In the matter of Heartland Group Pty Ltd

1. [1]

   By Originating Process filed on 4 March 2025, the Plaintiff, Ms Richards, seeks an order under s 249G of the Corporations Act 2001 (Cth) (“Act”) that a meeting of members of the First Defendant, Heartland Group Pty Ltd (“Heartland Group”) be called to consider and vote on specified resolutions. She also seeks an order under s 1319 of the Act that a body corporate representative of the Second Defendant, Bernley Corporation Pty Ltd (“Bernley”) constitute a quorum of members at that meeting. Ms Richards also joined two other parties, Boyded Industries Pty Ltd (“Boyded”) and Mr Kieran Turner as Defendants to the proceedings. Mr Turner is, inter alia, a director of Heartland Group, Bernley and Boyded and opposed the relief that Ms Richards sought, ultimately on narrow grounds.

Background, affidavit evidence and chronology

1. [2]

   By way of background, these and earlier proceedings in 2024 (“Prior Proceedings) involve a group of companies collectively known as the Heartland Motor Group. I understand it to be common ground that Ms Richards and her sister, Ms Hooker are majority shareholders in B.G. Webb Pty Ltd (“BG Webb”), which is the ultimate holding company of the group, and Mr Turner indirectly holds a minority shareholding in BG Webb. Ms Richards, Ms Hooker and Mr Turner are also the directors of BG Webb and Bernley, which is a wholly-owned subsidiary of BG Webb.

2. [3]

   Bernley (with three directors) holds 599 of the 600 issued shares in Heartland Group, and the remaining share is held by Boyded, which is itself a wholly-owned subsidiary of Heartland Group. Ms Richards and Mr Turner are the only two directors of Boyded. The articles of association of Heartland Group relevantly provides that two members comprise a quorum at a general meeting and that, if within half an hour of the time appointed for a general meeting a quorum is not present, the meeting shall, where convened upon the requisition of members, be dissolved. An EGM of the Heartland Group therefore cannot proceed if either Bernley or Boyded does not attend that EGM.

3. [4]

   Turning now to the affidavit evidence, Ms Richards reads the affidavit dated 4 March 2025 of her solicitor, Ms Newbold, which refers to the structure of the Heartland Group of companies, to the prior proceedings and to the events and correspondence to which I refer below.

4. [5]

   Mr Turner reads the affidavit dated 24 March 2025 of his solicitor, Mr Lacey, who refers to the parties to the proceedings and to the matters in issue in am application for leave to appeal and appeal (“Appeal”) against the orders made in the Prior Proceedings, to give effect to my judgments in Re Heartland Group Ltd [2024] NSWSC 875 and Re Heartland Group Ltd [2024] NSWSC 1029. Mr Lacey there noted (Lacey 24.3.25 [22]-[23]) that declaratory relief was sought in the Appeal in relation to the composition of the board of directors of each of Heartland Group and Boyded and (in evidence admitted as submission) that:

5. [6]

   It is now common ground that proposition is not correct, at least so far as the procedural steps which have been taken by Ms Richards to convene the EGM of Heartland Group. There is no contest as to the composition of the board of Bernley which passed a resolution to call the EGM. If the Court of Appeal determines that Mr Anthony Turner is a director of Boyded and that Ms Richards is not a director of Boyded, that would reduce the likelihood of deadlock in the board of Boyded, but not necessarily increase the likelihood that Boyded would attend the EGM, so as to allow a quorum to be achieved with the result that Mr Anthony Turner would likely be removed as a director of Heartland Group. I recognise that, in correspondence which I address below, Mr Turner’s solicitors have suggested that he, and by extension Boyded, would cooperate in conducting a quorate EGM of Heartland Group after the determination of the Appeal. I address that possibility below.

6. [7]

   I now turn to a chronology of events that underpin this application, which are largely undisputed and in narrow scope. On 19 July 2024, I delivered judgment in the Prior Proceedings although the findings reached in that judgment are not evidence in these proceedings. On 15 August 2024, I made orders in those proceedings which are relevant to issues in this application, including holding that Ms Hooker has been a director of Bernley since 26 September 2022, with the result that its directors are now Ms Richards, Ms Hooker and Mr Kieran Turner; and Ms Hooker and Mr Anthony Turner are not directors of Boyded so that its directors are Ms Richards and Mr Kieran Turner.

