Lukaszewicz v Polish Club Limited

Supreme Court of NSW|2019-03-08|Before: Black J, John J

McInnes v Onslow-Fane [1978] 1 WLR 1520 - Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1 - Mopeke Pty Ltd v Airport Fine Foods Pty Ltd [2007] NSWSC 153; (2007) 61 ACSR 395 - Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 - Munstermann v Rayward [2017] NSWSC 133 - Pettit v South Australian Harness Racing Club Inc [2006] SASC 306; (2006) 95 SASR 543 - Re Carlton Football Club Ltd; Gratton v Carlton Football Ltd [2004] VSC 379; (2004) 51 ACSR 29 - Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 - Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd [2018] NSWSC 1315 - Re JGS Investment Holdings Pty Ltd [2014] NSWSC 1532 - Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) [2018] WASC 124; (2018) 126 ACSR 370 - State of New South Wales v Hunt [2014] NSWCA 47 - Taxa Australia Pty Ltd v Wang [2016] NSWSC 1913 - Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610 - Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 - Watson v Foxman (1995) 49 NSWLR 315 - Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1994) 180 CLR 459 - Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 89 ACSR 1 Category: Principal judgment Parties: Kazimiera Lukaszewicz (First Plaintiff) Mick Wykrota (Second Plaintiff) Waclaw Jagoszewski (Third Plaintiff) Dariusz Plust (Fourth Plaintiff) Polish Club Limited (First Defendant) Ryszard Borysiewicz (Second Defendant) Hania Geras (Third Defendant) Robert Czernkowski (Fourth Defendant) Mateusz Konopka (Fifth Defendant) Eleonora Olivia Danuta Paton (Sixth Defendant) Representation: Counsel: M B Evans/E P Anderson (Plaintiffs) M T McCulloch SC/R W Notley (Defendants)

Background

By a sprawling Second Further Amended Statement of Claim ("SFASC"), the Plaintiffs seek a range of relief in respect of the affairs of the First Defendant, Polish Club Limited ("Club"). The First Plaintiff, Ms Lukaszewicz ("KL") is a life member of the Club and has been a member for many years (SFASC [12], Defence [12]). The Second Plaintiff, Mr Wykrota ("MW"), has been a general or ordinary member of the Club for many years (SFASC [13], Defence [13]). The Third Plaintiff, Mr Jagoszewski ("WJ") claims to have been an ordinary member of the Club from 1991 until 16 May 2014, a director of the Club for a period that is in dispute and was suspended indefinitely as a member of the Club in May 2014 (SFASC [15], Defence [15]). The Fourth Plaintiff, Mr Plust ("DP"), was an ordinary member of the Club from 2011 or 2012 until May or June 2014 and, in May 2014, he was suspended indefinitely as a member of the Club (SFASC [17], Defence [17]).
As I noted above, the Club is the First Defendant to the proceedings. The Club is a company limited by guarantee and is also a registered club under the Registered Clubs Act 1976 (NSW). The Club operates as a licensed social club catering primarily to the Polish community of Sydney, in particular the Polish community in and around the inner western suburbs of Sydney, and has operated as a social club of that kind since about 5 August 1964 (SFASC [2]-[3], Defence [2]-[3]). The Club is the registered proprietor of real property known as 73-75 Norton Street, Ashfield (SFASC [5], Defence [5]). The Club's current premises are located at 73 Norton Street and the adjoining land at 75 Norton Street contains a building that has not been occupied since it was damaged by fire in 2003 and a car park that the Club makes available for paid use during the day.
Clause 50 of the Club's articles of association provides that it is to be managed and controlled by a committee consisting of a President, a Senior Vice-President, a Junior Vice-President, Honorary Secretary, Honorary Treasurer and four members of the Club. I will refer to that committee as the "management committee" or "board" and to its members as "directors". The Second to Sixth Defendants are currently members of the Club's management committee. They became members of that committee at different times, a matter that is of significance to some of the findings that I reach below.
The Second Defendant, Mr Borysiewicz ("RB") has been a director and President of the Club since early 2013 (SFASC [6]-[7], Defence [6]-[7]). The Third Defendant, Ms Geras ("HG") has been a director of the Club since 6 December 2015 and is currently its Junior Vice-President. The Plaintiffs plead that, since about August 2013, she has also acted as Secretary or de facto Secretary of the Club (SFASC [8], Defence [8]), although that allegation did not appear to have any significance for the issues to be determined in the proceedings. The Fourth Defendant, Mr Czernkowski ("RC") has been a director of the Club since 3 May 2015 and is currently its Deputy Treasurer (SFASC [9], Defence [9]). The Fifth Defendant, Mr Konopka ("MK") has been a director of the club since 8 April 2013 and is currently its Treasurer (SFASC [10], Defence [10]). The Sixth Defendant, Ms Paton ("EP"), has been a director since 16 March 2014 and is currently its Secretary (SFASC [11], Defence [11]), although HG in fact performs a number of functions often associated with a company secretary's role.
These proceedings were commenced by the Plaintiffs on 24 March 2017 by the filing of a Summons in Court with the leave of the Equity Duty Judge, and the Plaintiffs then obtained an ex parte order restraining the Defendants from taking any steps to sell or dispose of the Club's real property. The Defendants subsequently consented to the injunction continuing until further order on a without admissions basis. On 16 July 2018, the injunction was varied so that the Defendants were permitted to undertake discussions with third parties about possibilities for development and/or sale of 75 Norton Street; receive expressions of interest, including but not limited to plans and proposals for the development of 75 Norton Street; and engage in discussions with persons who submit, or who may submit, expressions of interest. That injunction, as subsequently varied, remains in effect. I will address the question whether it should be continued on a final basis or discharged below.

The applicable legal principles

I now turn to the applicable legal principles; then to the extensive affidavit evidence; and then reach findings as to the range of matters in issue. The Plaintiffs' case was largely brought as an oppression claim. Both parties addressed the case law in submissions and there was a degree of common ground as to the applicable principles.
Section 232 of the Corporations Act 2001 (Cth) provides that the Court may make an order under s 233 if the conduct of a company's affairs; an actual or proposed act or omission by or on behalf of a company; or a resolution, or a proposed resolution, of members or a class of members of a company, is either contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. Section 53 of the Corporations Act in turn identifies the "affairs" of a company for the purposes of s 232 as including specified matters. If one or more of the grounds identified in s 232 are established, the Court may "make any order under this section that it considers appropriate in relation to the company" under s 233 of the Act. That section identifies several orders that can be made, including an order restraining a person from engaging in specified conduct or from doing a specified act; or requiring a person to do a specified act.
Section 232 of the Corporations Act and its predecessors broadly extend to conduct involving "commercial unfairness"; or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play; or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair, or that is, in light of all the relevant circumstances, "inequitable or unjust": Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459; Mopeke Pty Ltd v Airport Fine Foods Pty Ltd [2007] NSWSC 153; (2007) 61 ACSR 395 at [25]. Mr Evans, who appears with Mr E Anderson for the Plaintiffs, points out that the Club is a social club and does not operate for the profit of its members, and submits that a test of whether the conduct is "inequitable or unjust" should be preferred to one of "commercial unfairness" in those circumstances. It seems to me that the application of each test in the present circumstances would lead to the same result.
In Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610, Richardson J observed (at 618) that: "Fairness cannot be assessed in a vacuum or simply from one member's point of view. It will often depend on weighing conflicting interests of different groups within the company. It is a matter of balancing all the interests involved in terms of the policies underlying the companies legislation in general and sec. 209 [of the NZ legislation] in particular: thus to have regard to the principles governing the duties of a director in the conduct of the affairs of a company and the rights and duties of a majority shareholder in relation to the minority; but to recognise that sec. 209 is a remedial provision designed to allow the Court to intervene where there is a visible departure from the standards of fair dealing; and in the light of the history and structure of the particular company and the reasonable expectations of the members to determine whether the detriment occasioned to the complaining member's interests arising from the acts or conduct of the company in that way is justifiable."
Both parties also refer to Wayde v New South Wales Rugby League above at 472-473, where Brennan J observed, in respect of a predecessor section to s 232 of the Corporations Act: "Section 320 requires proof of oppression or proof of unfairness: proof of mere prejudice to or discrimination against a member is insufficient to attract the court's jurisdiction to intervene. In the case of some discretionary powers, any prejudice to a member or any discrimination against him may be a badge of unfairness in the exercise of the power, but not when the discretionary power contemplates the effecting of prejudice or discrimination. It is not necessary now to decide whether "oppressive" carries in the context of s. 320 the meaning which it carried in the context of the statutory precursors of s. 320. At a minimum, oppression imports unfairness and that is the critical question in the present case. It is not necessarily unfair for directors in good faith to advance one of the objects of the company to the prejudice of a member where the advancement of the object necessarily entails prejudice to that member or discrimination against him. Prima facie, it is for the directors and not for the court to decide whether the furthering of a corporate object which is inimical to a member's interests should prevail over those interests or whether some balance should be struck between them … The question of unfairness is one of fact and degree which s. 320 requires the Court to determine, but not without regard to the view which the directors themselves have formed and not without allowing for any special skill, knowledge and acumen possessed by the directors. The operation of s. 320 may be attracted to a decision made by directors which is made in good faith for a purpose within the directors' power but which reasonable directors would think to be unfair. The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision."
Mr Evans also referred to Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 as authority that oppression can be established by conduct on the part of one who thinks that he or she is acting rightly. Mr Evans also pointed out that it is not a complete defence to the Plaintiffs' claim of oppression for the Defendants to say that they were acting in accordance with the terms of the Club's constitution, as a contract between the Club and its members, and referred to Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 where Campbell JA noted at [176] that: "It is perfectly possible for there to be the type of commercial unfairness that generates a remedy under section 232 even if no breach of contract is involved, and even if there is no departure from a position to which a party is bound by an estoppel: [Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672] at [4] per Spigelman CJ ( "... the jurisdiction should not be confined by technical distinctions..." ), O'Neill v Phillips [1999] 1 WLR 1092 at 1098-1101. As Lord Hoffmann said in O'Neill, at 1098, the legislative history of the corresponding English provision shows that Parliament "chose this concept [of unfairly prejudicial] to free the court from technical considerations of legal right and to confer a wide power to do what appeared just and equitable" , where that notion of "just and equitable" must itself be guided by principle. His Lordship recognised, at 1099, that "unfairness may consist in a breach of the rules" (by which he meant the articles of association or collateral agreements between the shareholders) "or in using the rules in a manner which equity would regard as contrary to good faith" . He also recognised, at 1101, that it was incorrect "that exercising rights in breach of some promise or undertaking is the only form of conduct which will be regarded as unfair for the purposes of s 459." He recognised, at 1099-1100, that "the notion of fairness in s 459 does not mean that conduct will not be unfair unless it would have justified an order to wind up the company".
In Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55; (2014) 314 ALR 62 at [9], the Full Court of the Federal Court of Australia observed that: "The test of unfairness requires an objective assessment of the conduct in question with regard to the particular context in which the conduct occurs. The question is whether objectively in the eyes of the commercial bystander there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the conduct or decision fair. As the test is objective, whether or not the conduct is oppressive will not depend upon the motives for what was done. It is the effect of the acts that is material …"
Mr McCulloch, who appears with Mr Notley for the Defendants, also refers to Hallen J's observation in Bull v The Australian Quarter Horse Association [2014] NSWSC 1665 at [326] that: "In a non-commercial corporation, fairness and conversely, unfairness, are to be assessed from the vantage point of a hypothetical, reasonable observer associated with the relevant corporation."
The principles applicable to an oppression claim were identified by Stevenson J in Munstermann v Rayward [2017] NSWSC 133 at [22] as including the following: "(1) The test of oppression is an objective one of unfairness ... (2) The court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly … (3) A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director ... (4) Conduct of a company's affairs may be oppressive even though the conduct is otherwise lawful ... (7) The court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined as at the date of the hearing … (8) The discretion under s 233 is wide as to the appropriate remedy … (9) The nature of the remedy chosen by the court under s 233 will be dependent upon the conclusions drawn by the court as to the type of oppression with which the court is dealing and the court will choose the remedy which is least intrusive …. (10) The aim of any order under s 233 must be to put an end to the oppression …" (citations omitted)
Mr McCulloch in turn refers to Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) [2018] WASC 124; (2018) 126 ACSR 370 at [99]-[103], dealing with the equivalent provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), where Pritchard J observed that: "The meaning of the phrase 'contrary to the interests of the members as a whole' in the corporations legislation has been equated with 'the benefit of the company as a whole'. The interests of the members, considered as a whole, are 'circumscribed by, and found within, the constituting documents of the company'. So, for example, to exclude a member from membership of a corporation, contrary to its articles, may be contrary to the interests of the members of the company as a whole. The requirement that an exercise of a corporation's powers be for the benefit of the members as a whole is to exclude their exercise for 'ulterior special and particular advantages'. The provision is directed to 'purposes foreign to the association's operations, affairs and organizations'. Conduct by a board of directors will be contrary to the interests of the members as a whole if no board, acting reasonably, could have engaged in that conduct. It is not necessary to show bad faith on the part of the directors. In other words, conduct may be contrary to the interests of the members as a whole even though the board of directors does not act in bad faith. In considering an allegation that conduct was contrary to the interests of the members as a whole, the courts will not assume the management of corporations, so as to substitute their decisions and assessments (about the merits of particular management decisions) for those of the directors. Consequently, in order to show that a decision was not in the overall interests of the members as a whole, it has to be shown that the decision of the board of directors was such that no board acting reasonably could have made it." (citations omitted)
Her Honour also there observed at [115] that: "In determining whether conduct is oppressive within the meaning of the section, the courts are not concerned with reviewing the underlying merits of the decisions of the directors. The courts do not substitute their discretion for the discretion exercised in good faith by the board. Actions for oppressive conduct are not the vehicle for de facto appeals on the merits of management decisions. By way of example, in the context of membership disputes, it is not for the Court to determine whether membership applications are bona fide. In those cases where the decision making body (whether the directors, a management committee or otherwise) has a very broad discretion to accept or reject membership applications, the Court will be very slow to interfere with decisions made in good faith. That principle recognises that there may be many legitimate reasons why a decision maker for a corporation or association would reject a membership application, ranging from a determination that the aims and aspirations of the applicant are not consistent with the objects of the corporation or association, to questions of capacity where the association does not have the ability to cater for an influx of members." (citations omitted)
Mr McCulloch also refers to my summary of the relevant principles in several cases involving family and commercial companies, most recently in Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd [2018] NSWSC 1315 at [67] as follows: "Section 232 of the Corporations Act and its predecessors extend to conduct involving "commercial unfairness" or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play, or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459. In Morgan v 45 Flers Avenue Pty Ltd above at 704, Young J observed that the phrases "oppressive, unfairly prejudicial or unfairly discriminatory" in a predecessor to s 232 of the Corporations Act should be construed as "a composite whole and the individual elements mentioned in the section should be considered merely as different aspects of the essential criterion, namely commercial unfairness". His Honour also there noted that whether oppression was established was to be determined by reference to the nature of the business carried on by the company and the nature of the relations between its participants and: 'whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair.'"

Affidavit evidence

A substantial volume of affidavit evidence was read, and there were significant differences in the witnesses' evidence as to contested conversations, with limited contemporaneous correspondence that would assist in resolving those differences. I have had regard to the fallibility of human memory, particularly when disputes intervene, in determining these proceedings. In an often quoted observation in Watson v Foxman (1995) 49 NSWLR 315 at 319, McLelland CJ in Eq observed that: "… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
In Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 129, Gleeson CJ, Gummow and Kirby JJ similarly observed that: "Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical."
I have also had regard to the fact that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness's motives and the overall probabilities: Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyd's Rep 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56]. I summarised the applicable principles in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 at [10] and in Re ICB Medical Distributors Pty Ltd above at [32], on which I have drawn for the summary which appears above. To the extent that credit issues need to be determined in respect of particular conversations, I have had regard to the fact that objective evidence is likely to be the most reliable basis for determining them, although that principle is of limited practical assistance in this case.
The Plaintiffs read numerous affidavits and a number of witnesses they called were not cross-examined. There were significant difficulties with the form of a number of those affidavits and I admitted significant parts of those affidavits with limiting orders under s 136 of the Evidence Act 1995 (NSW) as submission or as evidence of that witness's understanding of particular matters. I took that course because it seemed to me preferable to admit that evidence, despite the difficulties of its form, with appropriate limiting orders rather than to leave those witnesses with an impression that they had been deprived of an opportunity to be heard. The evidence admitted as submission was not itself probative of facts that were not otherwise proved, and the evidence admitted as evidence of that witness's understanding was only significant where that understanding was itself a significant matter.
Several statements alleged to have been made by individual Defendants and recorded in the Plaintiffs' affidavit evidence might amount to admissions of improper purpose on the part of members of the Club's management committee. I have been conscious of the risk, which seems to me to be substantial given the animosity between the parties, that that evidence might have been consciously or unconsciously tailored to support the Plaintiffs' case. I have also taken into account the fact that comments against interest, or in the nature of admissions, are less likely to be made to the opposing party in an adversarial setting. Some of those comments are consistent with views expressed or inferences that can be drawn from contemporaneous correspondence.

The Plaintiffs' affidavits

I will first refer to the affidavits of the Plaintiffs and then to other affidavits read in their case. The Plaintiffs relied on several affidavits of the First Plaintiff, KL. KL was cross-examined, giving her evidence in cross-examination through an interpreter although she had sworn her affidavits without the assistance of an interpreter. I accept her evidence that she took that course because of her concern that she might not be able to understand questions in a spoken environment, where English was not her first language, although it was apparent that she largely understood questions without the need for translation and she often answered them in English. KL often did not respond to questions in a direct manner, although I was not left with any impression that she was deliberately seeking to avoid engaging with the substance of those questions. There were also occasions on which I had the impression that KL did not understand questions that were put to her in cross-examination, and difficulties may also have arisen from the process of translation of the questions and some of her answers. KL's evidence was inevitably coloured by her views as to the issues in dispute.
In her first affidavit dated 22 March 2017, KL gave evidence of a general meeting of the Club held on 19 March 2017 ("March 2017 AGM"), to which I refer in dealing with that matter below. The Plaintiffs also read a second affidavit of KL dated 23 August 2018 which referred (in evidence largely admitted as evidence of her understanding with a limiting order under s 136 of the Evidence Act) to some members' support for Mr and Mrs Gnych, who had previously operated a restaurant at the Club and ceased to do so in circumstances that were the subject of other proceedings involving the Club. I will refer further to those proceedings below. KL also referred to her attendance at a meeting in July 2015 at which a resolution was proposed to amend cl 11 of the Club's constitution and to her attendance at a meeting at which she was asked to explain her support for Mr and Mrs Gnych, to which I refer below.
The Plaintiffs relied on MW's affidavit dated 24 March 2017 and he was not required for cross-examination. I will address his evidence as to the conduct of the March 2017 AGM in dealing with that issue below. The Plaintiffs also relied on WJ's affidavit dated 16 June 2017, large parts of which were not in admissible form and were not read. WJ there referred to his having been an ordinary member of the Club from 1991 until his suspension in May 2014; to having been a member of the board of directors of the Club from 2005 to 2006, and to having been nominated for election to the board again in February 2014; and to his suspension as a member of the Club on 16 May 2014. WJ's evidence was that, if he was still a member of the Club and had been allowed into the meeting to consider the resolution to change the status of Club property from core to non-core property, he believed he would have voted against it. The Plaintiffs also relied on WJ's affidavit dated 7 August 2018, which referred to his history within the Polish community and, in evidence admitted with a limiting order under s 136 of the Evidence Act, to his continued interest in the encouragement and promotion of the Club and its objects; and his concern that he is still excluded from being a member of the Club; and his belief that the Polish character of the Club has changed since RB was elected as President. WJ's further affidavit dated 23 August 2018 was not read.
The Plaintiffs read DP's affidavit dated 23 June 2017, and he was also not required for cross-examination. DP referred to his suspension as a member of the Club for an indefinite period from 16 May 2014. Significant parts of his affidavit were not read and other aspects were admitted as submission or as evidence of his understanding with limiting orders under s 136 of the Evidence Act.
The Plaintiffs also relied on an affidavit of Dr Adams-Dzierzba ("RAD") dated 29 March 2017, and he was not required for cross-examination. RAD referred to his role as a director of the Club for approximately two years from 2000 and again from 2014 until 2017. I will refer to RAD's evidence as to his suspension as a member and purportedly, for a period, as a director of the Club, in dealing with that matter below. The Plaintiffs relied on an affidavit of Mr Roman Korban dated 29 March 2017, who was not required for cross-examination. Significant parts of that affidavit were not pressed, but I will refer to his evidence of his exclusion from the March 2017 AGM below. The Plaintiffs also relied on an affidavit of Mr Janusz Nawrocki dated 30 June 2017, who was also not required for cross-examination, referring to his suspension as a member of the Club. I will refer to that affidavit in dealing with that issue below. The Plaintiffs withdrew reliance on an affidavit of Mr Ryszard Czeczucha dated 29 March 2017, where issues arose as to his capacity to give evidence and the weight that could be given to that evidence. The Plaintiffs relied on affidavits of Mrs Marianna Lacek dated 16 August 2018 and 18 January 2019, and I will refer to aspects of her evidence in dealing with several issues below.
The Plaintiffs also relied on an affidavit of Mrs Joanna Fenik dated 11 May 2017 and she was not required for cross-examination. Mrs Fenik referred to the circumstances in which she was not admitted to membership of the Club in September 2013 and was not permitted to attend the Club's premises on the date of the March 2017 AGM, having then claimed, with a degree of implausibility, that she wished to attend the Polish delicatessen inside the Club rather than that meeting. I will deal with the issue as to her membership of the Club below. The Plaintiffs also relied on the affidavit of Mr Piotr Fenik dated 7 August 2018. I will refer to his evidence of being admitted only as an associate member of the Club below. The Plaintiffs also relied on an affidavit of Mr Wojciech Wawrzynski dated 8 August 2017, who was not required for cross-examination. I will refer to his evidence as to not being admitted as a full member of the Club below. The Plaintiffs also relied on the affidavit of Mr Joseph Bernecki dated 8 August 2018. Significant parts of that affidavit were admitted with limiting orders under s 136 of the Evidence Act as evidence of his understanding and he was not required for cross-examination. I will refer to his evidence that he and his wife were not admitted as full members of the Club in dealing with that issue below.
The Plaintiffs relied on the affidavits dated 9 May 2017, 24 August 2018 and 4 February 2019 of Mr Maciej Jarysz ("MJ"). MJ's evidence was that he had been a full member of the Club since about 2014, when he also became a member of its management committee. He referred to a conversation with RB at the beginning of 2016, in which RB advised him that he needed to follow all of RB's decisions as President and he responded by suggesting that RB was trying to threaten him and he would not support RB from then on. MJ also referred (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding only) to his belief that RB was "attempting to rule the Club" in a way that he did not consider represented its best interests. He also referred to a disagreement with RB as to whether he was entitled to share his concerns as to RB's conduct as President of the Club with members of the Club. I will refer to his evidence as to disciplinary actions taken against RAD, Mr Stanislaw Zak ("SZ") and him in dealing with that matter below. I will also refer to MJ's evidence as to the admission, suspension and expulsion of members of the Club and the operation of the Club's restaurant in dealing with those matters below. MJ also refers to a discussion in which he had suggested that meetings be recorded by a recording device to address inaccuracies in the minutes and the rejection of that suggestion by RB. In his further affidavit dated 4 February 2019, MJ referred to the circumstances of an extraordinary general meeting of the Club on 7 August 2016 and to his opposition to an option for the redevelopment of the Club's property which (he contends) RB and some other members of the board preferred, and to his wish to obtain further expert input and to expose the issues more widely to members.
MJ was cross-examined at considerable length (T320ff), including as to the process for taking minutes at the Club and as to the disciplinary action taken against Mrs Lacek; and as to a debate as to whether the meetings of the board of the Club should be recorded; and as to the circumstances of his suspension as a member of the Club. I formed the view that he was doing his best to give honest evidence of his perception of events, although his and other witnesses' evidence was coloured by the strength of his and their views as to the issues in dispute. He was cross-examined as to a suggested failure to insist on the correction of minutes of earlier meetings, which seemed to me to be readily explicable by his evidence of the limited time made available to directors to review minutes and a hesitation in provoking further confrontation within an already contentious board. It was put to MJ in cross-examination that RB had not told him that RB regarded some members of the Club as "toxic" and MJ responded that RB constantly expressed himself in that way at board meetings. I formed the view, when that evidence was given, that MJ was likely telling the truth, although it is not necessary to find whether the particular term "toxic" (or any Polish equivalent) was used. That assessment is supported by emails in which RB and other directors of the Club have expressed their negative views of some dissentient members of the Club in direct terms. I will return to that issue below.
The Plaintiffs rely on SZ's affidavits dated 29 March 2017, 10 August 2018, 18 January 2019 and 31 January 2019. I will refer to SZ's evidence concerning the suspension of RAD as a member of the Club's board and as a member of the Club in dealing with that matter below. Significant parts of SZ's further affidavit dated 10 August 2018 were not read. I will refer to his evidence of RB's attitude to dissenting members of the Club below. He also gives evidence, in that affidavit, of having expressed objections to the arrangement by which the Club's restaurant was run and to RB's claim that the Club, or possibly the restaurant, was making a profit. SZ's further affidavit dated 18 January 2019 referred to the Club's annual general meeting on 2 December 2018 and to the disclosure of the level of the Club's debt at that meeting.
SZ was cross-examined, inter alia, as to occasions on which he, MJ and RAD voted together but were in the minority of the Club's board in respect of particular issues. SZ emphasised his view, in cross-examination, that proposals for development of the Club should be discussed in an open forum, so that those proposals could be tested and the best option for the community identified. SZ was also cross-examined as to the circumstances in which disciplinary proceedings took place against RAD at the meeting on 21 December 2016, and he and MJ left that meeting with RAD. SZ was also cross-examined as to what occurred at the general meeting held in August 2017; and as to his understanding of the effect of the resolution purportedly passed at that meeting declaring part of the Club's property to be non-core property; and also as to the approach adopted to the admission of persons as associate members of the Club. SZ also gave evidence in cross-examination of having requested more time, while he was a director of the Club, to review board minutes. He was also cross-examined as to an occasion in which there was a vote of confidence in RB at a meeting on August 2016, but indicated he had no recollection of that matter. He was also cross-examined as to the alternative approaches to the redevelopment of the Club's premises that were under consideration during 2015 and as to the matters which took place at an extraordinary general meeting of the Club in August 2016. SZ's evidence in cross-examination was that there were occasions on which the minutes of directors' meetings were "not false" but misleading, and he had drawn that matter to the attention of members of the board at the next meeting.
SZ's evidence in cross-examination was that he was denied entry to the March 2017 AGM, at a time he was suspended from membership of the Club but remained a director of the Club (T247-T248). SZ also maintained in cross-examination that RB referred to KL and persons associated with her as "enemies of the Club" in the course of directors' meetings (T251) and that RB said, at a directors' meeting at which SZ was present at about the time of the conflict with Mr and Mrs Gnych in respect of the restaurant, that the board could not expel KL because she was a life member but could expel her supporters and that would send a strong message to the rest (T253). SZ's evidence was that other persons on the board, including HG and EP shared RB's view as to that matter (T255) and that there was little point in SZ, RAD and MJ protesting that matter, where they were a minority as to that issue (T255). SZ also maintained in cross-examination that the members of the board used to call KL and the people who supported her a "gang" or "toxic gang". I will return to the use of those terms below.
The Plaintiffs also read an affidavit of Mrs Elizabeth Lipinski dated 7 August 2018. I will refer to that evidence in dealing below with issues as to the suspensions of members of the Club and the conduct of the March 2017 AGM. Mrs Lipinski also gave evidence, admitted as evidence of her understanding with a limiting order under s 136 of the Evidence Act; of a change in the character of the Club since RB was elected President. Mrs Lipinski evidenced her strong dislike of RB in cross-examination; she maintained her evidence as to an angry exchange with RB, at a time she claimed that he was eating a piece of cheesecake; and she was otherwise largely not prepared to focus upon the questions she was asked or answer them, notwithstanding Counsel's and my request that she do so. I obtained little assistance from Mrs Lipinski's evidence in cross-examination and I give little weight to her evidence in chief, where her approach in cross-examination did not allow it adequately to be tested.
The Plaintiffs relied on the affidavit of Mrs Teresa Wolak dated 9 August 2018, which annexed an affidavit dated 14 February 2014 previously sworn by Mrs Wolak in other proceedings. Mrs Wolak referred to her expulsion as a member of the Club and (in evidence admitted with a limiting order under s 136 of the Evidence Act) to her continuing interest in the encouragement and promotion of the Club and to her concern as to the position of the Club under RB's leadership. I will refer to Mrs Wolak's further evidence concerning the suspension of members from the Club in dealing with that question below. Mrs Wolak also referred to the circumstances in which her company was removed as a supplier of alcohol to the Club.
Mrs Wolak was cross-examined, including as to her previous arrangements for alcohol supply to the Club, and as to the process in respect of her expulsion as a member of the Club. She acknowledged in cross-examination that she was unhappy about the termination of that relationship, as she was losing a customer (T296); denied that she had a grudge against RB; and expressed her view that he had been rude to her and her mother and was not a "pleasant person" (T298). Mrs Wolak was also cross-examined about the fact that RB had provided information to her, on a confidential basis in December 2013, to explain the funding of the proceedings in respect of Mr and Mrs Gnych and was also cross-examined as to the circumstances of her attendance at the Club's board to discuss the disciplinary action against her in July 2014.
The Plaintiffs read affidavits of Mr Peter Wieczorkowski ("PW") dated 16 August 2018 and 21 January 2019. PW was previously named as a defendant in the proceedings; resigned as a director on 29 September 2017; and was then also removed as a defendant in the proceedings. Significant parts of PW's first affidavit were rejected for form with leave, and other parts were admitted with limiting orders under s 136 of the Evidence Act as directed to his understanding or by way of submission only. Significant parts of his second affidavit were rejected on the basis that they were expert evidence given without leave, or by reason of lack of relevance to the matters in issue in the proceedings, and other parts were admitted with limiting orders under s 136 of the Evidence Act as submission only. The Plaintiffs also relied on PW's further affidavit dated 13 February 2019 which led evidence, largely in admissible form, as to aspects of his earlier affidavit which had been rejected for form with leave. I will refer to his evidence of individual Defendants' attitude to dissenting members of the Club below.
The Plaintiffs relied on Mrs Gad's affidavit dated 9 August 2018, which refers to her history with the Club; to the fact that her applications for full membership by members of her family were not approved, although her son performed at musical concerts organised at the Club for many years; and, in evidence admitted with a limiting order under s 136 of the Evidence Act, to her continued interest in the encouragement and promotion of the Club and her concern that she is still prevented from becoming a full member of the Club. The Plaintiffs also relied on the affidavit of Mr Marek Zmuda dated 13 August 2018, which referred to his involvement in the Club and in Polish sporting activities; to his application for full membership of the Club in May 2017, which was sponsored by SZ and RAD; and to the rejection of his application in July 2017, when he was offered associate membership only, and to his shock and defence at that result, and his not accepting associate membership of the Club. In evidence admitted with a limiting order under s 136 of the Evidence Act, he also referred to his continued interest in the encouragement and promotion of the Club and his concern that he is excluded from being a full member of the Club.
The Plaintiffs relied on the affidavit of Mr Krzysztof Frankowski dated 13 August 2018, which referred to his involvement in Polish sporting activities, including events organised at the Club; to his application for full membership of the Club made in April 2017; and to the rejection of that application, and the offer of associate membership. He also referred, in evidence admitted with a limiting order under s 136 of the Evidence Act, to his continued interest in the Club and his disappointment that he is not allowed to become a full member of the Club. The Plaintiffs also relied on the affidavit of Mr Zygmunt Komorowski dated 16 August 2018, which referred to his admission as a full member of the Club in 2006; to events at a meeting in July 2015, following the High Court's decision in favour of Mr and Mrs Gnych; and to his having proposed that directors be required to give reasons when rejecting applications for membership of the Club. Mr Komorowski also gave evidence as to events at the March 2017 AGM. The Plaintiffs relied on the affidavit of Ms Genowefa Kozek dated 8 November 2018 which referred to her attendance at cultural events organised at the Club over many years; and to her application for full membership of the Club in April 2017, sponsored by KL and Dr Rumianek (who it appears is a dentist who shares premises with KL); and to her conversation with HG in respect of that matter. Ms Kozek was cross-examined through an interpreter.

