From a very young age, Eartha Mitt enjoyed gardening with her mother. She took such delight in watching her 'plant babies' grow and flourish. Over time, she became disheartened and frustrated with the damage being done to her plants by slugs, snails, and other insects. She tried a number of different, natural pesticides but nothing seemed to work. In addition to gardening, Eartha is a passionate innovator and is motivated by effecting change on the world around her whilst preserving the natural world. She decided to combine her love of gardening with her passion for innovation.

In 2023, Eartha incorporated Wizzy Wiz Pty Ltd (WWPL), a bespoke technology company which became famous for its invention of the "GardenBot". The GardenBot uses artificial intelligence to crawl over soil looking for slugs, snails and other invaders using a light. Once spotted, the GardenBot picks up the invader, stores it and then 'digests' the organic material to power itself.

The directors of WWPL are Eartha, Matthew and Thinh who are also shareholders. Damian and Tracey also own shares in WWPL.

Director meetings are often called without notice or warning and lack sufficient information about resolutions to be discussed. At a recent directors' meeting, the directors were called to vote on whether to sign a contract engaging a new company to improve the crawling wheels of the GardenBot, however no information about the supplier, the cost of the contract, or the proposed new crawling wheels was provided to the directors.

General Meetings of WWPL are very informal and often take place outside or at a local caf. At a recent General Meeting, the shareholders received 20 days' notice of the meetingwhich included a resolution proposing to remove Matthew from the board. Eartha did not receive the notice as she was attending a conference in Brisbane on upcoming gardening innovations which incorporated artificial intelligence technology. The meeting was held and the resolution proposing to remove Matthew was passed unanimously. Eartha was very upset when she discovered what happened at the meeting as she would have voted against the resolution.

Eartha has become extremely frustrated with the lack of notice and formality at director and shareholder meetings and feels that resolutions are not thoroughly discussed, and resolutions are made without proper consideration. She tells the other members that the lack of formality and information means that all the company's activities are void and demands that each meeting be reconvened so that the resolutions can be decided properly.

(a) The shareholders are concerned about the time and expense involved in reconvening the meetings and come to you for advice. Advise these shareholders if Eartha is right and whether all the resolutions of WWPL are void. Your answer should carefully consider s1322 of the Corporations Act 2001. You may assume that WWPL is governed by the replaceable rules in the Corporations Act 2001.

Concerns have emerged within WWPL, regarding the conduct and validity of its meetings Director and shareholder Eartha Mitt's grievances concerning formality, notice, and information provision are examined under this section. By assessing compliance with statutory requirements and addressing Eartha's concerns, this analysis aims to determine the validity of WWPL's resolutions within the framework of Section 1322.

Are the meetings being called for a proper purpose?

It must be considered whether the meetings are being called for a proper purpose. As per s249Q of the Corporations Act 2001 (Cth) (CA) a meeting of a company's members must be held for a proper purpose. As per the case NRMA v Scandrett, the motive for calling these meetings is irrelevant. Both the meetings discussed in the facts were called for proper purposes, approving a contract for improvement and changing board composition.

Did WWPL have the Authority to Remove Matthew as Director?

The removal of public company directors as per s203D requires an Ordinary Resolution where a simple majority- more than 50% of those who are present and entitled to vote, vote in favour of the resolution. WWPL correctly used an ordinary resolution and the unanimous vote to remove Matthew surpassed the 50% threshold. Therefore, it appears WWPL acted within its rights to remove Matthew from the board.

Are the informal General Meetings of WWPL rendering all of the company's resolutions void?

Eartha argues that the lack of formality regarding the informal location of meetings renders all of the company's resolutions void. Section 249R of the Corporations Act dictates that company member meetings can be held at one or more physical venues. The facts acknowledge Eartha's argument regarding the informality of WWPL meetings which are often held outside or at cafes. However, the information provided suggests these locations themselves likely comply with Section 249R (physical venues). The presence or absence of formality is not necessarily dispositive of a resolution's validity.

Did WWPL's lack of detailed notice regarding the GardenBot contract render the vote void?

The issue at hand pertains to whether WWPL has adequately provided notice of meetings to its members. S249L requires meeting notices to include specific details like the location, date, time, and the general nature of the business to be discussed. S1322(1)(b)(ii) states that a procedural irregularity includes a reference to a defect, irregularity or deficiency of notice or time and S1322(2) allows courts to invalidate proceedings with procedural irregularities, if they cause substantial injustice that cannot be remedied by any order of the Court. Legal precedent from Devereaux Holdings v Pelsart Resources dictates notices must fully inform shareholders about voting matters. The notice lacked details such as supplier, cost and proposed new crawling wheels, thus failing to inform directors as required by S249L and the Devereaux precedent. This omission is a procedural irregularity under S1322(1)(b)(ii) due to a defective notice. Therefore, Eartha may contend that the procedural irregularity has caused substantial harm to the company and its stakeholders as it deprived directors of their ability to make informed decisions, meaning this resolution of WWPL is likely void.

Notice period of 20 days

Eartha specifically highlights the 20-day notice for the general meeting to remove Matthew as a director. This notice period fell short of the 21 days allowed under the replaceable rules section 249H(3)(a), which states that at least 21 days notice must be given of a meeting of the members of a public company at which a resolution will be moved to remove a director. She can leverage s1322(1)(b)(ii) of the Act to seek a court order invalidating the meeting. She would need to convince the court that there has been a substantial injustice, arguing that the extra day's notice would have allowed her to return home from the conference and potentially influence the outcome of the vote regarding Matthew's removal by swaying the other shareholders. However, it is unlikely that the court would agree with her notion making it improbable that the meeting would be declared void.

Eartha's non-receipt of the notice for the meeting

Eartha's absence due to her non-receipt of the meeting raises the question if it constitutes substantial injustice and thereby potentially invalidates the meeting proceedings. As per the case Poliwka v Heven Holdings Pty Ltd, the judge decided that shareholders would not have attended the meeting anyway, therefore irregularity itself did not cause substantial injustice. In this case, WWPL correctly sent the notice out as per s253RA, however Eartha did not receive her meeting notice because she was attending a conference in Brisbane. Even if she had received the notice through alternative means, her prior commitment to the conference would have prevented her from attending the meeting. Therefore, Eartha's non-receipt of the meeting notice and her subsequent absence due to attending a conference does not automatically invalidate the meeting proceedings as it is not a substantial injustice.

The Impact of the Unanimous Vote and Eartha's Shareholding

It's important to note that even in the highly unlikely scenario that Eartha successfully challenged the meeting's validity due to her non-receipt of the notice, the outcome might be limited. Since the vote to remove Matthew was unanimous, even if she attended the meeting her vote would not have made a difference to the final decision. it's unlikely the court would grant her the power to block the resolution entirely.

The unknown extent of Eartha's shareholding adds another layer of complexity. Eartha may argue substantial injustice as per s1322(2) if she holds a majority of the shares because if she had been there the outcome may have been different. Therefore, if Eartha were to successfully challenge the meeting's validity due to her not receiving the notice, albeit unlikely, she could argue substantial injustice if she holds a majority of shares and void the meeting.

Balancing Formalities with Practicality

Eartha's concerns about WWPL's meeting procedures raise valid points. The resolution regarding the GardenBot contract may be void due to insufficient information provided to directors, potentially causing substantial injustice. However, the removal of Matthew as a director appears valid as it followed proper procedures, and Eartha's absence from the meeting does not automatically invalidate it. Nonetheless, if Eartha holds a majority of shares she may have more influence in challenging the meeting's validity. Overall, each resolution's validity hinges on compliance with the Corporations Act, and further examination is needed to determine their status.

Is my answer good??