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Cases Cited: - Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia (2016) 248 FCR 280; (2016) 113 ACSR 600; [2016] FCAFC 80
- Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
- Farrow v Registrar of Building Societies [1991] 2 VR 589
- Foss v Harbottle (1843) 2 Hare 461; 67 ER 189
- Fruit Shippers Ltd v Petrie [2020] NZHC 749
- Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89
- Jaworski v Chartered Accountants Australia and New Zealand [2024] NSWSC 1052
- Jaworski v Chartered Accountants Australia and New Zealand (No 2) [2024] NSWSC 1134
- Jaworski v Chartered Accountants Australia and New Zealand (No 3) [2024] NSWSC 1214
- John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113
- National Roads and Motorists Association v Parker (1896) 6 NSWLR 517
- Oates v Consolidated Capital Services Pty Ltd (2009) 72 ACSR 506; [2009] NSWCA 183
- Re BBY Ltd [2015] NSWSC 974
- Re Grocon Pty Ltd (admins apptd) (No 1) [2020] VSC 833
- Strawbridge, Re Virgin Australia Holdings Ltd (Admins Apptd) (2020) 144 ACSR 310; [2020] FCA 571
- Tan v Owners Strata Plan 22014 (No 2) [2015] NSWSC 1920
- Virgtel Ltd v Zabuski [2006] QSC 066
- Wallersteiner v Moir (No 2) [1975] 1 QB 373

Category: Principal judgment

Parties: Gerald Jaworski (Plaintiff)
Chartered Accountants Australia and New Zealand (Defendant)

Representation: Counsel:
Mr G Jaworski (Plaintiff) (self-represented)
Mr J C Giles SC/Mr S D Puttick (Defendant)
Solicitors:
Mr G Jaworski (self-represented)
Maddocks (Defendant)

File Number(s): 2024/238672

JUDGMENT

Nature and history of the application

1. By Summons filed on 28 June 2024, the Plaintiff, Mr Jaworski, sought relief described as:

“Grant of leave for derivative action per Request in attached Affidavit: Jaworski v Chartered Accountants, Australia and New Zealand.”

2. The Defendant, Chartered Accountants Australia and New Zealand (“CA ANZ”) is a body politic and corporate with perpetual succession, which was founded by Royal Charter in King George V’s name, which has been amended or supplemented by Supplemental Royal Charters, most recently by Queen Elizabeth II by letters patent in 2019.

3. The relief that Mr Jaworski seeks was initially framed as the grant of leave to bring a derivative action in accordance with the general law, where CA ANZ is not a company registered under the Corporations Act 2001 (Cth) (“Act”). However, Mr Jaworski rightly then recognised that leave was not required to commence the proceedings but, on the case law, was relevant to the question whether, as he sought, he should be entitled to retain legal representation to pursue the proposed proceedings at the cost of CA ANZ.

4. By my judgment delivered on 19 August 2024 (Jaworski v Chartered Accountants Australia and New Zealand [2024] NSWSC 1052) (“First Judgment”), I held that Mr Jaworski’s application should not be heard ex parte and that CA ANZ should be allowed an opportunity to be heard as to whether the relief sought by Mr Jaworski should be granted. I noted that the proceedings had not then been served on CA ANZ and stayed the proceedings until they were served, while leaving it to Mr Jaworski whether he wished to do so and assume any consequential costs risk. In a second judgment delivered on 4 September 2024 (Jaworski v Chartered Accountants Australia and New Zealand (No 2) [2024] NSWSC 1134), I did not allow Mr Jaworski’s application to reopen my First Judgment requiring that his application be served on CA ANZ before it was heard and determined. By a third judgment delivered on 26 September 2024 (Jaworski v Chartered Accountants Australia and New Zealand (No 3) [2024] NSWSC 1214), I ordered that a further application filed by Mr Jaworski seeking to reagitate whether the application could proceed in CA ANZ’s absence be struck from the file.

5. Mr Jaworski ultimately served his application on CA ANZ and he now relies on his Amended Summons filed on 24 February 2025, by which he seeks an order that:

“On the Court being satisfied that Mr Jaworski has a prima facie claim to be brought in the name [CA ANZ] against its officers, CA ANZ pay the future legal costs of Mr Jaworski’s conduct of that claim.”

6. In his opening written submissions, which refer to his first affidavit and his previous submissions in respect of previous hearings, Mr Jaworski made clear that he sought to allege that CA ANZ’s “controlling officers” had breached their duties in respect of the four specific matters that I address below and, more generally, advances an allegation that they had engaged in:

“nume rous actions/inactions since 2005 which have the effect of entrenching the power of the controlling officers, disenfranchising and diminishing the rights of members, and generally eschewing accountability”.

7. I pause here to note a significant aspect of Mr Jaworski’s proposed claim, namely that he seeks to bring claims against all or substantially all of CA ANZ’s current and former directors or officers over the last 10 or more years, and makes no attempt to identify any individual directors or officers who had any particular involvement in the decisions or conduct that he seeks to challenge, but treats the alleged “wrongdoers” as being a collective body of all those current and former directors and officers over the whole of that period. I return to the significance of that matter below. While I will generally adopt Mr Jaworski’s usage of the term “officers” in this judgment, the number of people who fall in that category and the lack of attention to their individual conduct and roles in that description should not be forgotten.

8. In his opening written submissions, Mr Jaworski submitted that the alleged conduct fell within exceptions to the general rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189, in several ways, including that it infringed the personal rights of members. I pause there to note that, as Mr Giles (with whom Mr Puttick appeared for CA ANZ) emphasised, that proposition had the consequence that several of the claims which Mr Jaworski seeks to bring as derivative claims in CA ANZ’s name could have been brought as personal claims of members of CA ANZ, including Mr Jaworski, at least as against CA ANZ. Mr Jaworski also submits that, having regard to the case law to which I refer below, “it would be reasonable (if not compelling) for an independent board to bring claims in CA ANZ’s name against the controlling officers” in respect of the matters to which I refer below. Mr Jaworski in turn seeks to bring those claims where CA ANZ’s current board has not done so.

9. I should note that, in his submissions and at the commencement of the hearing, Mr Jaworski expressed a concern that CA ANZ had been permitted to appear in the proceedings, represented by Counsel and solicitors instructed by its current board, to express a position which, he contended, had the consequence that:

“The alleged controlling officers have been allowed to influence the proceedings which would be plainly prejudicial to the CA ANZ entity, and also a breach of their duty to avoid a conflict of interest.”

