Primary Securities Limited v Aurora Funds Management Limited

BELL P: I agree with the reasons and orders proposed by White JA.

LEEMING JA: I agree with White JA.

WHITE JA: This is an appeal from orders of the Equity Division (Rees J) of 30 May 2019. The proceedings before the primary judge concerned the validity of resolutions passed at a meeting held on 15 January 2019 of members of a listed management investment scheme called Aurora Absolute Return Fund (“ABW”). At least prior to 15 January 2019, the respondent, Aurora Funds Management Limited (“Aurora”), was the responsible entity of the fund.

The resolutions purportedly passed at the meeting of members of the fund on 15 January 2019 included that Aurora be removed as responsible entity of ABW and that the appellant, Primary Securities Limited (“Primary”) be appointed as the new responsible entity of the fund. Those attending either in person or by proxy also purportedly resolved to amend the fund’s constitution. That resolution was proposed in return for Primary’s agreeing to take on the role of responsible entity.

The primary judge made the following declarations and orders (In the matter of Aurora Funds Management Limited [2019] NSWSC 626 at [170]):

The meeting was not convened by Aurora. It was purportedly called by Primary as agent for unidentified members (at [52]-[55] below). The meeting was purportedly called by members pursuant to s 252D of the Corporations Act 2001 (Cth). [1] The primary judge held that the notice calling the meeting was not valid because it was a requirement of s 252D(2) that the members calling the meeting be identified in the notice. Her Honour held that the notice was invalid and the meeting was not validly convened (J [141]).

The primary judge held that the failure to identify, in the notice of meeting, the members calling the meeting was a substantive, and not procedural, irregularity and hence s 1322(2) of the Corporations Act did not apply. Primary did not seek an order under s 1322(4) (J [167]).

This was the first basis upon which the primary judge held that the meeting and resolutions were valid.

At least 21 days’ notice of the meeting was required to be given to members (s 252F). The primary judge found that 75 per cent of members received 21 days’ notice of the meeting, a further 25 per cent of members received 15 days’ notice and three members received no notice at all (J [118]).

Section 1322 of the Corporations Act relevantly provides:

The primary judge concluded that because the required notice had not been given and for the reasons referred to in the passage quoted below, substantial injustice had been or was likely to be caused if the resolutions were permitted to stand as the result of procedural irregularities. Those reasons were identified as follows (at J [169]):

This was the second basis upon which the primary judge found that the meeting and resolutions were invalid.

Primary challenges the primary judge’s findings on both bases.

By a notice of contention Aurora seeks to uphold the primary judge’s decision on grounds additional to those upon which the primary judge relied. Aurora contends that the primary judge ought also to have found that the notice of meeting and explanatory memorandum were not sent to the directors and to its auditor within 21 days of the meeting, and that this was a substantive irregularity, or, alternatively, was a procedural irregularity that caused substantial injustice.

Aurora also submits that by itself, and irrespective of other findings, the primary judge’s finding that 25 per cent of members received 15 days’ notice and three members received no notice at all should have been characterised as a substantive and not a procedural irregularity to which s 1322(2) of the Corporations Act did not apply and that the meeting was invalid on that additional ground.

Aurora also contended that the primary judge ought to have declared that the meeting was invalid on the additional ground that the explanatory memorandum was misleading and deceptive, contrary to s 18 of the Australian Consumer Law and/or s 1041H of the Corporations Act or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) by not disclosing that two members, Mr Tim Staermose and Wonfair Investments Pty Ltd (“Wonfair”), together with some of their clients, and a Mr Michael Rigoni, collectively held about 36.5 per cent of the units in the fund and were acting together in a covert and concerted attempt to remove Aurora as responsible entity.

ABW is a listed managed investment scheme of which Aurora is the responsible entity. ABW’s sole investment is in another managed investment scheme, Aurora Fortitude Absolute Return Fund (“AFARF”) of which Aurora is also the responsible entity. AFARF is not a listed scheme. In about April 2017 Aurora caused AFARF to buy shares in Molopo Energy Ltd (“Molopo”). That investment did not go smoothly. Aurora became embroiled in a series of applications to the Takeovers Panel. The listing of shares in Molopo was suspended and Aurora was not able to dispose of the shares (J [8]). In the financial years ended 30 June 2017 and 30 June 2018, ABW and AFARF reported losses largely attributable to the problematic investment in Molopo (J [8]).

On 30 May 2017 the Takeovers Panel made a declaration of unacceptable circumstances in relation to Molopo. On 14 June 2017 it ordered that Aurora’s shares in Molopo be vested in the Commonwealth for the purposes of sale.

In September 2016 Mr Rigoni had obtained a copy of the register of unitholders in ABW (J [19]).

In June 2017 Mr Staermose, and in September 2017, Mr Staermose’s company, Wonfair acquired units in ABW (J [10] and [11]).

On 6 October 2017 Mr Staermose sent an email to Aurora’s then registry services provider, Registry Direct, requesting a copy of the register of members of ABW. Mr Staermose stated that his purpose of seeking a copy of the register of members was to understand who became a member and who ceased to be a member and when. He stated that his purpose was not for any of the prescribed purposes defined by Corporations Regulation 2001 (Cth) reg 2C.1.03.

Section 173 of the Corporations Act provides that a registered scheme must allow a member of the scheme to inspect the register of members without charge and must give the person a copy of the register or a part of it within seven days if the person makes application in accordance with s 173(3A) and pays any fee (up to the prescribed amount) as might be required (s 173(1)-(3)). For an application to be made in accordance with s 173(3A) the application must state each purpose for which the person is accessing the copy and none of those purposes is to be a prescribed purpose.

Aurora’s managing director, Mr John Patton, did not believe that Mr Staermose’s request accurately stated his purpose. Mr Patton made inquiries into the shareholdings in Wonfair and the register of unitholders in ABW. He ascertained that if Mr Staermose’s and Wonfair’s holding of units in ABW were aggregated with unitholdings of companies that held redeemable preference shares in Wonfair, the collective holdings would amount to approximately 7.8 per cent which would trigger an obligation to provide a substantial unitholder notice if the parties were associates.

Mr Patton caused notices to be sent pursuant to s 672A of the Corporations Act to Mr Staermose, Wonfair, a Mr Chor Leng Tan and a company called Solano Investments Pty Llc (“Solano”) who had made investments in ABW. No responses were received from Mr Tan or Solano. Mr Staermose and Wonfair refused to respond to the notices.

Between October 2017 and 3 July 2018 the collective unitholdings of Mr Staermose and Wonfair increased. By 10 May 2018 their voting interests had climbed to 19.99 per cent (substantial unitholder notices were lodged). On 3 July 2018 Mr Tan lodged a substantial unitholder notice recording unitholdings in ABW of 5.23 per cent.