7. [8]

   On 22 October 2024, Mr Kieran Turner sought leave to appeal against aspects of the orders that I had made in the Prior Proceedings. His leave application and the Appeal have been heard together and the Court of Appeal has reserved its judgment. Consis1tent with my observations above, it is now common ground that the matters in issue in the Appeal and any decision of the Court of Appeal, would have no impact on the procedural validity of the matters that are in issue in these proceedings.

8. [9]

   By email dated 25 January 2025 (Ex P1, CB 231), Ms Richards convened a board meeting of Bernley to consider whether Bernley should call an extraordinary general meeting (“EGM”) of Heartland Group to consider the appointment of Ms Hooker and the removal of Mr Anthony Turner (if validly appointed) as a director of Heartland Group, which would have altered the constitution of the board of that company as determined in the Prior Proceedings.

9. [10]

   On 3 February 2025, a board meeting of Bernley was held (Ex P1, CB 245), attended by each of Ms Richards, Ms Hooker and Mr Turner. The board resolved by majority, over Mr Turner’s dissenting vote, that Bernley as a member of Heartland Group should convene an EGM of Heartland Group to consider the two proposed resolutions for the appointment of Ms Hooker and the removal of Mr Turner as directors of Heartland Group and resolved to appoint Ms Hooker as its corporate representative to vote in favour of those resolutions. Mr Turner opposed the proposed resolutions for reasons that he explained at that meeting. Also on 3 February 2025, Bernley sent notice (Ex P2) to the Heartland Group under s 249F of the Act calling the EGM of Heartland Group for 26 February 2025.

10. [11]

    On 18 February 2025, Ms Richards emailed Mr Turner (Ex P1, CB 250) a signed circulating resolution and instrument of appointment providing for Mr Turner’s appointment as corporate representative of Boyded for the Heartland Group EGM that had been called for 26 February 2025 and offering alternatives to that approach for Mr Turner’s consideration. Mr Turner did not respond to that email and Ms Richards did not subsequently seek to complete the process for Boyded’s appointment of a corporate representative, for example, by calling a board meeting of Boyded to effect that appointment. It appears to be common ground that that appointment could not have been effected at such a board meeting, where Ms Richards and Ms Turner were the only two directors of Boyded; Mr Turner opposed the conduct of the EGM and the resolutions proposed at it; and there is no suggestion that Mr Turner would, at least prior to the determination of the Appeal, take any step to facilitate that meeting or the appointment of a corporate representative of Boyded to allow it to be quorate.

11. [12]

    Correspondence between Mr Turner’s and Ms Richards’ solicitors followed between 19 and 24 February 2025 (Ex P1, CB 257ff). By letter dated 19 February 2025 (Ex P1, CB 257), Mr Turner’s solicitors advised Ms Richards’ solicitors that:

12. [13]

    In that correspondence, Mr Turner foreshadowed seeking an injunction restraining the proposed resolutions from being put to the Heartland Group’s proposed EGM. On 25 February 2025, Mr Turner applied for and obtained orders (Ex P1, CB 298) for short service from the Federal Court of Australia in relation to an application for an injunction restraining the proposed resolutions from being put to the proposed Heartland Group EGM. He did not serve those proceedings and his solicitors wrote to Ms Richards’ solicitor on the same day (Ex P1, CB 306) indicating that he no longer pressed that relief. On 26 February 2025, the Federal Court of Australia made orders (Ex P1, CB 313) recording the discontinuance of those proceedings.

13. [14]

    On 26 February 2025, Ms Richards and Ms Hooker attended at the notified time and place of the Heartland Group EGM, but Mr Turner did not attend. That was perhaps not surprising, where he had not been appointed as corporate representative of Boyded to attend that meeting. The Heartland Group EGM was then dissolved as inquorate in accordance with the Heartland Group’s constitution. This reflected the position under the articles of association of Heartland Group, to which I referred above.

14. [15]

    On 4 March 2025, Ms Richards commenced this proceeding. In subsequent correspondence between the parties’ solicitors, Mr Turner has taken the position that any changes to the governance of Heartland Group should occur only after the determination of his application for leave to appeal and the Appeal.