10. I addressed that contention in an earlier ex tempore judgment and here simply note that it seems to me that it is not correct, for at least three reasons. First, this hearing comprises an application by Mr Jaworski to be funded by CA ANZ in his proposed conduct of the proceedings in CA ANZ’s name. He brings that application in his personal capacity, to seek an order against CA ANZ, and not on CA ANZ’s behalf. Second, and importantly, the fact that Mr Jaworski alleges wrongdoing against CA ANZ’s “controlling officers” does not establish the fact of that wrongdoing or any consequential “conflict of interest”. Third, and importantly, this submission neglects, as much of Mr Jaworski’s case neglected, the facts that the “controlling officers” to which he refers are the directors or officers of CA ANZ over a period of ten years; unsurprisingly, there has been significant change in the membership of CA ANZ’s board over that ten year period, although it appears that several directors have remained in office for significant parts of that period; and the allegations that Mr Jaworski seeks to make on CA ANZ’s behalf largely relate to conduct of persons who are no longer directors of CA ANZ, although I appreciate that Mr Jaworski seeks to extend those allegations to the current directors of CA ANZ. I recognise that, in my first judgment, I noted that it would be open to CA ANZ to appoint an independent board committee to consider the position in respect of the allegations; I do not know whether it has done so; but any question of conflict affecting the present board of CA ANZ must be considered in the context that the allegations largely relate to the conduct of previous boards of CA ANZ, involving many different people, over a period of at last ten years.

11. The parties addressed issues of some complexity, extending over a significant period, in evidence and submissions. However, the issues in the proceedings ultimately narrowed to a simpler question when Mr Jaworski made clear in his submissions in reply that the relief that he seeks is that which his Amended Summons indicates, namely that he be funded to bring proceedings in the name of CA ANZ against its officers, and that he does not seek declaratory or other relief as against CA ANZ as to the validity of challenged actions which would have been available to him, at least in respect of several issues, in his personal capacity.

Applicable case law

12. I now turn to the authorities on which Mr Jaworski relies, which I reviewed in my First Judgment, on which I partly draw for this summary. Mr Jaworski relies on the Court of Appeal’s decision in Wallersteiner v Moir (No 2) [1975] 1 QB 373 (“Wallersteiner”) which is a well-known decision in respect of the derivative action at general law, prior to the introduction of the present statutory derivative action regime for corporations under the Act. Lord Denning MR (at 390) identified the rationale for such a derivative actions as follows:

“But suppose [the company] is defrauded by insiders who control its affairs – by directors who hold a majority of the shares – who then can sue for damages? Those directors are themselves the wrongdoers. If a board meeting is held, they will not authorise proceedings to be taken against themselves. If a general meeting is called, they will vote down any suggestion that the company should sue them themselves. Yet the company is the one person who is damnified. It is the one person who should sue. In one way or another some means must be found for the company to sue. Otherwise the law would fail in its purpose. Injustice would be done without redress.”

13. I pause to note that Lord Denning there referred to “fraud” by company insiders and a claim for damages brought on the company’s behalf. I will point below to aspects of Mr Jaworski’s claim that have a different character.

14. Lord Denning (at 391-392) also there held that a minority shareholder, as an agent acting on behalf of the company, was "entitled" to be indemnified by the company against costs and expenses reasonably incurred by him in the course of the agency. As I noted in my First Judgment, that proposition depends upon the existence of an agency, arising where a minority shareholder is properly pursuing proceedings on the company's behalf. The Master of the Rolls also identified (at 392) a possible procedure to address the question of an indemnity for costs in favour of such a minority shareholder, namely that the minority shareholder, soon after issuing the proceedings, should apply for the sanction of the Court in somewhat the same way as a trustee does, by applying ex parte for directions supported by an opinion of Counsel as to whether there is a reasonable case or not. The Master of the Rolls noted that:

"The master may then, if he thinks fit, straight away approve the continuance of the proceedings until close of pleadings, or until after discovery or until trial (rather as a Legal Aid committee does). The master need not, however, decide it ex parte. He can, if he thinks fit, require notice to be given to one or two of the other minority shareholders - as representative of the rest - so as to see if there is any reasonable objection.”

The Master of the Rolls also there noted that a preliminary application should be simple and inexpensive and should not be allowed to escalate into a "minor trial".

15. Mr Jaworski has partly adopted that approach here, but has not taken the course which Lord Denning MR contemplated that his application should be supported by an opinion of Counsel. I recognise that Mr Jaworski indicates he has not done so because he wishes or needs to have the costs of legal representation paid by CA ANZ, but whether that should occur partly depends on the prospects of the proceedings, which an opinion of Counsel would have addressed. The absence of such an opinion has the significant consequence, which I also noted in my First Judgment, that the Court is deprived of the independent view of the merits of the proceedings which an independent opinion of Counsel would provide.

16. Mr Jaworski also refers, in his outline of submissions, to the criteria identified by Buckley LJ in Wallersteiner at 403-404 that:

“It seems to me that in a minority shareholder's action, properly and reasonably brought and prosecuted, it would normally be right that the company should be ordered to pay the plaintiff's costs so far as he does not recover them from any other party. In all the instances mentioned the right of the party seeking indemnity to be indemnified must depend on whether he has acted reasonably in bringing or defending the action, as the case may be: see, for example, as regards a trustee, In re Beddoe, Downes v. Cottam [1893] 1 Ch. 557. It is true that this right of a trustee, as well as that of an agent, has been treated as founded in contract. It would, I think, be difficult to imply a contract of indemnity between a company and one of its members. Nevertheless, where a shareholder has in good faith and on reasonable grounds sued as plaintiff in a minority shareholder's action, the benefit of which, if successful, will 404accrue to the company and only indirectly to the plaintiff as a member of the company, and which it would have been reasonable for an independent board of directors to bring in the company's name, it would, I think, clearly be a proper exercise of judicial discretion to order the company to pay the plaintiff's costs.”

17. Buckley LJ (at 404) also there noted that a minority shareholder could apply for directions as to whether he should proceed in such an action and to what stage without further directions. His Lordship went on to make further observations as to that approach and Scarman LJ (at 407) agreed with the procedure proposed by Buckley LJ.

18. Mr Jaworski also draws attention to Oates v Consolidated Capital Services Pty Ltd (2009) 72 ACSR 506; [2009] NSWCA 183 as authority that leave is not required to commence derivative proceedings, at general law, before their commencement. Campbell JA there noted (at [87]) that a minority shareholder which is concerned about his or her potential future liability for costs and which seeks to obtain indemnity from the company in respect of such costs may bring an application to address that issue, as Mr Jaworski now does. Campbell JA also there referred to the observations in Wallersteiner to which I have referred above. In Virgtel Ltd v Zabusky [2006] QSC 066 at [67], de Jersey CJ in turn treated such an application as seeking a "preliminary adjudication of the competence of the proceeding". The applicable case law has also been reviewed in comprehensive judgments in Tan v Owners Strata Plan 22014 (No 2) [2015] NSWSC 1920 at [90]ff and in Fruit Shippers Ltd v Petrie [2020] NZHC 749, which the parties did not address in submissions.