On 13 October 2017 Aurora declined Mr Staermose’s request for a copy of the ABW register. Aurora asserted that Mr Staermose’s stated purpose was imprecise and vague and that the requirement of s 173 that he state each purpose was not satisfied. Aurora also said that there was a possibility that businesses with which Mr Staermose was associated might make unsolicited offers targeted to ABW unitholders to acquire their units (which would be a prescribed purpose). It also expressed concerns that substantial unitholding notices had not been lodged and that Mr Staermose might have engaged in various contraventions of the Corporations Act which could be facilitated by the provision of the register (J [33]).

On 31 August 2018 Mr Staermose served a further request for a copy of the ABW register (J [38]). On this occasion he stated that he wished to obtain a copy of the register “... in order to write to unit holders in relation to a unit holder meeting”.

Aurora did not respond to the notice. The primary judge inferred that this was because it continued to hold the views expressed in its letter of 13 October 2017 (J [38]).

After Mr Staermose had complained to ASIC that he had not been afforded access to the register, Aurora gave instructions to Boardroom (which had assumed responsibility to maintain Aurora’s register) to allow Mr Staermose to inspect the register but not to take a copy (J [48]). On 12 October 2018 Mr Staermose inspected the register.

On 15 October 2018 Mr Staermose wrote to Aurora pursuant to s 252B of the Corporations Act requesting that Aurora call a meeting of members of ABW to consider resolutions for the removal of Aurora as responsible entity and its replacement by a company called Millinium Capital Managers Limited or, if the first resolution were not passed, that the fund be wound up.

Later that day Mr Staermose advised Mr Patton that he did not wish to press the request (J [44]).

On 16 October 2018 a Mr Andrew Purcell, whom the primary judge said acted as Mr Staermose’s agent (J [19]), telephoned Mr Garton Smith of Primary and they spoke briefly about ABW. Mr Purcell sent an email to Mr Garton Smith on 16 October 2018 inquiring whether Mr Garton Smith’s firm might be able to assist with a proposal to call a meeting to seek the removal of Aurora as responsible entity of ABW. He said:

The primary judge found (J [47]):

The primary judge found that also on 17 October 2018 Mr Staermose sent unsolicited emails to other unitholders of ABW to enlist their support in replacing Aurora (J [48]).

On 29 October 2018 Primary sent a request to Boardroom for a copy of ABW’s register. It advised that the register was required for the purpose of communicating with members in relation to a proposal to replace Aurora. Boardroom did not pass on that request to Aurora. The primary judge found that Mr Patton did not obtain a copy of the request until 13 November 2018. He did nothing about it (J [50] and [51]). Mr Garton Smith of Primary complained to ASIC about the lack of response to its request for the register. On 29 November 2018 Mr Purcell told Mr Garton Smith that “it’s difficult keeping everyone committed to this path given how little progress we have made to date”. The primary judge inferred that Mr Staermose was working together with other members who had all agreed to work towards removing Aurora (J [54]).

In his email of 29 November 2018 to Mr Garton Smith, Mr Purcell considered what steps Aurora might take to frustrate the attempt to call a meeting of creditors and postulated the following course:

“What do you think about playing a little dirty ourselves and putting the ball in their court to have to sue us? For example, why don’t we just send out a meeting notice to the names on the ABW register we have from Tim’s last inspection? It’s out of date, presumably, but so what? Nearly all the selling since then has been to accounts where we know the addresses of the owners. Aurora would get a nasty shock if we sent out a Notice of EGM thinking that no one has the register. See what they do then. If they mount a legal challenge then this is when we would state in our defence that we had no choice since they wouldn’t hand over the register.” (J [55])

The primary judge inferred that by 29 November 2018 Mr Rigoni had provided the register he had obtained from Aurora in September 2016 to Mr Staermose (J [55]).

The course suggested by Mr Purcell was implemented.

Mr Garton Smith prepared a report to the board of Primary proposing that Primary convene a meeting to be appointed as responsible entity for ABW. The primary judge found that by the time of this report, Mr Garton Smith apprehended that Mr Purcell was representing more than Mr Staermose and Wonfair (J [56]). Mr Garton Smith proposed that Primary proceed on the basis of a September 2016 register. He proposed a strategy that:

The primary judge found (at [59]):

In other words, the primary judge was satisfied that Primary deliberately delayed calling a meeting of members until just before Christmas.

In the first two weeks of December 2018 both Primary and Mr Staermose made further complaints to ASIC about Aurora’s failure to call a meeting of unitholders. In an email to ASIC of 13 December 2018 Mr Staermose complained that his and Wonfair’s request for a copy of the register was met with stonewalling from Aurora. He advised ASIC that he had relayed his concerns about Aurora to a fellow unitholder, Mr Tan who held more than five per cent of the ABW. He stated that Mr Tan engaged Primary to request a copy of the register on his (Mr Tan’s) behalf. He stated that Mr Tan had informed him that he had learned via Primary that Aurora had told ASIC that it had never received a request for the register of ABW.

The primary judge found that Mr Tan did not retain Primary (J [61]) and that Mr Staermose misled ASIC in this regard (J [63]).

Aurora continued to stonewall Primary’s request for a copy of the register. On 18 December 2018 it said that it was not aware of a proposal of a kind mentioned in Primary’s letter to Boardroom requesting a copy of the register for the purpose of a resolution to replace Aurora as responsible entity (J [64]).

The minimum period for the calling of a meeting of unitholders was 21 days. On 19 December 2018 Mr Garton Smith sent an email to Mr Purcell suggesting that the meeting (which was to be convened shortly before Christmas) be held on 15 January 2019 (J [18]). The primary judge found that the timing of the calling of the meeting and the holding of the meeting was chosen to take advantage of the Christmas and New Year holidays where many of the unitholders and Aurora’s directors and staff might not be in the office or paying attention to the post (J [66]).

On 21 December 2018 Primary’s staff prepared and posted by ordinary mail a notice of meeting to be held on 15 January 2019 and explanatory memorandum (J [76]). There were 650 packages comprising a coversheet, notice of meeting, explanatory memorandum and proxy form (J [75]). The primary judge found that Primary’s staff added addresses for Aurora’s directors and auditor to the mailout (J [75]).

As noted above, on 18 December 2018 Aurora had sent a letter to Mr Garton Smith in relation to Primary’s request on 14 December 2018 for a copy of the register by asking for a more detailed specification of Primary’s purpose, stating that Aurora was not aware of any current proposal for it to be removed as responsible entity. Mr Patton stated that if Mr Garton Smith were acting on instructions of Mr Tan, Aurora had sent tracing notices pursuant to s 672A of the Corporations Act on three occasions to Mr Tan due to concerns over possible breaches of the Corporations Act, and had received no response.

On 24 December 2018 Primary responded to Aurora’s letter of 18 December 2018, advising that it did not act for Mr Tan (J [77]). The primary judge found that Primary deliberately did not say that a meeting had already been called. The primary judge found that Mr Garton Smith wanted Aurora to receive notice of the meeting through the post and not in advance (J [77]). (The primary judge also found that the response was misleading in respect of Mr Tan (J [78]).)

