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Key decisions

  • Keybridge Capital Limited v WAM Active Limited [2023] FCAFC 194

CORPORATIONS

Appeal from decision that respondent’s directors did not act for an improper purpose in resolving to move a general meeting from an in-person meeting to an online meeting during COVID-19 restrictions – no appellable error – appeal dismissed.

Keybridge Capital Limited v WAM Active Limited [2023] FCAFC 194 (O’Callaghan, Halley and O’Sullivan JJ)

This was an appeal from Keybridge Capital Limited v WAM Active Limited [2023] FCA 339. In those proceedings, the respondent (‘WAM’) was a public ASX listed company. The appellant (‘Keybridge’) held voting shares in WAM. On 7 February 2022, Keybridge issued an ASX announcement stating its intention to make a conditional off-market takeover bid for WAM, and the same day, WAM wrote to Keybridge and issued an ASX announcement stating that it did not consider Keybridge’s proposed bid was genuine.

About a week later, on 14 February 2022, Keybridge issued a notice calling a meeting of the company under Corporations Act 2001 (Cth) s 249F. The notice stated that a general meeting of WAM would be held at a specific time on 17 March 2022 at an address in Melbourne (‘in-person meeting’). It set out proposed resolutions (‘Keybridge Resolutions’) and also enclosed proxy forms to be returned. At that time, COVID-19 related restrictions remained in force in Victoria.

The next day, WAM’s board had a teleconference and decided to change the venue of the in-person meeting to an online venue, at the same time and date, essentially because of COVID-19 safety concerns. An ASX announcement dated 16 February 2022 was issued stating that the venue of the meeting was being changed to a wholly online meeting ‘[i]n order to minimise health risks created by the COVID-19 pandemic and to ensure compliance with public health orders’ and because ‘shareholders … will be able to participate in the General Meeting through an online platform [which] … enables participants to listen to [it] live, vote on the relevant resolutions in real time and ask questions online’. The notice also enclosed an alternative proxy form, set out the Keybridge Resolutions, provided attendance and voting instructions, asked members to ignore Keybridge’s ‘defective’ notice, and instead vote at the online meeting or through the ‘valid proxy forms’.

On 15 March 2022, WAM released an ASX announcement stating that on the basis of proxy forms already lodged, its shareholders had voted against the Keybridge Resolutions. Eventually, both the online meeting and in-person meeting took place. None of the Keybridge Resolutions were passed at either meeting. Keybridge withdrew its bid the following month.

Keybridge was required to show that the primary judge’s finding that their evidence was to be accepted was glaringly improbable or contrary to compelling inferences.

Keybridge then sought to impugn the change of venue decision in the Federal Court, alleging the power to change the venue was invalidly exercised for an improper purpose. The primary judge held the decision was not for an improper purpose but rather to allow as many shareholders as possible to attend and participate in the meeting, and to protect the health and safety of shareholders and staff. Keybridge appealed, arguing the decision to change the meeting from an in-person meeting to an online one ‘was motivated by the improper purpose of the directors, seeking to ensure their sole control of the board’ and the fact that no hybrid meeting was called also evidenced an improper purpose.

The Court’s findings

O’Callaghan, Halley and O’Sullivan JJ

In a joint judgment, O’Callaghan, Halley and O’Sullivan JJ held that because the primary judge had the benefit of seeing and assessing the credit of WAM’s witnesses, Keybridge was required to show that the primary judge’s finding that their evidence was to be accepted was glaringly improbable or contrary to compelling inferences (citing Warren v Combes (1979) 142 CLR 531 at 552; Fox v Percy [2003] HCA 22 at [29]; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at 686-87) (at [22]).

Their Honours dismissed the appeal as the primary judge’s determination was plainly open on the evidence. In this regard, the Court noted that (at [30]):

  • there was nothing to suggest the Keybridge Resolutions would have enjoyed any better prospects at an in-person or hybrid meeting, rather than a wholly virtual one (at [23]-[25]).
  • WAM’s 16 February 2022 notice cited COVID-19 concerns and the desire for all shareholders to be able to participate in the meeting as reasons for the change of venue before any complaint was made about improper purpose;
  • Keybridge’s own notice of meeting referred to COVID-19 health risks and encouraged lodgement of proxy forms rather than attending the meeting in person;
  • temporary amendments to the Corporations Act 2001 (Cth) remained in force, allowing for wholly virtual meetings of members, in recognition of the ongoing impact of the pandemic; and
  • COVID-19 related restrictions on movement and gathering in Victoria, which changed relatively frequently, were still in force.


Vincci Chan is a barrister at University Chambers.