19. The parties did not here address the question whether, as a matter of history or principle, a mechanism for a derivative action exists in respect of CA ANZ, which was created by Royal Charter, and I accept that the courts may well not have had occasion to consider that question in recent years. Mr Giles did submit that a derivative action was not here available by reason of the terms of CA ANZ’s charter and by-laws, but it is not necessary to address either the wider question of the availability of a general law derivative action against a body incorporated by Royal Charter or the narrower question whether a derivative action is excluded by the terms of CA ANZ’s charter and by-laws, given the conclusion which I reach on other grounds below.

20. The parties also drew attention to Farrow v Registrar of Building Societies [1991] 2 VR 589 as an example where an order of the kind contemplated by Wallersteiner was made in respect of a body that was not a company, although Mr Giles points out that that order was there subsequently revoked and the plaintiff discontinued the proceedings. The parties also addressed the substantial case law in respect of statutory derivative actions under the Act, where Australian courts have generally required that the applicant seeking leave to bring a statutory derivative action indemnify the company for the costs to which it may be exposed by a derivative action being brought in its name.

Affidavit and other evidence

21. I should also briefly refer to the affidavit evidence on which the parties rely, although it will be convenient to address its detail below in respect of the particular claims sought to be advanced by Mr Jaworski. Mr Jaworski read a lengthy affidavit dated 28 June 2024, much of which comprised submissions as to the affairs of CA ANZ, which were admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) (“Evidence Act”) as submission and not as proof of the relevant fact. Mr Jaworski there referred to the history of the CA ANZ and noted that, as is common ground, its constitutional framework consists of Supplemental Royal Charter by-laws, which can be amended by a resolution of members which only becomes effective with the assent of the Governor General of the Commonwealth of Australia. Mr Jaworski also referred to the principal objects of CA ANZ as stated in its charter and to aspects of its governance. Mr Jaworski also there addressed the several matters which are the subject of the claims that he wishes to bring in the name of CA ANZ against CA ANZ’s officers, which I address below.

22. Mr Jaworski also read his second affidavit dated 14 March 2025 which identified documents relating to aspects of his claim and his third affidavit dated 17 March 2025 which sought to establish links between members of CA ANZ’s board and the members who voted at CA ANZ 2019 Annual General Meeting (“AGM”), in order to support a submission that the members who voted at that AGM were conflicted in doing so, a matter to which I return below.

23. CA ANZ in turn read the affidavit dated 4 March 2025 of Ms Goldstein, its company secretary, who also addressed CA ANZ’s history, constituent documents and governance and referred to the position in respect of director remuneration, to which I return below. Ms Goldstein also referred to governance reviews and a professional conduct framework review which had been undertaken by CA ANZ and to the conduct of its AGMs. By a second affidavit dated 1 April 2025, Ms Goldstein noted that Mr Jaworski had indicated, on 28 June 2024, that he was not proposing to renew his membership with CA ANZ and his membership had lapsed no later than 11 July 2024. Ms Goldstein also there addressed the circumstances in which a 2021 member vote of CA ANZ, which I address below, was conducted by an electronic ballot and passed four resolutions as set out in an information sheet and explanatory memorandum provided to members.

24. The parties in turn tendered (Ex J1) voluminous documentation in respect of the application, which I address in respect of particular issues below. However, I should here note several significant provisions of CA ANZ’s Supplemental Royal Charter made in 2019. Article 3 of the Charter sets out the principal objects of CA ANZ which include advancing the theory and practice of accountancy; promoting quality, expertise and integrity in the profession of accountancy by its members; and prescribing high standards of practice and professional conduct for and maintaining the observance of such standards by, inter alia, its members. Article 4 sets out ancillary objects and powers of CA ANZ.

25. Article 10 of the Charter provides that there shall be a board of CAANZ consisting of natural persons, not more in number than are prescribed by the by-laws and elected or appointed in the manner described by the by-laws. Article 12(a) provides that:

“The Board shall be responsible for managing or directing the management of the affairs of CA ANZ … The Board may also, in accordance with the provisions of this Our Supplemental Charter and of the [b]y-[l]aws, lawfully exercise all of the powers of CA ANZ except as to such matters as are by this Our Supplemental Charter or by the [b]y-[l]aws directed to be transacted by or at a general meeting of the members of CA ANZ.”

26. Articles 12(b) and 12(c) in turn provide for delegation of the board’s powers and responsibilities. Article 13, on which Mr Jaworski relies, that:

“All powers which under the provisions of this Our Supplemental Charter may be exercised by the Board shall be exercised by it in accordance with, and subject to, the provisions of this Our Supplemental Charter of the By-Laws, and the exercise of all those powers shall be subject also to the control and regulation of any general meeting of CA not so as to make invalid any act done by the Board previously to any resolution being passed at a general meeting, and any act or proceeding of the Board shall not be invalidated or be illegal in consequence of there being any vacancy in the Board at the time of such act or proceeding being done or taken.”

27. Articles 13A and 13B provide for the establishment and responsibilities of the CA ANZ Council and article 15 for the establishment of Regional Councils and Overseas Regional Councils. Articles 21 and 22 provided for the making of by-laws “for the better execution of this Our Supplemental Charter, the furtherance of the objects of CA ANZ and generally for regulating the affairs of CA ANZ as CA ANZ sees fit”.

28. Both Mr Jaworski and Mr Giles also referred to CA ANZ’s by-laws as amended in July 2019 (Ex J1, 792) and I should also note several of those by-laws. Section 7 of the by-laws provides for the conduct of meetings of regional members, meetings of overseas regional members and for meetings of members of CA ANZ. By-law 59 provides for an annual general meeting of members conducted in October in each year or such other month as the board determined, with no more than 15 months elapsing between two successive annual general meetings. By-law 60 permits CA ANZ’s board, when it thinks fit or upon a requisition made by a specified number of members entitled to vote, to convene a special meeting of members. By-laws 73ff deals with voting at such a meeting. Section 8 deals with the establishment of Regional Councils and Overseas Regional Councils and section 8A with the CA ANZ Council.

29. Section 9 of the by-laws provides for the board of CA ANZ and by-law 133 provides for the board’s powers, as follows:

“In accordance with Article 12 of the Supplemental Charter, the affairs of CA ANZ shall be managed by or under the discretion of the Board and for such purposes the Board shall, inter alia, exercise absolute and exclusive powers (but without prejudice to its right to delegate the same in accordance with these By-Laws) in respect of [specified matters].”

30. By-law 136A, to which Mr Jaworski refers, provided for the remuneration of CA ANZ’s directors as follows:

“The remuneration of the Directors, President and Vice Presidents shall be based on market rates, determined by the CA ANZ Council, based on a recommendation from the Nominations and Governance Committee, within the parameters and principles approved by Members.”

31. By-law 154, to which Mr Jaworski also refers, requires that:

“The Board shall cause to be prepared for each financial year a General Purpose Financial Report in accordance with Australian accounting standards which gives a true and fair view of the financial performance and position of CA ANZ. The Board shall cause the General Purpose Financial Report to be audited by the auditor of CA ANZ not less than 28 days before each ordinary general CA ANZ meeting.”