Aurora provided Primary with a copy of the register on 28 December 2018 following pressure from ASIC. Mr Patton of Aurora instructed Boardroom, when sending the register, to supply only addresses, but not email or phone details (J [82]). The primary judge correctly found that if Aurora were satisfied of Primary’s stated purpose, Aurora should have provided the register in its entirety (J [83]).

On 20 December 2018 Mr Staermose and Wonfair signed authorities authorising “Tania Melkus or Nicole Lim (officers of Primary Securities Ltd)” as their agent to call and arrange to hold a general meeting of members of ABW pursuant to s 252D of the Corporations Act.

On the same day, Ms Melkus signed a notice of meeting of members of ABW as follows:

Ms Melkus was a secretary of Primary. The primary judge found (at J [129]):

The explanatory memorandum that accompanied the notice stated:

No point was taken by Aurora that Ms Melkus, in her capacity as secretary of Primary (and therefore acting as agent of Primary), did not have authority to give the notice on behalf of Mr Staermose and Wonfair. It is arguable that the authority given by Mr Staermose to Ms Melkus or Ms Lim was given to them personally and that the words “(officers of Primary Securities Ltd)” were words of description only, so that it was either of the individuals and not Primary (acting through one of those individuals) who was authorised to call the meeting on Mr Staermose’s and Wonfair’s behalf. Instead Aurora argued at trial (but not on appeal) that the notice of meeting and explanatory memorandum were misleading by creating the false impression that the meeting was being called by Primary on behalf of unitholders holding more than five per cent of the units rather than by Ms Melkus on their behalf.

Aurora submitted that the notice was invalid because the identity of the members on whose behalf the meeting was called was not disclosed. The primary judge accepted that submission (J [130]-[141]).

The primary judge found that on 21 December 2018 Primary’s staff posted 522 envelopes containing the mailout of the notice of meeting and explanatory memorandum. These were sent to those who were recorded as members in the September 2016 register. The primary judge found that Primary’s staff also sent copies to the directors of Aurora and its auditor (J [75], [117]).

After Primary, with Mr Purcell’s assistance, compared the register provided by Aurora on 28 December 2018 with the 2016 register, a second mailout was sent to 92 unitholders, being, in most cases, unitholders in the September 2016 register whose addresses had changed (J [84]).

The primary judge found that this comprised about 25 per cent of members by number and voting rights and a further three unitholders (0.06 per cent) were not mailed at all.

Mr Patton did not receive a copy of the notice of meeting and explanatory memorandum until 7 January 2019. The primary judge found that the mail sent to Aurora’s auditors went to the wrong partner in the accounting firm and did not come to the attention of the auditors until 17 January 2019 (that is, after the date of the meeting). Her Honour found that this did not appear to have been Primary’s fault (J [86]).

The primary judge was prepared to assume that giving 15 days’ notice of the meeting to 25 per cent of the members of ABW was a procedural and not a substantive irregularity.

The meeting took place at the Hellenic Club in Woden, Australian Capital Territory, on 15 January 2019. Only two unitholders attended the meeting in person. One of those was Mr Staermose. Mr Garton Smith and another employee of Primary were present. Resolutions for the removal of Aurora as responsible entity and its replacement by Primary, and for amendments to the constitution were passed, with 90.8 per cent of members voting at the meeting in person or by proxy being in favour of the resolutions. The primary judge added:

After Mr Patton received a copy of the notice of meeting and explanatory memorandum on 7 January 2019, Aurora made an announcement to the Australian Stock Exchange and made a further announcement the following day (8 January 2019). In its announcement of 7 January 2019 Aurora recommended that unitholders take no action at that time, saying that it was considering the validity of the notice of meeting, having regard to the fact that the identity of the members who are said to have called the meeting was not disclosed. In its announcement of 8 January 2019 Aurora stated that the notice calling the meeting was invalid and that it would not recognise any resolutions passed at the meeting as being valid. It advised unitholders to ignore the meeting materials and not attend (J [88]).

The explanatory memorandum which accompanied the notice of meeting commenced with the statement referred to at [54] above.

The explanatory memorandum then described the establishment of ABW in 2004 (under its former names) and stated that the fund had invested 100 per cent of its portfolio into a sub-fund (called the Master Fund) which was a registered managed investment scheme. It referred to the investment objective and investment strategy of the fund and to promises said to have been made in the product disclosure statement of the fund. It then referred to action taken by ASIC following the misappropriation of one million dollars from a fund called “AUP” by the former chief financial officer and director of Aurora, to the imposition by ASIC of licence conditions on Aurora, and to an ASIC requirement that Aurora appoint an independent expert to review, amongst other things, Aurora’s risk management and internal governance and communication systems. The explanatory memorandum then addressed the assets in which the Master Fund had invested, stating that 44 per cent of the net asset value of the Master Fund consisted of one investment, namely stock in an ASX listed company called Molopo Energy Limited, and the write-down in value of that investment, and an adverse finding made by the Takeovers Panel against Aurora in relation to an off-market takeover offer for 100 per cent of the shares in Molopo that the Master Fund had announced.

The explanatory memorandum stated that Primary believed that it was in the interests of members to investigate the past actions of Aurora and investments made by the Fund and by the Master Fund. It then referred to Aurora’s having failed to provide the register to “one of the Members of the Fund who holds more than 5% of the units in the Fund” and to Primary. The explanatory memorandum stated:

The explanatory memorandum stated that Primary was independent from all parties associated with the fund. The explanatory memorandum concluded with the statement that the information in it had been prepared by or on behalf of Primary and by Primary alone and that the members who convened the meeting were not responsible for the explanatory memorandum.

Aurora submitted that the explanatory memorandum was misleading because of what it failed to disclose. Nine complaints were pressed at trial.

The primary judge held that it was not necessary to deal with the particular features of the notice and explanatory memorandum which Aurora complained were misleading. This was because a reader of the explanatory memorandum would understand that the members calling the meeting were dissatisfied with Aurora’s performance and wanted the new responsible entity to investigate Aurora’s management of the fund. Such a reader would not expect the member calling the meeting to put forward the counter arguments that Aurora might rely upon. Rather, the reader would understand that Primary as the author of the explanatory memorandum would be putting its case as to why it should be appointed instead of Aurora and not purporting to give an impartial assessment of Aurora’s performance (J [157]). A member calling a meeting was not under the same duty as would a board of directors calling a meeting fully and fairly to inform and instruct shareholders on the matters relevant to a proposed resolution (J [145]-[150]).

On appeal, Aurora contended:

The primary judge stated that Aurora’s complaint that there was a “relevant agreement” between Mr Staermose and his “associates” that triggered a contravention or contraventions of Ch 6 of the Corporations Act infused “all else” (J [105] ff).