The Defendants' affidavits

The Defendants relied on RB's affidavit dated 19 October 2018, which referred to his professional background and to the terms of the Club's constitution which conferred powers on the Club's management committee. RB also referred to the history of the proceedings against Mr and Mrs Gnych and addressed the suspension or expulsion of several members of the Club and the alleged wrongful refusal to admit suitable applicants for membership to the Club. That affidavit also addresses the Plaintiffs' allegations of a refusal of access to membership records of the Club and that the management committee refused to hold an extraordinary general meeting of the Club on a requisition by members and refers to the circumstances of the March 2017 AGM and to the Club's financial circumstances. I will address RB's evidence as to those matters in dealing with those issues below.
By his further affidavit dated 21 February 2019, RB responded to PW's affidavit dated 13 February 2019. I will address that evidence below. In that affidavit, RB also addressed the admission of members prior to the extraordinary general meeting on 21 May 2017 and the circumstances in which the existing lender to the Club declined to offer an increase in the loan facility or extend its existing facility, in about May 2018, so that the existing facility of $3 million was repayable on 18 September 2018, and the Club applied to refinance that facility, including with First Mortgage Capital Pty Ltd ("FMC") and that additional facility was approved. I address that evidence in dealing with those matters below.
Mr McCulloch accepted that RB gave his evidence in a way which might be thought to be "somewhat truculent" at times and submitted that he is an intelligent and proud man and obviously takes a great deal of pride in the Club and the volunteers who support it. While I broadly accept that submission, it seems to me that RB was not prepared to acknowledge aspects of his approach and conduct which plainly emerged from contemporaneous correspondence and the objective probabilities or to make concessions that should properly have been made. I have not accepted parts of his evidence below.
The Defendants also rely on HG's affidavit dated 19 October 2018. HG's evidence is that she has attended meetings of the Club's management committee to take minutes and interpret documents since about 2001, but she did not have any voting rights at meetings of the management committee until she became a member of the management committee and a director of the Club on 6 December 2015. She later became licensee of the Club in June 2018, in place of her husband who previously held that role. I will refer to HG's evidence as to the process for dealing with membership applications, disciplinary proceedings and the March 2017 AGM in dealing with those issues below. By her further affidavit dated 21 February 2019, HG responds to PW's affidavit dated 13 February 2019. I will also address that evidence below.
HG was cross-examined at considerable length. Mr McCulloch submitted that HG was a dispassionate and highly intelligent witness who had a keen interest in the Club's affairs and possessed significant commercial acuity, and that she gave her evidence in a forthright way and was not shaken in cross-examination. It also seems to me that HG was not prepared to acknowledge aspects of her, RB's and possibly EP's, approach and conduct which emerged from contemporaneous correspondence and the objective probabilities or to make concessions that should properly have been made. I have also not accepted parts of her evidence below.
HG distinguished, in cross-examination, between applications for membership being "rejected" and applications being "declined" and members being invited to accept an associate membership (T577). While there is some force in that distinction, the difference between full membership and associate membership is real so far as voting rights are concerned. HG explained the numerous persons admitted to membership in the period immediately prior to the March 2017 AGM on the basis that membership applications must have "matured" by that time, with the implication that such applications had arrived and been considered in the ordinary course (T640-T641, T697). HG also denied that she was anxious to get applicants voted on as new members in advance of that meeting on the basis that their applications had simply "matured" so they were entitled to vote (T641). It seems to me that evidence should be approached with scepticism. There were points at which HG took a somewhat literal approach to questions, which resulted in evidence that was potentially misleading, or at least not a fair representation of the true position. For example, she was asked whether Ms Mendel, the sponsor of an applicant for membership, was related to RB, and responded that Ms Mendel was neither related to RB nor to any other member of the board (T652) without disclosing that Ms Mendel was the fiancée of RB's nephew (T654). HG accepted in cross-examination that she could not recall any occasion, other than the March 2017 AGM, when members attending the Club for a meeting or other reasons have been required to produce any identification in addition to their membership card (T670).
The Defendants also relied on RC's affidavit dated 19 October 2018. RC referred to his background; the manner in which meetings of the membership committee were conducted; and the process for considering membership applications, which he described in substantially the same terms as in RB's affidavit evidence. I will refer to his evidence as to the criteria he applied in dealing with applications for membership and as to the March 2017 AGM in dealing with those issues below. RC otherwise denied the allegations made by the Plaintiffs in substantially the same terms as RB and HG. By his further affidavit dated on 21 February 2019, RC responded to PW's affidavit dated 13 February 2019. I will address that evidence below.
Mr McCulloch submitted that RC gave his evidence with precision and in an impressive way. RC was plainly an intelligent witness and seemed to me (as the contemporaneous correspondence indicated) to be loyal to RB's leadership of the Club which he perceives as maximising the prospect of its survival. There were aspects of RC's evidence on cross-examination that struck me as implausible, including his suggestion that, absent context, a reference to "[e]nemy of the Club" or "[e]nemies of the Club" "could be anything" (T721), and his unwillingness to acknowledge that RB regarded Mr and Mrs Gnych and their associates as "[e]nemies of the Club", where that language was often used in correspondence between the individual Defendants (T725). RC's lack of recollection of references to those terms or to the term "gang" used to refer to associates to KL was also surprising, given the extent of use of those terms in contemporaneous correspondence. I accept RC's evidence as to his own approach to membership applications and financial matters, but I treat his evidence, to the extent that he was asked about RB's and HG's approach, with caution, since it seems to me that he would not have given evidence adverse to them in a manner that he would have perceived as disloyal to them and to the Club's interests.
The Defendants rely on EP's affidavit dated 19 October 2018. EP became a member of the management committee and a director of the Club on 16 March 2014 and is the Secretary of the Club. I will refer to her evidence as to her criteria for admitting members of the Club; disciplinary proceedings; and the March 2017 AGM in dealing with those matters below. By her second affidavit dated 4 February 2019, EP took issue with an aspect of SZ's affidavit dated 10 August 2018. By her further affidavit dated 21 February 2019, EP responded to PW's affidavit dated 13 February 2019, and I will refer to her evidence in that respect below.
EP was cross-examined at some length, including as to the process for dealing with applications for membership of the Club. She was cross-examined as to the reference in the email to which I referred above to the earlier termination of the membership of KL's "minions", and fairly accepted that was a reference to KL's friends, although she denied that it was the board's policy to isolate KL, as far as possible, or that one of the methods employed to do so was to terminate the membership of her friends and supporters. EP was precise in her response to questions in cross-examination, which often had a lack of clarity about them, and that reduced the utility of that cross-examination.
The Defendants relied on MK's affidavit dated 23 October 2018. MK referred to the circumstances in which he joined the management committee and to the process adopted for consideration of applications for membership at meetings of the management committee. I will refer to his evidence as to the criteria he adopted for determining applications for membership to the Club, and as to disciplinary proceedings and the March 2017 AGM in dealing with those questions below. MK otherwise denied the Plaintiffs' allegations in substantially the same terms as other individual Defendants. The Defendants also relied on MK's further affidavit dated 21 February 2019, which responded to PW's affidavit dated 13 February 2019, and I will address that evidence below. He denied other parts of PW's affidavit in terms that broadly corresponded to other individual Defendants' responses to that affidavit.
MK was cross-examined. Mr McCulloch submitted that MK gave his evidence in a straightforward manner and was an impressive witness. It seemed to me that MK fairly acknowledged the adverse views that several individual Defendants held of persons associated with Mr and Mrs Gnych and KL in cross-examination; fairly acknowledged his inability to speak to the motivations of others; and honestly outlined his approach to the admission of members, which would have admitted few rather than more full members and was not consistent with that of the majority of the Club's management committee and did not prevail. MK's evidence on cross-examination, which I accept, was that the exclusion of a member had little impact on the finances of the Club by way of membership fees, although earnings from persons attending the Club were of greater significance. His evidence in cross-examination was also that he did not favour allowing full membership status generally, on the basis that persons should first be associate members of the Club or, more precisely, that he neither supported nor declined an application for full membership which other members of the board wished to grant (T523). MK's evidence in cross-examination was that he did not take a stance as to the persons admitted to full membership on 21 April and 12 May 2017 and he was the only member of the management committee who held the view that persons should generally be admitted to associate membership before full membership (T525). I understand him there to be contrasting his view with that of other members of the management committee who would admit persons they knew through other involvements with the Club or the Polish community to full membership rather than first admitting every applicant as an associate member. MK accepted in cross-examination that some 60 or 70 applicants were admitted as full members of the Club, over three meetings on 18 March, 21 April and 12 May 2017, and explained the influx of membership as reflecting improvements in the condition of the Club in the period since he had joined the board (T526-527). I give weight to that explanation given the view that I formed as to MK's credit and the cogency of his evidence generally.
Mr McCulloch submits that the Plaintiffs failed to observe the rule in Browne v Dunn (1893) 6 R 67 at 70-71 in their cross-examination of the individual Defendants. He points out that that rule is one of practice or procedure, based on general principles of fairness, designed to achieve not only fairness to a witness but also a fair trial between the parties: Bale v Mills [2011] NSWCA 226; (2011) 81 NSWLR 498 at [42]-[45]. He also submits that compliance with that requirement is not satisfied merely by an exchange of affidavits and that the Plaintiffs, by their Counsel, did not fairly put to each of the individual Defendants, in cross-examination, the substance of the allegations made against them which is relied upon to establish oppression within the meaning of s 232 of the Corporations Act. I do not accept that submission. The substance of the allegations of impropriety against the individual Defendants was clear from the pleading and the Plaintiffs' evidence in chief and the individual Defendants had denied that allegation, in general terms, in their initial affidavits and in greater detail in their responses to PW's further affidavit dated 13 February 2019. Mr Evans, in any event, put the substance of facts supporting the allegations against the individual Defendants to them in lengthy cross-examinations. I am satisfied they had a fair opportunity to respond to those allegations.
Mr McCulloch also submits, and I accept, that the Court should have regard to the level of satisfaction required to reach findings in respect of serious allegations against the individual Defendants involving a degree of moral turpitude: Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362. I proceed on the basis that the claims against the individual Defendants of improper purpose must be established having regard to the standard of proof recognised in the general law in Briginshaw v Briginshaw above and under s 140 of the Evidence Act, which similarly provides that, in a civil proceeding, the Court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities and that, without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account the nature of the cause of action or defence; the nature of the subject-matter of the proceeding; and the gravity of the matters alleged.