15. [16]

    By a letter dated 7 March 2025, Mr Turner’s solicitors reiterated his position that the EGM should not take place until after the determination of the Appeal, suggesting that Ms Richards convene a directors’ meeting of Boyded to consider the appointment of a corporate representative, and any EGM of the Heartland Group be convened, on a date following the determination of the appeal. There is no suggestion in that letter, and no suggestion in the position taken by Mr Turner in these proceedings, that he would contemplate voting in favour of a resolution to appoint a corporate representative of Boyded for an EGM of the Heartland Group, if that meeting were to occur prior to the determination of the Appeal. The position at present, and until the Appeal is determined, is that the board of Boyded is deadlocked and unable to appoint a corporate representative to attend an EGM of Heartland. I recognise that that position may change, if Ms Richards were to accede to Mr Turner’s wishes and defer holding of an EGM until after the Appeal.

16. [17]

    By a further letter dated 18 March 2025, Mr Turner’s solicitors (Ex D1, CB 434) indicated that:

17. [18]

    Mr Turner’s solicitors there suggested that questions may arise as to the validity of a resolution at a meeting of directors of Boyded that took place prior to determination of the Appeal, although that position was not pressed at this hearing. Mr Turner there indicated that, at the earliest possible date “after determination of the appeal”, he would attend a meeting of directors of Boyded to vote upon a resolution that he be appointed as corporate representative of Boyded. It was again implicit in that position and in the position he adopted at this hearing that he would not take that approach if that meeting were held before the determination of the Appeal. His solicitors then confirmed that position as follows:

18. [19]

    Mr Turner’s application for leave to appeal and the Appeal were heard concurrently on 26 March 2025 and the Court of Appeal reserved its decision which has not yet been delivered.

19. [20]

    By an email dated 8 April 2025 (Ex D2) Ms Richards sought to call a meeting of directors of Bernley to be held on 14 April 2025 to appoint Ms Hooker as Bernley’s corporate representative for the purposes of any general meeting that may be ordered by the Court in these proceedings.

20. [21]

    By letter dated 9 April 2024 (Ex P3), Mr Turner’s solicitor again indicated that he was “willing to facilitate the convening of a general meeting following delivery of the Court of Appeal’s judgment” (emphasis added) and proposed specified terms, including for a meeting of members of Heartland Group within 7 days after judgment was handed down on the Appeal. The solicitors also noted that Mr Turner would be overseas until 27 April 2025 and suggested that meetings of several other entities to be held on mutually agreeable dates after 28 April 2025.

21. [22]

    By their response dated 11 April 2025 (Ex P4), the solicitors for Ms Richards responded that:

The applicable principles, submissions and determination

1. [23]

   I first address the applicable principles, and I have here drawn on the comprehensive review of those principles in Beck v Tuckey Pty Ltd (2004) 49 ACSR 555; [2004] NSWSC 357 (“Beck”) and in Re Kentel Australasia Pty Ltd [2024] NSWSC 1352 (“Kentel”).

2. [24]

   Section 249G(1) of the Act relevantly provides that:

3. [25]

   An application for such an order may be made by a director of the relevant company and Ms Richards is a director of Heartland Group and has standing on that basis. Broadly similar provisions have long been part of statutory company law for many years: Companies Act 1948 (UK), s 135; Companies Act 1961 (NSW), s 142; Companies (NSW) Code, s 246; Corporations Law, ss 251 and 1319; and see Austin J’s comprehensive review of the history of the section in Beck at [39].

4. [26]

   The case law recognises that two matters generally arise in an application under this section. First, the applicant must establish that it is impracticable to call the meeting in any other way. In Re El Sombrero Ltd [1958] Ch 900 (“El Sombrero”), Wynn-Parry J observed (in an application under s 135(1) of the Companies Act 1948 (UK)) that

5. [27]

   A similar approach has been taken in later case law, including Re Totex-Adon Pty Ltd and the Companies Act [1980] 1 NSWLR 605, Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACSR 345, Favretto v Eagland (1995) 18 ACSR 196 and in Beck. In Laine Commodities Pte Ltd (recs apptd.) v CS Agriculture Pty Ltd [2021] FCA 635 at [31], O’Callaghan J in turn observed that it is well established that, for the purposes of s 249G of the Act, it is “impracticable” to conduct (or call) a meeting of a company where it is likely that those in a position to render the meeting inquorate will do so, and Nixon J followed that approach in Kentel.