Mr Staermose, Wonfair, and the persons alleged to be associates of Mr Staermose and Wonfair were not parties to the proceeding and no issue as to whether those persons had engaged in conduct in contravention of Ch 6 of the Corporations Act was directly relevant to any claim for relief. Section 606 of the Corporations Act, read with s 604, prohibits the acquisition of relevant voting interests in a listed registered scheme in circumstances which were said to be engaged in the present case. But s 607 provides that a transaction is not invalid merely because it involves a contravention of s 606. Section 657A provides that the Takeovers Panel may make declarations of unacceptable circumstances in relation to a company’s affairs. The primary judge found that Mr Staermose, his clients and at least one other member were acting together in a concerted attempt to remove Aurora as responsible entity (J [114]). But, as the primary judge said, the only relevance of that finding was as to whether this was a relevant matter for other members to know such that it was misleading for it not to be disclosed in the explanatory memorandum (J [113]).

The primary judge found that the resolutions purportedly passed at the meeting on 15 January 2019 were invalid for two reasons. First, the identity of the members calling the meeting was not disclosed in the notice (J [141]). This was a substantive irregularity (J [167]). Secondly, because 21 days’ notice of the meeting was not given to 25 per cent of members who instead received 15 days’ notice (J [118]; [158]).

It was not disputed on the hearing of the appeal that if the notice calling the meeting were invalid for failure to identify the members who called the meeting, that that was a substantive and not a procedural irregularity within the meaning of s 1322 of the Corporations Act and that the resolutions were invalid.

The provisions for the calling of meetings of members of a registered managed investment scheme are contained in Pt 2G.4 of the Corporations Act. Section 252A provides that the responsible entity of a registered scheme may call a meeting of the scheme’s members. Section 252B specifies the procedures to be followed if sufficient members, measured either by voting rights or by number, request the responsible entity to call and arrange to hold a meeting of the scheme’s members to vote on a proposed resolution. Section 252C deals with the circumstance where a responsible entity fails to call a meeting if a request is made under s 252B.

Section 252D is headed “Calling of meetings of members by members”. It was this section that was purportedly invoked by the notice signed by Ms Melkus on behalf of unnamed members. Section 252D provides:

Section 252D(2) directs attention to the way in which meetings of scheme members may be called by the responsible entity under s 252B. Section 252B relevantly provides:

Division 2 of Pt 2G.4 is headed “How to call meetings of members”. Sections 252F, 252G, 252H and 252J are in Div 2. They relevantly provide:

Section 252L enables members, other than members who have requested the responsible entity to call a meeting under s 252B, or who have themselves called a meeting under s 252D, to give notice of a proposed resolution. Section 252L relevantly provides:

Section 252N provides that members of the requisite number or voting interest may request a responsible entity to give to all members of the scheme a statement about a proposed resolution. Pursuant to s 252N(3) such a request must be in writing and signed by the members making the request.

Section 252T provides that the auditor of a registered scheme is entitled to attend any meeting of the scheme’s members and to be heard at that meeting on any part of the business of the meeting that concerns the auditor in the auditor’s capacity as auditor (s 252T(2)).

Part of the business of the meeting identified by the explanatory memorandum was to consider Aurora’s response to the misappropriation by Ms Poon of money of another fund under the management of Aurora and the subsequent requirement for an independent expert review of Aurora’s compliance procedures, including its risk management systems. At least arguably, that part of the business of the meeting concerned the new auditor, Grant Thornton, in its capacity as auditor.

Primary emphasised that s 252D(2) requires only that the meeting be “called” in the same way – so far as possible – as meetings of the scheme’s members may be called by the responsible entity under s 252B.

Section 252B identifies three stages for the holding of meeting of members called by a responsible entity. The first stage is that members either holding at least five per cent of voting rights or numbering at least 100, make a request to the responsible entity for the responsible entity to call and arrange to hold a meeting. In making a request to the responsible entity for a meeting to be called and held, the members making the request must be identified. Primary submitted that once a valid request was received, the first stage for the calling of a meeting under s 252B was exhausted. There is no requirement in s 252B for the calling of a meeting by the responsible entity that requires a separate identification of the members on whose behest the responsible entity is calling the meeting.

Primary submitted that s 252D(2) requires only that the meeting be called in the same way – so far as possible – as meetings of the scheme’s members might be called by the responsible entity. This requires that the same period of notice be given as would be required for a meeting called by the responsible entity under s 252B (that is, not less than 21 days and not more than two months’ notice) (s 252B(6)). It requires members calling the meeting to give to the members of the scheme a copy of the proposed resolution and permits the giving of a statement (s 252B(7)). It requires that the members calling the meeting be responsible for the expenses (s 252B(9)). It does not require, so Primary submitted, that the identity of the members calling the meeting be disclosed.

Members who request the responsible entity to call a meeting, or who propose their own resolution at a meeting called by other members or by the responsible entity, or who wish to have a statement given to other members, must identify themselves (ss 252B(2), 252L(2) and 252N(3)).

Referring to these provisions, the primary judge said:

After considering King v Fulton (1876) 2 VLR (Eq) 100 and Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc [2015] NSWSC 638 and Re Carlton Football Club Limited [2004] VSC 379; 51 ACSR 29, the primary judge concluded (at [141]):

I generally agree with the primary judge’s reasons. Primary criticised the primary judge’s reasoning at [135] quoted above in that her Honour considered that a requirement that the members calling a meeting under s 252D(2) identify themselves serve the purpose that the other members could be satisfied that the members calling the meeting were entitled to do so. Other members could not conclusively make that determination because they would not have ready access to the register of members.

Nonetheless, the substance of the point made by the primary judge is correct. Because the notice must be given to each director of the responsible entity, the directors of the responsible entity, who have access to the register, will be able to determine whether the meeting has been validly called if the identity of the members calling the meeting is disclosed.

A practical illustration of the importance of such disclosure is Bisan Ltd v Cellante [2002] VSC 430; 43 ACSR 322 where a general meeting was called by an agent on behalf of four shareholders who together were stated to be entitled to shares entitling them to exercise 6.01 per cent of the votes at a general meeting. The shareholders who were calling the meeting (through their agent) were named. Before the notice convening the meeting was sent to shareholders, one of the shareholders who owned 1.21 per cent of the shares revoked its authority to its agent. This was one of the grounds upon which Dodds-Streeton J restrained the holding of the meeting. If the notice had been given on behalf of unnamed shareholders, that information might not have become available.

Where a meeting is called by the responsible entity under s 252B, the identity of the person calling the meeting will be known. Therefore, for the meeting called under s 252D to be called in the same way, so far as possible, as a meeting called by the responsible entity, the identity of the persons calling the meeting should be known. It is not to the point that s 252B does not require the responsible entity who calls a meeting at the request of members to identify the members who made the request. Consistently with the requirements of the common law in regard to the holding of meetings set out in Shackleton on the Law and Practice of Meetings (14th ed., Sweet & Maxwell, 2017) and Lang, Horsley’s Meetings, Procedure, Law and Practice (7th ed., LexisNexis, 2015) quoted by the primary judge as set out above, a notice calling a meeting must clearly indicate on whose authority the notice is issued.

In King v Fulton one of the reasons that the notice was invalid was that it did not indicate who gave the order for the calling of the meeting. There is no reason to exclude the common law requirements for the calling of meetings in the construction of s 252D. The note to s 252J is a textual indication that there may be matters, beyond those expressly provided for by the Act, which must be disclosed when calling a meeting.

Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc concerned s 249D of the Corporations Act which is concerned with the calling of meetings of a company by directors when requested by members with at least five per cent of voting rights. The section is similar but not identical in structure to s 252B. Like s 252B(2)(c), s 249D(2)(c) requires the request to be signed by the members proposing the resolution to be moved at the requested meeting. Black J held that this requirement was not met by the printed name of the person. His Honour said (at [51]):

These authorities supported the primary judge’s conclusion that the identity of those calling the meeting should be disclosed so that their entitlement to do so can be verified.

There are also contextual and practical reasons that support the primary judge’s conclusion. The legislative provisions are concerned with the calling of a meeting of members of the registered scheme. It is of the essence of a meeting that matters of mutual interest are to be debated, or at least considered, by members. There is something incongruous in the idea of a member calling other members to a meeting to debate matters of mutual interest where the other members do not know who has called the meeting and with whom they will be debating.

The identity of members calling the meeting could be relevant to how the other members of the scheme vote on a proposed resolution. Some individuals or companies have a high commercial reputation. Some have a low reputation. The reputation, whether it be good or bad, of members proposing a resolution could be an important consideration for other members in considering how to vote.

For these reasons I agree with the primary judge’s conclusion that the notice convening the meeting was invalid. Hence, the resolutions purportedly passed at the meeting were invalid. On this ground, the appeal should be dismissed.

Ground 5 of the amended notice of appeal challenged the primary judge’s finding that the failure to identify the members calling the meeting was a substantive irregularity and that s 1322(2) did not apply. This ground was abandoned:

That is sufficient to dispose of the appeal, save for Primary’s application, after judgment was reserved, to amend its notice of appeal. That application is dealt with below after consideration of the other issues.

Aurora submits that the primary judge ought to have found that not only was only 15 days’ notice given to 25 per cent of the members (and no notice given to three members), but that her Honour also ought to have found that less than the prescribed 21-day period of notice was given to the directors of Aurora and that no notice was given to its auditor. Aurora disputes the primary judge’s finding (J [75]) that the copies of the notice and explanatory memorandum were posted by Primary to the directors and auditor in its first mailout on 21 December 2018.

Primary’s evidence of posting the first mailout was given by Ms Sandra Fisher (Blue 59). She deposed:

The annexure “SF B” comprised an email sent by Mr Garton Smith to Ms Fisher at 6:01pm on 20 December 2018 forwarding the following email chain between Mr Purcell and Mr Garton Smith:

Aurora had pleaded that it and its directors did not receive the notice and explanatory memorandum until 7 January 2019 and that it was not until 17 January 2019 that its auditor received a copy of those documents. It submitted that Ms Fisher’s affidavit established that she posted the notice of meeting and explanatory memorandum to those persons shown as unitholders in the register she was sent on 20 December 2018 (para 6), and to the new investors shown in the email from Mr Purcell to Mr Garton Smith which she was sent on Thursday, 20 December 2018 (para 7) and to Aurora (para 8).

Aurora submitted that this evidence showed that the original mailout on 21 December did not include the posting of the notice of meeting to each director of Aurora, nor to its auditor.

In other words, Aurora submitted that Ms Fisher’s reference to “these new investors” was only a reference to the new unitholders referred to in the third of the three emails forwarded to Ms Fisher by Mr Garton Smith, or, perhaps, to those unitholders and the other unitholders whose addresses were provided in the second email.

Aurora had three directors: Mr Patton, a Mr Victor Siciliano, and a Mr Anthony Hartnell. Mr Patton and Mr Hartnell were not unitholders. Mr Siciliano was. He was separately referred to in the second email in the chain of emails forwarded to Ms Fisher on 20 December 2018 where his address was given as the same address as Aurora’s.

Mr Siciliano left the Aurora office on 21 December 2018 for the Christmas break. On his return on 7 January 2019 he found a postal package addressed to him containing a copy of the notice and explanatory memorandum at his desk.

On Friday 4 January Mr Patton asked Mr Garton Smith to send him a copy of any materials sent to unitholders. (It will be recalled that Aurora provided Primary with a copy of the register on 28 December 2018 ([50] above)).

At 3:43pm on 4 January, Mr Garton Smith informed Mr Patton “meeting documents” had been sent to the company and Mr Patton personally.

Mr Patton did not receive the notice of meeting or explanatory memorandum until Monday, 7 January 2019. He did not say how or to whom the envelope he received was addressed.

Mr Patton included in a bundle of documents that he exhibited to his affidavit a copy of an envelope received from Primary addressed to him at his residential address in Camberwell, Victoria. He did not say whether this was the package that he received on 7 January, or whether the document received by him on 7 January was that provided to Mr Siciliano that Mr Siciliano received on that day, or whether it was a document addressed to Aurora, or to:

Mr Hartnell received an envelope addressed to him at his residential address in Greenwich, New South Wales. He thought it was junk mail and so did not open it, but left it on his desk at his office in Elizabeth Street where it remained unopened until 25 January 2019.

Primary adduced no evidence as to how or when the envelopes addressed to the residential addresses of Messrs Patton and Hartnell were posted.

Primary made a second mailout on 29 December 2018 following inspection of the register on 28 December 2018. A Ms Natasha Olsen deposed that she attended Primary’s offices on 28 December 2018 and was advised by Mr Garton Smith that Primary needed to supplement the mailout and it had been provided with the Aurora register by Boardroom. She received an email from Mr Purcell which attached the register and highlighted the investors that needed to be sent the meeting documents. She arranged for envelopes to be prepared and for the notice of meeting and explanatory memorandum to be placed in the envelopes addressed to 92 investors, most of whom were investors whose address had changed.

On 28 December 2018 Mr Garton Smith sent an email to Mr Purcell with the subject heading “Who was mailed to”, stating:

Ms Fisher’s affidavit of 22 March 2019 does not refer to her having posted a package to the individual directors.

The emails Ms Fisher received on 20 December 2018 are set out at [103]. They contained the subject heading “ABW – additional unitholders”. Under that heading were named some new unitholders, some existing unitholders, Aurora itself, and “The Directors Aurora Funds Management Ltd” and Grant Thornton. They were all persons included in the “... list of new names and addresses to be included in the mailout” referred to by Ms Fisher in para 7 of her affidavit. She referred to such persons as “these new investors”.

Ms Fisher was not required for cross-examination.

I do not conclude that the letters posted to the directors’ residential addresses were posted on 21 December 2018. But I understand Ms Fisher’s evidence to be that the companies and persons whose names and addresses were set out in the email chain she was forwarded on 20 December 2018 were sent the package. An affidavit must tell not only the truth but the whole truth (ERS Engines Pty Ltd v Wilson (1994) 35 NSWLR 193 at 197). That is, an affidavit must not tell a half-truth so that it is misleading by omission. If, when Ms Fisher made her affidavit, she was aware that she had not posted the packages addressed to “The Directors Aurora Funds Management Ltd”, or to Grant Thornton, she would not have been telling the whole truth if she refrained from saying so, and took recourse to the ambiguous language of para 7. No such inference should be drawn.

Section 252G(1)(b) requires written notice of the meeting be given to “each director”.

Pursuant to s 28A of the Acts Interpretation Act 1901 (Cth) (the operation of which is preserved by s 109X(6)(a) of the Corporations Act), where an Act requires a document to be served on a natural person, including where the expression “give” is used, the document may be served on that person by sending it by pre-paid post to the place of business of the person last known to the person serving the document (s 28A(1)(b)). Service by post may be effected by “properly addressing, prepaying and posting the document as a letter” (s 29(1)).

Aurora did not submit that the documents were not “properly addressed” by being addressed to “the directors”. Nor did it submit that Aurora’s address was not the directors’ last known place of business.

Although the notice was not received by Mr Patton (or Mr Siciliano) until 7 January 2019, pursuant to s 252G(4) it is taken to have been given three days after it was posted, that is, on 24 December 2018.

Primary has established that it posted the notice to Aurora’s directors at their last known place of business on 21 December 2018.

If I am wrong in that conclusion, then, contrary to Aurora’s submission, failure to give the requisite notice to the directors would be a procedural irregularity within the meaning of s 1322, being an irregularity or deficiency as to notice. That the irregularity should be properly classified as procedural is also clear from the fact that it would have been a failure to comply with the requirements of ss 252F and 252G which are contained in Div 2 of Pt 2G.4 under the heading “How to call meetings of members”. That is clearly a reference to a procedure to be followed.

The procedural irregularity would not invalidate the meeting unless the court were of the opinion that the irregularity had caused substantial injustice that could not be remedied by any order of the court and declared the meeting to be invalid. The only evidence of substantial injustice was that given by Mr Patton.

Mr Patton gave evidence as to what he would have done had he received the notice of meeting and explanatory memorandum at least 21 days before 15 January 2019. The primary judge summarised his evidence (at J [90]) as follows:

The primary judge did not reject Mr Patton’s evidence that if he had received a copy of the notice convening the meeting and the explanatory memorandum at least 21 days prior to 15 January 2019, he would have arranged for Aurora to issue a further communication to all members of ABW addressing the matters in the explanatory memorandum with which Aurora took issue.

Mr Patton’s evidence that eight days did not leave sufficient time to prepare the communication and have it served on all the members of ABW in time for those members to receive it and then have sufficient time to consider it properly in advance of the meeting is entirely plausible and was not rejected by the primary judge.

The primary judge’s finding that there was “considerable merit” in what Mr Patton said was rather an acceptance of his evidence as to what steps would have been taken had he received the notice of meeting and explanatory memorandum at least 21 days before 15 January 2019. The qualification to the primary judge’s acceptance of Mr Patton’s evidence was that her Honour found that he was substantially motivated by his incorrect assumption that the mailout had not been sent until after Mr Purcell and Mr Garton Smith inspected Aurora’s register on 28 December 2018. That finding is not inconsistent with her Honour’s acceptance of Mr Patton’s evidence as to what he would have done had he received the documents at least 21 days before the meeting, nor with her Honour’s acceptance of Mr Patton’s evidence that he considered that the eight-day period which he had was insufficient to prepare the communication which he would otherwise have prepared.

If, contrary to my view, and contrary to the finding of the primary judge, notice was not given to Mr Patton in conformity with ss 252F and 252G, I would accept that the failure to give such notice did give rise to substantial injustice. The prejudice to members of the fund from not having Aurora’s response would not be obviated by Aurora’s previous stonewalling of Mr Staermose’s and Primary’s request for the register. But for the reasons I have given, that question does not arise.

It was not until 17 January 2019 that the notice of meeting and explanatory memorandum was received at the offices of Grant Thornton. The document was initially received by a personal assistant to a tax partner on the morning of 17 January 2019 and was handed on the same day to a director of the Audit and Assurance Division of Grant Thornton. According to the affidavits of partners and an employee of Grant Thornton, the address of its Melbourne office was Tower 5, 727 Collins Street, Melbourne. The address Ms Fisher was given was Tower 1, 727 Collins Street, Melbourne. This is the most probable explanation for the delayed receipt of the package by Grant Thornton.

The failure to give a properly addressed notice to the auditor was a procedural irregularity for the same reasons as a failure to give notice to the directors would have been a procedural irregularity.

The issue then is whether the procedural irregularities found by the primary judge and the further irregularity in failure to give notice to the auditor caused substantial injustice.

Aurora adduced no evidence as to what it would have done had the notice been sent to Grant Thornton at the proper address. The notice would have been taken to have been given to Grant Thornton on 24 December (s 252G(4)). 24 December was a Monday. There was no evidence that it was likely that in the ordinary course of post the document, if posted from Perth by ordinary post on the afternoon of Friday 21 December, would have been received at the offices of Grant Thornton by 24 December. In the absence of evidence as to likely time for delivery in the ordinary course of post at that time of the year, it is to be presumed that the document would have been delivered to the offices of Grant Thornton on the seventh working day after 21 December, that is, 4 January 2019 (Evidence Act 1995 (NSW), s 160(1)).

There was no evidence as to whether, if the document had been received at the offices of Grant Thornton on Friday, 4 January 2019, it would have come to the attention of the relevant audit partner, or any other partner or employee of Grant Thornton, who would have then brought the document to the attention of Mr Patton prior to his becoming aware in any event the following Monday. In other words, there is no evidence that if the document had been properly addressed to Grant Thornton, Mr Patton would have received earlier notice than he did receive of the calling of the meeting.

Nor is there any evidence that Grant Thornton would itself have sought to attend the meeting or to arrange for representations to have been made to unitholders. Aurora has not displaced the onus that lies on it pursuant to s 1322(2) to show that the irregularity caused substantial injustice.

As noted above the primary judge found that there was an irregularity in that 25 per cent of members received only 15 days’ notice of the meeting and three members received no notice at all (J [118]). Her Honour found that substantial injustice had been or was likely to be caused if the resolutions were permitted to stand for the reasons (J [169]) quoted at [11] above.

Primary did not file a cross-claim seeking relief under s 1322(4). Accordingly, the issues were whether the irregularities identified were procedural irregularities within the meaning of s 1322(2) and, if they were, whether the primary judge erred in finding that they caused substantial injustice. The primary judge was prepared to assume that the irregularities were procedural. Aurora challenged that assumption.

