Alan, Biil and Clare were the directors and shareholders of Sailfree Pty Ltd

(sailfree) nrhich distributes and seils boating equipment. Alan and Bili each had 300 shares in Sailfree while Clare had 200 shares. All three of them actively participated in the company's management. Last year Ciare suffered a miid heart attack and decided that she should resign from the board of Saiifree and trausfer her shares to her daughter, Gail. Alan and Bill did not

object and the transfer was registered. Shortly afterwards, Alan discovered that Gail 's finance, Tom, was a major shareholder in and a director of a large interstate company that intended to expand its business and would possible be a serious competitor to Sailfree which passed a special resolution adopting the following internal rule:

"if a member the spouse or child of a member carries on or is director of a business that in the opinion of the directors is a competitor or a potential competitor of Sailfree, the director may requires that member to sell his or her shares to a person named by the directors at a fair price fixed by an independent expert appointed bu the directors."

The resolution was passed by Alan and Bili, who were the only people at the meeting. Gail was on her honeymoon in the Cook Islands at the time and did not receive the notice of meetin$ until she returned home. When she returned, she was given a notice requiring her to sell half her shares to Alan's wife, Sue, and half to Bill's wife, Helen, at a price of $20.00 per share (the value put on the shares by Graeme, the independent expert appointed by Aian and Bill).

Gail does not want to sell her shares in Sailfree. Advise Gail:

a. whether the meeting had power to adopt the internal rule set out above;and b.whether she has any grounds to challenge the notice requiring her to sell her shares.