6. [28]

   Secondly, where such impracticality is established, the Court has a discretion to make or refuse the order sought: Beck at [38]; Kentel at [28]ff. In the latter case, Nixon J reviewed the case law including El Sombrero and In re H R Paul & Son Ltd (1973) 118 Sol J 166 and my decision in Re Statewide Office Furniture Pty Ltd [2015] NSWSC 142 at [19], where I noted that:

7. [29]

   In Kentel, Nixon J in turn observed (at [49]) that

8. [30]

   Section 1319 of the Act in turn provides that:

9. [31]

   In Kentel at [36], Nixon J noted that:

10. [32]

    I do not understand these well-established principles to be in dispute in this case. Turning now to the parties’ submissions, Mr Ashhurst, with whom Mr Langshaw appears for Ms Richards, points to a deadlock in the board of Boyded. I accept that deadlock presently exists, where it is plain that Ms Richards seeks to have a corporate representative of Boyded appointed so as to attend an EGM of Heartland Group, and allow a quorate EGM to proceed so that the resolutions that she propounds will be passed by Bernley’s vote at that meeting. Mr Turner does not support that position, as a director of Boyded or generally, at least until after the determination of the Appeal. Mr Ashhurst also submits, and I also accept, that the deadlock in the board of Boyded has frustrated the attempts of Bernley to convene a quorate general meeting of Heartland Group to consider the proposed resolutions, and that rendered it impracticable to convene a general meeting of the Heartland Group without the Court’s intervention. That position presently subsists, notwithstanding the possibility that Mr Turner will, as he has foreshadowed, take a different view at some point in the future, following the determination of the Appeal.

11. [33]

    As I noted above, it is plain, from the consistent position put by Mr Turner’s solicitors in correspondence on his behalf and in these proceedings, that he does not support the appointment of a corporate representative of Boyded to attend an EGM of Heartland Group prior to the determination of the Appeal. His present position, as articulated in his solicitor’s correspondence, is that he would support the appointment of a corporate representative of Boyded to attend an EGM of Heartland Group after the determination of the Appeal. However, I recognise that the present intentions of parties may change as events develop. I am satisfied that it is presently impracticable to call a quorate meeting of the Heartland Group without Mr Turner’s cooperation and while Boyded’s directors are deadlocked. I do not understand Ms Nolan, who appears for Mr Turner, to contest that position, At least prior to the determination of the Appeal. That position may change after the determination of the Appeal, as Mr Turner has indicated through his solicitors, or it may not. That is sufficient basis to make the orders sought under s 249G of the Act, subject to issues as to the Court’s discretion as to which I now turn.

12. [34]

    Mr Ashhurst relevantly submits that:

13. [35]

    Ms Nolan now resists the orders sought by reference to discretionary considerations. She submits that the Court should exercise its discretion not to make those orders because a more “cooperative” approach would be taken by the parties after the determination of the Appeal. In opening submissions, she submits that:

14. [36]

    Ms Nolan also submits that:

15. [37]

    Ms Nolan in turn submits:

16. [38]

    Mr Ashhurst responds that the position put by Mr Turner is “ill-conceived” and that:

17. [39]

    I do not accept Mr Turner’s contention that the Court should not exercise its discretion to make the orders sought by Ms Richards. First, as is now common ground, the determination of the Appeal has no factual or legal relationship with the steps taken by Ms Richards that are in issue in these proceedings, and taking Mr Turner’s approach would undermine the procedures established by the Heartland Group’s constitution for the exercise of shareholders’ voting rights in an EGM. Second, it seems to me that the Court should exercise its powers under s 249G of the Act by reference to the position which now exists rather than not doing so on the basis that a shareholder (Boyded) or its director (Mr Turner) will be or may be more cooperative in the conduct of an EGM at the time of their choice, after the Appeal is determined.