Alleged wrongful suspension and expulsion of members from about July 2013

Broadly, by paragraphs 46A to 61B of the SFASC, the Plaintiffs plead that the individual Defendants wrongfully suspended or expelled members of the Club who opposed RB's policies and positions in respect of Mr and Mrs Gnych and the potential sale and development of 75 Norton Street. Such conduct might, in a proper case, amount to oppression, and the question whether it is continuing would then be relevant to relief. For example, in Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [278]-[279], although Pritchard J held that while the cancellation of memberships of an organisation amounted to oppressive conduct, her Honour made no consequential order where the organisation subsequently acknowledged that the relevant persons remain members and their membership had not been validly cancelled and they were subsequently permitted to attend meetings.
The Plaintiffs' claim in respect of the suspension and expulsion of members and their further claim (which I address below) as to admission of applicants as associate members rather than full members must be approached by reference to the relevant provisions in the Club's constitution. Clause 3 of the Club's memorandum of association (Ex D4, Tab 3) provides that the Club's objects are: "(a) To provide for members who shall be of Polish extraction or related to persons of Polish extraction or who shall be Australians interested in Polish activities, and for the guests of members, a Club with all the usual facilities of a Club, (b) To promote and maintain social and cultural activities of the Polish community, (c) To promote and encourage the integration of the Polish community with the Australian community and preserving the Polish culture and traditions, (d) To obtain and hold the Certificate of Registration under the Registered Clubs Act, 1976 (as amended) or such other license, certificate or permit as may be required or available from time to time by the law applying to clubs."
The power to suspend or expel members is found in cl 21 of the Club's articles of association which relevantly provides (and, it appears, provided at the relevant times) that: "The Committee shall have power to suspend either for a fixed period of indefinitely or to expel any member if in their opinion - (a) His conduct is in disobedience of these Articles or any By-Laws or regulations and interest of the Club or is calculated to bring the Club into disrepute or contempt; or (b) His membership was obtained by improper means or without the required qualifications; (c) He is not desirable as a member of the Club; or (d) He has knowingly introduced any person into the activities of the Club who has been expelled from or has been refused membership or admission to the Club; or (e) He has become a bankrupt or has committed any act of bankruptcy; or (f) He becomes a patient or an incapable person or a mentally ill person within the meaning of these terms in the Mental Health Act 1950 of New South Wales or any enactment by which the Act is replaced.
Clause 22 of the Club's articles of association in turn permits the Club's President or Honorary Secretary or any Vice-President or in their absence any two members of the management committee or the Duty Officer to suspend, until the date of the next scheduled meeting of the management committee, any member who has, in their opinion, rendered themselves liable to be dealt with by the management committee under cl 21(a) of the articles of association.
The Plaintiffs contend that, from July 2013, "many" members of the Club and others showed their support for Mr and Mrs Gnych in a dispute between them and the Club, including by delivery of petitions to the Club and that "many" members of the Club, including the Plaintiffs, were opposed to the actions and conduct of RB and the Club's board (SFASC [46A]-[46B]). I will return to the nature of that dispute below. The Plaintiffs plead that, under cl 21 of the Club's articles of association, the Committee has power to suspend a member either for a fixed period or indefinitely or to expel any member if in their opinion that member has, relevantly, engaged in conduct in disobedience to the articles of association or any by-laws or regulations and interest of the Club; or is calculated to bring the Club into disrepute or contempt; or is not a desirable member of the Club (SFASC [47]). The Plaintiffs also plead that that power is exercisable only in good faith and for proper purposes on its terms and in a manner consistent with the objects of the Club (SFASC [48]-[49]), pleading that that power: "cannot be exercised for the purpose of expelling or suspending a member opposed to or likely to be opposed to the re-election of a member or members of the Board and/or a member opposed to some particular policy pursued by the Board, ie, for the purpose of ensuring that the current Committee members retain their positions as Committee members or as President. The exercise of the power of suspension or expulsion for such a purpose would be an exercise of the power for an improper motive."
The Plaintiffs also plead (SFASC [49A]) that, in exercising that power, the Club's directors and the individual Defendants are subject to specified duties and that power cannot be exercised for specified purposes, and, in particular, are bound to act fairly in the exercise of the said power and not to exercise the power motivated by bias or animus against the member in question and to exercise the power in good faith and in the Club's best interests having regard to the Club's objects and not to exercise the power for some improper purpose. The Defendants respond (Defence [47]-[49A]) by referring to cl 21 of the Club's articles of association, denying that RB or committee members engaged in any unlawful exercise of power or were motivated by an improper motive and otherwise not admitting or denying the allegations.
The gravamen of the Plaintiffs' claims in this respect is that, from about July 2013 until March 2017 the Club, by its board, suspended or expelled "numerous" members of the Club (SFASC [50]) on specified bases when: "in fact, the members suspended or expelled in this way had done no more than oppose, or appear to oppose, the policies and the position of the second defendant as President and as a director of the Club, in particular with regard to the Gnych proceedings." (SFASC [51]) That allegation is particularised by reference to some 18 persons, some of whom gave evidence in the proceedings, some of which was in an admissible form. In response, the Defendants admit that the Club, by its board, suspended or expelled members of the Club and rely on cl 24 of the Club's articles of association which provides that no proceedings may be commenced or prosecuted against any member of the Club, including the board, who exercise any power or duty as a member or executive member of the management committee (Defence [50]). It seems to me that that clause cannot exclude the Court's statutory jurisdiction in respect of oppressive conduct or breach of duty and an attempt to rely on it to do so would itself constitute such conduct.
The Plaintiffs then seek to establish a negative, pleading that members suspended or expelled in the period from July 2013 to March 2017 had not engaged in conduct that fell within the suspension/expulsion grounds nor had they otherwise acted contrary to the interests of the Club or in breach of the Club's constitution (SFASC [52]) and that members suspended or expelled in this way were charged, in effect, with acting against the interests of the Club for supporting Mr and Mrs Gnych or otherwise for seeking the removal of RB from the position as President of the Club and from membership of the management committee (SFASC [53]). The Plaintiffs also plead the circumstances of the suspensions of WJ and DP as members of the Club and contend that their suspensions were not effected in accordance with cl 21 of the Club's constitution for several reasons (SFASC [54]-[57]).
The Defendants respond by pleading the process adopted for the suspension of relevant persons; denying that the suspension power was exercised for an improper purpose and again rely on cl 24 of the Club's constitution to which I have referred above (Defence [52]-[57]). In opening submissions, the Defendants submit that the individual Defendants exercised their power under cl 21 of the Club's articles of association in accordance with the rules of natural justice and guided by the best practice guidelines issued by ClubsNSW. The Defendants also submit, and I accept, that it is important to have regard to the date on which the resolutions of the management committee to suspend or expel the relevant persons was passed; which members of the management committee were present at the meeting at which such decisions were made, including which of the individual Defendants were present and which of the witnesses called by the Plaintiffs were present; and also to whether the decision of the management committee to suspend or expel the person was unanimous or by majority.
I now turn to the background to the division of views within the Club and the evidence that at least some of the individual Defendants had negative views of supporters of Mr and Mrs Gnych and KL, just as those persons likely had negative views at least of RB and the individual Defendants generally. It is common ground that the Club became involved in a dispute from about 2013 with Mr and Mrs Gnych, who had operated a restaurant known as the Kameralna Restaurant at the Club. Mr and Mrs Gnych were excluded from the Club's premises on 4 August 2013, implementing a decision made by the Club's then management committee at a meeting on that day (Ex P9, vol 2, 160; Ex D4, Tab 16). Mr and Mrs Gnych were successful at first instance in proceedings brought in this Court seeking declaratory and injunctive relief in respect of that exclusion and returned to the Club's premises and reopened the restaurant in October 2013 (RB 19.10.18 [47]). The Club was successful in an appeal from that decision and Mr and Mrs Gnych again ceased to operate the restaurant in November 2014 (RB 19.10.18 [49]). Mr and Mrs Gnych were then successful in an appeal to the High Court, and again returned to the Club's premises and reopened and then closed the restaurant. They subsequently brought further proceedings against the Club and RB, which were resolved in January 2017 by a Deed of Settlement and Release by which the Club and RB agreed to pay $325,000 to Mr and Mrs Gnych and to pay their costs of the proceedings commenced by them in April 2016 on an ordinary basis as agreed or assessed. In March 2017, Mr and Mrs Gnych, the Club and RB entered a further Deed of Settlement and Release regarding the quantum of the costs of those proceedings. The Plaintiffs initially pleaded, but abandoned, a case that attacked the Club's involvement in respect of these matters, although their cross-examination of the Defendants' witnesses from time to time strayed into that territory.
The evidence indicates that RB and other directors of the Club recognised, not surprisingly, that some members of the Club took different views from the management committee as to issues facing the Club, including the dispute with Mr and Mrs Gnych. By 16 March 2013, RB's President's report had identified a group in opposition and expressed the view that the board had been hindered by a "small group" of people who ran a social media campaign, who he said were making multiple accusations with no evidence and commencing actions in this Court (Ex P9, vol 1, 26-27). There is a significant amount of evidence that several of the individual Defendants also expressed negative views as to dissenting members of the Club. It is, of course, necessary to bear in mind that oppression, or breach of duty, is not established by the directors holding, or expressing, negative views as to dissenting Club members, but only by oppressive or improper action taken in that regard. The Plaintiffs' affidavit evidence also refers to occasions on which such views were expressed.
KL referred, in her affidavit dated 23 August 2018, to a club meeting (the date of which was not identified) where RB referred to the "gang of uneducated people who support [KL]" and to their "interfer[ing] with how [RB] rule[s] this Club" and asserted that "we will win". KL was cross-examined as to the timing of that meeting. Although she was imprecise in her evidence as to that matter, her cross-examination did not undermine her evidence that the meeting took place or of what was said at it. In cross-examination, KL maintained, and I accept, that RB referred to a "gang of uneducated people" who supported KL and to how that gang interfered with governance of the Club. That evidence is supported by comments of a similar character in contemporaneous emails.
SZ referred, in his affidavit dated 10 August 2018, to having heard RB describe persons as "an enemy of the Club" and says that he also heard reference in board meetings to the fact that, although the management committee could not expel KL because she was a life member, it could expel her supporters (T253). His evidence was that, although he could not precisely indicate the timing of that comment, it was made during the period of the conflict concerning the restaurant operated by Mr and Mrs Gnych. On balance, I think it likely that comment was made, at least by RB, and the opportunity to suspend or expel persons who were supporters of Mr and Mrs Gnych from membership was welcomed by RB. It does not, however, follow that such expulsions were motivated by a dominant or substantial improper purpose or were not justified in the relevant circumstances. SZ's evidence in cross-examination was also that RB, HG and EP would refer to KL and people who supported her as a "toxic gang" (T255). I also think it likely that that language was used, given the similar perception expressed in contemporaneous emails. SZ accepted in cross-examination that he did not protest the use of that language, but referred to the difficulty of being a minority on the management committee (T255).
In his affidavit dated 13 February 2019, PW also referred to having spent some time, after his appointment as a director, with HG in working through the excel spreadsheet records of the Club's members and comparing them with documentary records such as receipts for payment of membership fees. HG accepted that process took place although there was a dispute as to how long it took. PW's evidence was that, in the course of that process, HG referred to the possibility that some persons "might be a Gnych supporter" or that a particular member was a supporter of Mr and Mrs Gnych and "should not be a member of the Club" and distinguished between those who were supporters of Mr and Mrs Gnych and those who were supporters of the board and the Club and expressed her view that it would not matter if the Club lost the patronage of persons who only came for functions for KL or in support of Mr and Mrs Gnych. I largely accept PW's evidence of those conversations and I am not persuaded by HG's denial of them in cross-examination, given the views expressed in the contemporaneous correspondence.
PW also referred in that affidavit to RB having described persons who he understood to be supporters of Mr and Mrs Gnych, including KL, WJ, DP, Mrs Wolak and Mr and Mrs Fenik, as variously "enemies of the Club", "gangsters", "terrorists" and "toxic haters". Some of those terms were also used in email correspondence to which I refer below. PW also led evidence of epithets which RB used to describe KL, including as "evil doctor" (which I recognise was not intended to be taken literally) and others that were of an even more offensive character (PW 13.2.19 [21]). PW also refers to, and the correspondence corroborates, the fact that RB and HG referred to supporters of Mr and Mrs Gnych or KL as a "gang". PW's evidence is also that the persons who were suspended or expelled on the basis of disciplinary charges brought before the board were referred to by RB and sometimes by HG as an "enemy of the Club" or as a member of the "gang" (PW 13.2.19 [28]). I think it likely that language was used, given its use in contemporaneous email correspondence. PW also referred to steps that he suggests were taken to identify supporters of KL or Mr and Mrs Gnych (PW 13.2.19 [33]).
It appears that RB recognised that disciplinary proceedings could provide a degree of protection against challenges from persons who he perceived as aligned with Mr and Mrs Gnych or KL or as opponents of the management committee. By email dated 22 July 2014 (PW 13.2.19 Annexure F), he advised members of the management committee, in respect of a letter that he proposed to write to a person who was previously refused admission to membership and had been a visitor to the Club: "he is one of the 'gang' that was busy last year trying to unseat the Board and was refused membership when he applied. He has given us grounds to reprimand him and this will give us a defence should we be taken to task for refusing his membership in the future." That email does not suggest that the grounds for disciplinary action were not genuine, but only that the opportunity for it was taken when such grounds existed.
In an email dated 28 October 2014 to then members of the management committee (PW 13.2.19 Annexure I3), RB characterised the opponents to the management committee's policies as a small group, observing that: "Lets [sic] be really honest … this is the work of just 10 people (Drewniak, 2 Gnych's [sic], KL, M[r]s Wolak, M[r]s Lipinski, Mr Pazdzior, Mr Kurek, [WJ] and [DP]) with KL, Drewniak and the Gnych's [sic] as the ringleaders and the rest just useful idiots. The arrival of Mr Macioch and Joanna blah-blah [sic] were just 2 new useful idiots." (underlining in original)
RB's evidence in cross-examination was that the reference to "useful idiots" was to those who believed in misinformation and invented stories, and the suggestion that the "terrible club" was seeking to get rid of Mr and Mrs Gnych rather than, in his perception, trying to ensure its survival (T804).
By an email dated 23 March 2015 to then members of the management committee (PW 13.2.19 Annexure C), RB referred to a meeting on the day before and observed that: "Evil Doctor [KL] sounded and looked stupid … Evil Doctor is looking increasingly isolated and alone ( we [sic] have terminated the membership of her minions) … and this is making her go even more crazy." It seems to me that the reference in that email to terminating the membership of KL's "minions" is a reference to Club members who supported KL's views, and that email indicates that RB at least recognised the advantage of terminating those persons' membership of the Club in further isolating KL, and welcomed that result. That does not necessarily establish that those persons' membership were terminated for an improper purpose.
An email dated 16 April 2015 from RB to members of the management committee (PW 13.2.19 Annexure D) in turn referred to "Evil Doctors [KL's] [sic] pivotal role with the 'gang'" and attached a letter from KL requesting copies of specified Club documents, including the current membership roll. By an email dated 11 July 2015, RB advised HG, with a copy to other members of the management committee, that a particular person was "rotten" and "fits in so well with the terrorist gang" (underlining in original) (PW 13.2.19 Annexure I4). Again, the views that RB held of that person may or may not be warranted, but that email indicates the perception held at least by RB of other members of the Club who held views opposed to those of RB and members of the management committee. The language of that email also supports PW's evidence of the language likely to have been used in conversations, to which I referred above.
By email dated 9 October 2015, PW (who is now, as I noted above, a witness in the Plaintiffs' case) recorded his then opinion that a particular member "is one of the so-called 'patriots' who is anti club [sic]" and that he was not keen to support him, and his organisation should pay the normal hire for use of the Club's hall if it was allowed into the Club (Ex P8). RB then advised EP by email dated 10 October 2015 (Ex P8) that: "The alarm bells for me are going off re [that member's] connection to Evil Doctor [KL], participation recently at the [Gynch's] opening and his past attempt at getting elected onto the Board. These people are all loosely connected and I suspect another 'game' being played on us during the current election period."
By email dated 27 March 2017 (Ex P8), RC noted his belief in the management committee's strategy and that RB was the only one who could competently manage a team to deliver on it, and also adopted the language "enemies of the Club" in observing that: "The enemies of the Club, both those with $ signs in their eyes, as well as those with no idea, are without the ramparts."
The individual Defendants each addressed the question of the suspension or expulsion of members of the Club in their affidavit evidence. In his first affidavit dated 19 October 2018, RB referred to clause 21 of the Club's articles of association which provided a power of suspension or expulsion of a member; asserted that the Club followed guidelines issued by ClubsNSW in respect of the process for suspending or expelling a member; and referred to the process adopted for disciplinary proceedings. RB in turn gave evidence that: "I have never voted to expel or suspend a member of the Club because the person was opposed to, or was likely to oppose: 1. the re-election of a member or members of the Management Committee; or 2. Some particular policy pursued by me or the Management Committee. I deny that I have ever voted to expel or suspend a member of the Club because of bias or animus towards the member. When deciding how to vote with respect to the suspension or expulsion of a member I have always acted in good faith and in what I consider to be the best interests of the Club."
RB's evidence as to the suspension or expulsion of members otherwise referred to management committee meetings and correspondence concerning those events and, in the case of some members, to the circumstances of a purported extraordinary general meeting of the Club held on November 2013, which sought to remove existing members of the management committee from office and appoint different persons as members of the management committee. I will hold below that that meeting was not validly convened or held.
By his further affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, RB denied that he had heard HG refer to persons as being supporters of the "anti-Club faction" or as "not a supporter of the Club" or as "associated with the Lukasewicz [sic] gang" or as "enemies of the Club". It seems to me that, having regard to the contemporary email record, it is likely that such references were made, and I do not accept RB's evidence denying that matter. RB accepted that he referred to KL as "the evil doctor" or the "evil one", although he and other Defendants emphasised that took place in private conversations and private email communications. RB denied making many other statements attributed to him in PW's affidavit.
In cross-examination, RB acknowledged that he had referred to Mr and Mrs Gnych and their supporters as a "gang", and responded to the suggestion that that was a pejorative term by pointing to the names he had been called (T784) and did not accept that that term was used in denigration of those persons (T785). RB's evidence in cross-examination was that the reference to "terrorists" was not to particular individuals, but to a range of people who, after hearing complaints from Mr or Mrs Gnych in his restaurant, would abuse other staff of the Club (T802). I am inclined to think that that term had a more specific reference, although I cannot exclude the possibility that it had the meaning to which RB referred. It is not necessary to determine that matter in order to resolve the proceedings.
RB's evidence in his second affidavit dated 21 February 2019 was that he never voted to suspend or expel a member because he or she was a supporter of Mr and Mrs Gnych or a person who questioned or disagreed with RB or any similar reason. I will find below that it has not been established that the Club or its management committee expelled such persons for that reason, although I have no doubt that RB regarded it as a happy result where other grounds arose to expel or suspend such a person from Club membership and was not reluctant to take advantage of that position when it arose.
In her first affidavit dated 19 October 2018, HG also dealt with disciplinary proceedings in respect of members, in substantially the same terms as the denial of impropriety in RB's evidence. In her further affidavit dated 21 February 2019, HG describes the process by which disciplinary charges against members were considered at management committee meetings in substantially the same terms as RB's second affidavit. In responding to PW's affidavit dated 13 February 2019 in that affidavit, HG accepts that, in reviewing the Club's membership list with PW, she may have said words to the effect that a person is a "supporter of the Gnychs" or a friend of KL but denies that she referred to those persons as being a supporter of the "anti-Club faction"; or not a supporter of the Club or the current board; or as associated with the "Lukasewicz [sic] gang". Having regard to the use of similar language in contemporaneous correspondence, I think it likely words of that character were said. HG also addresses the process for disciplinary proceedings against members and otherwise largely denies the matters set out in PW's further affidavit.
By his further affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, RC acknowledged that HG from time to time described persons as supporters of Mr and Mrs Gnych but denied that she had described them in the other manner set out in PW's affidavit or as "enemies of the Club" or "supporters of the anti-Club faction". RC also fairly acknowledged that, in dealing with decisions to suspend or expel a member, members of the management committee sometimes expressed the view that persons wanted to "destroy the Club" or were described as "toxic" or as "haters", but denied that RB or HG used the terms "enemy of the Club", "Lukasewicz [sic] gang" or "toxic gang" to identify persons who supported Mr and Mrs Gnych or disagreed with RB. It seems to me likely that those terms were also used, for the reasons I have noted above. RC denied that he had voted to suspend or expel a member because they were supporters of Mr and Mrs Gnych or persons who questioned or disagreed with RB or for any similar reason.
In her affidavit dated 19 October 2018, EP deals with disciplinary proceedings of the Club and her evidence is substantially identical to HG's evidence in that regard. By her affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, EP accepted that HG may have referred to persons as a supporter of Mr and Mrs Gnych, a friend of KL or "not a supporter of the Club", but her evidence is that she had not heard reference to the "anti-Club faction" or to persons not being a supporter of the current board or being associated with the "Lukasewicz [sic] gang" or as "enemies of the Club" or "supporters of the anti-Club faction". She also denied that RB or HG used the terms "enemy of the Club", "enemies of the Club", "Lukasewicz [sic] gang" or "toxic gang" to identify persons who were supporters of Mr and Mrs Gnych or opponents of the Board at meetings to consider whether to suspend or expel members and denied that she voted to suspend or expel members for that reason or any similar reason, and EP otherwise denied aspects of PW's further affidavit.
In his first affidavit dated 23 October 2018, MK also dealt with disciplinary proceedings, and his evidence in that respect was substantially identical to that of other individual Defendants. In MK's further affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, he accepted that HG may have referred to persons as a supporter of Mr and Mrs Gnych or a friend of KL, but denied that he heard her use the other expressions referred to in PW's affidavit.
I now turn to the position as to the 18 particularised individuals who are the subject of claims that they were improperly removed or suspended as members of the Club. The first two of those persons, Mr and Mrs Gnych, were expelled as members of the Club (Ex P9, vol 2, 160). By letter dated 7 August 2013 (Ex D4, Tab 24), the Club advised Mrs Gnych of her expulsion as a member of the Club on the basis that the management committee considered that she had engaged in conduct in disobedience of the Club's articles of association or by-laws or that was calculated to bring the Club into disrepute, and that she was not desirable as a member of the Club. A corresponding letter was sent to Mr Gnych on 7 August 2013 (Ex D4, Tab 25). The Plaintiffs contend that Mr and Mrs Gnych had done no more than assert their legal right to a lease of the restaurant premises under the Retail Leases Act 1994 (NSW) and that they were entitled to do so in the face of demands that they leave the Club. That is no more than a bare assertion, with no evidentiary basis. Mr and Mrs Gnych did not give evidence in these proceedings and the Plaintiffs have not established that they had not engaged in other conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution or that they were suspended for any improper purpose.
The Defendants also point out that RB was the only individual Defendant who was present at the meeting of the management committee at which the decision to expel Mr and Mrs Gnych was made (Ex P9, vol 2, 160) and that the Plaintiffs have called no witnesses who were present at that meeting and there is no evidence to suggest that other members of the management committee who then voted to expel Mr and Mrs Gnych (namely Messrs Kalbarczyk, Kunc, Pazdzior and Mokrzycka) were biased against them or expelled them for an improper purpose. I accept that submission and will address its significance below.
The third particularised person, Mr Szymanski, also did not give evidence in the proceedings. The Defendants submit that Mr Szymanski was not a member at the time of his expulsion, which was directed to his not attending the Club as a guest of a member or as a temporary member due to his behaviour, and point to a letter dated 22 July 2013 from the Club to Mr Szymanski confirming that his application for membership of the Club was incomplete (Ex D5, Tab 43) and a letter barring him from entry to the Club sent on 7 August 2013 (Ex D4, Tab 26). They also point to the absence of any reference in the minutes of the management committee that are in evidence to any application for membership of the Club by Mr Szymanski being approved and that his "expulsion" was not dealt with in the manner in which the expulsion of members was dealt with by the management committee. The Plaintiffs have not established that he was suspended or expelled from membership or that, if that occurred, he had not in fact engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution or that he was suspended for any improper purpose.
It is convenient to deal together with the position of the fourth, seventh, eighth and ninth persons who are particularised as improperly suspended or expelled, namely WJ, DP, Mrs Wolak and Ms Bobrowski. WJ and DP were suspended indefinitely as members of the Club (Ex P9, vol 2, 193, 203); Mrs Wolak was expelled as a member (Ex P9, vol 2, 207) and Ms Bobrowski was neither suspended or expelled (Ex P9, vol 2, 207), so the challenge to her alleged suspension or expulsion is misplaced. Turning to the facts of this matter, on 4 February 2014, following a purported extraordinary general meeting held in November 2013 that sought to remove the Club's board (which was invalid for the reasons noted below), the Club sent letters to, inter alia, each of WJ, DP, Mrs Wolak and Ms Bobrowski allowing them the opportunity to attend a meeting of the management committee to address their proposed expulsion or suspension as a member. It appears that step was taken at the same time as WJ and DP were standing as candidates for election to the management committee, and their entitlement to do so was confirmed by the Court in other proceedings.
For example, a letter dated 4 February 2014 from the Club to Mrs Wolak (Ex D4, vol 1, Tab 50) recorded the management committee's intention to consider whether she should be suspended or expelled as a Club member, under cl 21 of the Club's articles of association, by reason of a letter dated 13 December 2013 from the solicitors for the requisitionists to the Club which stated that she was the treasurer of a newly formed committee, following that purported extraordinary general meeting, a letter dated 10 April 2014 from the Club to WJ (Ex D4, Tab 31) indicated that it was alleged that he had acted in conduct prejudicial to the Club's interests or in conduct that was unbecoming of a member, and particularised that allegation by reference to a letter dated 13 December 2013 from the requisitionists' solicitors which advised that he was president of a newly formed committee and that the Australian Securities and Investments Commission ("ASIC") was notified of that matter. RB's evidence indicated that he regarded the conduct of persons who had lodged the requisition with ASIC as "attempted fraud" (T777) and he considered Mrs Wolak's advising ASIC that she was a director of the Club to amount to "attempted fraud" (T833). It seems to me that RB genuinely held those views.
It seems to me that the Plaintiffs have not established the negative proposition (SFASC [52], [55(a)], 57(a)] that WJ, DP, Mrs Wolak and Ms Bobrowski had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution so as to permit such a suspension. The notification to ASIC of a resolution passed at an invalid meeting of shareholders that purportedly replaced the Club's board could, in an appropriate case, have that character. The evidence does not establish that the power of suspension was used in respect of WJ or DP because of their opposition to the expulsion of Mr and Mrs Gnych (SFASC [55(c)], [57(c)]), or to entrench the current board (SFASC [55(d)], [57(d)]), rather than by reason of their involvement in the notification to ASIC of the result of that meeting, without disclosing its invalidity. While different views might be taken as to the substantive merit of the suspensions of WJ and DP and the expulsion of Mrs Wolak, the Plaintiffs have not established the improper purposes for which they contend were the predominant or actuating purposes of them. The claim in respect of Ms Bobrowski cannot succeed where she was not expelled or suspended.
The Defendants also point out that RB and EP were the only individual Defendants who were present at the meeting of the management committee on 9 May 2014 at which the decision to suspend WJ was made (Ex P9, vol 2, 193) and that there is no evidence to suggest that the majority of the management committee that voted to suspend him, namely RAD, SZ and PW were biased against him or suspended him for an improper purpose. They do not give evidence of any such bias or impropriety in their evidence in the Plaintiffs' case. The Defendants also point out that RB, EP and MK were the only individual Defendants who were present at the meeting of the management committee on 16 June 2014 at which the decision to suspend DP was made (Ex P9, vol 2, 203) and that there is no evidence to suggest that the majority of the management committee that made that decision, namely MJ, Mr Kalbarczyk and Mr Slomowski (the latter two having not given evidence) and SZ were biased against him or suspended him for an improper purpose. The Defendants submit that RB was not involved in the deliberations of the management committee in respect of Mrs Wolak, but it is not necessary to determine that matter. EP was the only other individual Defendant who was present at the meeting of the management committee at which the decision to expel Mrs Wolak was made (Ex P9, vol 2, 207) and there is again no evidence to suggest that the majority of the management committee that reached that decision, namely MJ, Mr Slomowski (who did not give evidence) and SZ were biased against her or expelled her for an improper purpose. It has not been established that these decisions were made for any such improper purpose or constituted oppression.
The fifth particularised person, Mr Drewniak, was suspended indefinitely as a member of the Club (Ex P9, vol 2, 188). RB's evidence in cross-examination was that his recollection was that the conduct for which Mr Drewniak was suspended was persistent defamation of the board in public and online, continuing after he was asked to cease (T777). The resolution in respect of Mr Drewniak was initially considered at a board meeting on 17 April 2014, after his legal representative advised that he would not be attending due to his age; the date; the time of the meeting and the weather; and the board then resolved to suspend Mr Drewniak for an indefinite period, apparently unanimously (Ex P9, vol 2, 188; Ex D4, Tab 33).
As Mr McCulloch points out, Mr Drewniak then attended a further hearing of charges against him; the management committee unanimously decided that Mr Drewniak was guilty of the charges; and Mr Drewniak left the Club's premises before the management committee heard him as to the penalty to be imposed. Mr Drewniak was offered a further opportunity to attend a further meeting of the management committee to address it as to penalty (Ex D4, Tab 39) and did not do so, and the management committee then suspended Mr Drewniak indefinitely until he withdrew certain statements he made, and publicly apologised for them (Ex D4, Tab 40). There is no evidence as to whether those statements were withdrawn or any such apology made and Mr Drewniak did not give evidence in these proceedings.
The Plaintiffs have not established their pleaded case that Mr Drewniak had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution so as to permit such a suspension or that his suspension was undertaken for an improper purpose. The Defendants also point out that RB, MK and EP were the only individual Defendants who were present at the meeting of the management committee on 31 March 2014 and 17 April 2014 at which the decisions concerning Mr Drewniak were made and that there is no evidence to suggest that the majority of the members of the management committee who made that decision, namely RAD, SZ, MJ, Messrs Slomowski and Kalbarczyk (the latter two having not given evidence) and PW were biased against him or made those decisions for an improper purpose. Again, RAD, SZ, MJ and PW do not give evidence of any such bias or impropriety in their evidence in the Plaintiffs' case. I accept that submission and will address its significance below.
The sixth particularised person is Mrs Lipinski. Disciplinary action was taken against her in October 2014, in respect of an incident concerning RB. By letter dated 26 October 2014 (Ex D4, vol 1, Tab 41) the Club advised Mrs Lipinski that it was alleged that she had acted in conduct prejudicial to its interests or in conduct that was unbecoming of a member and particularised that conduct as follows: "Your conduct when you attended Club premises on Sunday 26 October 2014 physically assaulted a Club member, the President of the Club on the first floor lobby adjacent to the bar area. Your conduct on this same occasion expressed to members in front of the main entrance that you had intended to shove a piece of cheesecake into the same Club member's face and would be prepared to do so again."
The minutes of the management committee on 5 December 2014 (Ex P9, vol 2, 227; Ex D4, vol 1, Tab 43) recorded that Mrs Lipinski had not attended that meeting and eight directors present (including RB, MK and EP) but also including RAD, SZ, PW (with MJ arriving late after determination of the matter relating to Mrs Lipinski) found Mrs Lipinski guilty on both charges and determined to suspend her membership indefinitely with no right of entry into Club premises until she attended a board meeting and apologised.
In her affidavit dated 7 August 2018, Mrs Lipinski referred to the circumstances in which one of her friends was expelled from membership of the Club, and she had asked RB why he was expelling people from the Club and refusing memberships, and RB replied that was "none of your business". Mrs Lipinski also referred to a later conversation with RB's wife, which appears to have been in the nature of a confrontation, in which Mrs Lipinski was told, somewhat cryptically, that she would "pay for [her] signs [sic]". Mrs Lipinski refers to her later suspension as a member of the Club and indicates that she chose not to attend the meeting which decided upon that suspension.
RB's evidence in cross-examination was that the events involving Mrs Lipinski involved her grabbing his left arm, in which he was holding a piece of cheesecake on a plate, at the time his right arm was in a sling, after he had dislocated it the day before, and that Mrs Lipinski was accusing him of "all sorts of terrible things" and that he tried to get away from her (T778). The incident appears to have been sufficiently serious that an ambulance was subsequently called, although there is no evidence of any substantial injury to RB arising from it.
Although different views might be taken as to the seriousness of the alleged assault of RB, and as to the wisdom of Mrs Lipinski's suspension, the Plaintiffs have again not established that Mrs Lipinksi had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution, or that the suspension was not prompted by the incident to which it related rather than any wider improper purpose. The Defendants also point out that RB, MK and EP were the only individual Defendants who were present at the meeting of the management committee on 5 December 2014 at which the decision concerning Mrs Lipinski was made (Ex P9, 227) and that there is no evidence to suggest that the majority of the members of the management committee who made that decision, namely RAD, SZ, PW and Mr Kalbarczyk (who did not give evidence) were biased against her or made that decision for an improper purpose. I accept that submission and will address its significance below.
The seventh, eighth and ninth particularised persons are DP, Mrs Wolak and Ms Bobrowski, to whom I have referred above. The tenth particularised person is Mrs Lacek. It appears that the conduct alleged against Mrs Lacek supporting charges that she had engaged in conduct prejudicial to the interests of the Club or that is unbecoming of a member was that she had made a "threat" to EP and the Club's manager, Mr Romanowski, that she would take the Club to court in the context of the dispute concerning the movement of a piano from the Club's auditorium stage to its mirror hall; her failure to leave Club premises when directed by EP to do so; and her behaviour at a Polish Christmas management committee meeting on the same date. I pause to note that, although this matter was not addressed in submissions, there may be a prospect that the pursuit of disciplinary proceedings founded solely on a member's threat to take court action against the Club would amount to a contempt of court, so far as it would deter access to justice and the vindication of a member's rights, but it is not suggested this action was based solely on that threat.
In her affidavit dated 16 August 2018, Mrs Lacek referred to the circumstances of a dispute which occurred in September 2014 in relation to the movement of the piano. In his affidavit dated 24 August 2018, MJ also referred to a discussion with RB in which he referred to the expulsion of Mrs Lacek who RB described as being "in the gang". I have referred above to other references to a "gang" of persons associated with KL. MJ refers to the circumstances in which he signed a letter giving notice to Mrs Lacek of her suspension, and claims to have done so under a threat by RB that he would otherwise be removed as a director, and says he later apologised to Mrs Lacek for doing so.
The charge against Mrs Lacek was discussed at a management committee meeting on 6 October 2014 (Ex P9, vol 2, 216) where both EP and the Club's manager provided an outline of relevant events, and the management committee deferred the matter to its next meeting, allowing Mrs Lacek a further opportunity to attend at the meeting on 24 October 2014 (Ex P9, vol 2, 221). The management committee then decided that Mrs Lacek should be suspended as a member for six months to 24 April 2015 but was to be allowed entry into Club premises subject to signing in as a visitor and recorded that the "lifting of the suspension [is] conditional upon retraction of the threat to take the Club to Court and apology [sic] to the democratically-elected board" (Ex P9, vol 2, 221; Ex D4, vol 2, Tab 60). Mrs Lacek's suspension was subsequently reviewed and, in April 2015, she was informed that her suspension would end on 25 April 2015 (Ex D4, vol 2, Tab 64). It appears she was reinstated as a member of the Club in July 2015 (Lacek 16.8.18 [15]).
Again, different views might be taken as to the seriousness of a dispute as to the movement of a piano and as to the wisdom of Mrs Lacek's suspension. However, the Plaintiffs have not established the negative for which they contend, that Mrs Lacek had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution or that the suspension was undertaken for the wider purpose for which the Plaintiffs contend. I think it likely that at least some of the individual Defendants perceived Mrs Lacek as a supporter of Mr and Mrs Gnych or as aligned with KL. However, the Defendants point out that RB, EP and MK were the only individual Defendants who were present at the meeting of the management committee on 24 October 2014 at which the decision to suspend Mrs Lacek for six months was made (Ex P9, vol 2, 221) and that there is no evidence to suggest that the majority of the management committee that decided that matter, namely PW, SZ, RAD, MJ and Mr Kalbarczyk (who did not give evidence) were biased against her or suspended her for an improper purpose.
The eleventh particularised person is Mr Vit, who did not give evidence. He was suspended for six months as a member (Ex P9, 265), and whose suspension has long since ended. The parties did not make submissions as to the basis of that suspension. Although RB, EP, RC and MK were the majority present at the meeting of the management committee on 18 September 2015 at which the decision to suspend Mr Vit for six months was made (Ex P9, vol 2, 265), it has not been established that they, or the three other members of the management committee that decided that matter, namely PW, SZ and RAD, were biased against Mr Vit or suspended him for an improper purpose. The twelfth particularised person is Mr Makowski who also did not give evidence. The Defendants point out that there is no evidence that his application for membership of the Club was approved and that his "expulsion" was not dealt with in the manner in which the expulsion of members was ordinarily dealt with by the management committee. The Plaintiffs have not established that he was a member of the Club, or was suspended or expelled as a member. They have also not established that, if that occurred, he had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution, or that he was suspended for a wider improper purpose.
The thirteenth particularised person is Mr Macioch, who did not give evidence and it appears that he also was not suspended or expelled as a member of the Club (Ex P9, vol 2, 331). Even if that had occurred, the Plaintiffs have also not established that he had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution, or that he was suspended for a wider improper purpose. The fourteenth particularised person is Mr Kurek, who also did not give evidence. The Defendants submit that Mr Kurek was not a member at the time of his "expulsion" which involved not permitting his attendance at the Club as a guest of a member or as a temporary member due to his alleged behaviour, and they also point out that the letter from the Club to Mr Kurek dated 22 July 2013 expelled him from the Club and said the Club had treated his application for membership dated 30 June 2013 as invalid (Ex D4, vol 2, Tab 76). They also point to the absence of any reference in the minutes of the management committee that are in evidence to any application for membership of the Club by Mr Kurek being approved and that his "expulsion" was not dealt with in the manner in which the expulsion of members was ordinarily dealt with by the management committee. The Plaintiffs have not established that Mr Kurek was a member of the Club, or was suspended or expelled as such, and have also not established that, if that occurred, he had not engaged in conduct that fell within the suspension/expulsion grounds and had not otherwise acted contrary to the interests of the Club or in breach of the Club's constitution, or that he was suspended for a wider improper purpose.
The fifteenth particularised person is RAD. I will deal with the claim concerning him below. The sixteenth particularised person is Mr Nawrocki. The disciplinary matter in respect of Mr Nawrocki was considered at the meeting of the management committee on 22 January 2017 (Ex P9, vol 2, 318), and he was suspended as a member of the Club for three years, "conditional upon good behavior and no public statements, disinformation or defamation or any other action against the Club". The Plaintiffs read his affidavit dated 30 June 2017 which refers to his support for a motion to remove RB as a director and to his having organised a demonstration against RB on 19 March 2017 (the date on which the March 2017 AGM was to be held) to protest against the actions of RB and the Club's board. His evidence is that he was suspended as a member of the Club in January 2017, before he organised that demonstration, and would have voted against the resolution to change the status of the Club's property at the March 2017 AGM had he still been a member and allowed into that general meeting. Although the individual Defendants were the majority present at the meeting of the management committee on 22 January 2017 at which the decision to suspend Mr Nawrocki was passed, it has not been established that they, or PW, who was the other member of the management committee that decided that matter, were biased against Mr Nawrocki or suspended him for an improper purpose. The seventeenth and eighteenth particularised persons are SZ and MJ. I will deal with the claims in respect of them below.
The Plaintiffs plead, and the Defendants deny, that the alleged conduct in respect of the suspension or expulsion of these members (or, I interpolate, those who were in fact members of the Club) amounted to a breach of the individual Defendants' duty to act in the interests of the Club and its members as a whole for the improper purpose of seeking to ensure that RB retained his position as President of the Club and thereby was able to exercise control over the Club's affairs and property (SFASC [58]). The Plaintiffs also plead (SFASC [59]), and the Defendants also deny, that the conduct was carried out in breach of a duty to act in the interests of the Club and its members as a whole for an: "improper purpose of seeking to advance an undisclosed agenda of [RB] to procure the sale and development of the Club premises without the fully informed consent of the full membership of the Club, at least from late 2016 if not even as early as July 2013."
The Plaintiffs also plead (SFASC [60]), and the Defendants deny, that the suspension or expulsion of members of the Club "at the instigation of [RB]" in the period from about July 2013 to date was improper and invalid, and thus void or voidable in that members were expelled for alleged conduct not falling within the suspension/expulsion grounds under cl 21 of the Club's constitution; and "The said suspensions or expulsions were carried out for an improper motive of ensuring that then current Committee, and, in particular the second defendant retained their positions and for the supplementary and related purpose of removing from membership of the Club persons who were or who might be opposed to [RB] remaining in office as President of the Club and as a director and who were or might be opposed to some policy of [RB] with regard to the Club, such as the wrongful expulsion of the Gnychs and/or the sale of the Club premises."
In closing submissions, the Plaintiffs correctly acknowledged that the documents relating to the disciplinary proceedings (Ex D4) "give the appearance of a process in which some proper procedure was followed and those charged were afforded natural justice". The Plaintiffs also submitted that there were common features in the suspensions and expulsions that "belie[d] those apparent facts", namely that all of the people charged and suspended in this way were variously identified as "enemies" of the board; the effective complainant in all cases, with the exception of Mrs Lacek, is RB who, in each case, then chaired the management committee meeting at which the questions of liability and penalty are determined; and also submitted Mr Drewniak was aged 90 at the time he was charged and was a founding member of the Club and had voiced opposition to RB at the Club (Ex P9, vol 2, 165). The submission that RB was the "effective complainant" does not recognise the fact that RB was only one member of the management committee and the individual Defendants were a minority of that committee when many of the relevant decisions were made, and those decisions were made by, or supported by, other members of that committee who are now aligned with the Plaintiffs and whose conduct and motives in that respect are not challenged. In oral closing submissions, Mr Evans also indicated that the Plaintiffs did not seek to have the Court reach findings as to the detail of the disputes involving the relevant individuals who were suspended or excluded from membership, which could have been agitated in separate actions by those individuals (T901).
In closing submissions, the Defendants accepted that the rules of natural justice applied to the exercise of the power by the management committee to suspend or expel a member of the Club, and that that power must be exercised in good faith and not motivated by bias or animus against the member in question. They pointed to the evidence of individual Defendants, to which I have referred above, denying that they had voted to expel or suspend a member of the Club because the person was opposed to, or was likely to oppose, the re-election of a member or members of the management committee or some particular policy pursued by RB or the management committee; denying that they had voted to expel or suspend a member of the Club because of bias or animus towards the member; and claiming that they had always acted in good faith and in what they considered to be in the Club's best interests when deciding how to vote with respect to the suspension or expulsion of a member. They also rely on their submission as to the Plaintiffs' suggested failure to satisfy the rule in Browne v Dunn above concerning this evidence. While the individual Defendants' evidence is not sufficient, in itself, to displace this allegation, and I have not accepted the submission as to Browne v Dunn, these allegations are not established given the other findings that I have reached above.
The Plaintiffs also plead (SFASC [61A]) that "[i]n all cases in which any of the above listed members were suspended their suspension was indefinite and thus, effectively, constituted expulsion from the Club." That allegation is not established in respect of the majority of those persons because, as I have noted above, only WJ, Mr Drewniak, Mrs Lipinski and DP were indefinitely suspended as members of the Club. As Mr McCulloch points out, the indefinite suspension of WJ, Mrs Lipinski and DP arose because they did not attend a hearing of the charges against them at a meeting of the management committee, after they were invited to do so, and the suspensions continued pending their attendance at such a meeting or the provision of a written explanation for the charges for review and consideration by the management committee (Ex D4, vol 1, Tabs 29, 31, 32, 34, 36 (WJ); Ex D4, vol 1, Tabs 41-43 (Lipinski); Ex D4, Tabs 44, 45, 47, 48 (DP)). It was open to each of them to attend such a meeting or provide such an explanation if they wished to do so, leaving the management committee then to determine whether to continue or revoke their suspensions or take other action. This allegation is also not established in respect of those persons.
The Plaintiffs in turn plead that, by acting in the manner pleaded in numerous incorrectly referenced paragraphs (SFASC [73]-[86]), RB and HG, and the other individual Defendants "to the extent to which they were involved in the decisions taken to suspend or expel members in this time", acted in a manner oppressive of the members of the Club, and, in particular, in a manner oppressive of those members opposed to RB continuing in office as President and as a director of the Club and, in doing so, RB exercised his powers as President of the Club and as a director of the Club for improper purposes, in particular, to ensure his own retention of his position as President and as a director (SFASC [61]). The Defendants deny that allegation (Defence [61]). Assuming that this allegation refers to the immediately preceding paragraphs, its factual basis has not been established against RB, HG and the other individual Defendants for the reasons noted above. This allegation also cannot support any claim against RC, MK and EP where it does not identify what involvement they are alleged to have had in the relevant actions and where many of those actions occurred prior to at least HG's and RC's appointment as directors of the Club.