However, the failure to give the required 21 days’ notice to 25 per cent of members was clearly a defect of procedure and a deficiency of notice or time. It is true that the meeting was called in the knowledge that there would be deficiencies of notice and time because it was called without access to the current register and with a bare 22-day deemed notice period. There was every likelihood and almost certainty that the actual period of notice would be less than 21 days. It was also anticipated that some members would not receive due notice on the first mailout because Primary was using an old register. The non-compliance with s 252F was deliberate.

Nonetheless, notwithstanding the views of Young J in Re PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674 at 675, as Sackville AJA observed in Beck v L W Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; 87 ACSR 672 at [232] “the balance of authority favours the view that an irregularity can include a deliberate act of non-compliance with the articles or the Corporations Act” (citing Nenna v Australian Securities and Investments Commission (2011) 198 FCR 32; [2011] FCA 1193 at 44 [54], 47-48 [76]-[82]).

The giving of only 15 days’ notice to 25 per cent of members was not the only irregularity. The primary judge found that no notice was given to three unitholders having 0.06 per cent of the voting rights. But this was a defect for want of notice and a “deficiency of notice” within the meaning of s 1322(1)(b)(ii) and hence a procedural irregularity (Re Testro Bros Consolidated Ltd; Ex parte Attorney-General [1969] VR 199 at 201; Re Compaction Systems Pty Ltd and the Companies Act [1976] 2 NSWLR 477 at 493; Re Broadway Motors Holdings Pty Ltd (in liq) (1986) 6 NSWLR 45 at 57).

There is an important distinction between the operation of s 1322(2) and s 1322(6)(c).

Where an application is made under s 1322(4) (and none was made in this case) by virtue of s 1322(6)(c) the court must be satisfied that no substantial injustice has been or is likely to be caused to any person if an order is made declaring the thing purporting to have been done, or the proceeding purporting to have been taken under the Act, not to be invalid by reason of the contravention.

Where the irregularity in question is a procedural irregularity, it does not invalidate a proceeding under the Act, unless the court is of the opinion that the irregularity has caused or may cause a substantial injustice that cannot be remedied by an order of the court and by order declares the proceeding to be invalid (s 1322(2)). In an application under s 1322(4), one of the questions will be whether the making of a validating order would cause substantial injustice, in which case the order cannot be made. Under s 1322(2) the question is whether the procedural irregularity has caused or may cause substantial injustice.

The grounds upon which the primary judge found that substantial injustice had been caused or was likely to be caused if the resolutions were permitted to stand are set out at [11].

The first two matters relied upon by the primary judge, that is, the deliberateness of the contravention, and the choice of the Christmas and New Year holidays for the period of notice, do not in themselves establish that the short period of notice to 25 per cent of unitholders and no notice to three unitholders caused injustice. They would be relevant to any application under s 1322(4), but do not establish a nexus required by s 1322(2) between the procedural irregularity and an injustice.

The fourth ground was as to the lack of information provided to unitholders as to Mr Staermose’s and others’ engaging in a concerted attempt to remove Aurora. This was unrelated to the procedural irregularity.

The fifth ground was that, if Aurora had received notice in the usual way it would have informed unitholders at length about its concerns regarding Mr Staermose and his clients, and that may have affected how unitholders voted.

If the relevant procedural irregularity were failure to give notice to Aurora or to its directors, then I would agree with that reasoning. But before a causal nexus could be established between the irregularity in giving of notice to unitholders and that identified injustice, Aurora would need to establish that had such notice been given to members on 21 December 2018 (which may, in any event, not have reached members until towards the end of the first week of January 2019) at least one member would have brought the notice to Aurora’s attention at a sufficient time before 7 January 2019 that would have permitted Mr Patton to have prepared that communication.

There was no evidence from any member who was only given 15 days’ notice (or any of the three members who were given no notice at all), that had they been given the prescribed period of notice they would have brought it to Aurora’s attention. It cannot be assumed that they would have done so. Unitholders could rather expect that Aurora would have received the notice at or about the same time as the member received it.

The third ground relied on by the primary judge was that “in the result” less than half of unitholders participated in the meeting either in person or by proxy. “In the result” does not mean “as a result”. Nor was there evidence that the result of the deficiency of notice was that either less than half of unitholders participated in the meeting, or indeed, that any unitholder who would otherwise have participated but for the deficiency of notice did not do so.

Were it necessary, I would uphold Primary’s challenge to the primary judge’s conclusion that the failure to give the requisite notice to 25 per cent of members caused substantial injustice.

Aurora’s ground of contention is quoted at [70] above. Three matters should be noted at the outset. First, Aurora does not challenge the primary judge’s application of observations made by Wheeler JA (with whom McLure JA agreed) in Westralia Property Management Ltd v Davison [2006] WASCA 203 at [21] and [22] that s 249D(2) does not impose on members of a registered scheme who call a meeting under s 252D a like duty as the responsible entity (or directors in the case of a company) would owe to members to make full and fair disclosure of all matters which would enable members to make a properly informed judgment. That question is not before us and there is no occasion to consider the apparently conflicting authorities on the question that are discussed by the primary judge.

Secondly, the claim for relief is squarely based upon the statutory provisions referred to in the ground of appeal and not on common law principles of company law.

Thirdly, Aurora does not contend that the representations referred to in ground 5(a)(ii) and (iii) were themselves misleading. Rather, it is said that the misleading conduct alleged was that the explanatory memorandum did not disclose that Mr Staermose and Wonfair, together with certain clients, plus Mr Rigoni, collectively held about 36.5 per cent of the units in ABW and were acting together in a covert and concerted attempt to remove Aurora as responsible entity. Primary’s role in issuing the explanatory memorandum referred to in ground 5(a) is said to be a reason that unitholders would reasonably expect that the matter referred to in 5(b) ought to have been disclosed if it existed: (Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 42 (per Gummow J) referring to Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,193 that:

The way Aurora put its case on appeal was different from its submissions before the primary judge. Aurora submitted that an ABW member would reasonably have expected to be informed by Primary if Primary were aware that Mr Staermose, acting with other ABW members, represented a voting block of 38 per cent and that the meeting that was called was part of a process by which Mr Staermose proposed to take control of the fund without disclosing that voting block to the market, nor paying a control premium for it, in apparent breach of Ch 6.

In oral submissions Aurora did not put the matter so high. It did not submit that Primary was aware of the facts that the primary judge found were established. It put the matter more widely. It submitted that Primary had information that ought to have alerted it to the asserted fact that Mr Staermose, Wonfair, and other members of the fund who between them controlled 38 per cent of the votes were acting in concert to remove Aurora in contravention of Ch 6. Aurora submitted that the primary judge ought to have found that Mr Garton Smith suspected that there was a relevant agreement between unitholders who were acting in concert which may have an impact on the rights of all members.