The claim in respect of the 2020 resolutions

32. The first claim that Mr Jaworski seeks to bring against CA ANZ’s officers (as a collective group) relates to the circumstances in which CA ANZ declined to put 38 resolutions proposed by several of its members including Mr Jaworski to an AGM in 2020. In his first affidavit, Mr Jaworski addresses, at some length, the circumstances in which ten members of CA ANZ, including Mr Jaworski, requested that CA ANZ put 38 motions to the 2020 AGM for a member vote, and refers to CA ANZ’s response, by its legal representatives, that the proposed motions could not lawfully be put to a general meeting and would therefore not be put to members for a vote. Mr Jaworski there indicated that:

“The Court is requested to declare whether it was lawful for the Board to prevent all of the proposed motions from being considered by members at the AGM.”

33. Mr Jaworski rightly there recognises a question of the allocation of powers between shareholders and a board considered in cases such as John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 and Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia (2016) 248 FCR 280; (2016) 113 ACSR 600; [2016] FCAFC 80 and submits that, on the proper construction of clause 13 of the Supplemental Royal Charter and CA ANZ’s by-laws, the power to pass resolutions of the kind sought to be put before CA ANZ’s 2020 AGM remained with shareholders, contrary to the position which now generally prevails in respect of company law.

34. Mr Jaworski took me to the document which set out the 38 motions which members sought to have put before CA ANZ’s AGM on 3 December 2020 (Ex J1, 1053). For example, the first proposed motion was framed as a declaratory statement that the “by-laws should be amended” to include a particular requirement, rather than as itself an amendment to those by-laws, and the fifth and sixth motions were also framed as declaratory statements that the by-laws should be amended in a particular manner, rather than as themselves implementing amendments to the by-laws. Many other motions were in the nature of statements that various steps described in relatively general terms should be taken, generally as soon as practicable.

35. Mr Jaworski in turn referred to a letter dated 4 November 2020 (Ex J1, 1202) by which the solicitors for CA ANZ contended that:

“The motions are not motions of a kind that members can legally require to be put nor are they in a form appropriate to put to the meeting.

Therefore, the proposed motions will not be put to the 2020 annual general meeting (AGM). However, CA ANZ is looking to consider the issues raised in the following ways:

● The Board is separately conducting a review of the governance framework of CA ANZ as parts of its continual review and improvement process, and in doing so, the Board will consider the issues raised by the proposed motions; and

● The Chair of the board will also address the themes raised by the proposed motions at the 2020 AGM.”

36. The notice of meeting sent to members for the 2020 AGM (Ex J1, 1203) in turn stated that:

“On 25 September 2020, CA ANZ received a notice from Mr Gerald Jaworski and 9 other members, seeking to requisition 38 special motions (requisitions) for consideration by members at the AGM. The motions will not be put to the AGM as they are not motions that can legally be proposed by members or are not in a form appropriate to be put to the meeting. Further details in respect of the board’s response to the requisition is set out in the Information Sheet.”

37. That Information Sheet in turn referred to communications from Mr Jaworski in respect of several matters and provided a brief summary of the 38 special motions that he proposed as relating:

“to a range of matters, including disclosure in CA ANZ’s financial statements, CA ANZ’s corporate governance structure and whether its post-merger structure is appropriate, its overseas offices, its overseas travel costs, its disclosure in relation to the remuneration of its CEO and senior executives and its ability to act as an advocate in the public good.”

38. That Information Sheet also recorded that a copy of the 38 special motions was available on CA ANZ’s website and went on to observe that:

“In addition to satisfying the procedural requirements set out in the By-Laws, proposed motions must also satisfy certain legal principles. CA ANZ has thoroughly tested whether the special motions are of a kind that can be validly put to members in light of these principles and has determined that they were not motions that members could legally propose or were not in a form appropriate to be put to the meeting.

Nevertheless, the board believes that it is important to address issues raised by Members. The Chair of the Board and the President therefore spend time at the AGM addressing some of the themes raised by the proposed motions and Members will be able to ask questions.”

39. I have not neglected that Mr Jaworski also criticises the manner in which questions could be raised at the AGMs of CA ANZ.

40. In his opening written submissions. Mr Jaworski submits that, in respect of this matter, that:

“The first matter is a legal question of whether it was lawful for the CA ANZ Board to quash the 38 requisitions led by ten members for the 2020 AGM. It is alleged that the quashing was not justified by the company's constitutional provisions and it's [sic] reason for existing. The key issue is the scope of rights provided by article 13 of the Charter. The key facts are submitted as being uncontroversial: that the requisitions were made; that they were quashed; and the relevant contents of the CA ANZ Charter and By-Laws at that time. It is submitted that the relevant facts are evidenced to the required legal standard.”

41. Mr Giles in turn refers to the case law which has recognised that shareholders of a company cannot ordinarily give directions to a company’s board as to matters which are within the scope of the Court’s power under the company’s constitution, including Gramophone and Typewriter Ltd v Stanley [1908] 2 KB 89 at 105-106, National Roads and Motorists Association v Parker (1896) 6 NSWLR 517 and the decisions to which Mr Jaworski had referred . Mr Jaworski in turn responds to CA ANZ’s reliance on these cases by pointing to article 13 of CA ANZ’s charter (to which I referred above) which, he contends, makes the exercise of the board’s power subject to the control and regulation of general meeting. I recognise that there may be a question in this case as to whether the position that would likely exist as to a company is diluted or excluded by the terms of that article, as Mr Jaworski submits, but it is not necessary to determine that question in order to determine the proceedings.

42. Mr Giles also submits that a member of CA ANZ (which Mr Jaworski was at the relevant time, although he has since ceased to be a member of CA ANZ) had standing to seek declaratory relief, or potentially injunctive relief, as to whether particular resolutions could be validly be put to a meeting of CA ANZ, although it would obviously be more difficult to obtain that relief several years after the event. Mr Giles also rightly submits that a claim of that character would properly be brought by Mr Jaworski (at least of he was still a member of CA ANZ) or the other members who had sought to have the resolutions put before CA ANZ’s 2020 AGM and was properly not brought as a derivative action in the CA ANZ’s name, where it was a claim against rather than by CA ANZ. As I noted above, Mr Jaworski made clear in reply submissions that he does not now seek the declaration identified in his affidavit, so far as it would be open to him to seek it in his personal capacity, but instead seeks to pursue the action in CA ANZ’s name against its (implicitly, largely former) officers, which I infer would assert a breach of duty by them not causing those motions to be put to the 2020 AGM.

43. Mr Jaworski and Mr Giles did not address any case law that identifies the nature of duties owed by officers of a body incorporated by Royal Charter, although Mr Jaworski submitted that:

“CA ANZ officers would be in breach of the CA ANZ Code of Conduct and one or more of their other strict legal duties to act bona fide in the best interest of the company and/or its members as a whole, such as; a duty to act in good faith for the benefit of the company; a duty to avoid situations where there is a conflict between the interest of the officer and the interest of the company; a duty to exercise their powers for a proper purpose; a duty to exercise reasonable care; and an obligation to act fairly towards members.”

