Alan, Bill and Clare were the directors and shareholders of Sailfree Pty Ltd (Sailfree) which distributes and sells boating equipment. Alan and Bill each had 300 shares in Sailfree while Clare had 200 shares. All three of them actively participated in the company's management. Last year Clare suffered a mild heart attack and decided that she should resign from the board of Sailfree and transfer her shares to her daughter, Gail. Alan and Bill did not object and the transfer was registered. Shortly afterwards, Alan discovered that Gail's fiance, Tom, was a major shareholder in and a director of a large interstate company that intended to expand its business and would possibly be a serious competitor to Sailfree. Alan called a general meeting of Sailfree which passed a special resolution adopting the following internal rule:

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

The resolution was passed by Alan and Bill, 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 meeting 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 per share (the value put on the shares by Graeme, the independent expert appointed by Alan 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.