18. [40]

    Third, as I have noted above, there can be no certainty that the position will in fact change following the determination of the Appeal, since Mr Turner would be free to alter his present intention to support the appointment of a corporate representative to Boyded at that point, where he plainly does not support the removal of Mr Anthony Turner or the appointment of Ms Hooker as a director of the Heartland Group. He has not, for example, offered undertakings to Ms Richards or the Court that would bind him to cooperate in the conduct of any appointment of a corporate representative to Boyded or the conduct of an EGM of Heartland Group at that point. Fourth, to the extent that Mr Turner considers that the steps that Ms Richards seeks to take will give rise to commercial disadvantages to the Heartland Group, or to the basis of a claim for oppression, these are matters which can be addressed after they have occurred, where Mr Turner did not pursue his earlier application in the Federal Court of Australia to injunct such a meeting.

19. [41]

    Ms Nolan also submits:

20. [42]

    Ms Nolan similarly submits, as to the Court’s power under s 1319 of the Act, that:

21. [43]

    I do not accept that position subsists here. First, the board of Boyded is in fact presently in deadlock as to these matters and Ms Richard’s and Mr Turner’s “willingness to negotiate their differences” is limited, where each insists on their respective positions that the EGM be held promptly, in the case of Ms Richards, or after determination of the Appeal, in respect of Mr Turner. Mr Turner’s present position is not a “negotiated outcome” but simply his preference that the AGM not proceed until after the determination of the Appeal. There is no suggestion that the parties are advancing any wider resolution of their differences.

22. [44]

    Ms Nolan also prepared “Speaking Notes” for the hearing and, with the aid of that document, made brief oral submissions. I do not address matters addressed in her speaking notes which turn on the proposition, now not pressed, that the determination of the Appeal would have any impact on the validity of the steps which have been taken to call the EGM or the resolutions ought to be passed at the EGM. Ms Nolan submits that the Court would not “lightly override” the quorum provisions for the EGM. While I accept that submission, the case law recognises that Court will make an order under s 1319 of the Act to override quorum provisions where, as here, it is apparent they will not be satisfied, at least as matters stand, by reason of the deadlock between Boyded’s directors so that it will not appoint a corporate representative to attend the EGM, unless Mr Turner changes his approach after the determination of the Appeal.

23. [45]

    Ms Nolan in turn submits that:

24. [46]

    Again, I do not accept that submission. The making of an order under s 249G of the Act will not “entrench one faction’s advantage”, beyond the advantage that inevitably arises at a shareholder meeting from holding the majority of shares, which is a necessary consequence of corporate structures. Such an order will simply give effect to the rights of Bernley as a shareholder, albeit in circumstances that Ms Richards and Ms Hooker now constitute a majority on Bernley’s board and Mr Turner a minority, and Bernley is the holder of nearly all the shares in Heartland Group. As I have noted above, there is no suggestion that “negotiations” will resolve the underlying dispute between the parties and there is also no suggestion that the Appeal or other pending “judicial processes” will do so.

25. [47]

    I have not neglected, but need not further address, Mr Ashhurst’s submissions in replay.

Orders

1. [48]

   For these reasons, I will make orders substantially to the effect sought by Ms Richards. I note that Ms Richards proposed that meeting be convened for 29 April 2025, immediately after the date on which Mr Turner’s solicitors had indicated he would return from overseas. Ms Nolan, without instructions, sought a longer period for the meeting to be convened, to allow a “grace” period until Mr Turner’s return from overseas. On balance, I should allow a slightly longer period than proposed by Ms Richards, and I will order that the meeting be convened on 2 May 2025, with information as to a videolink to be made available for that meeting to be provided by 29 April 2025. I will adopt the location proposed by Ms Richards for that meeting, although I am conscious that it may not be a neutral location, where the opportunity for a corporate representative of Boyded to attend by a video link will be available. There is no reason not to permit attendance in that manner, which is now widely used. Ms Richards has been successful and Mr Turner has been unsuccessful in the proceedings, and he must pay Ms Richards’ costs of the proceedings, as agreed or as assessed.

2. [49]

   I otherwise make orders in the form proposed by Ms Richards, as follows: