cattle on common property.
34 The 13 March 1999 resolution is not a clause 2(a)(iii) rule or regulation. It is a resolution of Currawinya’s members in general meeting. Subject to the defendants’ arguments about procedural defects in the 13 March 1999 meeting, what is the effect on the defendant’s rights of a mere resolution rescinding “permission” to shareholders to graze cattle on Currawinya’s common property? In my opinion, the resolution did not have the effect of revoking the defendants to graze cattle on common property. Currawinya’s constitution provides a clear method for restricting the defendants’ rights to use common property. The method prescribed by the constitution serves an important purpose in preserving the rights of members and the orderly use of the company’s common property. The company did not use that method. What the company did was ineffective to restrict the scope of the defendants’ supplementary contractual licence to use common property. It is not disputed that before 13 March 1999 the defendants’ supplementary licence to use common property included the grazing of cattle. That licence was unchanged from 13 March 1999.
35 The company argues that the defendants were in no doubt as to the intent of the resolution and its desired effect to revoke all existing licence to graze cattle. That can be accepted. The company and its members made a compact as to exactly what procedure would be followed before members’ rights of use and occupation would be limited. But merely to enforce “the intent” of the resolution would involve abandoning the important agreed procedure.

Alternative Events Justifying a Rule

36 The company says in the alternative, that if the 13 March 1999 resolution is not itself a valid clause 2 (a)(iii) rule or regulation that there are other events that are sufficient to remove the defendants’ right to graze cattle on common property. There are said to be in support of this argument: first, a resolution of members in general meeting on 4 October 1998; secondly, the adoption in practice by Currawinya’s directors of the effect of the 13 March 1999 resolution as a rule; and thirdly, the resolution passed at a company general meeting on 21 October 2002. In my view, none of these three events qualifies as a clause 2(a)(iii) rule or regulation.
37 The 4 October 1998 Resolution . Currawinya’s members passed a resolution in general meeting on 4 October 1998 in the following terms:-

“That the right to graze cattle on Currawinya common land be rescinded unless an acceptable stock management plan (which is in harmony with Rivercare and State Government guidelines) is presented at the General Meeting in February”

38 Heightened attention was given to the problems associated with grazing cattle on common property in the six months leading up to 4 October 1998. As the defendants point out, at the general meeting on 18 April 1998 motions were passed “that cattle be excluded from grazing Currawinya’s river flats and associated gullies” (Motion 10) and “that if Motion 19 of general meeting 18 April 1998 is not complied with within 6 months of this meeting then the right to graze cattle on Currawinya Pty Limited common land be rescinded” (Motion 11). A number of Motions at a general meeting held on 23 May 1998 proposed an October [1998] conference to consider a management plan for common property and to discuss the issue of grazing cattle on and the use of common property. A conference involving a mediator was held between 28 September and 2 October 1998. This conference did not resolve much. But it provided a forum for Ms Adam and her opponents amongst the body of shareholders to firmly exchange opinions both for and against the wisdom of grazing cattle on common property. The 4 October 1998 meeting at which the subject motion was passed followed the conference. The 4 October 1998 Motion is no more effective as a clause 2(a)(iii) rule or regulation than is the 13 March 1999 resolution. It does not purport to prescribe a rule. The extra deliberation leading up to it makes little difference to the legal analysis of its effect. Indeed, it is really more in the nature of a statement of corporate intention to take a future step, if an acceptable stock management plan were not to be presented in February 1999. The 4 October 1998 resolution is in such a conditional form that it could not readily qualify as a clause 2(a)(iii) rule or regulation.
39 Directors Adopt the Rule in Practice. The company next argues that after the publication of the 13 March 1999 resolution Curawinya’s directors in practice adopted it as a “rule”, which has since gained the increasing support of members. The argument is that all directors and shareholders have adopted and lived by this rule since 1999. The argument is flawed.
40 The argument arises from the somewhat peculiar and informal way that Currawinya has run its affairs over many years. I accept Mr Worrall’s account that from the time that the land was purchased that a great many decisions of the company which would in many corporate organisations be made by the board of directors, were made by the company in general meeting. Once the company made a decision in general meeting the directors and/or the secretary customarily implemented the decision. Mr Worrall explains this procedure carried over from the period prior to 1984 when ownership of the land was held by Mr Murray Slavin as trustee for the occupiers. The trustee followed the occupiers’ wishes, much as would trustees holding property for the members of a voluntary association. This kind of decision-making is not uncommon in small corporate structures that exist solely for the benefit of their members. Mr Worrall is well placed to give an account of Currawinya’s corporate history, as he and Mr Villis have lived on Currawinya’s land from the time that it was held in trusteeship. The minutes of general meetings and directors’ meetings from the early 1980’s confirm the correctness of what Mr Worrall says about Currawinya’s early decision-making practices.
41 Mr Worrall says that because of this history that the views of members expressed in general meeting have a special significance both generally and with respect to the 13 March 1999 resolution. He says of the general background to this decision: that the company is entitled to make decisions about the use of its land; that previously (that is prior to 13 March 1999) a majority of shareholders had favoured grazing cattle on Currawinya’s common property but that some shareholders then changed their minds about the issue; that if a single shareholder were to be permitted to run cattle on the property without a proper cattle management plan that dissension and conflict would be encouraged within the company and shareholders would start to ignore company decisions; that furthermore, allowing the running of cattle on common property without a proper cattle management plan would provoke accusations and counter accusations about damage to property and common areas. The risks Mr Worrall identifies can be accepted at a practical level.
42 But Mr Worrall explains that this decision was fully implemented, a matter which is then built on in the company’s final submissions. He says, and I accept his account about this subject, that when Ms Adam’s cattle were not removed from common property during the six months after the 13 March 1999 resolution that the cattle issue was discussed at a director’s meeting on 14 September 1999. Then the annual general meeting on 3 October 1999 resolved that the company’s secretary write to the defendants “requesting that they comply with Motion 13 of the meeting of the 13 March 1999 to remove their private cattle herd from Currawinya within the next 14 days”.
43 I accept that the company sent a letter to the defendants in conformity with the 3 October 1999 resolution. I also accept that the minutes of the director’s meeting of 14 September 1999 and the annual general meeting of 3 October 1999 were published to members including the defendants, as were the minutes of the 13 March 1999 meeting. The company submits on the basis of these facts that “a rule was made within clause 2 (a)(iii) of the memorandum by these several publication of minutes and by the company executive acting on the 13 March 1999 resolution (which itself was the culmination of an extensive consideration of the cattle issue)”.
44 This argument is not successful. None of these resolutions or this correspondence describes what is being done as a “rule”, or an amendment to a “rule”, or invokes memorandum clause 2(a)(iii) or says that the company is publishing a “rule” of common application to all leases. The company does not merely by further publication of the 13 March 1999 resolution to members elevate it into a clause 2(a)(iii) rule. The later resolutions of the directors meeting of 14 September 1999 and the annual general meeting of 4 October 1999 are merely couched in terms that seek to enforce the 13 March 1999 resolution against the defendants individually, rather than to create a rule.
45 Resolution on 21 October 2002 . The company also relies on what is described as a “Special Resolution” proposed by Ms Castrikum and Mr Villis at a general meeting of 21 October 2002 and passed unanimously. The resolution was to the effect “that no commercial animal ventures be carried out on common land by individual shareholders or their partners”. The apparent intention of this resolution was somehow to amend the company’s memorandum and articles of association. This is to be inferred from the fact that the publication of the minutes of that meeting is followed by the explanatory note “shareholders please note that this Special Resolution which needs an 80% vote was unanimously carried and will be included in the company’s memorandum and articles of association”. Curiously, neither the resolution nor the note explain exactly what part of the company’s constitution is to be amended, nor how any such amendment will mesh with the operation of memorandum clause 2(a)(iii). Also the copy of the company’s memorandum and articles of association tendered in evidence in these proceedings does not anywhere include this amendment. The company rightly concedes that this resolution cannot be an effective “special resolution” because it appears to amend the entrenched clause 2(a) contrary to memorandum clause 4. The company says that despite these deficiencies the 21 October 2002 resolution was intended to operate as a permanent rule and was valid and effective in accordance with clause 2(a)(iii), especially because it operates equally on all shareholders/lessees.
46 The flaw in this argument is that the 21 October 2002 resolution does not purport to be a clause 2(a)(iii) rule or regulation nor does it operate in substance as such a rule. Rather it operates inconsistently with the clause 2(a)(iii) rule making power by purporting to amend the company’s constitution. In so doing it stands outside the more flexible system of rule making and amendment provided for by clause 2(a)(iii). This system allows members the opportunity to argue for change to the clause 2 (a)(iii) rules, rather than to have the use of common property tied up by constitutional amendment. There is no doubt that by running her cattle on common property Ms Adam has been conducting a “commercial animal venture” and would contravene this resolution were it effective as a rule or regulation. But because the clause 2(a)(iii) power has not been used the resolution does not regulate Ms Adam’s use of Currawinya’s common property.

The Defendants’ Alternative Procedural Arguments

47 The Defendants also attack the 13 March 1999 resolution on a number of other, principally procedural, grounds. My conclusions about the 13 March 1999 resolution make it strictly unnecessary to deal with these arguments. Nevertheless, acknowledging the detailed contest that took place about these alternative challenges to the 13 March 1999 resolution, it is useful that I express my conclusions about them. Moreover, these challenges raise contested issues of fact. It may be useful for my findings about them to be recorded. These proceedings may go on appeal. By analogy with a trial judge’s assessment of damages where a defendant is successful at trial, dealing with these arguments will assist the efficiency of any appeal process: Nevin v B and R Enclosures [2004] NSWCA 339 and Cook v R & M Reurick Holdings Ltd [2004] NSWCA 268.
48 The defendants put three arguments: first, that there was a procedural deficiency in calling the 13 March 1999 general meeting with the result that Motion 12 at that meeting was not valid; second, that the 13 March 1999 resolution involved an invalid cancellation of class rights held by the defendants; and, thirdly, that Motion 12 of the 13 March 1999 meeting was not passed as a special resolution when a special resolution was required. The second of these arguments is not considered here but under question 11 below.
49 Procedural Invalidity of the 13 March 1999 Meeting . The defendants argue that there was a procedural deficiency in the passing of the 13 March 1999 resolution in that the meeting of that date was said to not have been “validly called or conducted”. The company says that there is no such procedural deficiency.
50 The alleged deficiency arises out of the circumstance that the meeting of 13 March 1999 was originally called for 2 March 1999 but was adjourned to the later date because of the lack of a quorum on the earlier date. The 2 March 1999 date was a Tuesday. The 13 March 1999 was a Saturday. It is not in issue that there was no quorum on 2 March 1999 and that there was a quorum on 13 March 1999. The defendants argued that the application of Article 11 of Currawinya’s articles of association in the circumstances leads to the conclusion that the 13 March 1999 meeting was not validly constituted. Article 11 provides:-

“11. If within an hour from the time appointed for the meeting a quorum is not present the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the next day in the same week at the same time and place, or to such other day and at such other time and place as the members present may determine, and if at the adjourned meeting a quorum is not present within an hour from the time appointed for the meeting, the members present shall be a quorum.”

51 Part of the 2 February 1999 notice of meeting (the first page) and the agenda for Currawinya’s general meeting to be held on 2 March 1999 at Currawinya’s Garden Cottage is in evidence. This notice of meeting set out the Motions to be voted on at the meeting including a Motion proposed by T. Villis “that cattle owners be required to remove cattle from common land by 2 August 1999” (Proposed Motion 6). The minutes of the meeting on 2 March 1999 record that “the directors put [Motion 1] that the general meeting of 2 March 1999 be adjourned because of a lack of quorum to Saturday 13 March 1999 at 10am at the Garden Cottage”. Article 10 of Currawinya’s articles of association provides that “five members present in person or by proxy and 60 per cent shall be a quorum”.
52 The defendant argues that if the 2 March 1999 meeting was convened by the requisition of members, then Article 11 requires that upon the absence of a quorum that the meeting “shall be dissolved” and cannot be adjourned. It is clear, the argument goes, from the form of minutes the director’s meeting on 2 March 1999 that the directors “adjourned” the 2 March 1999 general meeting. If it was a meeting requisitioned by members it could not be adjourned. But rather fresh notices would have needed to be issued and a fresh meeting called for 13 March 1999. That did not occur. So the defendants argue that the later meeting was invalidly inconstituted, because it did not comply with the notice requirements for a fresh meeting provided for in Article 7 of Currawinya’s articles for at least 28 days notice of such a meeting to be given.
53 This argument is unsuccessful. I infer that the 2 March 1999 meeting was not convened upon the requisition of members. Although only one page of the notice of meeting and agenda is in evidence there are clear indicators that the 2 March 1999 general meeting was called by directors, not by members. It was adjourned by directors at a “directors meeting” held at 10.40am on 2 March 1999. There is no correspondence from members requisitioning the meeting. The minutes of the previous general meeting of 4 October 1998 record at their close “NEXT MEETING February ’99 (Directors to set).” This is consistent with the directors then calling the general meeting early in 1999. There is nothing on the first page of the 2 February 1999 notice which gives any indication that the meeting thereby being notified was requisitioned by members. Examination of the history of the affairs of Currawinya leading up to1999 shows that Currawinya’s board was generally quite responsive to the concerns of members such that it was unlikely that members would have had to requisition a meeting. The 13 Motions set out in the 2 February 1999 notice (page 1) are proposed by eight different shareholders. This is more than a third of members. The applicable legislation at the time, Corporations Law, s 249D would have required signatures for the requisition from all these shareholders on the requisition for the meeting. None of such signatories are in evidence. I find that the 2 February 1999 meeting was not convened on the requisition of members.
54 The defendants’ other point is that if the 2 March 1999 meeting was convened other than on a requisition of members, then the adjournment of the meeting was by resolution of the directors not of the members present. The defendants argue Article 11 requires the members present to adjourn the meeting. The answer to this argument lies in the minutes of the meeting of 2 March 1999. The prefatory words “the directors put” before the Motion for adjournment supports the inferences: that the directors present at this meeting put this Motion to all the shareholders present; that those shareholders all agreed to it; and, that therefore the members “[d]etermined” within Article 11 the time and place of the adjourned meeting. All that the minutes indicate is that the directors initiated the motion for adjournment and the fixing of the time and place, as might be expected. Although the composite minutes of the 2 and 13 March 1999 are headed for 2 March 1999 “Director’s Meeting”, the better view of the record is that the meeting was adjourned by the members in general meeting. It was said to have been “carried unanimously”. The result of the Motion was “meeting adjourned at 1pm”. The members’ not a directors’ meeting was being adjourned. Accordingly, I conclude that the 2 March 1999 meeting was adjourned on the determination of the members present.
55 In any event, were either of the defendants’ arguments about procedural irregularities in the calling of the 13 March 1999 meeting to have been upheld then, upon an application of Corporations Act , s 1322, resolution 12 would not be invalidated because of this procedural irregularity. I am of the opinion that any such irregularity neither caused nor is likely cause of “substantial injustice”. I would not have been prepared to declare Motion 12 to be invalid. Corporations Act , s 1322 applies. The Corporations Law applicable in March 1999 included an identical provision: Corporations Law, s 1322. A “procedural irregularity” in this section includes a reference to the absence of a quorum in a meeting and a defect, irregularity or deficiency of notice of time: Corporations Act , s 1322(1). Corporations Act , s 1322(2) provides:-

“A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order by the Court and by order declares the proceedings to be invalid.”

The steps taken by the members present to successfully adjourn the meeting were “a proceeding under this Act”: Re Broadway Motors Holdings Pty Limited (in liquidation) (1986) 6 NSWLR 45 at 56 and City Pacific Limited v Bacon (No 2) [2009] FCA 772 at 51; (2009) 178 FCR 81.

56 There was no “substantial injustice” here. Ms Adam was aware of the adjourned date of the meeting. She attempted to put documents before the meeting. She was a full time school teacher at that time. The adjourned Saturday date was likely to have been more convenient to her than the Tuesday fixed for the original meeting. The adjournment gave her more time to prepare a cattle management plan, a requirement that had been made clear to Ms Adam at the general meeting called on 4 October 1998. The general meeting on 2 March 1999 was effectively adjourned to 13 March 1999.
57 Special Resolution . The defendants also submit that any resolution passed at a general meeting such as that called on 13 March 1999 should be a special resolution by reason of Currawinya’s articles of association. Articles 7 and 8 provide:-

“7. Subject to the provisions of the Code relating to special resolutions and agreements for shorter notice, twenty-eight (28) days’ notice at the least (exclusive of the day on which the notice is served, but inclusive of the day for which notice is given) specifying the place the day and the hour of meeting and in case of special business the general nature of that business shall be given to such persons as are entitled to receive such notices from the Company.8. All business shall be special that is transacted a general meeting, and also all that is transacted at an annual general meeting, with the exception of declaring a dividend, the consideration of the accounts, balance sheets, and the report of the Directors and Auditors, the election of Directors in the place of those retiring, and the appointment and fixing of the remuneration of the Auditors.

The non-receipt of notice of a meeting by any person entitled to such notice shall not invalidate the meeting or the proceedings thereat.”

58 The defendants limited this contention by conceding that because Currawinya’s constitution does not expressly provide the occasions that a special resolution is required, that the effect of Articles 7 and 8 may only be to require a special resolution if class rights are to be amended. It seems to me that the argument put is wider than that, but the argument fails for other reasons.
59 The argument does not distinguish between on the one hand the concept expressed of “special business” in Currawinya’s articles at a company general meeting, and on the other hand the passing of a “special resolution” in conformity with applicable corporations legislation. A “special resolution” under legislation is a resolution which has met the notice requirements of Corporations Act , s 249L and has been passed by at least 75 per cent of the votes cast by members entitled to vote on the resolution: Corporations Act , s 6. Similar provisions existed in March 1999 in the Corporations Law : Corporations Law , ss 9 and 249L. Article 7 and 8 do not go as far as to say that every resolution passed at a general meeting should be a “special resolution”. Rather the articles use a form of language designed to make clear that particular motions proposed at a general meeting should be notified to members so that fair warning should be given to members of the general nature of the business to be brought before the meeting: Ryan v Edna May Junction Gold Mining Co NL [1916] HCA 37(1916) 21 CLR 487 andCummings v Macks [2000] FCA 55 at [52] to [13]; [2000] FCA 55(2000) 96 FCR 345. The Corporations Law at the time did not expressly require all motions passed at a general meeting of the company to be special resolutions. I would hesitate to infer that result from the form of Articles 7 and 8. I decline to do so. Currawinya has not contended that a special resolution was passed on 13 March 1999, in any event. But in my view such a resolution was not required.
60 Two other issues emerge out of the parties’ contentions about question 5. One is a question of estoppel and the other is about the nature of the leases that the company issues to its shareholders.

Estoppel

61 The company submits that the defendants are estopped by convention from departing from a mutual assumption made between the shareholders and the company to the effect that a resolution of the members in general meeting was itself sufficient to effect rule a regulation. The company points to evidence given by Ms Adam concerning a general meeting held on 23 June 1996 where she herself proposed motions about the use of common property with the intention that if they were passed they would be effective against the dissent of other members until the company decided otherwise. Mr Bickmore seconded motions with a similar intent on 11 October 1997. Ms Adam proposed numerous other motions which the company says on their face were intended to take effect as rules. Mr Worrall’s account of the company’s affairs was that it conducted business at general meetings with the intention of regulating the use of common property by simple motion of members at the general meeting.
62 None of this history in my view amounts to an estoppel by convention. All that has occurred here is that on a number of different occasions the defendants themselves advanced motions which appear to assume that shareholder’s use of common property could be validly regulated under Currawinya’s constitution by a simple majority vote at a general meeting, without more. There is not a sufficient course of dealing between the parties for it to be said that they had adopted a “conventional basis” for the governance of relations between them such that they are bound by that conventional basis of their affairs: Grundt v Great Boulder Pty Ltd [1937] HCA 58(1937) 59 CLR 641, 657, 677; 11ALJR 272 andAmalgamated Investment & Property Co Ltd (in liquidation) v Texas Commerce Bank Ltd [1982] QB 84; [1981] 3 All ER 577. Neither party’s conduct has indicated an intention clearly to give up the right to contend that common property should be governed by clearly passed rules or regulations.
63 But there are other problems with the plaintiff’s argument. The defendants have long maintained the position that their right to graze cattle on Currawinya’s common property was an inherent constitutional right of theirs. This assertion is made as early as 15 August 2000 in a letter from Allen Allen & Hemsley to Currawinya’s secretary. The defendants’ conduct since 2000 is as much to be explained by such a belief as by any estoppel by convention. A better view of this company’s affairs in 1999, and indeed up to the present time, is that the company had not really given serious consideration to codifying the rules that applied to shareholders’ use of common property. The whole issue has been dealt with for 35 years on an entirely ad hoc basis by successive boards and members. This approach is exemplified by the way that the company approached the form of the lease that it offered to its members, which leads to a problem which must soon be solved by the company.

Currawinya’s Leases to its Members

64 Most members of Currawinya have leases from the company that are inconsistent with the reasoning in this judgment and in my earlier judgment. This situation will need to be rectified by the company. What the company must do is discussed below in relation to the grant of relief upon the cross claim.
65 The defendants do not have lease from the company. Most of the company’s shareholders do. This state of affairs has arisen partly because of the kind of lease the company offered to the defendants and partly because of the defendants’ refusal to enter into it, unlike other shareholders.
66 On 1 February 2003 Currawinya’s board of directors approved a form of lease to shareholders. The draft had been considered at a general meeting in January 2003. A pro forma version of the lease was prepared in 2005. By August 2008 nineteen shareholders had signed the lease in this form, which is in very plain language. Perhaps the language is too plain. On subject matters related to these proceedings the draft form of lease provides as follows:-

“Para 5 The Lessor accords to the Lessee joint enjoyment of all the Common Land owned by the company.5a The Lessee agrees to use the Common Land only for the purposes approved by 75% of a duly convened AGM/General Meeting. Animals kept for commercial exploitation are specifically excluded from the Common Land.”

67 There are many problems with this aspect of the company’s existing lease. Clauses 5 and 5a are inconsistent with the Court’s analysis in these reasons of Currawinya’s constitution. Clauses 5 and 5a assume that a resolution at a general meeting which is not necessarily passed as a rule or regulation under memorandum clause 2(a)(iii) will be sufficient to regulate the use of common property as between the company and the shareholder. This is inconsistent with the regime set up by memorandum clause 2(a)(iii). Moreover clause 2(a)(iii) is one of the provisions entrenched by memorandum clause 4. Only the unanimous consent of all members could permit the abandonment of the memorandum clause 2(a) mechanism. Yet clauses 5 and 5a of the standard existing lease provides for a de facto departure from the mechanism. Were the company to attempt to regulate the use of common property based upon this clause it would be inviting another legal debate.
68 Whilst the company’s existing lease may not merit Ms Adam’ description in her letter of 2 May 2003 that “the lease being presented to members is nothing more than a sham” or that it is, as her lawyers described it “a joke of a lease”, it nevertheless has at least the deficiencies here identified.
69 Curiously, the draft agreement forwarded by the company to its shareholders in 2000, and drafted by its then lawyers based upon the memorandum and articles, was considered by some shareholders at the time as being too legalistic. Nevertheless, it contained the following clause relevant to the matters in issue in these proceedings which are more consistent with the Court’s reasons than the current lease. It provided as follows:-

“4. The Lessor may from time to time establish such reasonable by-laws as its Directors may deem necessary for the management and control of the land and may also from time to time alter amend and repeal such by-laws and this Lease shall be in all respects subject to such by-laws which when a copy thereof has been furnished to the Lessee shall be taken to be part hereof and the Lessee shall obey all such by-laws and see that they are faithfully observed by the family, guests, employees and sub-tenants of the Lessee it being understood that such by-laws shall apply to and be binding upon all of the Lessees of the land but the Lessor shall not be responsible to the Lessee for the non-observance or violation of such rules by any other Lessee or person other than employees of the Lessor. Such by-laws so established by the Directors may also be amended from time to time by a resolution of 80% of the shareholders of the Company at any annual meeting or a special meeting called for that purpose.”

70 The deficiencies identified here should be attended to in the best interests of the company and all of its members. It is not the place of a judgment such as this to identify all the lease’s deficiencies. Currawinya has access to competent legal advice which will enable a full review of the lease to occur.

Action in Trespass – the Company’s Possession of Common Property?

71 There is another issue the defendants raise in response to the company’s claim in trespass. The defendants argue:- that the plaintiff’s claim is one in trespass upon the common property owned by the plaintiff; that the current leases signed by the nineteen other shareholders as at August 2008 confer “joint enjoyment of all the common land owned by the company” which includes the common property; and that by making the common property the subject of leases in this way, the company has deprived itself of any right to immediate possession of that common property. The essence of trespass by wrongful entry consists in an entry without right or authority by one person onto the land of another who is in possession, using that word in its strict sense so as to include a person entitled to immediate and exclusive possession: Thompson v Ward(1953) 2 QB 153 at 158-9 and Barker v R [1983] HCA 18(1983) 153 CLR 338 at 341;[1983] HCA 18(1983) 47 ALR 1. The defendants submit that the plaintiff has given up possession and a right to immediate possession by entering into these leases. It follows the defendants say that the correct claimants for any trespass on common property are the members themselves, who have the benefit of these leases, not the company.
72 This argument fails. It misapprehends the effect of clause 5 of the current lease. The current lease, accords to each member as lessee “joint enjoyment of all the Common Land owned by the company”. The words “joint enjoyment of all the Common Land” are not a demise of the common land to each member of lessee. They confer a non-exclusive licence to make use of the common land. Such a licence is consistent with the company maintaining a right to immediate possession of this common property, which is sufficient to maintain an action in trespass. The current lease is clearly an attempt to create a proprietary lease in conformity with memorandum clause 2(a)(i)-(iii). The language of clause 5 is not ambiguous. But even if it were, the context in which it was crafted makes clear that only a non-exclusive licence of common property was intended. Although the current lease, as I have pointed out, offers wide scope for improvement, it does not make the mistake of giving up the company’s right to possession of its common property.
73 The defendants are on stronger ground in relation to their submission about the trespass case against the second defendant, Mr Bickmore. His evidence is that he never owned any cattle and never sought to run any cattle on Currawinya’s property. He was not cross-examined about this statement. Even the plaintiff’s witness Mr Villis seemed quite uncertain as to whether Mr Bickmore owned any cattle. The claim of trespass could not have succeeded against Mr Bickmore.

6 Validity of the Decision to Withdraw Permission to Graze Cattle

74 In final submissions the defendants made clear that the issues arising under this question are the same as those arising under question 2. The defendants only attacked the validity of the company’s decision to withdraw permission to graze cattle on common land on the basis that this involved a variation of memorandum clause 2(a) which was not effected in compliance with memorandum clause 4. That issue has already been decided against the defendants by question 2.

7 The Effect of Invoices Issued for Agistment

75 The company issued invoices to the defendants for the agistment of cattle on common property after the resolution of 13 March 1999. The defendants claim that charging such a fee countermands the company’s request to remove the cattle and constitutes the continuation of the existing permission to graze them on common property. Strictly this issue no longer arises because I have found that the only way that the company can restrict the defendants’ use of common property is by exercising its powers under memorandum clause 2(a)(iii), which it has not done.
76 This issue involves contested facts. In case these proceedings go to appeal it is more efficient for the Court now to make findings in relation to those contested facts. The conclusion from my findings is that the company did not claim agistment at any time after the expiry of any periods of grace given to the defendants to remove their cattle from common property. No fresh permission to graze cattle on common property is to be inferred from the company’s conduct in issuing invoices for agistment in 1999 and 2000.
77 The company allowed the defendants a period after the resolution on 13 March 1999 to remove their cattle from common property. Finally, the company issued demands for removal. The plaintiff’s trespass claim relies on two letters of demand requesting removal of Ms Adam’ cattle from common property. The letter of 12 October 1999 gave 14 days’ notice for removal in order for the defendants to avoid further action. It was sent by Mr Worrall, the company secretary at the time. The 22 June 2000 letter gave 60 days’ notice for removal of the cattle but it was sent by the company’s then solicitors. Commonly a board of directors would delegate to the company secretary the writing of such correspondence. Currawinya authorised sending the 12 October 1999 letter in an annual general meeting held on 3 October 1999. The same annual general meeting resolved to continue to charge the defendants agistment at $1 per breeding cow per month. The invoices were issued. The company wished to bring the issue to finality and put it in the hands of solicitors in June – July 2000, after which no more invoices were issued.
78 The plaintiff’s case as to how the invoices came no longer to be issued is straightforward and I accept it. Mr Worrall says that on 4 July 2000 he told Mrs Castrikum no longer to charge agistment fees. He did so, he says, because the company’s solicitor, Mr Spence, advised him that the company should not charge agistment to share 15. Mr Worrall recalls that he was given this advice at the 4 July 2000 general meeting and instructed Mrs Castrikum to stop issuing invoices shortly thereafter. I accept that this is what happened. Mrs Castrikum says that she carried out the instruction. Future invoices to the defendants did not include agistment fees. The first of the invoices that did not include agistment fees was issued on 21 July 2000, only a few weeks after Mr Worrall’s instructions to Mrs Castrikum. The instruction to Mrs Castrikum was, I find, both given and carried out well within the 60 day notice period commencing on 20 June 2000. On these findings there was no time when Ms Adam’s cattle were allegedly trespassing on common property, when the company was issuing invoices to her for their agistment. There is no basis for the defendants to say that the notice for removal upon which the company relies was countermanded by any invoices.
79 But the defendants press upon the Court some other conflicting evidence from Mr Villis, another shareholder. Mr Villis says that his best recollection was that the invoices were issued after the legal advice (not to issue them) came from the company’s solicitors. I prefer Mr Worrall’s evidence to that of Mr Villis on this issue. Mr Villis, Mr Worrall and Mrs Castrikum were present at a reconvened general meeting of the company at Walters Solicitors boardroom on 4 July 2000, the offices where Mr Spence worked. It is likely that the advice and instructions were given on this day. There is no evidence of any invoices being sent out charging for agistment after this date.
80 The defendants alternatively contend that in correspondence that the company’s solicitors accepted that the company needed to reformulate the resolution supporting the 20 June letter to avoid dispute about its validity. In my view the correspondence from the company’s solicitors does not admit that the 20 June 2000 letter is ineffective as a letter of demand. This point is without merit.

8 More than Nominal Damages if Trespass is Established?

81 Question 8 strictly does not arise because the company has not made out its claim in trespass. In deference to the arguments put on both sides on the question short analysis of it is useful.
82 The defendants’ preliminary answer the plaintiff’s claim for mesne profits for trespass is through the introductory words to memorandum clause 2(a). Currawinya’s objects are defined as including the development of the land “on a multiple occupancy basis for the sole use and grant of the members of the company without attempting to make any profits or other gains for the company …” [emphasis added] The defendants say the company is precluded by this Article from attempting to make any profits and therefore is prevented from claiming any mesne profits or any gains through its successful trespass claim. Were the company to ultimately make out a rule or regulation in conformity with the memorandum clause 2(a)(iii) and then to exclude the defendants’ cattle from common property, then this issue may arise. In my opinion though were the company’s trespass claim were to have been otherwise successful this defence would not have prevented a claim for mesne profits for the following reasons.
83 First, the statement of objects in the preamble to memorandum clause 2(a) is not a prohibition against the company making a profit. Currawinya’s memorandum assumes at times the company will make a profit: see for example memorandum clauses 2(h) and (n), (s), (t), (u), (v). The purpose of memorandum clause 2(a), and the constitutions of home unit companies upon which it is modelled, is to characterise the company as other than a commercial venture in which people contribute to a fund of stock in which the company trades but rather to characterise it as an enterprise in which the company’s assets are made available for members for the members’ own use: Wilson v Meudon Pty Ltd [2005] NSWCA 448 per Bryson JA at [16]; [2005] NSWSC 448(2006) ANZ ConvR 93; Fischer v Easthaven Limited [1964] NSWR 261(1964) 80 WN (NSW) 1155 at 1158.
84 Second, the company’s bringing an action for trespass does not intersect with the subject matter of memorandum clause 2(a). By seeking to recover damages to its property for an intentional tort, the company is in no sense within memorandum clause 2(a) ” attempting to make a profit” [emphasis added]. Rather, it is merely recovering compensation in respect of its property against a third party whether that third party be a shareholder or not. The recovery of “mesne profits” is merely a measure of compensatory damages for an intentional tort; it is not the making of a “profit” in a conventional accounting sense: Progressive Mailing House Limited v Tabali Pty Limited [1985] HCA 14(1985) 157 CLR 17 at 39; [1985] HCA 14(1985) 57 ALR 609 and Clifton Securities v Huntley & Ors [1948] 2 All ER 283.

9 Damages by way of Mesne Profits

85 The plaintiffs’ trespass case failed. In consequence it is not necessary to assess mesne profits. There are disputed questions of fact however in this area that it is nevertheless useful to decide should this matter be subject of an appeal in relation to the construction of Currawinya’s constitution. The company claims an entitlement “to agistment fees by way of mesne profits”. In this section the Court’s findings are of the various integers of the calculation that make up the assessment of the damages claimed by the company.

Preliminary Matters

86 Two preliminary matters require consideration. The first is to identify the heads of damage in the mesne profits claim. The second is to distinguish the mesne profits claim from other possible claims.
87 The company only claims agistment fees by way of mesne profits. Its Amended Statement of Claim foreshadowed that further particulars would be provided of other heads of damage for assessment. Such other heads were said to include but to not be limited to damages: for degradation of land; for the frustration or prevention of projects to remediate the land; for the trampling of plantations; and for, the inability of the plaintiff company to take advantage of grants available for environmental purposes. The plaintiff abandoned all of these other heads of damage and proceeded only in respect of agistment fees. There was extensive evidence in the proceedings in relation to the subject matter of these other heads of damage, but little evidence of their cost to the company. In contrast the market rates for agistment fees were supported by the expert evidence of Mr John McMahon, a licensed stock and station agent with experience in organising agistment of cattle in the Tabulam area on behalf of clients.
88 There was a suggestion in the company’s submissions in reply that damages can be awarded on “an unjust enrichment basis”. To the extent the company is suggesting that it has pleaded a claim for unjust enrichment, it seems to me that that issue has not been properly joined by the parties in final submissions. The issue is referred to in the plaintiff’s submissions in reply but has not received attention from the defendants. It is a matter upon which I will need to hear brief submissions from the parties. Directions about that are made at the end of these reasons. Although it must be said that the thrust of the company’s claim in its submissions is founded on a cause of action in trespass, paragraph 13 of the Amended Statement of Claim has within it a degree of debatable ambiguity about ideas of unjust enrichment:

“13. By reason of those acts and trespasses the plaintiff has been deprived of the use and enjoyment of its land and has suffered loss and damage.”

89 The claim in the Amended Statement of Claim for loss by reason of the deprivation of ‘use and enjoyment’ of the land may arguably plead the elements of an unjust enrichment claim. But the relief claimed does not identify a separate claim for unjust enrichment. Paragraph 4 of the relief claimed only seeks “damages”. I will leave open the question of whether, in light of the findings made in this section, the plaintiff is able to claim agistment fees by way of unjust enrichment on the current pleadings. If that claim is permitted its quantum should readily be able to be calculated based upon the findings in this section.

Applicable Legal Principles

90 The plaintiff’s case is that the plaintiff’s entitlement to mesne profits for trespass arises from and continues from the expiry of its final notice of 20 June 2000 to Ms Adam to remove her cattle 60 days later. The applicable legal principles are clear. Once a lease, or by analogy a licence, is determined the licensee commits no breach of covenant by reason of non payment of rent for the unexpired portion; and a lessor who serves a lessee with process for recovery for possession is entitled to mesne profits for the period during which the lessee remains in possession after service: Canas Property Co Ltd v KL Television Services Ltd (1970) 2 QB 433 and Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14(1985) 157 CLR 17 at 39 per Brennan J; [1985] HCA 14(1985) 57 ALR 609. Damages are ordinarily calculated as the real rate of return which the lessor would otherwise have received but for the trespass rather than the rent previously due under the lease:Clifton Securities Limited v Huntley [1948] 2 All ER 3. Although, where the lease has been affirmed the occupation cannot be a trespass so mesne profits will not arise and any payment will be treated as rent: Lidsale Nominees Pty Ltd v Elkharadly [1979] VicRp 10[1979] VR 84.
91 The discussion of the assessment of damages in this section of these reasons assumes that a trespass were to be committed after 19 August 2000 (60 days after the expiry of notice) and that the lease was thereafter not affirmed. Final calculations are not undertaken because they are not necessary because of the dismissal of the trespass claim. Nevertheless the findings here will permit such a calculation to be done if it is ever required.
92 The parties contested two questions on the assessment of damages: what is the applicable rate for agistment; and, what numbers of cattle were run by Ms Adam on common property.
93 The applicable rate for agistment . The parties agreed upon the relevant market rates for agistment. The rates are set out in Mr McMahon’s report. He was not cross-examined. His evidence was that the market weekly rate for agistment of cattle in the Tabulam region from 2000 up to the time of trial did not change. His view was that the rate of agistment varied according to the season, the quality of grass, the nature of water and fencing, the age and description of the cattle, the overall type of country and the proximity to facilities such as sale yards and meat works. In respect of each kind of cattle, weaners, grower cattle, dry adult stock and cows and calves he gave a range of agistment rates (per cow per week). The rates were the following:-

“Weaners – 6-12 months- 75 cents to $1.25 average $1.00Grower cattle – 12-30 months – $1 to $2 average $1.50

Dry adult stock – $1.50 to $2.50 – average $2.00

Cows and calves (depending on calf size) – $2 to $3 average $2.50″

94 The defendants say that the plaintiff cannot rely upon this expert evidence because there is too little certainty about the variables that Mr McMahon identifies. The defendants point to a number of matters to show this uncertainty: the evidence of inadequate fencing on Currawinya on common property and around individual designated areas; the lack of precise evidence about the quality of grass and pasture on Currawinya; the absence of evidence about Currawinya’s proximity to sale yards and meat works. The defendants submit that as a result the company cannot rely upon this expert evidence.
95 I do not agree with this submission. Whilst the evidence is not extensive, there is some evidence about Mr McMahon’s variables from which inferences can be drawn, sufficient to allow the Court to fix something in the range given by Mr McMahon. In such circumstances the courts are required to do the best they can to assess damages on the available materials, poor though they may be: Fink v Fink (1946) 24 CLR 127at 143.
96 Quite a bit can be said about the evidence relating to Mr McMahon’s six variables. The factor of the seasons is self explanatory but it only has the result that the agistment would move within the range Mr McMahon has already given. Although Mr Bickmore said that the grass was not of good quality I infer from the fact that Ms Adam has sought to graze cattle on the property for a long time and has taken an adjoining lease that the grass on Currawinya is not so poor that it has materially affected her decision to agist on Currawinya. The grass is probably not below average quality. There is evidence that the property has been used for grazing for a long time. I can infer that the water quality of the property is excellent. Currawinya is unique in this respect. It lies at the confluence of the Clarence and Cataract Rivers. The very problem presented by this case is that the best pasture areas are those closest to the rivers where most of Currawinya’s residents are also found, creating competition for the use of water on common property in these areas. The water on the property is a very attractive factor for potential agistment. In contrast, I infer the fencing on the property is poor. There are many instances where it has failed or needed to be replaced or has not prevented the straying of stock over the years. The long history of disputes between the plaintiff and the defendants has inhibited investment in such things. If anything, the facilities on the property for the grazing of cattle have been reduced over the years. For example a set of cattle yards were dismantled in the 1990’s, reducing the flexibility for the control and transport of stock. There is extensive evidence from both sides about the age and characteristics of the cattle from which inferences can be drawn. The overall type of country at Currawinya is readily able to be inferred from aerial photographs showing the relative proportion of pasture land to bush country. The poorer quality country, such as undeveloped native bushland becomes was not expressly used by the company as a basis for setting low agistment fees. I infer it is not an obstacle to gaining a reasonable market agistment price. Finally, it can be assumed from the defendants’ continued use of Currawinya’s common property and her holding an adjoining lease, that the property is not so distant from sale yards and meat works as to make agistment on the property uneconomic.
97 Most of these factors cancel one another out. Some factors suggest that Currawinya would command above average market rates for agistment. Other factors suggest below average market rates. In my view it is appropriate to select Mr McMahon’s average market rates for each kind of cattle: weaners $1 per cow per week, grower cattle $1.50 per cow per week, dry adult stock $2 per cow per week and cows and calves $2.50 per cow per week.
98 A related question is whether Mr McMahon’s market rates are relevant at all. The defendant says that the company should be restricted to the previous rate of agistment that the plaintiff actually charged to Ms Adam. But I accept the company’s submission that any rate charged when Ms Adam had permission to run the cattle is not relevant to when Ms Adam is assumed to have run cattle without permission and trespassed upon the property; damages for wrongful occupancy of the land is the reasonable rental value of the land during the time of the defendants:Sommerhalder & Sommerhalder v Burjan & Feigl [1962] SASR 271 at 278 per Travers J. A defendant who without permission wrongfully depastures cattle on the plaintiff’s land will be ordered to pay as damages the reasonable cost of agistment: Yakamia Dairy Pty Ltd v Wood [1976] WAR 57. Mr McMahon’s average market rates, not the company’s prior rates charged to Ms Adam are the appropriate rates to be used.
99 Numbers of Cattle . The company rightly submits that the determination of the numbers of cattle on the property from time to time is difficult. Ms Adam gave precise evidence about the number of cattle on the property from time to time. The company sought to contradict that evidence with its own cattle counts.
100 Ms Adam kept her own record of the cattle she ran on Currawinya since 2000. She would have to do this for her own accounting and taxation reasons. She summarised the import of those records in her affidavit sworn on 30 March 2009. She answered interrogatories to the same effect. There was no problem with the quality of her record keeping. Her records start as a sound basis for assessing the numbers of cattle she ran on Currawinya.
101 The plaintiff’s evidence is based upon a count done from time to time by persons such as Mr Worrall. The plaintiff then draws inferences about the numbers of cattle in later periods. But in my view the evidence of the plaintiff’s head counts is not reliable. Ms Adam is better than these other persons at recognising her own cattle, thereby preventing miscounting. She has an incentive outside this litigation to get the cattle numbers right. Her records show continuity. The plaintiff’s competing head counts are mere snapshots taken for the purposes of litigation.
102 The company challenges Ms Adam’s evidence about her head count. But this challenge does not succeed. She gave larger cattle numbers in a letter to Primac Elders. But I accept that she included other herds of cattle in these numbers. Her evidence explaining this was credible. When Ms Adam said that no one else could tell exactly how many cattle she had on Currawinya I accept that as accurate and I also accept the correctness of the figures for cattle numbers in her answers to interrogatories.
103 One issue in relation to the numbers of cattle on which agistment is payable remains. The defendants rely upon Mr Villis’ evidence that the agistment fee was only paid by reference to the number of breeder cattle being agisted. Ms Adam said the same thing. On the basis of this the defendants submit that mesne profits should only be payable on breeder cattle. I do not accept this submission. It misunderstands the nature of mesne profits which are not based upon prior arrangements between the plaintiff and the defendants but upon market rates in respect of all cattle.
104 There is a residual question about whether any discount should be applied to the agistment rates because Currawinya’s common property might be occupied for agistment by other shareholders’ cattle. Such discounts may be necessary when assessing mesne profits: Viviano v Natoli & Ors (1998) 43 NSWLR 695. But here the evidence is that other shareholders removed their cattle from the property before the end of 1999. Ms Adam continued to assert that other shareholders were running cattle on the property after that date and that has inflated the numbers. I do not accept that that is correct. There may well have been some stray cattle on Currawinya, apart from Ms Adam’ cattle. On the other hand, I do not accept that other shareholders were not systematically running cattle on common property.

Issues on the Cross Claim

105 The defendants raised a further eight remaining issues in the proceedings on the cross claim. For convenience the parties set these issues out in a series of further questions, numbered 10 to 17. Those questions are the following:

“Contract10. Do the constitution of the company or the provisions relied upon by the defendants amount to an agreement for a lease claimed by the defendants ( at no rent, for the term of the defendants’ shareholding, and providing for the exclusive occupation of the land designated to the defendants’ share and a right to occupy the common land, including by way of grazing cattle) and should that agreement be specifically enforced on the application of the defendants?

Class rights of the defendants’ share

11. Was the plaintiff’s purported cancellation of the defendants’ right to graze cattle an invalid variation of class of rights by reason of a failure to adhere to the procedure set out in article 81 of the constitution?

Misrepresentation and estoppel

12. Did the provision of the 1982 minutes and the draft constitution (later adopted as the ‘1986 memorandum’) to the defendants constitute the representations by the plaintiff to the defendants that shareholders, including the defendants if they purchased a share, would by reason of being shareholders be able to graze cattle on the land for the time that they held shares in the company?

13. Is the plaintiff estopped by those representations, the adoption of the 1986 memorandum, the use of the property as a grazing property to the knowledge of the defendants prior to their purchase of their share, the defendants’ subsequent occupation of the area of land designated to their share, the grazing of cattle by the plaintiff and other shareholders from 1986 to 1999 and an assumption created by the plaintiff by reason of these matters and acted on by the defendants by purchasing their share from denying that the defendants are entitled to graze cattle on the common land?

Claims for damages and orders unde the Trade Practices Act

14. What damages have the defendants suffered by reason of:

14.1 any breached of the agreement (in relation to the right to a lease, its entitlement to graze cattle on the common land and to do so without being subjected to any fee); or14.2 any representations being false; and

in the latter case, when were those damages first suffered and is the claim for damages or for orders under section 87 of the Trade Practices Act brought within time?

Oppression15. Does the conduct of the plaintiff, as particularised by the defendants, including in relation to cancelling the defendants’ right to graze cattle on the common land, charging the defendants a fee, commencing and prosecuting proceedings and failing to provide the defendants with a lease as claimed by the defendants separately or collectively amount to oppressive conduct under the Corporations Act and if so, should the plaintiff be ordered to purchase the defendants’ share as independently valued or otherwise be ordered to be wound up?

Winding upon the just and equitable ground

16. In the event that the defendants’ interpretation of the plaintiff’s constitution is upheld, is it just and equitable that the company be wound up on the petition of the defendants on the grounds set out in the defendants’ particulars dated 18 November 2009, in particular on the grounds that the company is at deadlock and/or the company cannot be conducted in the manner the majority wishes?

Appropriate orders

17. What respective declarations and other orders as sought by the parties should be made?”

106 These reasons now deal with these eight Cross Claim questions.

10. Contract

107 The defendants seek specific performance of an alleged agreement between them and the company that by reason their shareholding that they would: be granted a lease in accordance with the 1986 memorandum; be entitled to graze cattle on the common land; and, be free of any fee or any charge by reason of grazing cattle on the common land. The defendants say that the plaintiff failed to provide a lease to them “as provided for by the 1986 memorandum” and purported to withdraw their entitlement to graze cattle on the common land and charge a fee for grazing cattle on common land. Most of these contentions have been decided by the Court’s answers to questions 1 to 9. These reasons have already decided that Currawinya’s constitution gives the company a right enforceable in contract to make rules or regulations which may remove any entitlement of the defendants to graze cattle on common land or to permit the grazing of cattle on common land for a fee. That part of the defendants’ contract claim therefore must fail.
108 But one important issue remains. The defendants’ contend that: that they should be granted a lease in accordance with the 1986 memorandum; that they have at all times remained ready, willing and able to be granted such a lease; that the company, despite being requested to do so, has refused or failed to provide a lease; and, that specific performance of the agreement for lease should be granted against the company.
109 The defendants say that by reason of the company’s breach of contract they have suffered loss and damage measured by the loss of value of their share. These contentions require analysis of the parties’ original lease negotiations.

Leasing Communications Between the Company and the Defendants

110 The question of the form of any lease to be issued by the company to the defendants has been contentious throughout the whole period of the defendants’ shareholding. As has already been explained in these reasons, by late 2008 some 19 shareholders had accepted a common form of lease from the company. The obstacle that now stands in the way of the defendants’ acceptance of such a lease for approximately 15 years is the cattle issue.
111 When the company sent out a draft lease agreement to shareholders on 25 May 1993 the defendants received a copy. The letter explaining the purpose of these leases in the words of the company’s then secretary, MrPeter Leihne was to provide shareholders “with security of tenure and proof of ownership should they wish to raise funds from lending institutions…[and]…they would also underpin some elements of the M and A’s”. Mr Leihne explained that the draft “consisted of some nineteen pages of legalese”. Comments on the draft were sought and the defendants were reminded of the necessity for them to submit a map of their home site area. Mr Liehne’s letter explains why the defendants’ submitted their home site map when they did in about September 1993; as to which see my first judgment: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [35]. But as my first judgment records, there was considerable delay before that home site plan was ” formally accepted”: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at[39]. Despite Mr Leihne’s resolve that it is “time that we followed this through and completed the actions required by the M and A’s as agreed to” , the company did very little to progress the matter of formalizing leases.
112 There was a long period of inaction by the company on finalizing a lease for its shareholders, until the issue re-surfaced during the development of the defendants’ dispute with the company about running cattle on common property. The issue of home site plans was discussed at the general meeting on 25 September 1993. This general meeting is remarkable for its failure to approve any particular form of proprietary lease to be issued to shareholders, given the correspondence that passed earlier in the year. The inaction may be explained by a degree of dissatisfaction with the company’s then solicitors which is evident in the minutes. This is consistent with what happens three years later.
113 The issue re-surfaces in July 1996. At the general meeting on 9 July 1996 it is resolved that one of the shareholders, Mr R Gould “researches or draws up a lease suitable for Currawinya’s shareholders”. It is not clear on the evidence that Mr Gould is legally qualified. Mr Gould presented a simple lease document later that month, which was still some time before the cattle issue came to a head. His draft had abandoned the legal rigour of the May 1993 lease. It dealt with the issue of the shareholders’ use of common property in the following terms:

“Currawinya Pty Ltd also assigns the right to the lessee’s to use the land described as ‘common land’ in conjunction with all other shareholders for common use as agreed from time to time in general meetings of the company.”

After this time all the company’s draft and final executed leases disregard the operation of memorandum clause 2(a)(iii).

114 The three months between December 1996 and March 1997 were a critical turning point in the relationship between the company and the defendants. Ms Adam resigned as a director. The company adopted the simple form of lease drafted by Mr R Gould. The company’s minutes first begin to record actions to remove private cattle from common property. These events have interconnections. After becoming a director in 1994 Ms Adam resigned by letter on 4 December 1996. She cited mistreatment of her partner and the behaviour of some residents as her reason for resigning. Some incidents at the cattle yards shortly before she wrote seem to have been the foundation of her concerns. From this time on it can be fairly said that relations between the defendants (in particular Ms Adam) and a majority of shareholders were characterised by incidents of open hostility. The notice of general meeting scheduled for 16 March 1997 issued on 18 January 1997 foreshadowed that the meeting would discuss the choice of leases between the solicitor’s draft from 1993 or Mr Gould’s more recent draft lease. The mood was starting to turn against cattle owners by the time of the March meeting. Mr Gould’s November draft had deleted from paragraph 5 the words “for example at this stage each shareholding may run 30 adult cattle on common land provided that the total herd on the property does not exceed 300”. Ultimately in 2005 the clause contained an express prohibition upon cattle roaming on common property. The 16 March 1997 meeting notes Ms Adam’s resignation, sends the ‘Gould’ version of the proprietary lease to the company’s solicitor for assessment (apparently preferring it to the earlier solicitor’s draft) and commences considering a policy of excluding cattle from Currawinya’s rivers.
115 Very little happens in relation to leases from then for two years until just after the 13 March 1999 meeting. Ms Adam says in her evidence that she had been requesting a lease since she purchased her share and had been in verbal correspondence with the company since that time. I do not think that this is correct. The issue reappeared just after 13 March 1999. From then until 2003 the parties developed entrenched positions which they have maintained right through until the hearing of the proceedings.
116 At the next Currawinya general meeting after 13 March 1999, which was held on 29 May 1999, the defendants proposed the following Motion which appears to have lapsed, apparently for want of a seconder:-

“13. That leases be issued to shareholders forthwith; such leases to state the rights of shareholders to use not taken up by other shareholders, and their responsibilities in caring for such spaces, in the best interests of the Company. Note that ‘ lease’ means ‘a wider occupancy'”.

From this time on I accept that the defendants were requesting a form of lease from the company. Their interest in the subject appears to have stimulated attention to the issue on the company’s part.

117 A “Revised Final Draft” of Mr Gould’s lease was produced in 2000. There is no evidence that the company progressed the draft in 2000 or 2001. On 22 February 2002 Ms Adam’ solicitor required “that a lease be prepared and executed in her favour in relation to the land presently occupied by her pursuant to the company memorandums within 21 days of the date hereof” (sic), and the solicitor noted “numerous requests over a long period of time” for a lease. Another draft lease was discussed at a general meeting on 19 June 2002 but this version did not deal with rights in relation to common property at all.
118 Something like what became the final current version of lease first appears in October 2002 and was referred to a re-convened general meeting held on 11 January 2003. On 4 February 2003 the defendants’ solicitors were sent a copy of the lease. It contains the relevant clauses in relation to the use of and cattle on common property that are set out earlier in these reasons.
119 In response, the defendants’ position has been to reject this lease as “not in appropriate form”. In her affidavit evidence in these proceedings sworn in March 2009 Ms Adam expressed a preference for the 26 May 1993 version of the lease. Back in 2003-2004 her indications of what would be “an appropriate lease” were anything but clear in her correspondence. In May 2003 she criticised the company’s approved lease. In November 2003 she asked “where is our lease”. In April 2004 she stated “the perpetual leases owed to all shareholders….are parts of the agreement that continue to be withheld from the shareholders”. By the second half of 2003 other shareholders had commenced to sign the approved form of lease. The defendants did not press in writing for the issue to them of a proprietary lease in a particular form.
120 In my view it is fair to say on this history that the company has never offered to the plaintiffs a lease that conforms with the memorandum and articles of association as these reasons interpret their operation. But nor have the defendants clearly asked for the issue of a lease to them in a form which conforms to these reasons and with my first judgment. The defendants complicated their request for a lease with the parallel assertion of an entitlement to graze cattle on the common land arising out of Currawinya’s memorandum and articles of association. So much was clear from their solicitor’s response to the draft lease to be presented to the 19 June 2002 general meeting. The defendants’ solicitors asserted on 12 June 2002 that the removal of cattle on common property “could be in violation and contradiction to the memorandum and articles of the company”. The contract plea in paragraphs 10 and 11 of the Statement of Cross Claim bundles the issue of the grant of a lease in accordance with the contract recorded in the constitution up with the defendants’ alleged entitlement to graze cattle on common land. The pleading does not ask for a lease that does not enshrine the defendants’ claim to an entitlement to graze cattle on the common land. This is evident from clauses 10 and 11 of the Cross Claim. The formulation of question 10 for the Court expresses the same composite idea.

Breach and the Remedy of Specific Performance

121 The company has not breached its contract with the defendants represented by Currawinya’s memorandum of Association. The company has not breached the contract the defendants plead in paragraphs 10 and 11 of the Cross Claim, because the defendants do not have an entitlement to a lease which entrenches their entitlement to graze cattle on common property. They had no basis to ask for such a lease and the company was not in breach of the Articles by not giving such a lease to them. Ms Adam has clearly said that she would not accept a lease which said she could not run cattle on common land or which excluded animals kept for commercial exploitation from the common land. This is what the lease presently offered to her says and is why she has rejected it.
122 That is enough to dismiss the defendants’ claim in contract. I accept that the defendants have at all times remained ready, willing and able to accept the lease confirming their entitlement to graze cattle on common land. But they have not demonstrated that they are ready, willing and able to accept the lease in conformity with the company’s constitution as interpreted by this Court. They may yet do so. But that time has not yet arisen. Such a lease has neither been asked of the company nor offered to the defendants. Specific performance of such a contract should not now be granted. It is not the case pleaded in the Cross Claim. The defendants have not shown that they are ready, willing and able to perform such a contract.
123 The company’s existing lease to shareholders and in particular clause 5a does not conform with Currawinya’s constitution for the reasons already explained. The company’s offer of this lease to the defendants does not assist the defendants pleaded action for specific performance. It is not necessary for the Court to consider any other basis on which specific performance of the contract for lease might be refused.

11. Class Rights

124 The defendants argue that Curawinya’s purported cancellation of their rights to graze cattle on common property on 13 March 1999 was an invalid variation of class rights because the company failed to adhere to the procedures set out in Article 81 of the company’s constitution. The defendants put this argument separately from their argument that the resolution is invalid because of a failure to comply with memorandum clause 4, a matter which I determined against the defendants in my first judgment: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666, [73] to [78]. Article 81 of Currawinya’s articles of association provides conditions for the variation of class rights:

“81. If at any time the share capital is divided into different classes of shares, the rights attached to any class ( unless otherwise provided by the terms of issues shown later in these Articles) may be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provisions of these regulations relating to general meetings shall mutatis mutandis apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class that any holder of shares of the class present in person or by proxy may demand a poll.”

125 The defendants’ argument is that their share in Currawinya “is a separate class of share as it entitles them to occupy their designated area. As such, it is a class of one”. The defendants say that Article 81 applies and that 75 per cent of the shares of that class need to consent in writing to change the rights attaching to those shares. The submission is maintained notwithstanding that Currawinya’s share register records all shares as “ordinary” class shares. The March 1999 Corporations Law statutory regime provided a procedure for varying or cancelling rights attached to shares in a class of shares, whether or not the constitution provided such a procedure: Corporations Law , s 246B-s246F(introduced to the Corporations Law provisions on 1 July 1998). Corporations Act s 246B-s246G are in identical terms. In passing the 13 March 1999 resolution the company did not follow the procedure provided for in Article 81 and Corporations Law s 246-246F. The question is whether any of these provisions apply because the defendants were the holders of a separate class of shares notwithstanding their designation as ordinary shares.
126 The right to use Currawinya’s common property pursuant to a supplementary licence is not a right attached to a class of shares of which the defendants are the sole members, as was the case in Wilson v Meudon Pty Ltd [2005] NSWCA 448. Rather, the right in question is a right possessed by all ordinary shareholders. Although it is not without its difficulties, the defendants’ argument that each share with its separate entitlement to a different designated area is in a class of its own may be accepted for the sake of argument as being consistent with Wilson v Meudon Pty Ltd [2005] NSWCA 448. Although Currawinya’s Articles do not expressly entitle the defendants to a particular designated area of land they nevertheless provide a procedure by which the defendants’ entitlement to a particular designated area may be made certain. Once that procedure is followed, as it was here, the right to occupy a designated area is arguably a right conferred upon the defendants’ in their capacity as member of the company attracting the operation of section 246B-F: Cumbrian Newspapers Group Ltd v Cumberland & Westmoreland Herald Newspaper & Printing Co Ltd [1987] Ch 1and Wilson & Anor v Meudon Pty Ltd & Anor [2005] NSWCA 448at [28]; [2005] NSWSC 448(2006) ANZ Conv R 93. But the difficulty with the defendants’ argument is that the supplementary licence to use common property which is the precise right in dispute in these proceedings is a licence that exists in identical terms for all shareholders irrespective of the designated area that each shareholder occupies. It is not a right which relates to a particular designated area. It is not a right attached to any sub class of shares smaller than the class of all ordinary shareholders.
127 I have found against the defendants on this argument. The plaintiff contended that the defendants could not take this point in the proceedings because the defendants had narrowed their arguments to the issues determined in question 2 of my first judgment. But the point was clearly flagged in the defendants’ first round of written submissions. There is no prejudice to the plaintiff in my determining the matter.

12 & 13 The Defendants’ Misrepresentation and Estoppel Case

128 The defendants claim that they purchased their share from Mr Bordet in July 1986 in the course of trade and commerce. They say that the company represented to them that in the event that they were to acquire Mr Bordet’s share they would be able to graze cattle on the land by reason of being shareholders. The substance of the alleged misrepresentation is said to be contained in certain minutes of the meeting of the company held in 1982 and the new memorandum of Article of Association of the company adopted in May 1986 just before the defendants acquired their shares in July. There are two other pieces of context to the representation that the defendants rely upon. Ms Adam says she saw cattle grazing upon the property before she and her brother purchased the share. She also read other documents of the company created between 1975 and 1982, Mr Murray Slavin’s “Design Farm” document dated 25 August 1975, Mr Slavin’s report of 12 September 1978, minutes of the general meeting at Currawinya on 15 May 1979, minutes of the meeting of Currawinya dated 15 November 1981 and finally the minutes of the meeting of Currawinya on 4 September 1982.
129 The defendants advanced arguments in respect of their estoppel and misrepresentation claims together. It is convenient to consider them together in these reasons. Both of the claims fail. The defendants do not rely upon on any oral representations made on behalf of the company.
130 I accept that Ms Adam read the several documents that she says that she read and that she saw cattle grazing on Currawinya’s current property when she was negotiating with Mr Bordet. The threshold problem for the misrepresentation case is that the representations said to have been relied upon are not made out. To understand how this conclusion is to be drawn it is first necessary to go back to Currawinya’s foundation.

Currawinya – The Early Years

131 To assess the defendants misrepresentation claim an understanding of the early structure of Currawinya is necessary. The only one of the witnesses that gave evidence in the proceedings who was an original shareholder in Curawinya was Mr Bruce Worrall. I accept his account of the early affairs of Currawinya. He purchased his share as a founding member of Currawinya in 1976 by contributing $8,500, paying $2,500 as a deposit and the balance over the following eight years.
132 Currawinya was founded as a kind of idyllic rural community. The founders based their community on a philosophy of sharing the riches of nature’s environment, propounded by the native American Chief Seattle, who negotiated the sale of land to the US government in about 1854. It is a community that ideally should never have had to resort to the Courts. The company adopted a memorandum of articles of association on 6 August 1976 which is now of only historical interest. The company’s present memorandum of articles of association was adopted on 10 May 1986 after discussions among members in the early 1980s. The discussions for a new constitution took place in parallel with a change in the ownership of Currawinya.
133 Until 1975 Currawinya was owned by a Mr Tom Hamilton. He used it to graze cattle. In 1975 Mr Murray Slavin was a moving force promoting a proposal by Currawinya to set up a rural community on it. Mr Slavin laid out funds to procure an option to purchase the property and sought to raise funds to complete the purchase. He sent out his vision for Currawinya in a document entitled “Design Farm” dated 25 August 1975. It and subsequent documents of that period are of some importance for the misrepresentation claim. Ms Adam says she relied upon these documents to buy shares in the company. She says she looked at them when she attended the property whilst on holidays in the Christmas vacation of 1985 and 1986 and relied upon them a few months later in purchasing her shares.
134 Mr Slavin raised sufficient money for the purchase. He exercised the option to acquire Currawinya for $92,000 on 2 September 1976. At the same time he executed a deed of trust acknowledging that upon his purchase of the land, he held it as trustee on behalf of the company.

The structure of Mr Slavin as trustee on behalf of Currawinya was used because there were practical restrictions on dealing with non-freehold title owned by corporate entity in the State of New South Wales at that time: Crown Lands Consolidation Act 1913, s 44(5). The intention was that the company would receive title to the land once it had been converted to freehold. The land then purchased is identical to the land now held by Currawinya.

135 An interesting feature of Mr Slavin’s “Design Farm” document of August 1975 is that it did contemplate the possibility of cattle being grazed on Currawinya but expressed views about the limited future of that activity:

“We are personally against the idea of having cattle on the property on a long term basis. However, while the land is becoming established, and while there are fairly heavy repayment commitments, we feel that we must investigate all possible methods of obtaining income. Heifers can be bought on present markets for about $25/head and sold after a year for at least $50/head (the short term market has converted to soya bean).The land is free from most diseases that affect stock, and we believe we can maintain this by establishing quarantine paddocks and not overstocking.

There is such a large range of micro climates and vegetation on the site, we feel that there is enormous scope for growing fruit, nuts, vegetables, herbs, flowers and grains that range from those found around most of the extent of the east coast of Australia.”

136 When speaking as “we” in the August 1975 “Design Farm” document Mr Slavin appears to be speaking on behalf of himself and a number of other promoters of the idea of purchasing Currawinya.
137 As an interim measure, until Currawinya’s titles were converted to freehold, the company was left somewhat dormant and in the control of nominees. During this period the occupants of Currawinya conducted themselves through a kind of informal voluntary association. The company’s interim custodians were Mr John Axtens, a solicitor, and Mr Regan, another solicitor, both from the Lismore legal firm Page, Regan & Axtens, who had acted on the purchase. They held one share each in the company’s capital.
138 The early voluntary association that informally ran Currawinya never seems to have had a constitution or any agreed governing rules. Later on 5 February 1982 Messrs Page Regan & Axtens stated in correspondence that that firm had ” no record of the establishment of rules for the voluntary association”, as they made suggestions for the adoption of suggested rules. At a meeting later that year, in September 1982, extensive discussion took place about provisions that might be included in a set of rules for a voluntary association. A general consensus seems to have been reached about this subject but there is no evidence that this consensus was ever converted into a more formal set of rules. Rather it stayed as a draft set of minutes of meeting dated 4 September 1982.
139 From September 1978 Currawinya’s company directors were Mr Slavin and Mr Hugh Ellicot. Mr Ellicot was also the company secretary. Mr Ellicot was an original member of the Currawinya community.
140 Currawinya first began to resemble its modern shareholding structure in 1984. On 12 May 1984 the voluntary association met and resolved to transfer the shares in Currawinya from Mr Regan and Mr Axtens to Mr Slavin and Mr Phil Clark. At the same meeting it was resolved that further shares be issued to persons who were considered at the time to be members of the voluntary association and to be entitled to ownership of shares of Curawinya. Later the same year the company’s solicitors WP Walters & Company recorded the shares that had been issued to each shareholder. The partner handling the company’s affairs, Mr A.B. Pagotto reported that the changes to Currawinya’s land title had progressed to the point that Mr Slavin could now transfer the land to the company.
141 One aspect of that land transfer is of continuing significance in these proceedings. The defendants have argued in this case that they have a direct interest in the land independent of their shareholding in the company. They ultimately abandoned such a case. Aspects of that case are considered below. But the idea of individual shareholders retained an interest in Currawinya’s land is incompatible with the way that this transfer of the land to the company was approached in 1984. Mr Pagotto reported to the company that nominal stamp duty of $6 only would be levied on the instrument of transfer of the land from Mr Slavin to the company on the basis that the company could provide to the Commissioner of Stamp Duties “sufficient proof of payment of the purchase money for the land by the company rather than Mr Slavin”. Mr Pagotto acknowledged that the purchase moneys were provided by the members of the community rather than the company but he went on to say “although we are confident the commissioner would accept our argument that the persons providing the purchase moneys were in fact doing so as shareholders and members of the company”. The argument seems to have been a reasonable one. The company existed at the time of the purchase of the land. The proper inference in the circumstances is that those person that provided money to Mr Slavin did so in the expectation of having shares in the company issued to them.
142 Once shares in Currawinya had been issued the process of re-drafting the memorandum and articles of association of the company began. Mr Pagotto gave instructions to undertake this process by November 1984. It was completed almost two years later when the company adopted its present Articles on 10 May 1986. The new Articles appeared to provoke lively debate among shareholders. Amendment was necessary because the 1976 Articles were a poor vehicle for the kind of community that the shareholders wished to develop. Those 1976 Articles did not include any limitation on the power of the company to sell the land or any reference to the rights of shareholders to occupy individual sites. On the other hand, the consensus which had been reached at the meeting of 4 September 1982 was more directed towards ordering a voluntary association than creating a suitable constitution for Currawinya. In the course of the debate about a new constitution Mr Pagotto reiterated to one shareholder, Mr Gene Mapp, his view that “there is no doubt from the Deed of Trust that it was the intention of the company and of the parties at the time that Mr Slavin would hold the land as Trustee for the company and not as Trustee for the individual shareholders”. He explained that a principal task of the re-drafting process was to ensure that the new constitution allowed agreements to be reached between all members as to the exclusive occupation of particular portions of Currawinya’s land by particular members in order to prevent the recurrence of problems about land occupation which had already occurred by 1984. The detail of the debate among members is not of present importance. But there can be little doubt that Mr Pagotto emphasised to all shareholders at the time the very message he recorded in correspondence on many occasions, that the company was a legal and beneficial owner of Currawinya’s land. Mr Pagotto died before these proceedings came on for hearing.
143 The inference that the company is itself the beneficial owner of Currawinya’s land is assisted by an examination of the minutes of the general meeting of the company at the time the land was transferred from Mr Slavin to the company. There is no evidence that anything other than a nominal $6 duty was actually paid. No larger sum seems to have been budgeted for or debated. The minutes do not contain consistent shareholders’ assertions of a beneficial interest in Currawinya’s land. It must be said though that one or two individual shareholders such as Mr Mapp did maintain eccentric positions that they were beneficially entitled to a particular part of the company’s property. From time to time after 1986 some correspondence from the company also mistakenly refers to shareholders as having beneficial entitlements to the company’s land. These statements are an expression of an erroneous view of the position or are merely a description of shareholder’s rights to the lease of their designated area.
144 On 10 May 1986 Currawinya’s members adopted its present constitution in general meeting. I accept the correctness of the company’s analysis of what happened at this time. As a result of the adoption of these new articles by the company the members of the informal association exchanged whatever their rights were as association members for rights as shareholders according to Currawinya’s articles. This is consistent with the way the shareholders have conducted the affairs of the company ever since. References to the voluntary association in the minutes of meeting of the company and in correspondence die away from May 1986. The company’s minutes from this time are not consistent with the idea that any part of the company’s business was being managed externally by some voluntary association.
145 The defendants occasionally adopted in evidence and submissions a position taken by Mr Douglas Heyman, a shareholder who challenged the company’s right to seek compensation from him for damage caused to cattle yards, on the basis that the company was not the legal and beneficial owner of Currawinya’s property. The defendants did not ultimately press this case upon the Court. They advanced their claims in these proceedings on the basis of their entitlements as shareholders of the company under the present articles, rather than as beneficial owners of the land outside the company structure.

The Defendants’ Purchase of their Shares

146 The timing of the adoption of the new articles of association and the abandonment of the old voluntary association are of importance in relation to the defendants’ acquisition of their share from Mr Bordet. Part of Ms Adam’s misrepresentation case is that she says that she thought she was entitled to run cattle on Currawinya because of misrepresentations made to her by the company in documents created between 1975 and 1982. But by the time of her purchase in 1986 documents describing the intentions of occupiers of Currawinya between 1975 and 1982 had been wholly superseded by the adoption of Currawinya’s new constitution and the fading away of the voluntary association.
147 Ms Adam and her brother Mr Bickmore agreed to purchase Mr Bordet’s share in Currawinya for $15,000. They paid a deposit of $500 in July 1986 and the balance of the purchase price over time. They paid $5,200 between then and February and 1989. The final payment was made on 4 May 1989 when Ms Adam flew from Melbourne to Lismore to make it to Mr Bordet. I accept Ms Adam’ evidence that this is when she paid the money.
148 There were protracted delays before the company issued a share certificate (certificate no. 15) to the defendants, seven years later on 10 June 1996. The reason for this delay is a matter of dispute in the proceedings. But it is not a dispute which the Court needs to resolve. Ms Adam says that she understood that the company had been advised by her solicitor of the final payment and that he was attending to the transfer with the company. Whatever documentation was prepared in 1989 seems to have been lost at the time. A fresh share transfer from Mr Bordet to the defendants for an express consideration of $15,000 was signed on 19 April 1993. Stamp duty on this transfer seems to have been paid at the same time as the company issued a share certificate to the defendants on 10 June 1996.
149 Ms Adam moved from Melbourne to the northern rivers district in 1994. She says and I accept, that she did so with the intention of building a cabin on the home site that she and her brother had selected at Currawinya. Because of existing conflict among shareholders and legal action in which the company was then involved, unrelated to these proceedings, she decided to buy a house in Lismore but was nevertheless elected as a director of the company. This short history enables analysis of the defendants’ misrepresentation case.

Analysis of the Misrepresentation Case

150 The current constitution of Currawinya, called in the pleadings “the 1986 memorandum”, was shown to Ms Adam in 1986 as a proposal. It contains no representation that shareholders had any revocable right to graze cattle on common property. My findings to questions one and two in my first judgment make clear that there was no such right. All that the 1986 memorandum represents to a reader is that upon becoming a shareholder that the company would perform the contract represented by the memorandum of articles of association in accordance with its terms. Those terms include the making of rules and regulations which might modify the use that shareholders could make of common property and which might exclude its future use for grazing purposes. Had the defendants’ arguments succeeded in establishing that Curawinya’s constitution gave them a right to graze cattle on common property, then the representation that they seek to press out of the current articles may have had substance. But they failed on that argument. No representation arises from the current articles.
151 Nor does any representation arise from the other documents that Ms Adam was shown. None of these documents assist her case.

(a) The Design Farm Document of 25 August 1975 . This document is inconsistent with any contention that Currawinya’s shareholders had an irrevocable entitlement to graze cattle on its common property. It clearly contemplates the future cessation of cattle grazing. It is the foundation document which was designed to attract shareholders to invest in the acquisition of Currawinya. The later documents from the same period should best be read having regard to it. 
(b) Minutes of the 4 September 1982 Meeting . This document says nothing about how Currawinya was to be administered as a company under its articles of association adopted in May 1986. The 4 September 1982 minutes do not mention cattle. Nor do they make any statements about how Currawinya’s common property should be used by shareholders. The minutes relate to an outdated legal structure in which Mr Murray Slavin was holding Currawinya’s land as trustee for the company when the decision making structure for Currawinya was thought to involve a voluntary association. It assumes in places that occupiers of Curawinya have a direct equitable interest in the property outside the corporate structure by reference to their individual contributions to the acquisition of the land. The 4 September 1982 minutes reflect a compromise reached among Currawinya’s then occupiers and describes itself as “a sincere and successful attempt to break the impasse that has bedevilled Currawinya’s history since 1976”. This compromise was superseded by more enduring structural change in 1986. In my view the 4 September 1982 minutes did not make a representation to the defendants to rely upon for any purpose related to the operation of the company’s constitution. Ms Adam may well have not understood the profound clarification to the rights of members that occurred when the current constitution was adopted in May 1986, just before she and her brother purchased their share. But she had notice of the change. It was open to her to obtain legal advice about it. 
(c) The other documents. None of the other documents that the defendants relied upon provide any support for the making of a representation to the effect that by reason of being shareholders the defendants were “able to graze cattle on the land at the time they held shares in the company”. Mr Slavin’s report of 12 September 1978 says nothing about the grazing of cattle or the use of common property. The minutes of meeting of 15 May 1979 assume that some grazing of domestic animals will occur on parts of Currawinya but those minutes make no representation that this situation will continue indefinitely. The minutes of the meeting of 25 November 1981 say nothing about the use of Currawinya’s common property. They refer to a contemplated form of ownership that never came to pass, “once the free holding is complete, the company will hold the land in trust for a voluntary association (made up of all the shareholders). These minutes speak to a structure which never existed.

152 The defendants also claim a representation is made that they were able to graze cattle on the land for the whole time they held shares in the company from the fact that there were domestic animals grazing on common property up until the time they purchased their share from Mr Bordet. In my view all that this circumstance shows is that the company had given permission for the time being for domestic animals to be grazed on Currawinya’s common property. This circumstance was not in itself a basis to infer that that permission would continue for as long as the defendants remained shareholders.
153 There are yet other problems with the misrepresentation case. The Court is reluctant to infer any representation of the kind alleged, when the transaction in which the defendants’ share was acquired was a private sale from Mr Bordet undertaken outside the sale mechanism mandated by Article 103 of the current Articles (requiring proposed sales to be made through the company). The defendants’ private dealings with Mr Bordet were not consistent with this mechanism. It is difficult to infer that the defendants were the objects of any representation from the company or authorised by it in respect of a sale being undertaken contrary to its procedures. I accept the company’s case that until about 1993 it had no knowledge that the defendants had acquired Mr Bordet’s share. For example the minutes of the 1991 annual general meeting refer to a share registered to Mr Bordet, without any reference to the defendants. The company’s secretary wrote to shareholders on 11 November 1992 referring to amounts due in relation to the share owned by Mr Bordet. The evidence supports the conclusion that some general information had come to the attention of individual shareholders that Mr Bordet had sold his share. But the company had not been officially informed of it.
154 I conclude that the representation that the defendants allege that the company made to them that they were able to graze cattle on the land for the time they held shares in the company is not made out.

Estoppel

155 The defendants’ estoppel case relies upon the same facts as the misrepresentation case. The defendants say that the plaintiff’s alleged representations created an assumption on the defendants’ part that they were entitled to graze cattle on common land. The estoppel is completed by the defendants pointing to their purchase of the shares and other conduct, as acting to their detriment in reliance upon assumption so created.
156 For the reasons expressed in relation to the defendants’ misrepresentation claim, the defendants’ estoppel claim also fails for want of proof that a representation was made founding the estoppel. Equally, I am not prepared to infer that the defendants acted to their detriment on the basis of any such representations.
157 The defendants have not made out one element of the estoppel case which is additional to the misrepresentation case. The estoppel case depends upon a contention that the matters pleaded entitle the defendants to make “an assumption that a lease would be granted to them permitting inter alia the cross claimants to graze cattle on the common land”. The estoppel pleaded appears to be an equitable estoppel of the type accepted by the High Court in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7(1988) 164 CLR 387 at 399; [1988] HCA 7;(1988) 76 ALR 513. An element of such estoppels, attracting the intervention of equity as a court of conscience, is that the defendant knew or intended the plaintiff to act or abstain from acting in reliance on the relevant assumption or expectation: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7(1988) 164 CLR 387 per Brennan J at 428-9. Here the defendants have not established this element. The company did not know anything of their purchase from Mr Bordet until about 1993. There cannot have been any unconscientious inducement of the defendants to hold the relevant assumption.

14 Claims for Damages and Orders under the Trade Practices Act

158 Question 14 asks what damages the defendants have suffered by reason of any breaches of the agreement referred to in question 10 and in relation to any false representations referred to in question 12. The Court has not found any breach of the agreement pleaded in the Cross Claim. Nor has the Court found any misleading conduct on the part of the company nor any basis for a claim in estoppel against it. Accordingly, the defendants’ claim for Trade Practices Acts 87 relief also fails. It is unnecessary therefore for the Court to consider whether those claims for relief are out of time as has been pleaded in the Defence to Cross Claim.
159 In final submissions the defendants limited this claim for damages to such amount as may be found to be payable by them on the Statement of Claim for the alleged trespass. But as these reasons already show the company’s claim for damages for trespass has also failed.

15 & 16 Oppression and Winding Upon the Just and Equitable Ground

160 The defendants advanced their Cross Claim for relief against the alleged oppressive conduct of Currawinya’s affairs, if their interpretation of Currawinya’s constitution were upheld. The Court has not upheld that claim. So the claim for relief under Corporations Act , ss 232 and 233falls away. It is not desirable for the court to make any findings as to its subject matter because the claim may re-emerge at some future time, unless the Court’s current findings lead to a final resolution of the differences between the parties.
161 The defendants supplied detailed particulars of their claim of the oppressive conduct of Currawinya’s affairs. The principal events said to constitute the oppressive conduct occurred during the period 1999 to 2005. Their effects are said to continue. But the allegations of oppression are so connected with the defendants’ allegations that they had a right to graze cattle on common property that, if any claim for oppression were now to be pursued, it would need to be substantially re-formulated. The oppressive conduct alleged in the company’s affairs included the 13 March 1999 resolution, the charging of agistment fees, the commencement of these proceedings and the failure to provide the defendants with a lease. There were others too. But these allegations now look substantially different as a result of these reasons. It may be these allegations are not to be pursued any further. I will allow a short period for the defendants to indicate what course they propose to take in relation to this claim.

17 Relief, Mediation and Costs

162 There is much to be done as a result of this judgment to regulate future legal relations between the company and the defendants. For example, the company will presumably set about issuing a lease to the defendants in a form that conforms to these reasons. The defendants too may have to prepare themselves for the possibility that the company creates a valid rule or regulation under memorandum clause 2(a)(iii) that excludes cattle from common areas.
163 Aspects of this litigation remain unresolved. Principal among these is the question of costs. The plaintiff has been successful on some issues and the defendants on others. The costs outcome of the proceedings will be the subject of contest. For example, it may be argued by each party that, whatever the formal outcome, that the proceedings have in substance either been occasioned or been prolonged by the conduct of the other party. Directions for a timetable of submissions on costs will need to be provided for in short minutes of order.
164 I am minded to order, pursuant to Civil Procedure Act 2005s 26, that mediation now occur between the parties. Before directing mediation I will give the parties an opportunity to put submissions, as to whether or not such an order should be made. The Court has power to make such an order whether or not the parties consent. I will not make such order without hearing from the parties further because I do not know whether such attempts have already been tried in recent times and failed. It may be that these reasons for decision creates sufficient clarity for the future organisation of Currawinya’s affairs and of the respective legal rights of the company and the defendants, that there is some real prospect that mediation will be successful in the future when it has not been in the past. I regard mediation as highly desirable at this point. Relations between the parties to the proceedings are very bitter. This legal dispute is very protracted, relating as it does to resolutions passed in 1999. It is far better that the parties spend their resources on improving Currawinya than on further legal disputes. In considering the possibility of mediation and their future relations the parties could do a great deal worse than pay regard to the words of the great late eighteenth century Anglo-Irish statesman and philosopher, Edmund Burke who said of compromise in another context, “All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter”.

Conclusions and Orders

165 In conclusion, I have found that the 13 March 1999 resolution passed in general meeting did not create a valid rule or regulation under Currawinya’s memorandum of association clause 2(a)(iii). It was not effective in my view, to prevent the defendants from utilising the company’s common property by the grazing of cows pursuant to a licence to do so which they enjoyed. I have found that the company’s trespass claim fails. But I have also found that the 13 March 1999 resolution does not modify any rights to a class of shares of which the defendants are the sole members. Nor do the defendants’ contract claim, misrepresentation claim, or estoppel claim succeed. I have found that the defendants were not entitled to the lease to which they claim to be entitled. But on the other hand the company has not offered a lease to the defendants, or indeed any other shareholders in conformity with the company’s constitution. Nor did the company mislead the defendants about their right to graze cattle on Currawinya when they acquired their shares from Mr Bordet in 1986.
166 The parties should provide submissions: as to the future course, if any, of the defendants’ claims under Corporations Actss 232 and 233; as to whether or not the proceedings should be mediated at this point and finally as to questions of costs.
167 I direct the parties to bring in short minutes of order to give effect to these reasons.

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