44. I will assume, without deciding, that it would at least be arguable that CA ANZ’s officers owed it a duty of care and diligence, enforceable in negligence or in equity, and duties to act honestly and for a proper purpose to CA ANZ in that regard. However, it is not apparent to me that Mr Jaworski has a proper basis to put, on behalf of CA ANZ, that any individual current or former director or officer of CA ANZ breached his or her duty in that regard in any identifiable way. As I noted above, many of the resolutions which Mr Jaworski and the 10 other members of CA ANZ sought to put to this meeting were directory in nature, and even those which refer to potential amendments to the by-laws were not framed as having immediate effect as amendments of the by-laws. Putting aside the question whether those resolutions could properly have been put to the 2020 AGM, which (as I noted above) it is not necessary to determine, the more fundamental difficulty with Mr Jaworski’s claim against CA ANZ’s current or former directors and officers in respect of this matter is that he does not seek to identify the steps taken by CA ANZ’s former directors or officers (as at 2020) that are said to have breached their duties, beyond the bare fact that the resolution was not put to members at the 2020 AGM. He does not allege, for example, that those former directors or officers failed to consider the question whether the resolutions should be put to the AGM or failed to take legal advice about that question, or that they acted contrary to such advice as they had obtained as to that question. He assumes that the failure to put those resolutions to the 2020 AGM is, per se, a breach of duty, and that assumption does not seem to me to be well-founded.

45. I am not satisfied that Mr Jaworski has established a prima facie claim to be brought in the name of CA ANZ against its current or former directors and officers in respect of this matter, or that it is in CA ANZ’s interests to bring that claim, or that CA ANZ should pay the future legal costs of Mr Jaworski’s conduct of that claim against its current or former directors and officers. In summary, Mr Jaworski and other members could, at least if they had acted promptly, have vindicated their rights by a personal action against CA ANZ, although delay may now defeat such an action; second, Mr Jaworski does not identify any evidentiary basis for establishing conduct rising to the level of a breach of duty against any of CA ANZ’s then officers, even if they should have caused CA ANZ to put one or more of the resolutions to members at the 2020 AGM; third, CA ANZ would face difficult causation issues in such a claim, since Mr Jaworski does not identify any evidence to suggest the 38 resolutions would have been passed by the necessary majority of its members had they been put to the AGM; and fourth, Mr Jaworski has not shown any loss that has been suffered by CA ANZ by not putting the resolutions to members, as to which recovery could be made in a claim against its former directors or officers, several years after the event.

The claim in respect of amendments to CA ANZ’s by-laws in 2021

46. The second claim that Mr Jaworski seeks to bring against CA ANZ’s officers relates to an amendment of CA ANZ’s by-laws in 2021 to increase the minimum number of members required to bring a motion or business before a meeting from 10 members to 100 members.

47. In his first affidavit, Mr Jaworski addresses the position in respect the passage of this amendment as one of a larger number of changes made through a “member vote” process in 2021. It appears that this amendment was made as part of a wider range of amendments to CA ANZ’s by-laws, by the mechanism set out in by-law 78 which provides that, in lieu of submitting a proposal to a meeting, the board may submit a resolution to be voted on by members.

48. Mr Jaworski also took me to the information made available to CA ANZ members that dealt with the first amending resolution which provided for the amendment of several by-laws under the general heading “Modernising members’ ability to participate”. An explanatory memorandum referred to an amendment to by-law 68 to change the minimum number of members that could bring a motion or business before a meeting from 10 to 100 members, and described the rationale to that amendment as follows:

“This amendment aligns by-law 68 with by-law 60 which requires that 100 members can requisition an extraordinary meeting of members. It also aligns it more closely to the current requirements under the Corporations Act 2001 (Cth) namely that a motion can only be tabled at an AGM by at least 100 members.

The current low threshold of 10 members allows a very small minority of members (0.008%) to put forward motions that have no meaningful support amongst the membership. Addressing such motions has historically been expensive for CA ANZ.”

49. A document provided to members (Ex J1, 1409) in turn contained a login which permitted members to vote on the resolution, and itself made clear that the amendments included:

“Amending the number of members required to requisition an AGM down from 200 to 100 members; and at the same time, amending the number of members that can table a motion at an AGM up from 10 to 100. 100 members reflects requirements in the Australian Corporations Law.”

50. A member vote in respect of that matter in turn recorded that the several resolutions under the heading members’ ability to participate, including this resolution, were passed by 6,332 votes in favour, with 218 against, amounting to 96.67% of members supporting the resolutions (Ex J1, 1474).

51. Mr Jaworski also indicates, in his first affidavit, that the Court was requested to declare that relevant disclosure requirements were not satisfied in relation to this member vote. Again, Mr Giles rightly submitted that a member of CA ANZ could (at least had he or she acted promptly) have sought a declaration or other relief as to that matter, and that it was not appropriately the subject of a derivative action brought by CA ANZ where it would be the defendant in a claim for such a declaration. Again, Mr Jaworski made clear, in submissions in reply, that he did not now seek a declaration of the kind identified in his affidavit, which he could do in his own right, but instead sought to bring claims for breach of duty against the officers of CA ANZ in respect of this matter.

52. In his opening written submissions. Mr Jaworski submits that this matter:

“… is a legal question of whether proper/sufficient notice was given to support a 2021 AGM resolution to increase the number of members required to requisition AGM motions from 10 to 100. It is alleged that insufficient notice was given to support such a diminishment of member rights. The key issue (of considerable public interest) is whether CA ANZ could satisfy the requirements by posting relevant details on its website without properly describing their content in the "notices" sent via email/post to members. The key facts are the relevant constitutional provisions and the content of the emails and website postings. It is submitted that the relevant facts are evidenced to the required legal standard.”

53. I do not accept Mr Jaworski’s submission that CA ANZ’s providing a link to the disclosure material on a website did not sufficiently make it available to CA ANZ’s members, and I recognise that those members were chartered accountants who might be expected to have at least a degree of computer literacy. I also do not think that any chartered accountant would fail to appreciate that the change from 10 to 100 members would make it more difficult to put a resolution on the agenda for the AGM, when determining whether or not to vote in favour of that amendment. The view that Mr Jaworski takes in this respect is not consistent with that taken in the many cases in which this Court and other Australian Courts have authorised disclosure to shareholders and creditors in this manner, which is now commonly adopted, for example, in voluntary administration and schemes of arrangement. In Creative Memories Australia Pty Ltd (Administrators Appointed) [2013] NSWSC 732 at [8], I observed that:

“Australian courts have, in any event, been increasingly willing to modify the manner in which notices may be given in respect of companies in administration to address issues of costs and practicality, including by authorising the giving of the such notices by electronic means, no doubt reflecting the fact that such means are now more widely accepted in the wider community. There are several decisions in which the courts have made orders, in respect of first or second meetings of creditors of companies in administration, permitting notice to be given by electronic means to those for whom email addresses are available and otherwise by notice, for example, on an administrator’s website or by newspaper advertisement: for example, ABC Learning Centres Ltd (admins apptd*) (recs and* mgrs apptd) v Honey [2010] FCA 353; Re Silvia (as admins of FEA Plantations Ltd (admins apptd)) [2010] FCA 468; Re Carson (as admins of Hastie Group Ltd (admin apptd)) [2012] FCA 626; Carson Re Hastie Group Ltd (No 2) [2012] FCA 717; Re Mothercare Australia Ltd (admins apptd) [2013] NSWSC 263 at [8].”

54. That observation has in turn been approved by other Australian courts, including in Re BBY Ltd [2015] NSWSC 974 at [7], Strawbridge, Re Virgin Australia Holdings Ltd (Admins Apptd*)* (2020) 144 ACSR 310; [2020] FCA 571 at [28] and in Re Grocon Pty Ltd (admins apptd*) (No 1)* [2020] VSC 833 at [59].

55. I recognise that some members of CA ANZ may consider, as Mr Jaworski considers, that it would be preferable if a smaller rather than a larger number of members could place a matter before an AGM, but this is a matter as to which views may reasonably differ and it appears that the substantial majority of CA ANZ’s members who voted in favour of the amendment did not share Mr Jaworski’s view. It is not apparent to me that the claim that Mr Jaworski seeks to bring against CA ANZ’s directors or officers has a proper basis, such that it could reasonably be advanced by CA ANZ, still less that it is capable of recovering any loss on the part of CA ANZ. Mr Jaworski again does not identify what any particular officer did in respect of the steps taken to put the amending resolutions before members of CA ANZ, although it is apparent that those steps did no more than allow members to vote as to the amendment, which they did by approving it by a substantial majority.

56. I am also not satisfied that Mr Jaworski has established a prima facie claim to be brought in the name of CA ANZ against its officers in respect of this matter, or that it is CA ANZ’s interests to bring that claim, or that CA ANZ should pay the future legal costs of Mr Jaworski’s conduct of that claim against its officers, for largely the same reasons he has not done so in respect of the 2020 requisitions. In summary, it is not apparent that the amendment was not a proper one, where it replicates amendments that had previous made to the Act in the context of the number of members required to call a members’ meeting, albeit those amendments were then controversial, or that disclosure was not properly made in respect of it. Second, Mr Jaworski and other members could again, at least if they had acted promptly, have vindicated their rights as to this amendment by a personal action against CA ANZ, although delay may now defeat such an action. Third, Mr Jaworski does not identify any evidentiary basis for establishing conduct rising to the level of a breach of duty against any of CA ANZ’s then officers, even if they should not have caused CA ANZ to seek this amendment in this manner, which was approved by its members. Fourth, CA ANZ would face difficult causation issues in such a claim, since Mr Jaworski does not identify any evidence that the chartered accountants who are members of CA ANZ would not be sophisticated enough to click on a link to the disclosure material in respect of the amendment or did not do so. Fifth, Mr Jaworski again has not shown any loss that has been suffered by CA ANZ by putting the resolutions to members, as to which recovery could be made in a claim against its officers, again several years after the event. I do not grant the relief sought by Mr Jaworski in respect of this claim.

The claim in respect of directors’ fees

57. The third claim that Mr Jaworski seeks to bring against CA ANZ’s officers relates to payments of directors’ fees by CA ANZ between 2015 and 2025, which Mr Jaworski contends lacked authorisation, by reference to by-law 136A of CA ANZ’s by-laws, to which I referred above. In support of this claim, Mr Jaworski contends that an earlier resolution of members, in 2013 and a further resolution of members in 2019 were not sufficient to satisfy the requirement for approval of the relevant parameters and principles by members. He also challenges the adequacy of information provided to members of CA ANZ in respect of the resolution passed at the 2019 AGM relating to directors’ fees. He did not contend that directors who would receive such fees had voted in support of that resolution, but he places substantial emphasis on suggested conflicts of interest that affected other members who voted at that AGM in support of that resolution. Again, Mr Jaworski does not seek to declaratory relief as to this matter, which may be or have been available in an application brought by a current member of CA ANZ but makes clear that he seeks to bring an action in CA ANZ’s name to seek to recover those directors’ fees.

58. Mr Jaworski also drew my attention to a document which he had prepared (Ex J1, 3243; admitted with a limiting order under s 136 of the Evidence Act as submission), which sought to demonstrate links between members who voted at CA ANZ’s 2019 AGM in respect of remuneration principles and the board. That submission turned on the premise that members should be disqualified from voting or their votes discounted because they had connections with members of the board which Mr Jaworski perceived as amounting to a conflict of interest affecting their entitlement to vote, or at least the independence of their votes. Mr Jaworski drew attention to no authority that such a principle exists in respect of bodies established by Royal Charter, and I note that shareholders of a company are not generally disqualified from voting by reason of their personal interests in a resolution at a members’ meeting, although some voting rules are applied to particular resolutions under the Listing Rules applicable to listed companies. Mr Jaworski did not identify, and I cannot see, any basis for extending that position to unlisted bodies created by Royal Charter.

59. In her affidavit, Ms Goldstein in turn gave evidence as to member approval of the maximum aggregate annual remuneration that could be paid in a financial year to CA ANZ’s directors, President and Vice President; the conduct of reviews of remuneration by CA ANZ’s Nominations and Governance Committee; and the Council’s determination of remuneration of directors. I recognise that CA ANZ has been unable to locate a copy of its 2013 AGM minutes, although subsequent documents indicate what had occurred at that meeting. I was also taken in submissions, relevantly, to a notice of the AGM of CA ANZ to be held on 6 November 2013, which records the benchmark for directors’ remuneration from the previous year. The annual report for CA ANZ in 2014 (Ex J1, 234) in turn addressed the manner in which remuneration was determined and recorded that a recommendation on directors’ remuneration was approved by members at the AGM in November 2013. Ms Goldstein also refers in her affidavit to the minutes of the 2019 AGM which recorded the approval by members, by a show of hands, of a resolution to approve a 2020 remuneration pool and to the subsequent approval of a resolution to increase the 2020 remuneration pool by $150,000 which was put to members at the 2022 AGM.

60. In his opening written submissions. Mr Jaworski submits that, in respect of this matter, that:

“The third matter is a legal question of whether directors' remuneration paid since 2015 was properly authorised. This includes a question of whether a claimed member authorisation in 2013 prior to the amalgamation in 2015 can be considered lawful, and also whether the 2019 AGM resolution to increase directors' remuneration was lawful in light of the way the AGM was arranged, including the notices provided and whether it was carried by persons who stood to benefit from the proposal, or persons who were influenced by such persons. It is alleged that the controlling officers orchestrated the 2019 AGM in a way which made it practically impossible for ordinary members to vote against the proposal, and also that the evidence available at this stage would compel a finding that the resolution was carried by persons who were conflicted. It is submitted that the facts required at this stage of the case are evidenced to the required legal standard.”

61. Mr Giles responds, in opening written submissions, that:

“The complaint is flawed. Unlike the other complaints, it is conceivable that the corporation may be a proper plaintiff to recover the overpayments. But at that point, the complaint breaks down for three reasons because this is not simply overpayments (and a fortiori not dishonest overpayment). First, [CA ANZ] has acted in accordance with a resolution apparently passed and treated as passed by members; absent the resolution being found to be ineffective, [CA ANZ] cannot act to recover payments that are lawful in accordance with the by-laws — in any proceeding to invalidate the resolution, [CA ANZ] would be a defendant. Secondly, any proceedings to recover payments, ostensibly lawful when made, is overwhelmingly likely to fail as the directors are entitled to have acted in accordance with the resolutions. Thirdly, the members are not entitled to dividends (and their membership has no financial value which would be increased) while they are able to remove the directors; as such, the conditions to bringing a common law derivative action are not and cannot be met.”

62. In reply, Mr Jaworski submits that:

“[CA ANZ’s] submissions … relating to directors’ remuneration fail to address the key issues. On the facts presently available, without the benefit of pre trial interrogatories and discovery (such as for employment contracts and board papers), a claimed resolution to increase the directors’ remuneration pool was carried by persons who stood to benefit financially and/or by persons who could reasonably be considered to be influenced by such persons. The surprising absence of the minutes for the 2013 AGM further undermines the mistaken and unsupported proposition that members of ICAA in 2013 could somehow bind the members of [CA ANZ] formed with effect from 2015 in the manner contemplated by By-Law 136A. As to the other [CA ANZ] submissions on the remuneration issues: the circumstances point to dishonest overpayments which were never “ostensibly lawful”, compounded by the refusal of repeated requests since 2018 for an impartial review, and denying member access to key AGM minutes; orchestrating and voting for a resolution to be carried by conflicted persons is plainly a breach of duties to [CA ANZ] inter alia to avoid positions of conflict; the alleged failure to comply with ByLaw 136A since 2015 if proven means that members were mislead from 2015 by the controlling officers in a self-serving way, plainly in breach of duties to [CA ANZ]; and the assertion that a derivative action somehow depends on member rights to dividends or having financial value is inconsistent with the law being that derivative actions are brought to enforce company claims and not member rights.”

63. Mr Jaworski puts this claim on the basis that the applicable principles in respect of remuneration were not properly approved by resolution of members of CA ANZ and this proposition appears to turn on the assumption, for which he identifies no authority, that members who have a connection with the directors are unable to vote to approve principles applicable to their remuneration. Mr Jaworski makes no attempt to address the defences or cross-claims that would be available to CA ANZ’s directors in response to such a claim, which would likely include at least claims of conventional estoppel arising from the manner in which CA ANZ and the directors have conducted themselves over many years; a defence that no claim in restitution is available, if the resolutions were not valid, by reason of change of position on the directors’ part; and a cross-claim for reasonable remuneration on a quantum meruit basis. I also bear in mind that many former officers would have to be joined to pursue claims that are not large in absolute terms, with some ten directors or so having been in office in each year and only limited overlap between the directors over the ten years which are in issue. I am not satisfied that it would be in CA ANZ’s interests to bring such a claim, still less that I should that it pay Mr Jaworski’s costs in bringing that claim on its behalf.

The claim as to CA ANZ’s financial reports

64. The fourth claim that Mr Jaworski seeks to bring against CA ANZ’s officers (again as a collective group) relates to an allegation that CA ANZ published financial reports which do not present a “true and fair” view and/or did not comply with Australian Accounting Standards . Mr Jaworski here contends that CA ANZ’s financial reports are not compliant with by-law 154, to which I referred above.

65. Mr Jaworski contends, in his first affidavit, that the financial reports prepared by CA ANZ failed to satisfy by-law 154, primarily through not satisfying the requirements for truth and fairness, but also through not satisfying Australian accounting standards. He there develops a lengthy argument which deals with the public purpose of accounting standards and the “true and fair” standard and contemplates the possibility that the requirements of the accounting standards and the “true and fair” standard might diverge. He also addresses the requirements of users of financial statements, so far as they may emerge from academic studies and comments by public bodies, and addresses the wider question “[w]hy are Accounting standards allegedly flawed?”, which might have seemed to be more naturally a question for the legislature rather than for litigation brought by Mr Jaworski on behalf of CA ANZ against all of CA ANZ’s officers over a ten year period. Mr Jaworski in turn addresses several specific criticisms of the treatment of particular matters in CA ANZ’s audited financial accounts, as to which CA ANZ’s auditors have apparently raised no question of non-compliance with accounting standards or any failure to comply with the true and fair view requirement. In particular, Mr Jaworski took me, in submissions, to examples of consolidated financial reports for CA ANZ, for example, for the year ended 30 June 2019 (Ex J1, 942) and advanced some criticism of the fact that those financial reports were prepared on a consolidated basis and of the approach adopted in that year to the application of AASB 15, dealing with revenue from contracts with customers.

66. In his opening written submissions. Mr Jaworski submits that, in respect of this matter, that:

“The fourth matter is a legal question of considerable public interest being whether the financial reports published by CA ANZ satisfy its obligation to give a true and fair view of its financial performance and position. The main issue for judicial consideration is whether reports which satisfy the Australian Accounting Standards automatically satisfy the legal requirement for truth and fairness when it comes to presenting the reporting entity's financial position. It is alleged that the financial reports published by CA ANZ do not satisfy the legal requirements, primarily because the reports aggregate numbers in a way which users of the report would find meaningless and not aligned with what constitutes a measure of financial performance and position which for the vast majority of report users requires a market value approach. The key facts are the contents of published reports available on the CA ANZ website. It is submitted that the facts required at this stage of the case are evidenced to the required legal standard.”

67. Mr Jaworski also submits that this claim will agitate the interaction between the true and fair standard and the accounting standards, which he considers is insufficiently addressed in the case law, and possibly particular issues in respect of the treatment of specific items in CA ANZ’s accounts.

68. Mr Giles responds that this complaint:

“… is that CA ANZ’s financial reporting does not satisfy the “legal requirement for truth and fairness” because “[they] aggregate numbers in a way which users of the report would find meaningless and not aligned with what constitutes a measure of financial performance and position which for the vast majority of report users requires a market value approach” …. By the same, Mr Jaworski appears to accept that the financial reports do nevertheless satisfy the Australian Accounting Standards. On one view, his complaint is about the Australian Accounting Standards. Copies of CA ANZ’s Annual Reports from 2015 to 2024 are reproduced from pages 1476 to 2421. Its financial statements in each year were audited by Ernst & Young from 2015 to 201929 and by Grant Thornton from 2020 to 2024”

69. I recognise that, in submissions in reply, Mr Jaworski makes clear that he also contends that CA ANZ failed to comply with Australian Accounting Standards in the claim that he would bring on its behalf against its officers, again as a collective group. He in turn emphasises CA ANZ’s obligation under by-law 154 to “give the required true and fair view” and the further claim that CA ANZ has also failed to satisfy the Australian accounting standards and submits that:

“It is plain that it is detrimental to CA ANZ’s interests for legitimate significant legal questions around its reports to remain unaddressed.”

70. I assume that Mr Jaworski has expertise in this area, where he has been a member of CA ANZ in the past, and he has plainly devoted significant efforts addressing the complexities of the interaction between the true and fair standard and the accounting standards. Once again, he does not identify any step that any individual director of CA ANZ should have taken, but did not take, in respect of these matters, and the fact CA ANZ’s accounts were audited throughout the period and there is no suggestion that they have misstated CA ANZ’s overall financial position would likely provide significant obstacles to such a claim. I am not persuaded that a claim brought by CA ANZ against numerous individual directors or officers, over many years, is an appropriate mechanism to explore subtle and difficult questions as to the interaction of the true and fair view standard and accounting standards or that the costs that would be incurred by CA ANZ to bring such a claim against its many current and former officers would be warranted. It also seems to me almost inevitable, having regard to the subtlety of Mr Jaworski’s formulation of these issues, that a claim for breach of duty against the current and former officers will fail, not least because it could not satisfy the standards set in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 for reaching a finding of serious breach of duty against the individual directors or officers in respect of these issues.

71. For completeness, Mr Jaworski, in his first affidavit, also advances a wider allegation to “disenfranchisement of members’ rights and eschewing accountability”, which involves a range of wider criticisms as to the structure established by CA ANZ’s by-laws. Mr Jaworski, rightly, placed less weight on those matters in submissions, where it is not apparent that compliance with the structure created by CA ANZ’s by-laws could support a claim by CA ANZ against its current or former directors and officers.

Determination and orders

72. I should now address Mr Jaworski’s claims as a whole, having regard to the analysis above of the four claims on which the parties focussed in submissions. I bear in mind that the ultimate question which I have to decide, both in respect of the particular claims that I have addressed above and then those claims as a whole, is that framed by Mr Jaworski in the Amended Summons; namely, whether the Court should be satisfied that Mr Jaworski has a prima facie claim to be brought in the name of CA ANZ against its directors or officers, and should order that CA ANZ pay the unquantified “future legal costs” of Mr Jaworski’s conduct of that claim. I must determine that question by reference to the issues identified in Mr Jaworski’s affidavit and submissions, where Mr Jaworski has not prepared a draft pleading to indicate how the claims would be formulated against CA ANZ’s directors or officers and former directors or officers, in respect of the matters which are the subject of his concerns.

73. Dealing with Mr Jaworski’s claims as a whole, he submitted in his opening written submissions that:

“It is submitted that any one or more of the abovementioned four main matters would satisfy a reasonable and independent board that there exist legitimate questions to be tried and/or that a reasonable (if not compelling) case exists which would justify [CA ANZ] taking legal action against its officers. This is submitted to especially be the case considering the reason for [CA ANZ] existing which is to promote the accounting profession and its core values of transparency accountability and integrity - none of which are consistent with uncertainty around the lawfulness of significant actions/inactions by [CA ANZ] officers. This is corroborated through [CA ANZ] expending considerable resources in 2023 in an attempt to demonstrate that its Conduct Review Framework is fit for purpose, including commissioning a former Federal Court judge to comment on the internal findings (his comments ran to around 96 pages).

In the event that any and/or all of the abovementioned main four matters are considered to be consistent with lawful conduct (which is not admitted), then it is submitted that the conduct is of an unconscionable nature in the context of [CA ANZ]'s purpose and reason for existing and therefore should be subject to a fundamental rule in equity which forbids the exercise of such a right (Legione v Hateley (1983) 152 CLR 406, at 444).”

74. Mr Giles in turn submits, in opening written submissions that:

“Mr Jaworski need not prove all the facts necessary to establish his claims at a final hearing. However, the Court should not make the orders sought if it is apparent that the claims as put could not satisfy the requirements of an exception to Foss v Harbottle. Similarly, the Court should not make the orders where, even on a preliminary assessment, it is satisfied that prosecution of the claims, indemnified by [CA ANZ], would not be in [CA ANZ]’s interests.”

75. For the reasons set out above, Mr Jaworski has not satisfied me that he has a prima facie claim to be brought in the name of CA ANZ against its officers or that CA ANZ should pay the future legal costs of such a claim, in respect of the particular claims that I have addressed above or his claims taken as a whole. The matters to which I have referred above in respect of the particular claims are such that there is here no room for the whole to be stronger than the sum of its parts. I also bear in mind that, as I have noted above, many current and former officers of CA ANZ would be joined as defendants to the proposed proceedings, where they focus on events over that 10 year period and there has been significant change in the identity of CA ANZ’s directors from year to year. Where those many defendants may be, but would not necessarily be, commonly represented, the costs involved in the conduct of those proceedings are potentially substantial and CA ANZ would have exposure not only Mr Jaworski’s costs of pursuing the claim, but also to the Defendants’ costs under a constitutional indemnity potentially available to them under its by-laws, and by way of an adverse costs order against it if the proceedings brought by Mr Jaworski were unsuccessful. This matter also tends strongly against making the order that he seeks.

76. For all of these reasons, Mr Jaworski’s Amended Summons filed 24 February 2025 should be dismissed. Mr Jaworski did not suggest he wished to, or could, continue the proceedings at his own cost unless such funding was available form CA ANZ, and, in any event, the relief that he sought did not extend beyond the order for funding to any substantive relief against CA ANZ or its officers, directors or former officers or directors, so the determination of this question determines the whole of the proceedings. For these reasons, the proceedings generally should also be dismissed.

77. Mr Jaworski requested the opportunity to make submissions regarding costs orders, if his claim for relief was denied, and foreshadowed a submission that the circumstances of this case would justify an order that each party pay their own costs. I also recognise that, ordinarily, costs will follow the event, but I should permit Mr Jaworski the opportunity to make the submissions as to costs that he seeks, which will most efficiently be addressed in writing rather than by another listing of the matter.

78. I therefore make the following orders:

1 Subject to paragraphs 2-4 below, the Amended Summons filed 24 February 2025 and the proceedings be dismissed.

2 Direct that each party serve and send to the Associate to Black J its submissions as to costs, limited to six pages in Arial font 12 in one and a half spacing, by 4:00 pm on 21 May 2025.

3 Direct that each party serve and send to the Associate to Black J its submissions in response as to costs, limited to four pages in Arial font 12 in one and a half spacing by 4:00 pm on 28 May 2025.

4 The question of costs be determined in Chambers.

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