Aurora relied in part on findings made by the primary judge and in part upon a document sent by Mr Purcell to Mr Garton Smith at 10:02am on 20 December 2018 attaching an analysis by Mr Staermose on “where votes lie based on who he has talked to”.

The first matters relied upon are the communications between Mr Purcell and Mr Garton Smith on 16 and 17 October 2018 ([32] and [33] above) whereby Mr Purcell informed Mr Garton Smith that a significant number of unitholders wanted to call a meeting to seek the removal of Aurora as responsible entity and that the two largest unitholders, Mr Staermose and Wonfair, wanted to see the responsible entity replaced and it was believed that more than 40 per cent of the register would be interested in the motion being brought (J [46] and [47]).

The primary judge found that Mr Purcell’s email of 16 October 2018 did not cause Mr Garton Smith to consider that this might be a control event under Ch 6 and his interest was in Primary’s becoming responsible entity so that it could thereby earn fees and assist unitholders (J [46]). This was an acceptance of Mr Garton Smith’s evidence to that effect and not merely a recitation of that evidence.

The next matter relied on was an email from Mr Purcell to Mr Garton Smith of 29 November 2018 in which Mr Purcell said he was keen to keep whatever momentum they had as it was “difficult keeping everyone committed to this path” (J [54]). The primary judge found that the email suggested to her Honour that Mr Staermose was working together with other members who had all agreed to work towards removing Aurora, but accepted Mr Garton Smith’s evidence that he did not see this as a significant statement in terms of a control event, but simply as Mr Purcell wanting to move Primary along (J [54]).

The primary judge inferred from Mr Purcell’s proposal that they use the “ABW register we have from Tim’s last inspection” that Mr Rigoni had provided the register he had obtained from Aurora in September 2016 to Mr Staermose. There was no finding and we were not taken to any evidence that Mr Garton Smith knew of that.

Aurora relied upon the spreadsheet prepared by Mr Staermose referred to at para [160] above forwarded to Mr Garton Smith on 20 December 2018. The spreadsheet set out Mr Staermose’s “best guess of major unitholders in ABW following redemption since Aurora became RE”. Under the column marked “votes I am counting on” and marked green, Mr Staermose listed 20.436 per cent of the votes comprising his and Wonfair’s units with the notation “me, Wonfair currently able to ‘creep’ three per cent”. In that column in green he also listed “CLT” (Mr Tan), “CMDP” (part of a nominee holding), Mr Rigoni, Solano and a Mr Fraser.

Against these persons he attached a note “my client” and “I have an advisory relationship”.

Aurora submitted that this informed Primary that some other members of the fund were at least expected to vote together on the issue which would give rise to a suspicion that they were acting in concert. However, as was pointed out during the course of oral submissions, the statement that “me, Wonfair currently able to ‘creep’ three per cent” indicates to a reader that the person preparing the spreadsheet is conscious of the restrictions and prohibitions in Ch 6. Contrary to Aurora’s initial submission, the reference to the advisory relationship does not imply an agreement between advisor and client, as distinct, perhaps, from an expectation on the part of the advisor that the client will act on advice.

This is as high as the evidence goes as to the state of Primary’s asserted knowledge, or suspicion, or reason to suspect that Mr Staermose, Wonfair together with certain of Mr Staermose’s clients and Mr Rigoni were acting together in a covert and concerted attempt to remove Aurora as responsible entity. The evidence does not establish that Primary either knew of or actually suspected such concerted action.

It would not be reasonable for unitholders to expect that Primary, who described itself to unitholders as an independent party, would disclose in the explanatory memorandum matters of suspicion, particularly matters that were not directly relevant to the merits of the proposed resolutions. Unitholders might expect that if sufficient evidence of action taken in breach of Ch 6 were available, it would be reported to ASIC, but not that it would be disclosed in the explanatory memorandum. Indeed, Mr Patton reported to ASIC on 11 January 2019 concerns that he had in relation to an apprehended association between Mr Staermose and Wonfair, and parties he said were associated with Mr Staermose, including Mr Tan and Solano, and stated to ASIC that it appeared that the calling of the meeting was a “control event”.

When cross-examined as to why he did not raise those concerns with unitholders prior to the meeting of 15 January, Mr Patton said, amongst other things, that one reason was that the fact that Aurora had concerns was not a sufficient basis to make an accusation.

Unitholders could not reasonably expect Primary to disclose to members mere suspicions, even if they had been held, let alone to make disclosure of facts that might or should give rise to suspicion of illegal behaviour.

I agree with the primary judge’s conclusion that the explanatory memorandum was not misleading by omission. The question whether any statutory relief would have been available if breach of the relevant statutory provision had been established does not arise.

After judgment was reserved Primary sought leave to amend the notice of appeal to seek the following order:

As noted above at [140] Primary did not seek any relief under s 1322(4) at trial.

Primary correctly submitted that s 1322(4)(a) is not predicated upon the existence of an irregularity, substantive or procedural. At the hearing on the appeal Primary accepted that if the notice were invalid because it did not identify the members on whose behalf the meeting was called, this was not a procedural irregularity to which s 1322(2) applied. As noted at [99], although this had been a ground of appeal, that ground was abandoned. The proposed amended notice of appeal did not seek to re-agitate that ground.

Primary submitted that this court now has before it all the facts which bear upon the claim for the amended relief sought, as completely as if the claim had run before the court below and, by inference at least, submitted that no additional evidence would have been adduced below had the claim been made at trial.

Leave to amend should be refused. Aurora submitted that the fact that no cross-claim for relief under s 1322(4) was brought below had an effect on how the case was run. Aurora submitted that when Mr Garton Smith was cross-examined on the spreadsheet referred to at [165], he said that the document did not raise any concern for him that a relevant agreement had been entered into between Mr Staermose and his clients. Counsel submitted that Mr Garton Smith was not challenged on the truth of that answer because his honesty was not in issue. This was because Aurora took the position that whether the identity of the authorising members should have been disclosed was an objective question. Counsel submitted that had Primary been seeking relief under s 1322(4) on this issue it would have been necessary to explore whether Mr Garton Smith was acting dishonestly. The assurance of reputable and experienced counsel as to how the trial might have been differently conducted if the point sought to be taken on appeal had been raised below is not to be lightly set aside. I accept that the trial may have been conducted differently had the issue been raised below.

Further, for the reasons at [144]-[146], a different question as to “substantial injustice” arises in relation to s 1322(2) than 1322(6)(c). In the latter case, a question that would have to be addressed, if leave to amend were granted, would be whether Primary had demonstrated that no substantial injustice had been or was likely to be caused to any person if a validating order were made. This is a wider enquiry than the enquiry under s 1322(2) as to whether a procedural irregularity has caused a substantial injustice. If that enquiry were raised, then for the reasons already given (at [131], [132], [148], [150] and [151]), I agree with the primary judge that a substantial injustice would arise if the resolutions were permitted to stand. Allowing the amendment would not alter the result of the appeal.

For these reasons I propose the following orders: