Adamek v Royal Motor Yacht Club of NSW Ltd [2007] NSWSC 1043 | Case summary

4371/07 - ADAMEK v ROYAL MOTOR YACHT CLUB OF NEW SOUTH WALES LIMITED JUDGMENT 1 HIS HONOUR: This is an application for interim injunction brought by members of the first defendant. 2 The first defendant is a company limited by guarantee and not having a share capital, which is a corporation within the meaning of the Corporations Act 2001 (Cth). It would also appear that it is a registered club under the Registered Clubs Act 1976 of the State of New South Wales. 3 The articles of association contain various provisions to which it is necessary to refer. Article 1 is headed "Interpretation". It defines "Flag Officers" as meaning: "Such of the members of the Board as have been elected by a General Meeting to the offices of Commodore, Vice Commodore, and Rear Commodore of the Club". 4 "Register of Vessels" is defined as meaning: "The register containing the names of the boat-owner members of the Club and the names, the descriptions and the class of their vessels pursuant to Article 101". 5 Article 6, so far as is relevant, provides as follows: "6. The Club shall consist of five (5) classes of members but Boat Owner members, General members, and Life members only shall have the rights accorded by the Articles to full membership of the Club ...". 6 The article then goes on to define, in a sense, "a Boat Owner member" and says: "An applicant for this class of membership must be either solely or jointly with another member or members of the Club, an owner of a vessel eligible to be included in the Register of Vessels and must immediately upon being admitted as a member apply to have his name and the name, the description and the class of his vessel entered in the Register of Vessels". 7 Article 57 provides that where there is to be an election for the office bearers the board may appoint an election committee consisting of three members. The second, third and fourth defendants are the election committee that was duly appointed under article 57. 8 Article 53 provides that: "The qualifications for eligibility of the Office Bearers ... shall be as follows: (a) A candidate for Directorship must be a member of the Club of not less than five (5) years standing. (b) A candidate for an Office Bearer Director ... in addition to the qualification of paragraph (a) must have served on the Board for a full two (2) terms of office; and (c) A candidate for the office of Flag Officer in addition to the qualifications of paragraph (a) and (b) must be the sole owner of a vessel on the Register of Vessels". 9 Article 92 provides that the board is to constitute various committees. One committee is named "The Marine Committee" and under 92(c) the Marine Committee: "Shall consist of the Rear Commodore as the Chairman thereof and a minimum of two (2) other members of the Board. This Committee shall be in charge of the affairs of the Marina and its functions shall be to ensure that such premises and the equipment thereon or therein are adequately protected and maintained; that the services to the members who use same are efficiently conducted by the staff employed therefor and make such recommendations to the Board as it considers appropriate". 10 Articles 101 and 102 follow the heading "Registration of Vessels", and are as follows: "101. The Board shall maintain the Register of Vessels which shall show alongside the name of each vessel, a description of the vessel and the name in full of the owner or where there is more than one owner the name of each owner and the percentage of equity held in the vessel by each owner. For the purposes of Article 53(c) a vessel shall be a power boat not less than seven (7) metres in length. 102. The Board shall have the power to remove from the Register of Vessels the name of the member or members and the name of the vessel and have the later removed from the berth, or mooring of the Club, if: (a) the exterior of the vessel has been allowed to deteriorate to such an extent as to present an unsightly appearance and render the vessel unworthy to wear or fly the insignia of the Club, provided however that the owner of the same has been previously directed by the Marine Committee to rectify such condition and he has neglected to do so within a reasonable time. (b) [deals with people who use their vessels for commercial purposes]; and (c) the vessel fails to comply with the safety regulations of the club". 11 The members' list in the first defendant's year book contains the names of life members, honorary members, junior members, on-site boat owner members, off-site boat owner members and general members. 12 There is no distinction in the articles themselves between an "on-site boat owner member" and an "off-site boat owner member". The difference in fact is that the former moor their vessels in the first defendant's marina and the latter moor them elsewhere. The principal question of construction for today's application is whether, on the proper construction of the articles of association, an off-site boat owner member is a boat owner member and a person on the Register of Vessels within the meaning of the articles of association. 13 The application is an interlocutory application for injunction. What is sought is a mandatory injunction that the election, which is scheduled for 27 September 2007, be dealt with in such a way that the relevant meeting will be opened, but then ordered to be adjourned until 1 November 2007 with the ballot occurring not later than 3 pm on 1 November 2007; the purpose, no doubt, being to allow time for the final hearing of the proceedings before the ballot takes place. 14 Although to some extent the seeking of a mandatory interlocutory injunction is harder to obtain than a prohibitory interlocutory injunction, the modern tendency is to play down this distinction: see Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499. To get an injunction one normally has to show that there is a prima facie or arguable case, that the balance of convenience favours the grant of the injunction rather than its refusal, that damages are not an adequate remedy and that there is no applicable equitable defence such as lack of clean hands et cetera. In the present case, damages are obviously not an adequate remedy, nor is there any complicating factor of an equitable defence, so I need to turn my mind to the first two factors. 15 When one is talking about an arguable case the authorities show that that means with respect to a factual dispute. It does not extend to points of law or to points of construction. However, in the case of the latter, if the court can see that the point of construction may depend upon factual material, or if there has not been sufficient time to present adequately the arguments on construction, where the question on an interlocutory application for injunction is one of construction, the court does not deal with it on the prima facie case basis, but solves it. 16 There are three plaintiffs. The first plaintiff, Mr Adamek, submitted a nomination on the prescribed form in due time seeking election for the position of Commodore. The election committee ruled that his nomination was not valid and declared the only other candidate duly elected as Commodore. Mr Adamek owns a vessel. The vessel is not in the marina and Mr Adamek is an off-site member. 17 Mr Branson QC for the plaintiffs put that he was a boat owning member, because there is no differentiation in the articles between a person who has their boat on-site and a person who has their boat off-site. With great respect I disagree. 18 Article 102 deals with the power to remove from the Register of Vessels. It gives three reasons. The principal one is the condition of the vessel after there has been previous warning by the Marine Committee. The Marine Committee, under article 92(c), has a sole purpose to be in charge of the affairs of the marina, and to make sure that it is properly conducted. It would be quite outside the Marine Committee's mandate to deal with a vessel that was not within the marina, as would be the case with an off-site vessel. 19 It seems to me that when one looks at the articles as a whole, particularly 102, when read with 92, an off-site boat owning member is not a boat owning member for the purposes of the articles. I should add that there is no evidence of the application that was made for membership by the first or the third plaintiff as to whether they applied for a particular class of membership. 20 The first and third plaintiffs' vessels are not on the Register of Vessels. The argument put by the plaintiffs is that there has been incompetence, or worse, on the part of the administrators of the Register in not including the plaintiffs' vessels. Thus, in accordance with well known principles that people cannot act on the basis of their own wrong, the first and third plaintiffs cannot be refused office if the reason for their boats not being on the Register of Vessels is the wrong of the first defendant. I certainly accept that point and indeed I have decided cases in that way in the past, eg Sung Li Holdings Pty Ltd v Medicom Finance Pty Ltd (1995) 13 ACLC 955, 959-960 and see Stylis v United Medical Protection Ltd [2007] NSWCA 109. 21 That argument is reinforced by an appeal to what has happened in the past, where previous election committees have maintained that the first and third plaintiffs, or persons in similar plight, are eligible to stand for election as Flag Officers. There can be a situation where continued misinterpretation of articles of association can mean that there are estoppels or that the articles must be read in what would not appear to be their proper semantic construction: see Ho Tung v Man On Insurance Co Ltd [1902] AC 232. However, generally speaking, what has happened in the past few years is not a way in which one can interpret the written articles of association which appear to date back to 1972. 22 Mr Sweeney QC, who appeared for the first defendant, made an application to cross-examine Mr Isak in particular, the second plaintiff, to deal with some matters that have happened in the recent past. For the reasons I have just given I declined that application. 23 As the Register of Vessels is, the way I see articles 101 and 102, limited to on-site vessels, it follows that there has been no wrong doing by the first defendant in not recording the first and third plaintiffs' vessels on the register. As the first plaintiff is not on the register, accordingly, he is not eligible to stand for election as a Flag Officer under article 53(c). The third plaintiff, Mr Gelbart, did not stand for election as a Flag Officer, however, he was a candidate for the position of boat owner director, and on my construction of the articles, he is not within that category. 24 In the case of the second plaintiff, Mr Spiro Isak, he is connected with a vessel which is moored in the marina. However, the evidence clearly is that that vessel is, in law, owned by a corporation, Isak Marine Pty Limited. I would accept that at the trial Mr Isak could show that he is the sole director and shareholder in Isak Marine Pty Limited and otherwise controls it. However, in my view, on the proper construction of 53(c), that is not sufficient to make him the "sole owner" of a vessel. 25 "Sole" has the connotation of not being a joint owner and when one sees the definition of "Boat owner member" in article 6(a), which uses the words "solely or jointly", one can see that it has that connotation. It also has the connotation of being the only owner. Now, "owner" is a weasel word and can mean different things in different contexts, but if one looks at the word "owner", technically it means the only person with some title to the vessel. If, however, one has a corporation, even if one controls the corporation, or one has a trustee, one cannot be, in my view, described as the "sole owner of the vessel" because somebody else has a right of ownership as well. Accordingly, Mr Isak, who nominated for Vice Commodore, another Flag Officer position, was rightly excluded. 26 In my view the plaintiffs have failed to show that there is a proper arguable case and accordingly I do not need to get to the question of balance of convenience. Ordinarily, however, in disputes within organisations, the court does prefer for meetings to be held so that the members of the corporation can, within the limits of the law of defamation, freely and fully discuss their differences and if there is an invalid election then the court can declare that afterwards. Mr Branson says that that would be mightily inconvenient and inappropriate in this particular case, perhaps he is right, I doubt it, but I do not have to decide the matter because I can deal with no prima facie case. Accordingly, the application for interlocutory relief is dismissed with costs.

Adamek v Royal Motor Yacht Club of NSW Ltd

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)