Lianos v Order of AHEPA NSW Inc

Introduction

1. On 26 November 2020, for reasons published on 26 August 2020 [1] (the Principal Reasons), the Court made final orders in this appeal (the November 2020 Orders). However, the November 2020 Orders were stayed pending an application by amended notice of motion dated 14 December 2020, whereby the Court was invited to set aside the November 2020 Orders and reopen the hearing of the appeal (the Reopening Application). On 6 August 2021, for reasons published on that day [2] (the Supplementary Reasons), the Court made orders (the August 2021 Orders) varying the November 2020 Orders. The Court reserved the costs of the Reopening Application and the Court has now received written submissions on the question of costs from the Dissenting Members and the Eight Chapters. In these reasons, terms will be used as defined in the Principal Reasons and the Supplementary Reasons.

The Reopening Application

1. On 26 August 2020, when the Principal Reasons were published, the Court directed the Dissenting Members to file and serve draft orders giving effect to the conclusions in the Principal Reasons. Pursuant to that direction, the Dissenting Members provided proposed orders. On 24 September 2020, the Association having been placed in voluntary administration, the Dissenting Members filed an application for leave to proceed under s 440D(1)(b) of the Corporations Act 2001 (Cth). The Eight Chapters sought to be heard on that application. The Court subsequently made the November 2020 Orders substantially in the form sought by the Dissenting Members, which included Order 3.a. and Order 3.b. of the November 2020 Orders. The Reopening Application was subsequently filed by the Eight Chapters.
2. On 19 February 2021, the Eight Chapters filed and served an affidavit of Mr Harry Fandakis and written submissions in support of the Reopening Application. The Reopening Application was heard on 26 February 2021, when the Eight Chapters were represented by senior and junior counsel. They adduced substantial evidence and made submissions in support of the Reopening Application. They also adverted to proposed additional evidence that would be adduced if they were joined and the hearing of the appeal were to be reopened. The Dissenting Members were likewise represented by senior and junior counsel and also adduced evidence and made submissions in opposition to the Reopening Application. The Association was represented by a solicitor who indicated simply that it adopted the stance advanced on behalf of the Eight Chapters, including the withdrawal of the Principal Reasons and the Supplementary Reasons, setting aside the November 2020 Orders and reopening the hearing of the appeal. The Association did not seek to limit its support for the Reopening Application in any way or emphasise any particular aspect of it.
3. The Court concluded that the Eight Chapters were not proper parties to the proceedings, as they claimed, and dismissed the Reopening Application on 6 August 2021. The Court considered that, in so far as the Reopening Application was to be regarded as an application on behalf of the Association to adduce further evidence, it could not possibly succeed. However, the Court considered that, in so far as the Reopening Application could be regarded as an application by the Association at all, it could be understood as an application to reopen on the basis that the November 2020 Orders did not correctly reflect the Court's decision as contained in the Principal Reasons or exhibited a misapprehension of the facts in evidence.
4. The primary question raised in the proceedings concerned the validity of resolutions adopting a new constitution of the Association purportedly passed at the November 2018 meeting. [3] In the Supplementary Reasons, the Court concluded that the Principal Reasons proceeded on a misapprehension as to the structure of AHEPA Australia Limited and possibly its predecessor, AHEPA Australia and the relationship of that structure to the Association. In the light of the misapprehension that AHEPA Australia Limited was the successor to the "unincorporated association", the Court concluded that it was appropriate to confine the November 2020 Orders to the specific relief originally sought in the proceedings. [4]
5. The Court considered that Order 3.b. of the November 2020 Orders went beyond what was claimed on behalf of the Dissenting Members and, in any event, went beyond what was intended by the Principal Reasons. [5] That is to say, the November 2020 Orders were not intended to alter the current membership of the Association. To reflect properly the reasoning of the Principal Reasons, the Court considered that Order 3.a. should be rescinded and that Order 3.b. should simply declare that a person who was not already a member of the Association at the Registration Date must have been a financial member of one of the 13 Chapters on 30 June of the last financial year. [6] That was reflected in the August 2021 Orders.
6. The Eight Chapters assert that, in so far as one of the November 2020 Orders was rescinded and another of them was amended, the effect was a significant narrowing of the scope of the November 2020 Orders. Thus, they assert that they were successful and that, while the Reopening Application sought broader relief, that relief was sought predominantly because of the breadth of the November 2020 Orders, which were subsequently confined. They say that, having regard to their attempts in September 2020 to confine the orders to be made and the Court's decision subsequently to confine the orders, the Court's discretion as to costs should be exercised to order the Dissenting Members to pay their costs of the Reopening Application.
7. Section 98 of the Civil Procedure Act 2005 (NSW) (the Procedure Act) relevantly provides that, subject to rules of court and to the Procedure Act or any other Act, costs are in the discretion of the court, and the court has full power to determine by whom, to whom and to what extent costs are to be paid. The court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
8. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), costs normally "follow the event". That term generally refers to the result of the claim made in the proceedings, such that a successful party should have the costs of the proceedings, including any costs of an issue on which it failed, unless the issue that failed unfairly, improperly or unnecessarily increased the costs. In an appropriate case, a costs order may be moulded to reflect the degree of success on distinct issues.
9. The Dissenting Members do not accept that the Eight Chapters succeeded in the Reopening Application, which was primarily an application to be joined as parties to the appeal and for the appeal to be reopened. In fact, the relief sought in the Reopening Application was almost entirely refused. The Eight Chapters were not joined as parties and the Court did not withdraw the Principal Reasons or the Supplementary Reasons, as was sought. Orders 2, 3.c., 3.d., 3.e., 3.f., 4 and 5 of the November 2020 Orders remain undisturbed. Order 3.b. of the November 2020 Orders was varied but was not set aside.
10. Indeed, the Reopening Application did not, in terms, seek orders setting aside Order 3.a. or amending Order 3.b. of the November 2020 Orders. Rather it simply sought an order that the Eight Chapters be joined as parties and for the Court to reopen its judgment and set aside Orders 2 to 5 of the November 2020 Orders. To the extent that there was any measure of success in the Reopening Application, it was by reason of the adoption by the Association of certain of the contentions advanced on behalf of the Eight Chapters. Further, the Dissenting Members dispute the contention that there was an "event" as between them and the Eight Chapters. That is to say, the Court concluded that the Eight Chapters had no standing in the appeal.

Conclusion

1. The August 2021 Orders were made as a consequence of a misapprehension on the part of the Court. In those circumstances, if the only relief sought in the Reopening Application had been the relief that was actually granted in order to rectify the Court's misapprehension, it may have been appropriate to order that the costs of the application follow that "event". However, there were quite significant further issues raised by the Reopening Application in respect of which the Dissenting Members were successful. They are therefore entitled to their costs of dealing with substantial issues in respect of which the Eight Chapters were unsuccessful. They achieved a significant measure of success. In the circumstances, the appropriate order would be for the Eight Chapters to pay 50% of the costs of the Dissenting Members.
2. The relationship between the Eight Chapters and the Association was somewhat symbiotic. The Association advanced no submissions of its own on the Reopening Application. There should be no costs order as between the Dissenting Members and the Association.
3. Subsequent to preparing the above reasons, the Eight Chapters supplied submissions in reply, without leave. The Court considered them but remains of the views expressed above.

Endnotes

1. See [2020] NSWCA 193.
2. See [2021] NSWCA 159.
3. See Principal Reasons at [84].
4. See Supplementary Reasons at [76].
5. See Supplementary Reasons at [77].
6. See Supplementary Reasons at [79]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2021