Alleged wrongful refusal to admit otherwise qualified applicants for full membership of the Club in the period from July 2013 to March 2017

Broadly, by paragraphs 62-79 of the SFASC, the Plaintiffs plead that the individual Defendants wrongfully refused to admit suitable applicants as full members of the Club because the applicants were supported by persons who supported Mr and Mrs Gnych, or who were otherwise perceived by RB to be opposed to him.
I should first refer to the provisions in the Club's articles of association that deal with the admission of applicants to membership. Clause 4 of the Club's articles of association provides that: "Any person having attained the age of eighteen (18) years and having an interest in the encouragement and promotion of the Club and its objects [to which I referred above] shall be eligible for membership of the Club". That clause also refers to several classes of membership of the Club, being Life Members, Foundation Members, Ordinary Members, Temporary Members, Honorary Members and Associate Members. Clauses 5 and 10 of the Club's articles of association require that an application for admission to membership as an Ordinary Member must be signed by the candidate and by two Full Members (as defined) sponsoring them; contain a declaration that the applicant has read and if admitted agrees to be bound by the Club's memorandum of association and articles of association; and shall be in such form and contain such particulars as the management committee may from time to time direct. Clause 11 of the Club's articles of association provides that: "The application shall be submitted to and may be approved or rejected by the Committee at a duly convened meeting of the Committee and if approved the Candidate shall be elected the member of the Club by a resolution of the Committee and a record shall be kept by the Honorary Secretary of the names of the members present and voting at the meeting. The Committee shall not be bound to give any reason for a rejection of any application."
The Plaintiffs plead (SFASC [62]-[65]) that, from about July 2013 until at least March 2017, numerous people applied to become members of the Club, either as "General members" or "Social members"; that specified persons met the criteria for membership under the Club's constitution in that they were persons of Polish extraction or related to persons of Polish extraction or were Australians interested in Polish activities in the terms of cl 3 of the Club's objects; that in over 190 cases listed in Schedules 1, 2 and 4 to the SFASC, the Club's board rejected these applications for membership; and that, in 73 cases, the board invited the applicants to apply for associate or "social" membership or admitted the applicants as associate members although they had only applied for full membership.
The Plaintiffs also plead (SFASC [66], [69]) the particular cases of Mr and Mrs Fenik, and led their evidence in the proceedings. Mrs Fenik's application for membership was rejected at a meeting on 22 September 2013, and, by letter dated 22 September 2013, the Club advised Mrs Fenik of that decision (J Fenik 11.5.17 [10]). In his affidavit dated 7 August 2018, Mr Fenik gave evidence of his support for Mr and Mrs Gnych and of his understanding (admitted with a limiting order under s 136 of the Evidence Act) that RB knew of his support for Mr and Mrs Gnych. His evidence is that he was told by the Club manager that he would not be admitted as a full member of the Club and that he should not try to put in an application because RB would not accept it. He referred (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his state of mind) to his concern that he was prevented from exercising voting rights but offered only associate member status with the Club. The Club manager was not called to deny the statement attributed to him, and I infer that it was made. That statement does not prove the correctness of that perception, where any decision as to Mr Fenik would have been made by the board of which RB was one member, or that an offer of associate membership was not appropriately made to Mr Fenik. I put aside the question (to which I will refer below) of the board's power to offer associate membership to those who sought full membership, where the Plaintiffs chose not to pursue that issue although I had raised it in submissions.
Mr Fenik was cross-examined as to his having been granted associate membership of the Club in 2014 and did not recall whether he had applied for full membership of the Club at a later date. He did not have a clear recollection as to the position in respect of his previous membership of the Club and his cross-examination may have been affected by his misunderstanding of aspects of the questions asked. He had difficulty in addressing questions as to the reasons for his applying for membership of the Club, and if he had in fact been a member at an earlier time and was seeking to renew that membership. His evidence was that he accepted associate membership of the Club because the Club manager told him he would never become a full member of the Club (T287).
The gravamen of this claim is then pleaded in SFASC [70], namely that: "All of those refused full membership in this way were applicants whose nomination was supported by [KL] and/or by other members of the Club who had signed the petition in support of the Gnychs presented to [RB] and the board on 22 July 2013 or by persons who were otherwise perceived by [RB] to be opposed to him."
The Plaintiffs also plead (SFASC [72]) that: "… the powers of the Committee, the board, in considering whether to accept or reject an applicant for membership is bound to act in good faith and in accordance with its duty to act in the best interests of the Club as a whole and consistent with the objects of the Club as set out in Clause 3 of the Memorandum of Association". The Plaintiffs also plead (SFASC [73]) that a decision to refuse an application for membership on the basis that the applicant might, as a member, vote against the policies and "the person of" RB is not a proper ground for refusal of membership and is not a proper exercise of the discretion conferred on directors by cl 11 of the Club's articles of association.
The Plaintiffs rely on evidence that seeks to establish an improper purpose on the part of the individual Defendants in respect of the admission of some persons as associate rather than full members of the Club. Mrs Wolak referred (Wolak 14.2.14 [9]) to the purported meeting to remove the directors of the Club in November 2013 (which I have held to be invalid) and to a conversation with RB in early December 2013 concerning that meeting, where RB described that meeting as "illegal"; expressed the view that "you are all against me and the Board which is working very hard", which Mrs Wolak did not accept; and then responded to a question, "why did you stop people being members" in words to the effect: "I know who sponsored these people and I know what they have in mind and they are all against me." I think it possible that RB did say something to that effect, given the suspicion of applicants sponsored by KL that emerges from contemporaneous correspondence, although I also recognise a real risk that Mrs Wolak's (and other witnesses') recollection has been shaped by the matter in issue between the parties and affected by their strong commitment to the rightness of their cause. I accept that, as Mrs Wolak said in evidence admitted as a submission under s 136 of the Evidence Act, that conversation (if it occurred) would have referred to the non-admission of applicants for membership. That observation would, however, record the view of one director where, as will emerge below, decisions as to membership were made by a management committee of several persons and the Plaintiffs do not challenge the motives or good faith of the majority of members of that committee, as constituted from time to time.
By an email dated 7 April 2014 (PW 13.2.19 Annexure "I1"), HG advised several members of the management committee that: "We need to be on our guard for people who were refused full membership, didn't take up Associate membership and may now be approaching Directors or trusted sponsors to sponsor them. DO NOT SPONSOR people you do not know quite well. Even people you do know may have had Full membership refused due to their participation in that invalid 'EGM' or because they are unknown at the Club - noone can put a face to the name because they are not patrons of the Club." The language "on our guard" reflects a degree of suspicion of such applicants for membership.
By an email dated 3 June 2014 (PW 13.2.18 Annexure B), HG wrote to EP, copied to other members of the management committee, again referring to the possibility that the Club may receive new membership applications from persons who had not taken up offers of associate membership and continuing as follows: "This time they may have persuaded soft-hearted members or those who aren't aware of their previous activity to be their sponsors. We need to develop some sort of policy as we may not know many of the surnames. I can certainly ring the sponsors and ask how well they know the applicant but ultimately, if you've had a few chats with them in the upstairs seating area but they haven't told you that they think it was wrong for the Club to go to Appeal, for example, then ask you to sponsor them, you may be inclined to do so. I suppose I could also ask the sponsors whether the applicant made them aware that they had previously been refused full membership. I'll have to show all directors where the folder is with all the application forms for those who were previously declined full membership, just in case someone asks for sponsorship and you don't know them but think they seem alright." (italics omitted)
It seems to me, notwithstanding HG's denial in cross-examination, that this email contemplated an assessment of potential applicants for membership as to whether they were supporters of Mr and Mrs Gnych and disapproved of the Club's appeal against the decision at first instance in favour of Mr and Mrs Gnych, HG contemplated that persons who had previously been "refused full membership" and had been offered but not taken up associate membership should not be sponsored for full membership in a further application. However, the evidence does not establish that members of the management committee as variously constituted from time to time held that view, and HG was not then a director of the Club.
It is plain that RB was conscious of the risk that the admission of full members could allow the "opposition", presumably supporters of Mr and Mrs Gnych or KL, to obtain a majority in a general meeting. He said as much, in advising the board at a management committee meeting on 31 May 2015 that (Ex P9, vol 12, 243): "the Club needs to be cautious about the Club's opposition being able to get new members in, one by one, by stealth. That we as a Board have an obligation to ensure that all new members are suitable, their intent is good and that they will act in the best interests of the Club." An obvious difficulty with that approach is that it assumes that the Club's best interests are coincident with RB's perception, or the majority of the management committee's perception, of those interests.
At least RB, HG and EP were also conscious of the relationship between admission as a full member or as an associate member and the right to vote. In correspondence prior to the March 2017 AGM, EP observed that, because all members of the Club could attend and vote, "We are so stuffed". That could only have been a reference to the risk that associate members nominated by KL and admitted to membership would vote against the resolution proposed at that meeting. RB appears to have understood that email in that way and responded (Ex P8) that: "Actually no. … the zombies have in the main not taken up our offers of Associate membership. The bulk (90% +) of that category are Vibrations customers, locals and car park customers. … none will attend." RB's reference to "zombies" is, regrettably, likely to be to persons nominated by KL and her associates who had sought membership of the Club, but not been admitted as full members and had been offered associate membership. HG in turn responded, by email dated 23 February 2017, that: "They haven't taken theirs up because of the 'insult' of being denied full mbshp [sic] and voting rights …"
It is also likely, at least prior to the March 2017 AGM, that the individual Defendants or some of them sought to recruit new members who supported their approach, as recorded in an email dated 27 March 2017 from RC (Ex P8) who noted that: "I will continue doing my best to recruit new members who support the Club's strategy."
It seems to me that this correspondence supports a finding that at least RB and HG (for the later period in which she was a director) likely gave attention, in dealing with membership applications, to entrenching support for the management committee and its policies among the Club's membership, and depriving those who might oppose the management committee and its policies of voting rights, by depriving them of full membership and admitting them only as associate members. That is not sufficient to establish the Plaintiffs' claims of impropriety by the Club (through the management committee as constituted from time to time) or the individual Defendants generally in dealing with membership applications over the relevant period for the reasons noted below.
The Defendants respond that all decisions on whether or not to accept or reject membership applications were made by the management committee in accordance with the Club's articles of association and deny that the management committee was led by RB and by HG in making the decisions referred to and otherwise deny the allegations (Defence [64]). They also plead, inter alia, that all applications for membership were considered in accordance with cll 10 and 11 of the Club's articles of association; that the management committee is not bound to give any reasons for the rejection of any application; and say that the management committee is not bound to accept any applicant for membership and deny these matters were linked with the Plaintiffs' support for Mr and Mrs Gnych (Defence [65]-[70)]. The reliance on the provisions of the Club's articles of association which deal with how such applications can be treated does not exclude the possibility that such treatment may amount to oppression in the relevant circumstances. The Defendants also plead that the management committee had a discretion to approve or reject applicants for membership; deny that the alleged duty arose under cl 11 of the Club's constitution; and say the management committee acted in the Club's best interests in making the relevant determinations; and otherwise do not admit the allegations (Defence [72]-[73]). In opening submissions, the Defendants submit that the individual Defendants exercised their power under cl 11 of the Club's articles of association in good faith and having regard to the objects of the Club in cl 3 of the Club's memorandum of association.
The individual Defendants each gave evidence of their approach to dealing with membership applications in the varying periods in which they were members of the management committee. In his first affidavit dated 19 October 2018, RB referred to the objects of the Club and to criteria for eligibility for membership in the Club as set out in cl 4 of its articles of association. RB also referred to the provisions of the articles which dealt with the process for applications for membership and to HG's role in dealing with applications for membership. RB's evidence was that, when a person applied to become an ordinary member, it would usually be particularly important to him that the person regularly attended the Club and: "If a person applying to become an Ordinary Member is not known to me or to the members of the Management Committee, then I will usually vote in favour of the applicant being offered membership of the Club as an Associate Member but will vote against the applicant being offered membership as an Ordinary Member."
RB's evidence was also that: "I have never voted against a person being offered membership as an Ordinary Member or as an Associate Member because I considered that the person may: 1. disagree with or oppose decisions made or policies adopted by the Management Committee; or 2. disagree with or oppose my views or opinions, or may not vote for me if I nominate for election as a member of the Management Committee. I have never voted for a person being offered membership as an Ordinary Member or as an Associate Member because I considered that the person may: 1. agree with or support decisions made or policies adopted by the Management Committee; or 2. agree with or support my views or opinions, or may not vote for me if I nominate for election as a member of the Management Committee."
There are difficulties with that evidence. The first is that it deals together with ordinary members and associate members, and not specifically with the question whether membership has been declined as an ordinary member for the specified reasons. The second part of the evidence is confusing, so far as it denies that RB favoured membership applications where persons may not vote for him if he nominated for election as a member of the management committee. There is no suggestion that RB favoured applications on that basis. Evidence to substantially the same effect was given by other individual Defendants.
By his further affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, RB accepts that HG may have said words to the effect that particular persons were "a supporter of Mr and Mrs Gnych" or "a friend" of KL in the course of a management committee deliberating on an application by a person for membership of the Club, but claims that he did not vote to refuse a person being offered membership as an ordinary member or an associate member, or vote to offer a person membership as an associate member rather than an ordinary member, "simply because" a person or their sponsor was a supporter of Mr and Mrs Gnych or a friend of KL. That denial is limited and does not, for example, exclude RB having voted for that reason as a dominant reason, provided some other reason was also present. RB accepted in cross-examination that HG had a strong view that members should not be sponsoring other persons that they did not know well for membership (which is consistent with the correspondence to which I have referred) but that was not a board policy or RB's position (T802).
In her first affidavit dated 19 October 2018, HG referred to the manner in which membership applications were made, and parts of her evidence, albeit largely dealing with denials of wrongdoing in general terms, were substantially identical to RG's evidence. HG referred to the matters that she took into account in deciding on membership applications, including her "gut feeling" as to whether an applicant would make a good member of the Club and make other members of the Club feel comfortable and she indicated that, if she was not satisfied, then she would usually decide to offer a person membership as an associate member rather than an ordinary member (HG 19.10.18 [23]). HG denied voting against a person being offered membership as an ordinary member or an associate member for specified reasons, in largely the same terms as RB had denied that matter, albeit with the addition of two additional sub-paragraphs.
In his first affidavit dated 19 October 2018, RC's evidence was that, if an applicant for membership of the Club was known to members of the management committee, and they were satisfied that the person was of good character, they would usually approve the applicant becoming an ordinary member and that: "if the members of the Management Committee are not certain whether the applicant is a person of good character, then the Management Committee will usually approve the applicant becoming an Associate Member and encourage them to become involved in the Club before applying for membership as an Ordinary Member." RC denied voting against persons being offered membership as an ordinary member or associate member on specified grounds, or voting for persons being offered membership as an ordinary member or associate member on specified grounds, in terms that broadly correspond to RB's evidence and precisely correspond to HG's evidence in that regard.
By his further affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, RC denied that he voted to refuse a person's membership as an ordinary member or associate member, or to offer membership as an associate member rather than an ordinary member, "simply because" a person or their sponsor was a supporter of Mr and Mrs Gnych or a friend of KL. As with RB's and HG's similar evidence, that denial did not address the possibility that RC voted in that way for that reason and other reasons. RC's evidence in cross-examination was that his criterion for admission to membership was whether the applicant had an "emotional commitment" to the Club, as more than a commercial entity (T737). He also rejected the proposition, in cross-examination, that someone who opposed RB was unlikely to be accepted as a member of the Club, and responded that he knew "many people who are good members" who disagreed with RB (T747).
In her affidavit dated 19 October 2018, EP refers to the process for lodgement of membership applications and her evidence is that members of the management committee will usually look first at whether an applicant for membership is known to them, or attends the Club regularly or volunteers at the Club or other related Polish organisations or groups and that: "If the person is not known to the members of the Management Committee, then we will usually look at the sponsors. The Management Committee will take into account whether the sponsors attend the Club regularly, are of good character and whether they volunteer at the Club or at other related Polish organisations or groups." EP also denies having voted against a person being offered membership as an ordinary member or an associate member in specified circumstances, or voted for a person being offered membership as an ordinary member or an associated member in specified circumstances, in substantially the same terms as other individual Defendants' evidence.
By her affidavit dated 21 February 2019, responding to PW's affidavit dated 13 February 2019, EP denied voting to refuse persons membership as an ordinary member or associate member, or to offer only membership as an associate member, "simply because" a person or their sponsor was a supporter of Mr and Mrs Gnych or a friend of KL. I have referred to the limitations of similar evidence given by other individual Defendants above.
MK's evidence, in his affidavit dated 23 October 2018, was that while RB would support admitting persons as ordinary members "if he sees them behaving well or they can bring some value to the Club", MK believes that potential full members of the Club should first join as associate members and demonstrate their interest in the Club, for example by volunteering for the Club, before they become full members. I accept that MK genuinely holds that view. That view may be inconsistent with the Club's articles of association, which do not contemplate the admission of persons as associate members where they wish to be full members, but it does not involve the element of improper purpose alleged against the individual Defendants. MK there denies having voted against persons being offered membership for specified reasons, or voted for persons being offered membership for specified reasons, in substantially the same form as other individual Defendants. In MK's further affidavit dated 21 February 2019, he denied that he voted to refuse persons being offered membership as an ordinary member or as an associate member, or that he voted to offer persons membership as an associate member rather than an ordinary member, merely because that person was a supporter of Mr and Mrs Gnych or a friend of KL. I accept his denial of that matter where I have found that he genuinely holds the view which he expressed as to when persons should be admitted as full members.
In closing submissions, the Plaintiffs submit that a pattern existed in which applicants nominated by the Plaintiffs or several persons associated with them, were generally refused full membership of the Club and admitted as associate members, who did not have the right to vote, or were invited to apply for associate membership. The Plaintiffs submit that, at the same time, applicants sponsored by the individual Defendants, their relatives and associates were regularly admitted to full membership. The Plaintiffs did not lead evidence that might have allowed any substantive assessment of the comparative merit of applicants who were allowed full or associate membership, although evidence of the former emerged in Mr Evans' cross-examination of the individual Defendants as to the background of those admitted to full membership.
The Plaintiffs also submit that applicants sponsored by RAD, SZ and MJ were regularly granted full membership when they were "onside" with RB but a different result followed when they fell "out of favour" (and, I interpolate, were excluded from or left the board) and applicants sponsored by them were then rejected or offered associate membership, as were applicants sponsored by people associated with them, such as their family members and persons who they had previously sponsored for membership. It seems to me that little can be drawn from such a comparison without evidence whether the applicants sponsored before and after those persons ceased to be members of the board were of a similar character and quality. Again, the Plaintiffs made no substantive attempt to address that issue by evidence.
The Plaintiffs submit that the pleaded conduct is oppressive of the minority who unsuccessfully sponsored applicants for full membership, and is also conduct contrary to the interests of the members as a whole and demonstrates: "a determination on the part of the Board to dominate the membership, not only to the detriment of the minority represented by the plaintiffs and the other [sponsors of persons admitted as associate members], but also of other members, perhaps neutral, at [sic] any event apparently silent, who, while not aligned or seen to be aligned with the minority but who are not, at the same time, part of the ruling clique." That allegation treats the "Board" as a single entity whereas, as will emerge below, its composition changed significantly in the relevant period; several of the individual Defendants joined it in the latter part of the period; and they constituted a minority on the board for much of that period.
Mr Evans recognised that the individual Defendants' evidence was that they followed a policy of not admitting as full members applicants whom they "did not know" while offering them associate membership on the basis that the applicant could then spend time at the Club as an associate member and become better known. The Plaintiffs respond that it would be no defence to the charge of oppression on these grounds that these decisions made by the directors were made in good faith and for a purpose which fell within the powers of the directors, although they also "do not concede" that the individual Defendants had acted in good faith in that respect. Mr Evans also submitted that the evidence given by the individual Defendants in their affidavits (in substantially the same terms) that they have never voted against a person being granted membership because the person may disagree with the views of the management committee should be rejected. The Plaintiffs' submit, and I largely accept, that the objective evidence shows that applicants nominated by particular persons were regularly rejected or rejected as an applicant for full membership with the applicant being offered associate membership. However, as will emerge below, that does not establish that result is substantively unfair, which would depend on the merit of the applicants, or that it was undertaken for the improper purposes for which the Plaintiffs contend.
In oral closing submissions, Mr Evans described the Plaintiffs' claim as to oppression in respect of the admission of applicants for membership as follows: "the conduct has been oppressive in the sense that while it has not, as it were, directly excluded the plaintiffs and those associated with them from administration … [it has cut] off their opportunity to bring their friends into the club, while persons sponsored by the defendants or people associated with them are brought in. The voting position of the plaintiffs in the Club is diminished and what they lose is not so much the opportunity for them to participate in administration, but the opportunity for their nominees or preferred candidates to participate in the administration of the Club." (T871)
Mr Evans also identified the Plaintiffs' "principal claim" and the "principal ground of oppression" as being the Defendants' conduct in refusing to admit "suitable" applicants for membership (T871) (emphasis added). That submission highlighted the absence of substantive evidence as to the suitability of admission of many applicants who were admitted as associate members, beyond the fact that many of them had Polish surnames and were likely to satisfy that aspect of the criteria for admission to the Club, which is not sufficient in itself to require their admission as full members. The Plaintiffs also relied in closing submissions on a detailed spreadsheet recording the admission of persons to membership, to which I have had close regard. The matters recorded in that spreadsheet are reflected in my analysis of when applicants recorded in the relevant schedules were admitted to membership, as set out above.
Although the Plaintiffs' primary case advanced allegations of wrongful intention against the Defendants in respect of the admission of persons to membership, Mr Evans adopted an alternative claim for oppression based on the observation that applicants for membership sponsored by KL were regularly rejected for membership, which could extend to that occurring simply because the persons known to KL were generally not known to members of the management committee or their associates, including through previous participation in the Club's affairs. Mr Evans also recognised that an oppression case could be made without wrongful intent on the part of the individual Defendants (T874).
Mr McCulloch in turn submitted, and I accept, that cl 11 of the Club's articles of association gives the management committee a discretionary power to approve or reject applications for membership as an ordinary member of the Club, and refers to the similar view taken in Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1 at [187]. Mr McCulloch also submits that principles of procedural fairness did not apply to the management committee's consideration of applications for membership of the Club, relying on McInnes v Onslow-Fane [1978] 1 WLR 1520 at 1529; CECA Institute Pty Ltd v Australian Council for Private Education & Training (2010) 30 VR 555 at 582. He also refers to Millar v Houghton Table Tennis & Sports Club Inc above at [190]-[193], where Besanko J observed that. "This Court does not sit to hear appeals from decisions in relation to membership applications. The management committee has a very broad discretion to accept or reject membership applications. A Court will be very slow to interfere with decisions made by a management committee in good faith. … It is not for this Court to determine as a matter of objective fact that the membership applications are bona fide applications, or the efficacy of the strategic plan, or whether acceptance of the membership applications will make the Club financially secure or guarantee its future. A club like this one may have many reasons for rejecting membership applications. Through its management committee, it may determine that the aims and aspirations of an applicant are not consistent with the objects of the Club. Even if the aims and aspirations of an applicant are consistent with the objects of the Club, the application may be refused because, for example, the Club does not have the ability to cater for an influx of members. However, I think there are limits to the management committee's power to reject membership applications. The first limitation is that the power to accept or reject membership applications must be exercised in good faith. There is no evidence of actual bad faith in this case. In rejecting the membership applications, the management committee believed that it was acting in the best interests of the Club."
In submissions, Mr McCulloch contested the view there taken by Besanko J that the power to accept or reject membership applications must be exercised in good faith. I would take the same view as Besanko J, and I would add that directors must generally exercise the powers conferred on them in accordance with their statutory and equitable duties to do so in good faith and in the best interests of the corporation.
I also have regard to the helpful summary of the applicable principles by White J in Pettit v South Australian Harness Racing Club Inc [2006] SASC 306; (2006) 95 SASR 543 at [26], drawing upon Besanko J's observations in Millar v Houghton Table Tennis & Sports Club Inc above, as follows: "1. The constitution of an association binds the association and all of its members. This means that the Committee was bound to apply the relevant provisions of the Club's Constitution in its consideration of the membership applications. 2. The requirement that an exercise of an association's powers be for the benefit of the members as a whole is to exclude their exercise for "ulterior special and particular advantages", ie, it negatives "purposes foreign to the association's operations, affairs and organizations". 3. Other than in the limited circumstances of the kind outlined in the majority judgment in Wayde [v New South Wales Rugby League above], the courts are not concerned in applications of the present kind with reviewing the underlying merits of the management committee's decision. The courts do not substitute their discretion for the discretion exercised in good faith by an association's committee. There is no appeal on merits from management decisions to courts of law: nor will courts of law assume to act as a kind of supervisory board over decisions within the powers of management honestly arrived at. 4. Conduct by a committee of an association will be contrary to the interests of the members as a whole if no committee, acting reasonably, could have engaged in that conduct. 5. Conduct may be contrary to the interests of the members as a whole even though a committee does not act in bad faith. In Wayde [v New South Wales Rugby League above], Brennan J said: "[I]f the directors exercise a power - albeit in good faith and for a purpose within the power - so as to impose a disadvantage, disability or burden on a member that, according to ordinary standards of reasonableness and fair dealing is unfair, the court may intervene …" 6. In order to succeed, it is not necessary for an applicant to show that any decision of the association was invalid. 7. However, proof of invalidity or non-compliance with an association's rules may indicate that a decision is contrary to the interests of the members as a whole. This is because of the importance which the law attaches to adherence to the provisions of an association's constitution. … 8. The power to accept or reject membership applications must be exercised in good faith. 9. The power to accept or reject membership applications must be exercised having regard to the objects of the association. 10. A refusal of applications for membership without regard to the association's objects may well be a decision which no reasonable committee could reach. 11. It is not for this Court to determine as a matter of objective fact whether or not the membership applications are bona fide applications. 12. An association may have many reasons for rejecting membership applications. It may determine that the aims and aspirations of an applicant are not consistent with the objects of the association. Even if the aims and aspirations of an applicant are consistent with the objects of the association, the application may be refused because, for example, the association does not have the ability to cater for an influx of members." (citations omitted)
In any event, the Plaintiffs also rely on statutory principles of oppression which are plainly applicable to the conduct of the Club's affairs. The exclusion of applicants for membership because they might pursue policies with which the directors do not agree, or where the power is exercised for the purpose of stifling debate or to stifle views which differ from that of the directors would not be a proper exercise of the directors' power to admit members, and may be contrary to the interests of members as a whole and constitute oppression: Millar v Houghton Table Tennis & Sports Club Inc above; Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [352]-[357], [690]-[691]. In Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [232]-[234], Pritchard J summarised the applicable principles as follows: "The authorities in this area all turn on their facts, but some general principles can be discerned. By way of example, if the directors of a corporation reject membership applications, without regard to whether that rejection would be consistent with the corporation's objectives, or by reference to some criteria other than the corporation's objects, that decision might be characterised as one that no reasonable person could reach, or which was made for a purpose foreign to the corporation's objects, operations and affairs, or as an exercise of the directors' power for an improper purpose. Considering (and refusing) applications for membership as a bundle, rather than individually, may be a factor which supports the conclusion that the decision(s) were a misuse of the power to determine membership applications. That is because such an approach may support a conclusion that there was no consideration of the merits of the application, or that the directors applied an inflexible attitude to all applications. Differences of view between members of a corporation or association, about decisions or future courses of action which should be taken by the corporation or association, are an inevitable part of the dynamic of human relationships, and a legitimate feature of any organisation which operates on democratic principles. For directors of a corporation to deny membership, or terminate membership, in order to quash debate, or silence dissent, risks the characterisation of that action as a misuse of power, and oppression of the minority. However, in a case where members, or applicants for membership, hold views inimical to the objectives of the corporation itself, denial or termination of membership may be justified as being in the best interests of the corporation." (citations omitted)
Mr McCulloch also submits that it cannot be said that no board, acting reasonably, could have engaged in the conduct alleged in respect of the admission of members and, by parity of reasoning, there can be no oppressive conduct in relation to the membership application process generally. I do not accept that submission for the reasons noted below.
Mr McCulloch also points to the individual Defendants' evidence (to which I referred above) that they had never voted against a person being offered membership as an ordinary member or as an associate member because they considered that the person may disagree with or oppose decisions made or policies adopted by the management committee; disagree with or oppose their views or opinions, or may not vote for them if they nominated for election as a member of the management committee; or disagree with or oppose the views or opinions of RB, or may not vote for RB if he decided to nominate for election as a member of the management committee; and that they had never voted for a person being offered membership as an ordinary member or as an associate member because they considered that the person may agree with or support decisions made or policies adopted by the management committee; agree with or support their views or opinions, or may not vote for them if they nominated for election as a member of the management committee; or agree with or support the views or opinions of RB, or may not vote for RB if he decided to nominate for election as a member of the management committee. (The reference to "may not" in the latter part of these submissions appears to be in error.) The Defendants also rely on the affidavit evidence of the individual Defendants as to the process adopted in considering applications for membership, and MK's and RC's evidence in cross-examination as to those matters (T517, T737). They also repeat their submissions as to the suggested failure of the Plaintiffs to satisfy the rule in Browne v Dunn above concerning this evidence, which I have not accepted above.
In oral closing submissions, Mr McCulloch submits that applicants have no right to membership of the Club, because it is a social club, and its objects permit rather than require the admission of persons to membership, and other case law which has recognised any form of right to admission of an association arises in a professional or occupational context, rather than in respect of a social context (T912). Mr McCulloch submits that limited weight can be attached to the fact that some applicants were sponsored by the directors without evidence that they were specifically approached by directors to apply for membership, where one might expect that persons who wanted to apply for membership in a relatively small social club would seek sponsorship of one or more directors in order to do so (T927). Mr McCulloch also submits, with substantial force, that it was likely that persons who were actively involved in the Club and its affairs and who were volunteering at it would have been known to members of the board, and therefore satisfied the test for admission of members which at least the majority of the management committee claim to have applied (T930).
I now turn to the detail of these allegations. The first category of applications on which the Plaintiffs rely is applicants for full membership who were "refused" (or at least not offered) full membership and were offered associate membership or invited to apply for associate membership but did not take up that offer or make such an application. Schedule 1 of the SFASC identifies 77 persons within that category. The Defendants point out that 49 of the 77 persons listed in this Schedule were offered Associate Membership in 2013, in particular in the period September to December 2013.
Several applicants who are the subject of this claim were offered associate membership at a management committee meeting on 15 September 2013. The minutes of that meeting (Ex P9, vol 2, 164) recorded: "Applications for Membership - Usual pattern -s [sic] 3-4 applications a week. There has been a sudden rush involving about 90 applications. 33 applications were considered. The main focus of approvals was to grant Associate Membership to those unknown to directors or series-sponsored by the same members. It was decided to reject the applications of [two persons] as a result of objections raised by members."
In oral closing submissions, Mr McCulloch noted the number of applications for membership lodged by KL and persons associated with her at this time and pointed to the absence of a history of her doing so before that time (T920), and at least implied those applications were directed to "stacking" the Club's general meeting to capture a voting majority. I note that the dispute as to Mr and Mrs Gnych was then ongoing and they were excluded from the Club on 4 August 2013. It may be that the lodgement of numerous applications at this time could have led a reasonable observer to think that KL and persons associated with her were seeking to "stack" the Club's general meeting to capture a voting majority. A later email of RB dated 13 November 2017 (Ex P18, 200) had expressed that view, although the individual Defendants were not explicit in their affidavit evidence that they had formed that view. I do not reach any finding as to that matter where that allegation was not squarely put to the Plaintiffs in cross-examination and it is also not necessary to do so to determine the matter.
The decision at the management committee meeting on 15 September 2013 was made by eight directors, of whom only RB and MK are Defendants against whom allegations of improper purpose are made. I have accepted MK's evidence of his view of the basis on which members should be admitted to full membership, which did not have reference to their alignment with any faction, and involved no improper purpose. No allegation of improper purpose is made in respect of six of the directors involved in that decision. Any improper purpose on the part of RB alone is not sufficient to establish the Plaintiffs' case in respect of a board of which he is only one director. I should add, for completeness, that the decision at this meeting to offer only associate membership to those who were "series-sponsored" may be open to a criticism that the Plaintiffs did not advance, that it arguably did not focus on the merits of individual applicants.
Several applicants who are the subject of this claim were offered associate membership at a management committee meeting on 8 October 2013. The minutes of that meeting (Ex P9, vol 2, 165) recorded that 57 applications were considered and 3 were rejected. The decision at that meeting was again made by eight directors, of whom only RB and MK are Defendants against whom allegations of improper purpose are made. As I noted above, although HG had an administrative role in respect of membership applications, she was not a director at that time. No allegation of improper purpose is made in respect of six of the directors involved in that decision; I do not find any improper purpose on the part of MK; and any improper purpose on the part of RB alone is not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which he was only one director, where there is no basis for a finding that the other directors failed to exercise independent judgement.
On 3 November 2013, 23 applications for membership were considered by the management committee (Ex P9, vol 2, 168) and several applicants who are the subject of this claim were offered associate membership. Mr Bernecki, who is the fifth person in Schedule 1 of the SFASC, gave evidence that, on 11 November 2013, the Club rejected his application for full membership of the Club, which was sponsored by KL, and he was offered associate membership (Bernecki 8.8.18) at this time. Mr Bernecki also referred, in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding, to his concern that he was prevented from exercising voting rights and was offered only associate member status (Bernecki 8.8.18 [6]). The decision at this meeting was again made by eight directors, of whom RB and MK are again the only Defendants against whom allegations of improper purpose are made. Once again, no allegation of improper purpose is made in respect of six of the directors involved in that decision; I do not find any improper purpose on the part of MK; and any improper purpose on the part of RB alone is not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which he was only one director, where there is no basis for a finding that the other directors failed to exercise independent judgement.
On 20 December 2013 (Ex P9, vol 2, 171), 23 applications for membership were considered by the management committee and several applicants who are the subject of this claim were offered associate membership. The decision at that meeting was again made by eight directors (although two, including MK, arrived late) of whom RB and MK are the only Defendants against whom allegations of improper purpose are made. Where no allegation of improper purpose is made in respect of six of the directors involved in that decision, there is no basis for a finding that the other directors failed to exercise independent judgement and I do not find any improper purpose on the part of MK. Any improper purpose on the part of RB alone is not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which he was only one director.
The Defendants point out that 10 of the 77 persons listed in Schedule 1 of the SFASC were offered associate membership in 2014. Applicants who are the subject of this claim were offered associate membership at a board meeting on 14 February 2014 (Ex P9, vol 2, 175), where three applicants were accepted as full members and two were offered associate membership status. The decision at that meeting was made by nine directors, of whom only RB and MK are Defendants against whom allegations of improper purpose are made. By at least March 2014, the management committee considered that applicants should be personally known by sponsors. That view was recorded at its meeting held on 9 March 2014 (Ex P18, 135), where eight applications were considered, four were accepted as general members and the then committee noted, in respect of three applications sponsored by SZ and RAD that: "If any of the applicants are not known personally by the sponsors, an offer will be made of Associate membership."
At a board meeting on 31 March 2014 (Ex P9, vol 2, 182), twelve applicants were accepted as full members and one was offered associate membership status. That decision was made by nine directors, of whom only RB, MK and EP are Defendants against whom allegations of improper purpose are made. I have not accepted that an improper purpose was established on the part of MK and RAD; SZ and MJ participated in that decision and are not alleged to have acted with any improper purpose in that regard. Any improper purpose on the part of RB alone, or both RB and EP, is not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which he was only one director and they were only two directors, where there is again no basis for a finding that the other directors failed to exercise independent judgement.
At a board meeting on 6 October 2014 (Ex P9, vol 2, 216), full membership was approved for several applicants and full membership was applied for but associate membership was offered to three applicants. That decision was also made by nine directors, of whom only RB, MK and EP are Defendants against whom allegations of improper purpose are made, and RAD, SZ, MJ and PW are not alleged to have acted with any improper purpose at that time. Again, I have not accepted that MK acted with an improper purpose, and any improper purpose on the part of RB alone, or both RB and EP, is not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which he was only one director and MK and EP were only two directors, where there is no basis for a finding that the other directors failed to exercise independent judgement.
Several applicants who are the subject of this claim were offered associate membership at a board meeting on 5 December 2014 (Ex P9, vol 2, 227). The persons considered at this meeting included Mrs Gad, who is the 22nd person in Schedule 1. Her evidence (Gad 9.8.18) is that, on or about October 2014, she applied for full membership of the Club and her application for full membership was rejected and she was invited to apply for associate membership in December 2014 and, on or about May 2018, she again applied for full membership and that application was rejected, without an invitation to apply for associate membership. Twelve applicants were considered at that meeting, four were granted full membership, one was granted social membership, one was granted associate membership and five were offered associate membership. That decision was also made by eight directors, of whom only RB, MK and EP are Defendants against whom allegations of improper purpose are made, and RAD, SZ, MJ and PW are not alleged to have acted with any improper purpose at that time. Any improper purpose on the part of RB alone, or both RB and EP, is again not sufficient to establish the Plaintiffs' case in respect of a decision made by a board of which RB was only one director and they were only two directors, where there is again no basis for a finding that the other directors failed to exercise independent judgement. At the next management committee meeting on 23 December 2014 (Ex P9, vol 2, 230) nine membership applications were considered, and four persons were admitted as full members, one as a social member and four as associate members.
The Defendants point out that 4 of the 77 persons listed in Schedule 1 of the SFASC were offered associate membership in 2015, one of the 77 persons person listed in Schedule 1 was offered associate membership in 2016 and 13 of the persons listed in Schedule 1 were offered associate membership in 2017. One applicant (Mr Fenik) who is the subject of this claim was offered associate membership at a management committee meeting on 3 May 2015 (Ex P9, vol 2, 237) and others were offered associate membership at meetings on 19 July and 18 September 2015 (Ex P9, 254 and 265). Several full members and two associate members were admitted at a management committee meeting on 3 September 2016 (Ex P9, 303) and several associate members were admitted at a management committee meeting on 28 October 2016 (Ex P9, 309).
It appears that the different views as to the circumstances in which members should be admitted as full members, particularly as between MK on the one hand and other directors, then led to a moratorium on the appointment of full members, which continued until it was lifted at a meeting of the management committee on 22 January 2017 (Ex P9, vol 2, 318). RC's evidence in cross-examination was that the moratorium on new full members reflected the fact that there were different views on the management committee as to the meaning of membership; some viewed members as custodians of the assets, and others as something less than that; and that MK had a stricter view as to membership (which, I interpolate, is consistent with MK's evidence in cross-examination) (T736).
Full membership was granted to 24 new members at a management committee meeting on 18 March 2017, immediately prior to the March 2017 AGM on the next day; associate membership was also granted to a number of members; and an application by one member to become a member again, after he had been non-financial for close to 2 years, was refused (Ex P9, vol 2, 329). A bundle of applications by persons who were admitted to full membership at that meeting (Ex P3), as to which HG was cross-examined, demonstrates that many of them were sponsored by members of RB's family, or had associations with members of his family, including his sons, his niece and his nephew, and his nephew's fiancée, or by HG's husband who then held the liquor licence for the Club. It was not established by the cross-examination that those persons were not appropriately qualified for admission.
PW's evidence (PW 13.2.19 [35]) is that RB referred at that meeting to the need to "get the numbers for the meeting on 19 March". PW also refers to the steps then taken to telephone persons admitted to full membership on that date to encourage them to come and pay immediately for membership that evening or on the day of that meeting. PW also refers to the fact that many of the sponsors of persons admitted on that date were associates of RB. Both RB and HG claimed, in cross-examination, that the processing of those applications was undertaken in the ordinary course, and were not prepared to recognise any linkage with the March 2017 AGM held on the next day. I am not persuaded by that evidence, but it does not follow from that that the persons admitted for full membership at that time were not properly qualified for it, or that other persons whose qualities are not established by the evidence should have been admitted to full membership at that time. As I have noted above, Mr Evans' cross-examination as to the background of those admitted to full membership supported the contrary conclusion.
Full membership was granted to 28 applicants at a management committee meeting on 21 April 2017 (Ex P9, vol 2, 331; Ex D4, vol 2, Tab 74). The Plaintiffs rely on Ms Kozek's evidence that, in late April 2017, she lodged an application for membership of the Club, sponsored by Dr Rumianek and KL. Her evidence is that she had a conversation with HG, when she submitted her application, in which HG suggested that the Club had a problem with KL; that it would be better if the application was sponsored by two other persons, and Ms Kozek took issue with that approach and said she did not want to be part of such a Club (Kozek 8.11.18 [8]). I accept Ms Kozek's evidence concerning that matter and it supports a conclusion that at least HG took into account the identity of sponsors, and particularly whether KL was a sponsor, in accepting or rejecting applications for full membership. HG was, however, one of several directors who, as I have noted above, had different approaches to this issue.
Full membership was granted to a further forty people at a management committee meeting on 12 May 2017 (Ex P9, vol 2, 335), shortly before a further extraordinary general meeting of the Club. PW's evidence (PW 13.2.19 [35]) (denied by RB) was that RB observed at that meeting that: "We must win. We have no choice. We will always have the numbers to win." I am unable to determine, on credit grounds alone, whether that was said, given the parties' commitment to their respective positions.
In his affidavit dated 21 February 2019, RB denies that there was any plan or strategy by the management committee to admit ordinary members of the Club immediately prior to the extraordinary general meeting on 21 May 2017, or immediately to post or email notices of that meeting to those members to ensure that the board remained in power. Given the timing of events, I think it likely that RB recognised the advantage of admitting those members to membership, but it has not been established that they were not properly admitted.
PW also gave evidence of the circumstances in which Mr Pasternacki's application for membership was rejected at a board meeting on 12 June 2017 and he was offered associate membership status, when sponsored by a person who he claims was opposed to RB, although he claimed that other applications displayed at the same time sponsored by relatives of RB and by HG were admitted as full members. For the reasons I have explained above, these matters do not establish that the persons admitted for full membership at that time were not properly qualified for it, or that other persons whose qualities are not established by the evidence should have been admitted to full membership. Mr Zmuda's evidence is that, in May 2017, he applied for full membership of the Club, sponsored by SZ and RAD, and his application for full membership was rejected on 11 July 2017 (Zmuda 13.8.18 [7]-[8]) and he was offered associate membership on that date.
By an email dated 13 November 2017, RB explained his policy in respect of the admission of full members to the Club as follows (Ex P18, 200): "In the matter of new Members I ask myself number 1 key question … In my opinion do I think the candidate will be a good Member? That doesn't mean will they vote for me … It means will they use the Clubs facilities [sic], abide by the rules, respect the decisions of Management and Directors and finally that they will be a positive contributor to the life of the Club. If I know them or of them then it's easier … if I don't know them then I look at their sponsors … if that helps then good, but if it doesn't then I will ere [sic] on the side of caution and offer them Associate status to give them a go rather than reject them. I and others who have been on the Board a while now have endured much, and in particular we have had 2 massive 'Member stacking' attempts. One was earlier this year!! So forgive me for being cautious but I just can't take a leap of faith, but at the same am giving them a go. It's a fair balance in my view." That approach is consistent with the evidence given by RB in these proceedings. It does not, however, provide any real corroboration for that evidence, where that email was written in the course of the proceedings, and after the Plaintiffs had served several of their affidavits, and would hardly be expected to be inconsistent with the defence that the Defendants would advance in the proceedings.
The matters that I have set out above demonstrate both a narrower and wider difficulty in the Plaintiffs' claim in respect of the persons identified in Schedule 1 of the SFASC. The narrower, but substantial, difficulty is that, as I have noted above, the relevant decisions were made by management committees generally comprising several, and often as many as eight or nine directors, of whom the individual Defendants against whom allegations were made generally comprised a minority. Although HG had an administrative role in respect of membership applications, she was not a director for much of the relevant period. As I noted above, I have accepted MK's evidence of his view of the basis on which members should be admitted to full membership, which did not have reference to their alignment with any faction, and involved no improper purpose. The fact that decisions were made by a management committee of which RB was only one member, and of which RAD, SZ, MJ and PW were members for much of the relevant period, is also significant. RAD gave no evidence that he or other directors had any improper purpose in making relevant decisions, and the absence of that evidence weakens the Plaintiffs' case, even apart from any affirmative inference that could be drawn that RAD's evidence as to that matter would not have assisted the Plaintiffs' case: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419. As Mr McCulloch points out, SZ's evidence was that decisions were made by the management committee after discussion and its members voted according to what they considered to be in the Club's best interests (T158) and MJ's evidence was that he would not have allowed himself to be bullied in respect of such decisions (T344). Any improper purpose on the part of RB alone or RB and EP, or RB and EP and HG, is not sufficient to establish the Plaintiffs' case in respect of a decision made by a management committee of which he was only one director, or they were a minority of directors, where there is no basis for a finding that the other directors failed to exercise independent or proper judgement in that regard.
I recognise that persons sponsored by KL and several other sponsors were usually (although not in every case) admitted to, or offered, only associate membership, and that persons sponsored by directors were usually (although not in every case) admitted to full membership. However, the second and wider difficulty with the Plaintiffs' claim in respect of the persons identified in Schedule 1 is that the Plaintiffs lead little evidence of the background, history or characteristics of the large majority of the persons who were offered associate membership to support any normative judgement that they ought to have been offered full membership rather than associate membership as a matter of substantive fairness, still less as a matter of law. That evidence could readily have been led by KL or other sponsors of applicants, as well as by the applicants for membership. In the absence of any other explanation of the absence of that evidence, I infer that it would not have assisted the Plaintiffs. Mr Evans also cross-examined RB as to selected applications that were refused, in a manner that did not establish that that selection was representative, or that those applications to which the Plaintiffs chose to direct attention were unreasonably offered associate membership. For completeness, I do not accept that the mere fact an applicant for membership was in the class of persons that could have been admitted as a full member establishes that he or she should have been admitted as a full member, where the Club's articles of association plainly confer a discretion on the management committee whether to admit persons as full members of the Club. There is, on the other hand, a substantial body of evidence, largely arising from Mr Evans' cross-examination of the individual Defendants, that persons sponsored by the directors and admitted to full membership generally had strong links to the Polish community and with the Club and associated organisations and were strong candidates for admission as full members.
I think it likely that at least RB and HG were suspicious of persons sponsored by KL and that they also suspected, probably correctly, that KL and persons associated with her were seeking to "stack" the Club's general meeting, particularly by the 90 membership applications lodged in a short period to which I referred above. I am not persuaded that there was impropriety in the substantive decisions to offer full or associate membership, so far as persons who were largely unknown to the directors, and whose history and character has largely not been established in these proceedings, were offered associate membership, and other persons who appear to have been strong candidates for full membership were offered such membership. I will return to the question whether oppression is established below.

Applicants listed in Schedule 2 to the SFASC

The second category of applications on which the Plaintiffs rely is 81 persons listed in Schedule 2 to the SFASC who were not notified of the refusal of their applications until 27 June 2017. The Defendants respond, relevantly, that the Club received at least 78 membership applications for full membership which were not accepted on the basis that the application form was incorrect or improperly completed; those applicants did not submit their applications until early May 2017, 76 of the applicants were notified of their use of the wrong form on or about 27 June 2017 and two of the applicants were unable to be contacted because they had not provided contact details; and none of those applicants resubmitted their application using the correct form, or at all.
By his affidavit dated 13 February 2019, PW referred to the rejection of those applications for membership which Mrs Fenik had delivered to him, and he had delivered to the Club. PW refers to a strong statement made by HG, which characterised his passing those applications to the Club as "betraying the Club" (PW 13.2.19 [38]), and as "allowing these traitors to be part of the Club" (PW 13.2.19 [39]). I am not able, on an assessment of credibility without the aid of contemporaneous documents, to determine whether to accept PW's evidence or HG's denial that such strong words were used, although I have no doubt that HG had an adverse view of those associated with Mr and Mrs Gnych and KL. Following receipt of those applications, HG advised PW by email (PW 13.2.19 Annexure K) that: "We do NOT accept application forms in batches, especially from non members. We require a photocopy of ID for each application for starters. This may have been obtained but you haven't confirmed this." HG also emphasised the significance of administration in that email, and subsequently emailed indicating her refusal to process the applications or correct the incorrect administrative procedures. HG's reference to the process for application forms was overstated to some extent, since it appears that the Club had a process for checking IDs, at the point application forms were submitted, but neither maintained any record of that checking or a photocopy of IDs that were checked.
RC observed in cross-examination that he considered the lodgement of over 80 applications given by Mrs Fenik to PW "looked a little bit suspicious"; and pointed out that the particular application to which he was taken in cross-examination was dated two years before it was provided to the Club; and noted that the management committee first wanted to confirm that the applicants intended to lodge those applications (T728). He also observed in cross-examination that the fact that the bundle of applications from Mrs Fenik contained membership applications which were two years old "looked strange" (T733).
Mr Wawrzynski, who is the 80th person listed in Schedule 2, also gave evidence in respect of this claim. He refers to his support for Mr and Mrs Gnych and to having made a submission before the board and RB in their support. He refers to having submitted an application for full membership of the Club, together with several applications signed by Polish students who he assisted as an educational agent. He refers to the rejection of his application for full membership of the Club in November 2013, September 2015 and again in April 2017 and (in evidence admitted with a limiting order under s 136 of the Evidence Act as to his state of mind) as to his continuing interest in the encouragement and promotion of the Club and its objectives and his concern that he is prevented from becoming a full member of the Club.
The minutes of the meeting of the management committee on 12 June 2017 which considered these applications (Ex P9, vol 2, 339) recorded that: "84 new member applications, many undated or date in 2015, non-compliant application forms used, some applicants had earlier been expelled or are currently suspended, some had not taken up an earlier offer of associate membership. The applications were delivered to PW outside the Club by Piotr Fenik, a non member (his wife Joanna, also a non-member attempted to be include [sic] as a plaintiff in the court case against the Club but has since been removed as plaintiff). The Club's Counsel confirmed that the batch can be reviewed as a suspicious transaction. Discussion occurred. Action proposed ranged from taking no further action to writing to the applicants and requesting resubmission of current format application forms." The management committee then voted, by majority, to approve a resolution to contact all of the applicants in writing, other than those who had been expelled, and advise them to lodge a current membership application form. The Defendants point out that, in addition to the individual Defendants, PW, SZ, MJ and RAD were present at the meeting of the management committee on 12 June 2017 and none of them gave any evidence that they considered that that resolution was inappropriate or had been passed for an improper purpose.
In closing oral submissions, Mr McCulloch emphasised that there was a legitimate concern with the applications referred to in Schedule 2 of the SFASC, where they were lodged in bulk and there were discrepancies with the applications, including as to the long periods that had passed between when they were signed and when they were lodged with the Club (T922). Mr McCulloch also points out that those persons could have lodged fresh applications, when invited to do so, but did not choose to do so (T923).
It seems to me that the applications referred to in Schedule 2 of the SFASC had fundamental deficiencies, arising from the fact that many of them were dated a year or two years before they were submitted to the Club, and the management committee had no basis for knowing whether applicants wished to proceed with the applications where that length of time had passed since those applications were completed. It was not unreasonable, still less improper or oppressive, for the management committee and the Club to seek to require confirmation of the applicants' present intentions and proper identification of the applicants before processing the applications. In these circumstances, while a rejection of the applications and taking no further action (a position for which HG contended) might have been unreasonable, the step taken by the Club of writing to the applicants to invite applications on the correct form was not an unreasonable one. It seems to me that this matter plainly does not rise to the level necessary to establish breach of duty or oppression.

Applicants listed in Schedule 4 to the SFASC

The third category of applications on which the Plaintiffs rely is 8 persons listed in Schedule 4 to the SFASC who applied for full membership between 2013 and 2015 and whose applications were rejected. The Defendants submit that there is no basis to find that there was any bias or animus by any of the individual Defendants towards any of these applicants and no evidence to support any finding that the applications of the persons listed in Schedule 4 to the SFASC, for membership of the Club as an ordinary member, should have been accepted and not rejected by the management committee. The first of those persons is Mrs Lipinski; I have addressed the circumstances in which she was the subject of disciplinary proceedings above; and the Plaintiffs have not established that a decision not to readmit her to full membership was improper. The position in respect of Messrs Markowski, Duwajewski, Kuras and Olek and Mmes Jaruga and Kurzup was not addressed in the Plaintiffs' submissions, and no impropriety has been established in this regard. I have dealt with the position in respect of Mr Wawrzynski above and the Plaintiffs have not established that a decision not to admit him to full membership was improper. The decisions in respect of six of these applicants were made in 2013 and the decision in respect of Mr Markowski in 2014, when the individual Defendants were a minority of the management committee. As I noted above, the Plaintiffs did not contend that the majority of members of the management committees that made them were actuated by any improper purpose.

The Plaintiffs' claims in respect of membership applications

The matters set out above in turn found a series of allegations of wrongdoing. First, the Plaintiffs plead, and the Defendants deny (SFASC [73A], Defence [73A]) that the decisions taken by the Club's management committee to refuse applications for membership by persons nominated by the Plaintiffs or persons affiliated with them were not decisions made in good faith and in the interests of the Club as a whole but, rather, were decisions made for an improper purpose, to ensure the continuing control over the Club by RB as President and are void and/or unenforceable and ought be set aside. I have referred above to the evidence of statements made in board meetings on which the Plaintiffs rely to support this allegation. For the reasons set out above in dealing with particular decisions to admit applicants as full or associate members of the Club, I am not satisfied that this allegation is established on the balance of probabilities, where it is not alleged or established that the majority of persons making those decisions over the relevant period had that purpose.
Second, the Plaintiffs plead (SFASC [73B]) that numerous applicants listed in Schedule 2 to the SFASC who submitted their applications in 2015 and 2016 were not told that their applications had been rejected until they were all sent letters dated 27 June 2017 which advised that their applications had been rejected because they had used a form that was no longer the correct form. That allegation is plainly not well-founded, since those applications were dated in earlier periods but not submitted to the Club until May 2017 and those applicants were promptly advised of the difficulty with their allegations and invited to resubmit them.
Third, the Plaintiffs plead, and the Defendants deny, that the decisions taken by the management committee to refuse applications for membership by persons nominated by the Plaintiffs or persons affiliated with them were made in breach of a duty incumbent on the management committee to act fairly in that they made those decisions on the basis of the bias or animus held towards the Plaintiffs and those who supported them (SFASC [73C], Defence [73C]). As I will note below, there is reason for suspicion that the decisions made by the management committees (as variously constituted) as to membership have had the practical effect of increasing the proportion of members who are likely to share the views of the individual Defendants. However, the allegation of bias or animus has not been established on the balance of probabilities, on the findings that I have reached above, particularly where the operative decisions which were largely made by management committees of which the individual Defendants were a minority, and no bias, animus or impropriety is alleged or established in respect of the majority of their members.
Fourth, in a convoluted allegation, the Plaintiffs plead (SFASC [74]), and the Defendants deny (Defence [74]), that the conduct of RB and "of the board from time to time at the instigation of [RB]" in refusing applications for membership from persons who otherwise satisfied the criteria for membership was carried out in breach of their duty to act in the interests of the Club and its members as a whole for the improper purpose of seeking to ensure that RB retained his position as President of the Club and was thereby able to exercise unfettered control over the affairs and property of the Club. This allegation is also not established on the balance of probabilities, either in the terms pleaded, or in substance. As I noted above, the operative decisions which were largely made by management committees of which the individual Defendants were a minority. The evidence established that individual Defendants approached applications for membership in different ways, although a consensus was generally reached as to particular applicants. It has not been established that RB could or did refuse, or that the management committees at his instigation refused, particular applicants, as distinct from those committees (as variously constituted over the period) reaching a collective view as to such applicants. It has also not been established that the view they reached was contrary to the interests of the Club or its members as a whole, where the extent to which an applicant was known, or was a previous patron of, or volunteer at, the Club in determining whether to permit full membership was plainly a relevant matter, the background and history of those offered associate membership was largely not established by evidence and the cross-examination of individual Defendants showed that those offered full membership seem to have been well qualified for it. It has not been established that that conduct had the improper purpose (or an unpleaded predominant improper purpose) of seeking to ensure that RB retained his position as President of the Club, still less that he was able to exercise unfettered control over the affairs and property of the Club, where the Plaintiffs do not impugn the motives of the majority of the persons constituting the management committees that made the relevant decisions.
In reaching this conclusion, I put aside the possibility that the approach adopted was not within the board's constitutional powers since the Plaintiffs chose not to advance that proposition. I would have found that the process adopted by the management committee of declining applications for full membership and admitting persons as associate members, where those persons in fact wished to be full members, was inconsistent with the provisions permitting the admission of associate members under the Club's constitution, had the Plaintiffs advanced that submission. I only do not reach that finding because Mr Evans expressly eschewed any submission to that effect after that issue was raised in the course of the hearing. I cannot reach that finding where the Plaintiffs chose not to seek it.
Fifth, the Plaintiffs plead (SFASC [75]) that the alleged conduct in respect of membership was carried out for the purpose of seeking to advance an undisclosed agenda of RB to procure the sale and development of the Club premises without the fully informed consent of the full membership of the Club, and plead that that agenda existed at least from late 2016 if not even as early as July 2013. This allegation must fail, because the Plaintiffs do not impugn the motives of the majority of the persons constituting the management committees that made the relevant decisions and there is no sufficient evidentiary basis for an allegation that such an agenda, directed to the Club premises as a whole, still less without the fully informed consent of members in a general meeting, existed. The evidence of extensive information provided to members in respect of the options available to the Club is to the contrary.
Sixth, in another convoluted allegation (SFASC [76]), the Plaintiffs plead, and the Defendants deny (Defence [76]), that RB's and HG's conduct in refusing to admit at least the specified persons to full membership of the Club in the period from July 2013 to March 2017, and the conduct of other Defendants "to the extent that each of them was involved in" making the decisions to refuse full membership to these persons, was contrary to the best interests of the Club and contrary to their duty as directors to act in the interests of the Club: "because, apart from any other matters, the Club relies for its financial welfare on Club membership fees and from moneys spend at the Club by members in various ways."
This allegation must fail on the factual findings that I have reached above. So far as this allegation turns on an allegation that the Club's financial welfare depends on membership fees, RC's evidence in cross-examination was that the admission of additional members was not likely to improve patronage, and that the extent of a person's prior patronage of the Club was a matter relevant to whether they should be admitted as members (T729). I accept the evidence of the individual Defendants that the costs of admitting a member likely exceed the applicable fee and the Club in fact depends on revenue from services, not only or primarily from members, but from customers including members, associate members and visitors, and the admission of more members would have little or no positive impact on its revenue. This allegation also cannot be sustained against RC, MK and EP where it does not identify the nature or extent of their involvement and would fail against them for the same reasons.
The Plaintiffs seek a declaration that the decisions taken by the Club's board to expel or suspend the members of the Club listed in paragraph 77 of the SFASC (which may be intended to refer to SFASC [70]), and not to admit the persons listed in the relevant Schedules to the SFASC were not made in good faith in the best interests of the Club and instead were carried out for the improper motive of ensuring that RB retained effective control of the Club (SFASC, prayers for relief, [15]-[16]). The basis for these declarations has not been established. Oddly, the Plaintiffs also seek a declaration that the decisions taken by the Club's board were not made in breach of a duty incumbent on directors to act fairly in that they were motivated by bias (SFASC, prayers for relief, [17]). Assuming that the declaration sought in paragraph 17 is directed to the existence of a breach of duty rather than (as pleaded) its absence, no basis is established for a finding of breach of the alleged duty of individual Defendants owed to unidentified persons in these terms.
Finally, the Plaintiffs also plead (by a cross-reference to incorrect paragraph numbers) and the Defendants deny (SFASC [77]-[79], Defence [77]-[79]) that, by these matters, RB and HG, and other Defendants "to the extent to which they were involved in the decisions taken" to suspend or expel members or refuse full membership, acted in a manner oppressive of the members of the Club, and, in particular, in a manner oppressive of the members of the Club as a whole in specified respects. In order to address this allegation, it is necessary to consider the process adopted in respect of the applicants in Schedule 1 of the SFASC as a whole. It seems to me that the process adopted by the Club in that respect, in which individual Defendants participated, although largely as a minority of the management committee and over differing periods, was oppressive as a whole, although the improper purpose alleged against individual Defendants in respect of particular decisions has not been established. That process, focusing on whether individual board members knew particular applicants through their dealings with the Club rather than on the sponsors' assessment of those applicants or objective information as to their history, would tend to promote the admission of those who chose to associate with the current management committee, and tend to exclude those who preferred not to do so including because they took different views as to the Club's interests, from full membership and the exercise of voting rights. The latter class of persons would be admitted only as associate members or offered such membership and not admitted if, as was often the case, they were not prepared to accept what they could readily perceive as a "lesser" status. At least RB, HG and EP recognised and welcomed that outcome, as is demonstrated by the exchange of emails immediately prior to the March 2017 AGM to which I referred above. It seems to me that RC at least acquiesced in it, reflecting his perception of what loyalty to the Club and the management committee required. MK also accepted it because of his more exacting standard for the admission of full members, which the majority of the management committee did not apply to all applicants for membership.
When combined with the active steps taken (as noted in RC's email to which I referred above) to seek out and admit new full members who the management committee was confident shared its views, and with the frequent exercise of disciplinary powers against dissenting members (albeit where they have not been shown to be wrongly exercised), that approach had the capacity to manipulate the majority of the Club's membership by increasing the number of members who were likely to share the views of the management committee. That conduct, considered as a composite whole, seems to me to constitute oppression, in the sense of a visible departure from the standards of fair dealing, and to impose a disadvantage, disability or burden on the minority of the Club who would, over time, have less influence in a general meeting over its direction. This is plainly not a case, by contrast with Gaiman v National Association for Mental Health [1971] Ch 317, which was distinguished in Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [354ff], where the admission of the particular applicants for membership would have placed the existence of the Club at risk.
I will make declarations to give effect to that finding, as Mr McCulloch submitted was the proper course if I reached it. That finding does not presently support the wider relief sought by the Plaintiffs, as to the appointment of a receiver or the removal of directors, where the former would have the substantial risks to the Club to which I refer below and the latter is not justified on the merits. My finding of oppression in this respect does not have any impact on the result of the March 2017 AGM, which I address below.
Oppression is not established in respect of the applicants set out in Schedule 2 of the SFASC given the findings that I have reached above or in respect of the applicants set out in Schedule 4 of the SFASC for the reasons noted above.

Alleged refusal to permit Club members access to Club records

The Plaintiffs plead, and the Defendants admit (SFASC [80], Defence [80]) that, under cl 35 of the Club's articles of association, the management committee is required, upon receiving a requisition made in writing by not less than 5% of members, or 200 members, whichever shall be the lower, convene an extraordinary general meeting. Clause 36 of the Club's articles of association in turn provides that: "A requisition made pursuant to [cl 35] shall state the objects of the meeting and shall be signed by the requisitionists and deposited at the registered office of the Club and may consist of several documents in like form each signed by one or more requisitionists."
The Plaintiffs plead and the Defendants do not admit (SFASC [83], Defence [83]) that, in October 2013, some members of the Club, including WJ and DP, sought access to the Club's register of members for the purpose of exercising their rights under cl 35 of the Club's constitution to requisition the management committee to hold an extraordinary general meeting. The Plaintiffs also plead (SFASC [84]) that the management committee (or the Club's manager on behalf of the board), refused repeated requests for access to the Club's register of members. The Defendants respond by admitting that the committee received two or three requests for a copy of the Club's register of members in or around October and November 2013 and contending that the requests were defective in form, without identifying how, and otherwise denying the allegations (Defence [84]).
The only evidence identified by Mr Evans, in support of the claim that the management committee had refused access to the Club's register of members, was a letter dated 13 December 2013 from the solicitors acting for the persons who had purportedly held the extraordinary general meeting on 24 November 2013, pursuant to the invalid requisition for that meeting, which asserted that: "The Previous Board of Directors' conduct in refusing the members' access to the Club's Register of Full Members was intended to frustrate the members' requests for the Previous Directors to call an EGM." (Ex D4, vol 1, Tab 28) It will immediately be recognised that a solicitor's assertion of a matter is not proof of that matter. This allegation is not established.
The Plaintiffs also plead (SFASC [85]-[86]) that a requisition demanding the holding of an extraordinary general meeting was served on the Club and the Club's board failed and refused to hold any meeting. The Plaintiffs did not tender a requisition signed by the requisite number of members. The only request to convene an extraordinary general meeting to which Mr Evans drew attention, which seeks to pass a resolution to remove the Club's existing directors and to elect Messrs Macioch, Wawrzynski and DP as directors, was signed by DP alone, purportedly on behalf of "Members Entities" (Ex D4, Tab 27). The minutes of the meeting of the management committee on 3 November 2013 (Ex P9, vol 2, 168) recorded that: "EGM request signed by [DP] only, no other signatures attached. Letter was sent back that as request is non-compliant with Club MoA, request will be set aside and no further action taken."
RB's evidence in cross-examination, consistent with the form of requisition in evidence, was that the document that the Club received was not supported by documents bearing the signatures of other persons who supported the requisition (T775).
The validity of a requisition is determined on the face of the relevant requisition: Re Carlton Football Club Ltd; Gratton v Carlton Football Ltd [2004] VSC 379; (2004) 51 ACSR 29 at [10]; Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc [2015] NSWSC 638 at [51]ff. There is no room for treating printed signatures as supporting the requisition here, since the requisition here did not identify any persons other than DP or include their printed names as persons supporting it, even if that approach was permissible, contrary to the view which I formed in Khan v Khan above. The Plaintiffs point to the list of persons who attended the meeting on 24 November 2013 (Ex D4, vol 1, Tab 28), but a list of persons attending a meeting cannot substitute for signatures to a requisition to call that meeting, not least because a meeting that was not validly requisitioned does not become valid because persons later attend it. A requirement to hold an extraordinary general meeting has not been established absent evidence of a request signed by the requisite number of members and no oppression is established in the Club not having convened such a meeting.
The Plaintiffs also plead (SFASC [87]) that, on 24 November 2013, the requisitionists held an extraordinary general meeting, attended by 39 persons, at which certain resolutions were passed, including a resolution that RB cease to be a director of the Club and that (SFASC [88]) RB ignored that resolution. It has not been established that there was a valid requisition for the meeting or a valid meeting called by the requisitionists and the Club was not required to give effect to it. Much of this pleading is in any event superfluous, since the only claim advanced in consequence (SFASC [89]) (denied in Defence [89]) is that, by refusing some Club members access to Club membership records for the purpose of contacting members in the exercise of their rights under the Club's constitution, the Club's board: "acted oppressively toward the Club members who had sought access to membership records and oppressively towards members of Club [sic] in general by improperly using their powers as directors and, in the case of [RB] as President, to stifle and/or defeat actual or potential challenges to their respective positions as directors and as President by Club members."
It has not been established that the Club's board in fact refused access to membership records, for the specified purpose or otherwise, and this claim is not established.

Suspension of SZ, RAD and MJ as directors and as members in December 2016

Broadly, by paragraphs 90-105 of the SFASC, the Plaintiffs plead that the individual Defendants wrongfully suspended RAD, SZ and MJ as members of the Club and as members of the management committee on 21 December 2016. I first address the factual basis of this allegation. Disciplinary actions against RAD, SZ and MJ were taken when there was a degree of conflict in the management committee between the majority of its members and RAD, SZ and MJ. A resolution to suspend RAD as a member of the Club pending "natural justice" at a subsequent board meeting, pursuant to cl 22 of the Club's articles of association, was considered at a management committee meeting on 21 December 2016 (Ex P9, vol 2, 315). Four directors voted in favour of that resolution, RAD abstained as ineligible to vote, and three directors voted against. SZ then left the board meeting and, immediately afterwards, a resolution was passed to suspend MJ as a member of the Club until the opportunity was provided to explain or provide evidence in accordance with "Natural Justice principles", and passed with four directors in favour, MJ abstaining, and one against. A resolution was then passed to suspend SZ as a member of the Club, with four directors voting in favour, SZ abstaining and one against.
By letter dated 22 December 2016, the Club advised RAD that it was alleged that he had engaged in conduct prejudicial to the Club's interests or conduct that was unbecoming of a member and that, during the board meeting on 21 December 2016, the board had resolved that he be suspended from his membership of the Club and his position on the board immediately, pending a proper process at the next board meeting, and was immediately barred from all parts of the Club's premises (Ex D4, vol 2, Tab 78). That letter recorded several matters said to constitute the explanation for the charge, which involved a complex allegation that RAD had ignored board discussions and a majority board decision taken in respect of 75 Norton Street, and had briefed an architect, Mr Lania, as to whom he had a conflict of interest on an alternative plan which had no hope of commercial success, and had confused members and injected discontent and wasted valuable time and effort. The allegation extended to RAD having presented that proposal to other organisations and lobbied members to sign a petition to change the current board. It was also alleged that RAD rarely acknowledged Club communications and was using his Club membership and his position on the board for the benefit of other organisations and had threatened to take a longstanding event at the Club elsewhere, and that threat was not in the best interests of the Club at the time of financial stress.
By letter dated 22 December 2016, the Club advised MJ that it was alleged that he had engaged in conduct prejudicial to the Club's interests or conduct that was unbecoming of a member and that, during the board meeting on 21 December 2016, the board had resolved that he be suspended from his membership of the Club and his position on the board immediately, pending a proper process at the next board meeting, and was immediately barred from all parts of the Club's premises (Ex D4, vol 2, Tab 96). That letter recorded several matters said to constitute the explanation for the charge, namely that MJ had been approaching members to undermine the board's strategy; had "continu[ously] taken up valuable board time with discussions about [RB's] lack of fitness to be hold [sic] that role"; was incapable of acting in the Club's best interests as he rarely acknowledged Club communications; unilaterally decided to withhold the password for the CCTV system, "bringing the Club into disrepute and putting our licence at risk"; and engaged in repeated arguments with numerous directors, staff and volunteers, which was conduct unbecoming of a member and especially so for a member of the board; and had over the last 12 months "shown through his actions to be disruptive, divisive and incapable of teamwork with the Board, Staff and volunteers". The issue in respect of the CCTV system (which I address below) was only one of several matters said to support that suspension; and the other matters appear to reflect MJ's disagreement with the board in respect of a range of issues.
The basis of the charge against MJ was again summarised in a letter dated 12 February 2017 (Ex D4, vol 2, Tab 97) in similar terms, namely that: "1. You have constantly been approaching members to undermine the strategy of the Committee. 2. You have taken up Committee time with discussions about what you see as the President's lack of fitness. 3. You are incapable of acting in the best interests of the Club and rarely acknowledge Club communications. 4. You withhold the password/codes for the CCTV system when the Club had been requested to produce them by the Police. 5. You have engaged in repeated arguments with directors, staff and volunteers. 6. You have been disruptive and divisive as a director over the past 12 months." That letter also noted that the Committee did not propose to take disciplinary action in respect of items 1-3 and 5-6 of matters noted above, and relied only on item 4, relating to the password/codes for the CCTV system (which I address below) and invited a response to statements of Mr Geras dated 4 February 2017, HG dated 4 February 2017 and PW dated 4 February 2017 in respect of that matter. My attention was only drawn to the statement of HG in the course of the evidence, and it is not apparent that the Court has before it all of the evidence that was before the management committee.
By letter dated 22 December 2016, the Club similarly advised SZ that it was alleged that he had engaged in conduct that was prejudicial to the interests of the Club and that was unbecoming of a member, and that he had been suspended pending the proper process at the next board meeting. The explanation of the charges which were said to be attached to that letter is omitted from the copy in evidence (Ex D4, vol 2, Tab 90) but appears in a letter dated 12 February 2017 (Ex D4, vol 2, Tab 91) as follows: "1. At an EGM you introduced an option for the development of 75 Norton Street which had been rejected by the Committee. 2. You had ignored the Board's position in relation to the development of 75 Norton Street and instead had supported a cause [sic] of action proposed by another member. 3. You had encouraged members to sign a petition to change the Board. 4. In August 2016 you engaged in conduct which was offensive and constituted "verbal abuse and bullying of a female member who was a volunteer at the Club. 5. You have declined to sign a Code of Conduct for directors. 6. You only sometimes acknowledge Club communications."
By letters dated 1 March 2017 (Ex D4, vol 2, Tabs 82, 92, 98), the Club advised RAD, SZ and MJ respectively that it was still dealing with the disciplinary proceedings commenced against each of them as a member but confirmed that each was still a director of the Club and could attend the Club for the purpose of attending meetings of the management committee. By letter dated 10 March 2017, a further charge was brought against MJ (Ex D4, vol 2, Tab 99) relating to an interview with SBS Polish Radio, in which he was alleged to have made: "unauthorised, defamatory and factually incorrect statements about the workings of the Board and the reasons for your suspension as a member of the Club."
These matters were again to be considered at a management committee meeting on 18 March 2017, the day before the March 2017 AGM. The minutes of that meeting (Ex P9, vol 2, 329) record that RAD, SZ and MJ initially attended that meeting and MJ read a statement signed jointly by them and that: "The statement read by MJ asserted that the Board has broken rules and laws respectively from the Code of [P]ractice of Clubs NSW and from the Corporation[s] Act 2001 … and in particular that these breaches were undertaken by RB, HG, RC and MK, and that these breaches related to the disciplinary matters considered by the Board in relation to RAD, SZ and MJ. As a consequence, RAD, SZ and MJ refuse to participate in today's meeting. [T]he statement further said that the position taken by three directors was motivated by the legal advice sought and received by the Board, as well as legal advice sought and received by the three directors. After the statement, RAD, SZ and MJ asserted that proxies are not valid at directors' meetings. These directors then left the meeting without leave, after advising the Board that it was now inquorate."
The meeting was then adjourned due to a lack of quorum, and was resumed after EP joined the meeting by telephone, in accordance with a practice that had previously been adopted by the board, to deal with membership applications. The further consideration of disciplinary matters relating to RAD, SZ and MJ did not proceed when EP was unable to continue listening into deliberations by telephone, apparently by reason of illness, and the board again became inquorate. In those circumstances, the previous position where RAD, SZ and MJ were suspended, pending a hearing, appears to have continued unchanged.
By letter dated 7 April 2017, ClubsNSW (Ex D4, vol 2, Tab 100) responded to a complaint from MJ in respect of the process adopted for his suspension by noting that the disciplinary hearing was an opportunity for him to present his case to the board and stating that: "While I recognise that the outcome is unfortunate for you, there is no evidence that the Club has acted improperly." I give no weight to that letter. There is no evidence as to the extent of any investigation that ClubsNSW undertook as to the matters the subject of MJ's complaint and, unless a regulatory body undertakes a proper investigation, then it will likely find no evidence to support the subject matter of a complaint.
At a further meeting of the management committee on 21 April 2017 (Ex P9, vol 2, 331; Ex D4, vol 2, Tab 74), three members of the management committee found RAD guilty of the charge against him, three found him not guilty and two abstained. The minutes recorded that there was "no clear majority either way" and RAD was reinstated as a Club member. The management committee also discussed issues relating to SZ and MJ on that date and they were also reinstated as Club members on that date.
These matters are also addressed in RAD's, SZ's and MJ's affidavit evidence. RAD referred to his purported suspension as a director at a board meeting on 21 December 2016 and to his having expressed views, on many occasions in 2016, in relation to the running of the Club and the proposed development of the Club's property which differed to RB's views. He referred (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding) to his belief that the board had acted unlawfully in suspending him. RAD also referred to the circumstances in which he, SZ and MJ declined to participate in a further board meeting on 18 March 2017 to deal with disciplinary actions against them and were unable to attend the March 2017 AGM of the Club on the following day.
In MJ's affidavit dated 9 May 2017, he also refers to the circumstances in which a resolution for the suspension of RAD as a member of the Club's board and member of the Club was put before the board meeting on 21 December 2016, and to SZ having left the board meeting in protest with RAD, and to MJ shortly thereafter having been suspended as a director and member. He refers to the circumstances in which RAD, SZ and MJ were then told by the Club's manager to leave the Club that evening, when sitting at its café to discuss their position. MJ also refers to the further meeting to answer the charge in March 2017, before the March 2017 AGM.
SZ refers to the circumstances in which RAD was suspended as a member of the Club's board and member of the Club on 21 December 2016, and to the exclusion of SZ, MJ and RAD from the premises of the Club that evening; to the hearing in relation to the charge against him; to complaints made to ClubsNSW in respect of the decision that he was excluded as a director of the board, and to a subsequent letter from the Club advising that he was still a director of the Club. SZ also refers to the consideration of disciplinary matters at a committee meeting on 18 March 2017, before the general meeting on the next day, and to his exclusion from the March 2017 AGM.
The individual Defendants led evidence and were cross-examined as to these issues. RB's evidence in cross-examination characterised the conflict of interest affecting RAD as less to do with RAD's family relationship with Mr Lania (an architect to whom I referred above) and more to do with his dealing with other Polish organisations, to promote proposals that were inconsistent with those supported by the management committee as a whole (T826ff). His evidence in cross-examination was that the interaction between SZ and RB's sister about the operating costs of the restaurant (at which, I interpolate, he was not present) was treated by the management committee as bullying and taken seriously, and that questions as to the restaurant's operating costs would properly have been raised with the Club's treasurer, rather than RB's sister who served at tables, took phone bookings and reset tables, and was not responsible for the financials of the restaurant (T852). RC accepted in cross-examination that the management committee had misunderstood the law, and assumed that the suspension of RAD, SZ and MJ as members implied their suspension as directors (T750). His evidence in cross-examination was that the issue in respect of SZ's dealing with RB's sister was not the questioning of her about the operations of the Club's restaurant, but "anger issues" which could border on harassment (T750).
The Plaintiffs in turn plead and the Defendants deny (SFASC [105], Defence [105]) that the purported suspension of SZ, RAD and MJ as members and as members of the management committee, by the management committee on 21 December 2016, was unlawful and beyond the power of the management committee in that: "(a) The Committee, even at a meeting attended by seven or more members of the Committee did not have power to suspend a member in the manner and by the process whereby it purported to suspend [RAD]; (b) [RAD] had not engaged in any of the conduct described in Clause 21 of the Articles of Association as the basis for suspension; (c) The Committee, ie, the board, did not have power under the Constitution to suspend or dismiss a Committee Member or director; (d) The vote purportedly taken by the Committee after [RAD] and [SZ] had left meeting room [sic] was a vote taken by a Committee then comprising only six members and thus was invalid by reason that the Committee lacked a quorum and the matter voted on fell outside the matters a Committee could deal with under Article 60 … (e) The purported suspension of each of [SZ], [RAD] and [MJ] was contrary to the procedure set out in Clause 23 of the Articles of Association in respect of such matters. (f) To the extent that the purported resolutions dismissing [SZ], [RAD] and [MJ] as directors or members of the Committee and expelling or suspending them as members of the Club were made with power, the said resolutions are void and unenforceable having been carried out for the purpose of ensuring that [RB] and the other members of the Committee at that time, including [HG], retained their power to govern the Club which is an improper purpose and, on that basis the said purported resolutions are void and/or unenforceable and out [sic] be set aside."
I am not satisfied that these claims are established. So far as the first claim pleaded in SFASC [105] is concerned, the management committee had power to suspend RAD pending a hearing under cl 22 of the Club's articles of association, although the exercise of that power in this manner in these circumstances might well amount to oppression. So far as the second claim is concerned, an oppression claim is not an avenue for an appeal as to the factual basis of the charge against RAD, particularly where the management committee had itself reached no determination as to that charge. I note, for completeness, that there appears to be little substance in a criticism of RAD for non-disclosure of the family relationship between him and Mr Lania, on which significant weight was placed by several of the individual Defendants in cross-examination, since the minutes of the management committee meeting held on 30 March 2016 record that RAD had disclosed that Mr Lania was the husband of his wife's niece (Ex P9, vol 2, 281).
Although the second claim is directed to a challenge to the factual correctness of the charge against RAD, Mr Evans also submitted, in closing submissions, that the disciplinary action against SZ arose from his conversation with RB's sister about the question of the expenses of running the Club restaurant and, as a director and as a member of the Club's catering subcommittee, SZ was acting properly in raising these matters with RB's sister, and that the issue is highlighted by the Club's accounts for 2016 and 2017 and the auditor's comments about the lack of a system for recording cash takings. In oral closing submissions, Mr Evans also submitted that it was reasonable for SZ, as a member of the catering committee, to raise a relevant matter with RB's sister as one of the persons at the Club who was responsible for the operation of the restaurant (T889). That submission does not address the substance of the charge against SZ, which included that the manner in which the issue was raised with RB's sister was aggressive and potentially amounted to bullying.
Mr Evans also submitted that the charge against MJ should have failed on the facts and the task that he was required to carry out involved more than just accessing the CCTV footage using the access code. He submitted that the main task required of MJ was that of reviewing some hours of footage, to identify and prepare for submission to the police the relevant footage; that he completed that task by 15 December 2016; and the material was required to be produced to the police by 16 December 2016 (MJ 9.5.17, 16). I need not address that submission where these proceedings are not the occasion to determine the factual correctness of the claims against MJ, which the management committee itself did not determine.
Mr Evans also pointed in oral closing submissions to matters which may have given rise to the differences between RAD, SZ and MJ, including an occasion on which SZ was nominated as President of the Club in opposition to RB. It is plain that the relationship between RAD, SZ and MJ had deteriorated over a considerable period, although the matters in evidence suggest that deterioration extended from a wider range of disagreement and not merely or substantially from SZ being nominated for that position. I note, for completeness, that Mr Evans also referred in oral closing submissions to an unpleaded allegation in respect of PW, that after he had lodged the applications for membership received from Mrs Fenik (and the subject of Schedule 2 to the SFASC), he was left off certain communications between some of the directors and "shut out as a director" and then resigned (T901).
The third claim is plainly correct, but the purported suspension of RAD, SZ and MJ as directors was not continued beyond 1 March 2017. In order to address the fourth claim, it is necessary to address an issue as to the quorum for management committee decisions which is also raised in SFASC [107]-[110]. The Defendants point out that, since 2005 (Ex P16, 156), cl 72 of the Club's articles of association has provided that: The quorum for the Committee meeting, subject to Article 59 hereof shall be not less than five (5) Members of the Committee. The Plaintiffs did not submit that that amendment was not effective by reason of the manner in which it was implemented. The Plaintiffs therefore have not established that, at the relevant time, the Club's articles of association required a quorum of at least six members of the management committee. The quorum for the initial suspension decisions in respect of RAD, SZ and MJ was five directors and was satisfied, and, for completeness, the management committee did not make any further disciplinary decision concerning them at its further meeting on 18 March 2017 when it was inquorate for part of the meeting.
The fifth claim is not to the point, where the suspension of RAD, SZ and MJ initially relied on cl 23 of the Club's constitution and did not need to comply with cl 22 of that constitution, and no further disciplinary decision was made before the suspension was revoked. So far as the sixth claim is concerned, I am not satisfied that the decisions were carried out with the pleaded improper purpose, and I think it likely that their purpose was to address the matters with which RAD, SZ and MJ were charged, reflecting the frustration of the majority of the management committee with RAD's dealings with Mr Lania and his approach to 75 Norton Street more generally; SZ's approach to board meetings generally and (as narrowed) his alleged aggression in dealing with RB's sister; and MJ's approach to board meetings generally, culminating in the issue concerning police access to the CCTV surveillance footage.
The Plaintiffs have not established the claim pleaded in SFASC [105] in respect of these matters, that the suspension decision of 21 December 2016 was unlawful, beyond the management committee's powers or void or unenforceable or liable to be set aside. I address an oppression claim in respect of this matter below.

Alleged invalidity of resolutions after 21 December 2016

The Plaintiffs plead that, as a result of the allegedly wrongful suspension of RAD, SZ and MJ as members of the management committee, several resolutions passed by the management committee after 21 December 2016 were invalid as the Club's articles of association required a quorum of at least six members of the management committee for those resolutions. I have not found that the suspension of RAD, SZ or MJ was beyond power or void and the premise of this claim is not established, although that premise is not necessary to a claim that the management committee was inquorate when RAD, SZ and MJ ceased to attend its meetings. However, that claim is not established where I have also held above that the quorum for management committee meetings is five directors, not six, under cl 72 of the Club's articles of association.
The Plaintiffs in turn plead (SFASC [107]-[108]) that a resolution to call the March 2017 AGM, which they plead was passed between 21 December 2016 and 1 March 2017, was invalid on that basis. Both parties addressed this claim without seeking to identify when such a resolution was passed. The Defendants respond that, between 21 December 2016 and 21 April 2017, there were three meetings of the management committee, on 22 January 2017 (Ex P9, vol 2, 318), 17 February 2017 (Ex P9, vol 2, 326) and on 18 March 2017 (Ex P9, vol 2, 329). They point out that six members of the management committee were present on 22 January 2017, satisfying the quorum requirement; five members were present at the meeting on 17 February 2017, again satisfying that requirement; and the meeting on 18 March 2017 was initially adjourned due to a lack of quorum as only four members of the management committee were present, and was resumed after EP joined the meeting by telephone when five members of the management committee were present, and ended when EP was unable to continue participating by telephone. The Defendants submit, and I accept, that resolutions passed at the meetings of the management committee on 22 January 2017, 17 February 2017 and 18 March 2017 were not invalid due to a lack of quorum.
The Plaintiffs also plead that the proposed resolution at the March 2017 AGM was contrary to cl 7 of the Club's memorandum of association and inconsistent with the objects of the Club as set out in cl 3 of the memorandum of association. Mr Evans did not make submissions in support of that contention and I need not determine it, where to do so would require me to formulate an unarticulated case before I could determine it, and deprive the Defendants of an opportunity to respond to it.
By paragraphs 113-114 of the SFASC, the Plaintiffs also plead the absence of a quorum as invalidating the resolution on 18 March 2017 admitting approximately 40 new persons as members of the Club. At least five directors, and likely six directors including SZ, attended that meeting and a quorum is therefore established for it. By paragraphs 115-116 of the SFASC, the Plaintiffs plead the absence of a quorum as invalidating a resolution to employ security guards to attend the March 2017 AGM. There is no evidence that such a resolution was passed or was necessary for a matter of the Club's operational management and security and the invalidity of such a resolution, had it been passed, has no effect on any issue in the proceeding.

Consequential oppression claim

The Plaintiffs plead and the Defendants deny (SFASC [117], Defence [117]) that the purported suspension of SZ, RAD and WJ as directors and as members of the Club and the conduct of meetings of the board or management committee of the Club in their absence constituted conduct oppressive of the members of the Club as a whole because the purported suspensions were carried out contrary to the provisions of the Club's constitution dealing with removal of directors and, because these actions were carried out to uphold the control of the affairs of the Club by RB, these decisions were made for an improper purpose and are therefore void and/or unenforceable. This allegation has not been established, so far as it turns on allegations of improper purpose of that the decisions were void or unenforceable, for the reason noted above.
The suspension of RAD, SZ and MJ in December 2016 is also relied on, with many other matters, in support of an oppression claim in SFASC [135], where it is combined with allegations of conflicts of interest also advanced against RB. In oral closing submissions, Mr Evans characterised the relevance of the suspension of RAD, SZ and MJ as "simply a part of a pattern of oppressive conduct" and indicated that the Plaintiffs did not contend that matter was in itself sufficient to support relief in oppression (T901).
Assuming, without deciding, that SFASC [117] or SFASC [135] could be read as raising separate oppression claims in respect of the suspension of RAD, SZ and MJ, which did not depend on other matters pleaded in them that have not been established, I would decline to grant relief in that respect, having regard to the conduct of RAD, SZ and MJ and the management committee in respect of their suspensions as a whole. I am inclined to think that, taken alone, the management committee's conduct in invoking the power to suspend RAD, SZ and MJ on 21 December 2016, pending a future hearing, would arguably amount to oppression where there was no urgency warranting that decision. I might well have found that a decision to suspend or expel RAD, SZ and MJ as members at the meeting on 18 March 2017 had been oppressive, had RAD, SZ and MJ not withdrawn from the meeting and had that suspension then been continued after they had made submissions in opposition to it. However, whatever the status of the suspension prior to that date, it seems to have been properly left in place from that date where RAD, SZ and MJ chose not to engage with the disciplinary process or allow the opportunity for a determination of their status on the merits, and withdrew from the meeting so as to deprive the board of a quorum on that occasion. I recognise, in that respect, that the management committee did not continue the suspension of those persons after the meeting on 21 April 2017 which considered their status on the merits.
I would therefore not reach a finding of oppression in respect of the totality of the conduct involved in the suspension of RAD, SZ and MJ, or in respect of that aspect of that conduct which continued from 18 March 2017. Even if I had done so, I would not have exercised a discretion to grant relief in respect of the conduct, even apart from the fact that it ceased two years ago. I would also not grant any consequential relief in respect of the March 2017 AGM, where RAD's, SZ's and MJ's conduct in depriving the management committee of a quorum at the meeting on 18 March 2017 had prevented a decision as to whether their suspension should be continued beyond that date in a manner that prevented their attending the March 2017 AGM and contributed to the result that the existing suspensions continued in effect. This matter could not, alone or together with any other matter that I have found in favour of the Plaintiffs, support the relief primarily sought by the Plaintiffs, namely the appointment of a receiver to the Club, which would likely give rise to an event of default under its financing facilities as noted below, or alternative relief of the removal of individual Defendants from office as directors of the Club.

Conduct of the March 2017 AGM and the core property resolution

The Plaintiffs plead (SFASC [118]ff) the circumstances in which the March 2017 AGM was called and notice was given of a resolution proposed to be put to the members in this AGM and plead matters relating to members' entry into and the conduct of that meeting. The Defendants admit (Defence [120]) that the Club engaged a security company to provide security guards to attend the Club premises at this AGM; admit that the security guards were provided with a list of suspended and expelled members of the Club; say the security guards who attended the Club premises at the time of this AGM were instructed to only allow entry to members who had proof of membership with them; and otherwise deny the allegations. The Plaintiffs plead and the Defendants do not admit (SFASC [121], Defence [121]) that: "… many Club members who were entitled to vote at the meeting and who would otherwise have attended the meeting and voted against the proposed resolution were denied entry to the meeting, including but not limited to [SZ], [RAD] and [WJ]."
I now turn to the factual background to this issue. At its meeting on 22 May 2016 (Ex D4, vol 2, Tab 111), the management committee considered four options in respect of the property, namely to do nothing and concentrate only on the business at 73 Norton Street; to sell 75 Norton Street, which was described as "nonsensical as we need parking as a condition of having a liquor licence"; a plan presented by Mr Lania (an architect who was a somewhat distant relative to RAD) as to which the committee noted that funding was a major issue and the plan involved closing the Club for 3-4 years; and an asset swap. The committee voted, with RAD opposing and MJ and SZ abstaining, that: "The Club moves forward to explore and recommend to our members the preferred option of an asset swap of 75 Norton Street in conjunction with our neighbours."
The minutes of a management committee meeting held on 25 July 2016 (Ex D4, vol 2, Tab 112) noted that a proposed extraordinary general meeting to discuss these issues was a "first step to engage with members and provide them with a forum where all options are discussed" and that no decision was contemplated and that that proposed meeting was one of many steps needed to move forward with 75 Norton Street. An information meeting to discuss options for 75 Norton Street was then held on 7 August 2016 (RB 19.10.18 [187]). A powerpoint presentation given at that meeting (Ex D4, vol 2, Tab 113) identified options including "Do Nothing"; sell 75 Norton Street; develop 73-75 Norton Street together; redevelop just 75 Norton Street; or a joint venture with neighbours. The powerpoint recorded that the board had said "no" to each of the first four options; and said "maybe" to the fifth, the redevelopment of 75 Norton Street; and had said "yes" to the proposed joint venture with neighbours. That proposed joint venture comprised an "Asset swap meaning we get back carpark, ground floor, units + cash" and was to involve no disruption to 73 Norton Street. The minutes of that meeting are in evidence. Apparently without prior notice to the management committee, SZ arranged for Mr Lania to make a presentation on a different option at that meeting (Ex D4, vol 2, Tab 114). By 3 September 2016, there was disagreement between Mr Lania and at least RB, and most likely between Mr Lania and the majority of the management committee, since Mr Lania wanted to proceed with a development comprising both 73-75 Norton Street and the management committee considered the proposal should be limited to 75 Norton Street. I pause to note that there seems to me to have been nothing unreasonable in the management committee's concerns as to the feasibility of a proposal for both 73-75 Norton Street, given financing constraints and the recognition that that proposal would have required the closure of the Club for a significant period.
A further information meeting was held on 9 October 2016 (RB 19.10.18 [191]) and a further powerpoint was presented at that meeting (Ex D4, vol 2, Tab 118). On 1 November 2016, the Club sent a letter signed by RB to members outlining the Club's financial difficulties and again addressing a proposal for the sale of 75 Norton Street, in conjunction with the sale of neighbouring properties, in exchange for funds and an interest in any redevelopment of that property (RB 19.10.18 [193]). By letter dated 1 March 2017, the Club advised members of the "Key Points" to be addressed at the March 2017 AGM, and noted a proposed vote to declare 75 Norton Street to be non-core property for the purposes of s 41J of the Registered Clubs Act, to which I will return below (Ex D4, Tab 122). That vote was described as a first step that allowed the Club to start on a planned expressions of interest campaign, on the basis that the board would revert to members with the details of the best offer for that property and undertake a further vote to proceed or not.
At the Club's March 2017 AGM, members of the Club voted on, and passed or purportedly passed a resolution: "That for the purposes of section 41J of the Registered Clubs Act the members hereby declare the land and facilities at 75 Norton Street, Ashfield and the adjoining car park to be non-core property of the Club." That section relevantly provided that "core property" of a club meant any real property owned or occupied by the club that comprised its premises; any facility provided by the club for the use of its members and their guests; or any other property declared, by a resolution passed by a majority of the members present at a general meeting of the club's ordinary members, to be "core property" of the club. That section prohibited a club disposing of any of its "core property" unless the property had been valued by a qualified valuer; that disposal had been approved at a general meeting of the ordinary members of the Club at which a majority of the votes cast supported the approval; and the sale was by way of public auction or open tender conducted by an independent real estate agent or auctioneer. The term "core property" in that section did not include any property that was declared, by a resolution passed by a majority of the members present at a general meeting of the ordinary members of the Club, not to be "core property". The resolution passed at the March 2017 AGM was relevant for that purpose. For completeness, I should also recognise that, as the Defendants point out, the passage of that resolution would not have been sufficient to authorise the sale of 75 Norton Street unless a further special resolution was passed under cl 49 of the Club's articles of association authorising that sale.
It appears that security guards were provided with a list of persons who were not to be admitted to the AGM, which included photographs of those persons apparently obtained from a Facebook page relating to a proposed protest to take place at the Club on that day (Ex P1). That list included a number of persons whose membership had been suspended or terminated and also included persons who were current members of the Club, several of whom were in fact permitted to attend the meeting.
Following that meeting, by email dated 27 March 2017 (Ex P8), SBS Polish Radio sought a response to an allegation that the Club's President and board: "have destroyed the club and are trying to make a profitblocked [sic] members from entering the club because they were on a list with names regarded by the club as 'unfriendly' members prevented current members of entering club and attending the AGMhad [sic] people removed from the Club (café/restaurant) because they were critical of the club/board of directors online or elsewhere".
By an email dated 28 March 2017 (Ex P8), EP responded to that allegation explaining the process by which persons were excluded from entry to that meeting as follows: "As for the list of people who were barred entry this was those few who were previously expelled from the Club or those non-members who via social media had indicated they were coming last Sunday for an 'uprising' (powstanie). This was potentially a serious security matter for us and we took appropriate steps to safeguard our Club, members and guests. No members with a valid membership card were denied access." It appears from EP's cross-examination that she did not have a reasonable basis for the last statement, since she was not present on that occasion, and merely relied on a general practice of permitting members to attend member meetings. It appears that RC was subsequently interviewed and apologised for the exclusion of members from that meeting, although I was not taken to evidence of what he said. In the event, it has only been established that the process of requiring a second form of identification, or the maintenance of the exclusion list, brought about the exclusion of two persons entitled to vote at the meeting, MW and Mr Korban.
I turn now to the affidavit evidence as to the conduct of the March 2017 AGM. In her affidavit dated 22 March 2017, KL referred to the circumstances in which that meeting was held, and to her observations as to the process adopted by security guards who required two forms of identification for a member to enter the premises. KL referred to her observation that certain persons, who she understood were Club members (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of her understanding) were prevented from entering the Club and (in evidence admitted under s 136 of the Evidence Act as a submission) from attending or voting at the AGM. She refers to witnessing persons who she recognised as Club members being refused entry to the Club premises. Her evidence is that associate members were allowed to vote on the resolution, and it appears that reflected a view taken as to the operation of the Registered Clubs Act in respect of such a resolution. The parties did not put the correctness of that view in issue. KL also referred to the circumstances in which ballot papers were collected at that meeting.
By his affidavit dated 24 March 2017, MW gave evidence as to the conduct of the March 2017 AGM and says that, although he produced his membership and driver's licence to security guards present at the Club on that day, he was refused entry to the Club's premises, and was again refused entry when the Club's manager sought to assist his entry on the basis that he was on what a security guard described as an "unfriendly members list" (admitted in evidence, by agreement of the parties, with a limiting order under s 136 of the Evidence Act). His evidence is that he would have voted against the resolution to change the status of Club property from core to non-core property had he been admitted to that meeting. It is common ground that MW should have been admitted and permitted to vote at the meeting.
In his affidavit dated 29 March 2017, RAD refers to his having been excluded from attendance from the March 2017 AGM by security guards present on that occasion, and to this having been the first occasion on which he had seen security guards present or preventing members or guests attending the Club's premises. RAD was properly excluded from that meeting where he was then suspended from membership and I have not held that that suspension should be set aside. In her affidavit dated 7 August 2018, Mrs Lipinski refers to her observations at the March 2017 AGM, and gives evidence of her observation of people (who, I interpolate, were not necessarily members of the Club) being refused entry to the Club. In his affidavit dated 29 March 2017, Mr Korban (who was also not cross-examined) referred to his attendance at the Club for the AGM on 19 March 2017, and to his exclusion from attendance at that meeting, when he produced evidence of his Club membership but, implicitly, was unable to produce his driver's licence. Mr Korban was some 89 years of age at the time of that meeting. It is also common ground that he should have been admitted and permitted to vote at the meeting. In her affidavit dated 16 August 2018, Mrs Lacek referred to her attendance at the March 2017 AGM and to the steps taken by security guards in checking whether persons could attend that meeting.
The individual Defendants also address the March 2017 AGM in their affidavit evidence. In his first affidavit dated 19 October 2018, RB refers to the circumstances of the March 2017 AGM and to the steps which led towards that meeting and also addresses the Club's engagement of security guards to "keep the peace" at that meeting, on the advice of the police. RB also seeks to justify the steps taken to require a second form of identification at that meeting by reference to a "Best Practice Guideline" issue by ClubsNSW. In her first affidavit dated 19 October 2018, HG also describes the conduct of the March 2017 AGM, and refers to steps taken to arrange for security guards to be present at that AGM, which she attributes to the management committee, although there is no evidence that that matter was addressed at any formal meeting of that committee or approved by any formal resolution of that committee. She refers to her preparation of a list of members of the Club who had been expelled from the Club or whose membership had been suspended as at 19 March 2017 and indicates she cannot remember whether she gave that list to the security guards or gave it to someone else to give it to them. HG denies the allegations made by the Plaintiffs generally, in terms that are substantially identical to RB's denial of those allegations.
In his first affidavit dated 19 October 2018, RC also deals with the property at 75 Norton Street and the March 2017 AGM. He referred to his understanding that security guards at the entry to the Club on that day may have requested production of both a current membership card and photo identification or some other form of identification, and implicitly accepted that that was inconsistent with the usual procedure at the Club's AGMs, where Club volunteers ordinarily did not ask members for photo identification. RC accepted in cross-examination that he gave an apology to members who had been excluded from the March 2017 AGM on SBS Polish Radio, on the basis that that exclusion was not the management committee's intention (T741).
In her affidavit dated 19 October 2018, EP also deals with the March 2017 AGM and refers to the circumstances in which a second form of identification was sought from members attending the Club. In his first affidavit dated 23 October 2018, MK also referred to the position in respect of the land at 75 Norton Street and to the conduct of the March 2017 AGM. He was not present for a large part of that meeting, by reason of another commitment on that day.
The Plaintiffs submit, and I accept, that the manner in which a meeting is conducted, can amount to oppression: John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63. The wrongful exclusion of persons from an annual general meeting may also, in a proper case, amount to oppression: Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [254]. The Plaintiffs submit that a number of matters gave rise to oppression in respect of the conduct of the March 2017 AGM, namely that the Club employed security guards at the meeting to screen persons attempting to enter the Club, something that had not happened before at the Club; the security guards were given some oral instructions by RB and were also given a list of names and a document with names and photos of certain people lifted from a Facebook page (relating to a proposed protest at the Club on that day); the security guards asked persons attempting to enter the Club for their Club membership cards and some other form of identification such as a driver's licence, and members complained that had never happened before; a number of persons who were members on the day were excluded from attendance, although that has been established only in respect of MW and Mr Korban; and by reason of their suspension as members at that time, RAD, SZ and MJ could not attend. The Plaintiffs point out that the notice dated 22 February 2017 issued to members to advise them of this meeting (Ex D4, vol 2, Tab 121) and a letter dated 1 March 2017 from the Club's President to members (Ex D4, vol 2, Tab 122) did not advise members that a second form of identification would be required in order to enter the Club for the March 2017 AGM.
The Defendants respond, correctly, that the only evidence adduced by the Plaintiffs that members of the Club, who had not previously been suspended or expelled, were denied entry to the Club by security guards are the affidavits of MW and Mr Korban. They recognise that KL's affidavit also sought to establish that some members were denied entry to the Club by security guards, but rightly point out that that evidence was admitted subject to orders under s 136 of the Evidence Act limiting it to her understanding or as submission and otherwise rose no higher than that KL saw persons who "claimed" to be members being refused entry to the Club. The Plaintiffs do not pursue a submission that Mr Czeczucha was denied entry to the Club on that day.
The Defendants also rightly point out that, with the exception of MW, those persons who were members of the Club and whose names were contained on the list of persons to be excluded (Ex P1) were in fact (properly) admitted to the meeting, including Malgorzata Zak, Adam Gajkowski and Stefan Wisniowski, as is evidenced by a tick next to their names on the list of persons that was used to mark-off the members of the Club prior to entering the auditorium where the March 2017 AGM was held (Ex P4). The Defendants point out that, in these circumstances, the Plaintiffs have only established that two members of the Club, who had not been suspended or expelled were denied entry to the March 2017 AGM, and it is common ground that the core resolution was passed by a majority of five votes. The Defendants also submit that, even if more members of the Club were denied entry to the March 2017 AGM, the decision of the management committee to hire security guards was not inappropriate or unfair, so far as it was a response to the threatened protest to be held at the Club on that day and reflected advice taken from the police. While I accept that proposition, it would not have been an answer to the oppression arising from passage of the resolution as a result of the exclusion of persons who would have voted against it, had it been established that had occurred.
The Plaintiffs also plead (SFASC [123A]) that (as I have noted above) at least 20 new members were admitted to membership of the Club on 18 March 2017, who they allege were nominated by RB and/or members of his family and/or HG and/or members of her family and/or RC. The Defendants (Defence [123A]) admit that 24 people were admitted to full membership on 18 March 2017 and otherwise deny the allegations. As I have held above, it has not been established that the persons then admitted as members were not appropriately qualified for admission, and the evidence on cross-examination indicated that many of them were well-qualified for admission. Both they and those persons who were sponsored by KL and others, and accepted admission as associate members, were entitled to vote on the resolution as to the core property, irrespective of whether they were admitted as full or associate members.
The Plaintiffs also plead matters relating to a show of hands and ballot at that meeting. It is common ground (SFASC [125], Defence [125]) that RB advised the meeting that the resolution had been passed by 5 votes, 139 in favour and 134 against, and there is no evidence to establish that was not the case. The Plaintiffs plead and the Defendants do not admit (SFASC [126], Defence [126]) that more than 6 members who were otherwise entitled to attend and vote at that meeting and who would have voted against the core property resolution and who sought to enter the Club on 19 March 2017 were prevented from attending the meeting. As I have noted above, it was only established that two such members were excluded from attendance. The Plaintiffs plead and the Defendants deny (SFASC [127], Defence [127]) that the core property resolution as purportedly passed at the March 2017 AGM is invalid or otherwise ought be set aside. The Plaintiffs also plead and the Defendants deny (SFASC [127A], Defence [127A]) that the conduct of the March 2017 AGM was oppressive of the Club membership as a whole and, in particular, of the members excluded from the meeting, including members actually prevented from entering the Club to take part in the meeting on the day and, in respect of the members suspended or expelled from the Club prior to 19 March 2017.
As I noted above, the resolution in favour of the reclassification of 75 Norton Street from core to non-core property was passed on a ballot at the March 2017 AGM by 139 to 134 members. SZ's and MJ's evidence (MJ 9.5.17 [27], SZ 29.3.17 [16]) is that they would have voted against the resolution had they been permitted to attend the meeting. I have addressed the position in respect of the inability of RAD, SZ and MJ to attend that meeting, and held that had no impact on the result of the meeting where their suspension was not void or unenforceable and I would not grant relief in respect of oppression. The evidence of Mr Nawrocki (Nawrocki 30.6.17 [14]), DP (DP 23.6.17 [11]), WJ (WJ 16.6.17 [10]) and Mrs Lipinski (Lipinski 7.8.18 [12]) is that they would have voted against the resolution had they been permitted to attend the meeting. That also has no impact on the result of the meeting where I have not found their respective suspensions or expulsions as members should be set aside. Mrs Fenik's evidence (J Fenik 11.5.17 [18]) is also that she would have voted against the resolution had she been permitted to attend the meeting, but that is not to the point where she was not a member of the Club and was not entitled to attend or vote at that meeting. Other members could potentially have been prevented from attending by a requirement to produce two forms of identification (a membership card plus another form of identification), which was a practice not previously adopted at other AGMs; not contemplated by the Club's constitution; not authorised by any resolution of the management committee; and not notified to members in advance. However, the evidence does not establish that any other members other than MW and Mr Korban were in fact excluded on that basis.
My finding of oppression in respect of the process for dealing with the applicants in Schedule 1 to the SFASC also does not have any impact in respect of the result of the March 2017 AGM. Those admitted as associate members instead of full members were permitted to vote at that meeting, so their status did not affect their ability to vote at that meeting. There is no evidence that the outcome of that meeting would have differed if persons who were offered associate membership and did not take it up had instead been offered full membership, taken it up and attended and voted at that meeting. Mrs Gad, who was offered associate membership and did not take it up (Gad 9.8.18 [5]) does not say how she would have voted had she been able to attend the meeting, and Mr Zmuda (Zmuda 13.8.18) and Mr Frankowski (Frankowski 13.8.18) also do not say how they would have voted had they been able to attend that meeting. No other persons who were offered associate membership and did not take it up gave evidence that they would have voted, or how they would have voted, at that meeting. There is no evidence that, and I should not infer that, such persons would have voted against the resolution, irrespective of the information provided at the meeting or its merit, merely because they were nominated by KL or her associates.
The Plaintiffs seek a declaration that the resolution passed (or purportedly passed) at the March 2017 AGM to the effect that certain real property of the Club was not core property of the Club in the terms of s 41J of the Registered Clubs Act 1976 (NSW) is void and of no effect (SFASC, prayers for relief, [1]). They also seek a consequential declaration that the real property of the Club remains core property of the Club in the terms of s 41J of the Registered Clubs Act (SFASC, prayers for relief, [2]). The Plaintiffs seek an order that the Defendants and any of them be restrained from taking any steps to sell or dispose of any of the real property of the Club pursuant to a resolution purportedly passed at the March 2017 AGM (SFASC, prayers for relief, [3]). Their entitlement to that relief has not been established on the findings that I have reached.
The Plaintiffs also seek a declaration that the resolution purportedly passed at the March 2017 AGM is, on its terms, contrary to cl 7 of the Club's memorandum of association and inconsistent with the objects of the Club as set out in cl 3 of the memorandum of association (SFASC, prayers for relief, [4]). As I noted above, no submission was put to explain why that was so and I have not reached that finding. They also seek an order that the resolution purportedly passed at the March 2017 AGM be set aside (SFASC, prayers for relief, [4A]). Their entitlement to that relief has also not been established on the findings that I have reached.

Alleged management and operation of the Club restaurant by RB's wife and sister

The Plaintiffs plead (SFASC [128]) that, following the departure of Mr and Mrs Gnych from the Club and, in particular from the restaurant premises in the Club on or about 1 May 2016, the Club board granted rights to manage and operate a restaurant within the Club, in the restaurant premises previously occupied by Mr and Mrs Gnych, to RB's wife and RB's sister respectively. The Plaintiffs also plead (SFASC [129]) that, while RB's wife and sister claim to be managing and operating that restaurant business as "volunteers", in the sense that they say they do not draw any wages or takings from the restaurant, the business is conducted on the basis that: (a) The business did not use a cash register until after the commencement of these proceedings; (b) While the business accepts payments by way of both cash and credit cards, there is no independent or transparent record of the cash takings; (c) The declared net takings of the restaurant are paid to the Club after payment for food and other necessary items and the payment of wages to staff, such as the chefs; (d) The business does not pay the Club any rent or licence fee for the use of the space. (e) … [RB's wife and sister] employ Robert Grochulski, a nephew of [RB], and his fiancé, Apolonia Mendel as staff in that restaurant.
The Defendants respond (Defence [128]), inter alia, by denying that RB's wife and sister "are the managers of Sto-Lat Restaurant" and say that they "operate the restaurant in their capacity as volunteers of the Club and do not receive any remuneration for their services" and otherwise do not admit SFASC [128]. They also (Defence [129]) deny that the restaurant did not use a cash register until after the commencement of these proceedings; deny that there is no independent or transparent record of cash takings at the restaurant; and contend that: "the declared takings of Sto-Lat Restaurant are paid to the Club. Gross takings are paid in full to the Club (cash, Eftpos, UberEats and Groupon). All expenses including wages to chefs, cooks and kitchen hands are paid separately by staff and volunteers known as the finance team. All remaining revenue (gross profit) is retained in full by the Club." The Defendants submit that there is nothing unfair about the operation of the restaurant, which, they submit, except for a chef and a kitchen hand, is usually staffed by members of the Club that volunteer their time.
I have had regard to WJ's evidence of attempts to introduce weekly reporting processes in respect of the restaurant, which it appears were unsuccessful, and of his suggestion that the Club should lease the restaurant to professionals, which was not taken up. RB's evidence in cross-examination was that his wife and sister did not operate the restaurant, but a dozen volunteers were involved in doing so, although his wife and sister put in more hours than others, and that those volunteers contributed their time to the restaurant for the good of the Club (T850). RB acknowledged in cross-examination that the Club had had poor controls of cash takings for room hire, stock and cash paid as donations, which were not systematically or thoroughly recorded, although his evidence was that there would be a small number of missing documents in respect of transactions, among thousands of transactions in each year (T851). RB's evidence in cross-examination, which was not falsified, was also that the restaurant had always had a cash register (T852).
The evidence does not establish the Plaintiffs' pleaded case, either that the Club or the management committee granted rights to manage and operate a restaurant within the Club to RB's wife and sister, as distinct from their and other persons working as volunteers in a restaurant operated by the Club for its own benefit, or that there was no cash register in the restaurant in the relevant period. I recognise that several annual reports of the Club have been subject to qualified audit reports, which note that the audit was limited to records provided and amounts actually banked and payments made; there was no system of control over cash takings on which the auditor could rely for the audit; and there were no satisfactory audit procedures that could be performed to obtain reasonable assurance that all cash takings were properly accounted for (for example, Ex P9, vol 1, 141, 171). These qualifications are not addressed specifically to the operation of the restaurant. Although they should be, and apparently are, matters of concern for the directors of the Club, they do not advance the claims pleaded by the Plaintiffs and would not be sufficient to support the appointment of a receiver to the Club, absent any other reason to make that appointment.
The Plaintiffs also plead (SFASC [130]) that the grant of a licence to RB's wife and sister to manage and operate a restaurant business within the Club premises on the pleaded basis is oppressive of the members of the Club as a whole. They also plead that that act breached RB's duty as a director, in that, while his wife and sister say they are working as "volunteers" in managing and operating that restaurant, absent the installation of a cash register and the collection and maintenance of proper financial records of the restaurant, the operations of the business are not transparent. The Defendants respond that a cash resister was "always" used and otherwise deny the paragraph (Defence [130]). This allegation must fail where its factual basis, most significantly that such a licence was granted, is not established.

Alleged degradation of the membership and of the financial position of the Club under RB's Presidency

The Plaintiffs plead (SFASC [131]) that, in the period since July 2013, the financial circumstances of the Club have declined to the point that its financial viability is threatened. The Defendants respond (Defence [131]) that the financial circumstances of the Club have declined over time to the point at which its financial viability is threatened; that, at 30 June 2017, the Club had total liabilities of approximately $3 million including loans of approximately $2.6 million; and otherwise do not admit the allegations.
The Plaintiffs plead, and the Defendants deny (SFASC [132], Defence [132]) that the decline in the Club's financial circumstances has been brought about by specified matters, namely the incurring of legal expenses, in particular in the Gnych proceedings; a reduction in poker machine revenue; a decline in membership fees; an increase in administration costs; an increase in insurance premiums by a factor of approximately 300%, alleged to be largely by reason of the Club's claims on insurance in defending the Gnych proceedings; and borrowings in the sum of at least $2.5m to fund, in part, legal actions and damages payouts. The Plaintiffs also plead (SFASC [133]) that the matters that have led to the financial decline of the Club flow from the decisions made RB as President "as pleaded above", and in particular the wrongful suspension and expulsion of members from about July 2013; the wrongful refusal to admit suitable applicants as full members from July 2013 to March 2017; the conduct of the March 2017 AGM; and the defence of these proceedings. It has not been established that any of these decisions were made by RB, as the Club's President or otherwise, rather than by its management committee as variously constituted over the period. I will also find below that a causative link between these matters and the Club's present financial position was also not established.
The Plaintiffs plead that (SFASC [134]), in applying Club funds to uphold decisions taken by the board led by RB by borrowing sums of up to at least $2.5m to fund the cost of these decisions, RB, HG, RC, and "to the extent that they were involved in these decisions", MK and EP, have acted in a manner oppressive of the Club's members as a whole by applying Club funds and Club liabilities in support or pursuit of the matters listed in SFASC [132] and thereby placing the financial position of the Club at "grave risk".
The individual Defendants address the allegations concerning the Club's financial position in their affidavit evidence. In his first affidavit dated 19 October 2018, RB refers to his understanding, when he was elected as a member of the management committee in February 2013, that the Club was experiencing financial difficulties and had been experiencing such difficulties for some time. He also refers to revenue-raising initiatives implemented after he was elected President of the Club and to the operation of the Sto Lat Café and Restaurant, which has been operated in place of the restaurant previously operated by Mr and Mrs Gnych.
RB's evidence in cross-examination was that the admission of persons as members, who had not previously visited the Club or not spent money at it or were not active in the community would cost more in administration costs than the amount of the membership fee, and that offers of associate membership were made to allow persons to show that they would be active in the Club, so that they could then convert to full membership (T786). RB's evidence in cross-examination was also that legal expenses had affected the Club's financial circumstances, but the Club was the defendant in the proceedings initially brought by Mr and Mrs Gnych, after originally seeking to negotiate an amicable exit from the Club; that the decline in poker machine revenue reflected the board's focus on food as a growing source of revenue, and its not treating poker machines as a high priority, where the Club could not compete with larger clubs in that regard; that membership fees were not a significant element of the Club's revenue; that it needed customer revenue, which was not limited to revenue from members; that administration costs had grown, as a function of a substantial growth in the Club's revenue over six years; and that insurance premiums, together with council rates and other utilities had all increased over the relevant period (T856). RB's evidence was also that the Club had no choice other than to borrow, including to fund legal actions and damages payments, and that those borrowings incurred substantial interest payments, but he also fairly pointed out that those costs would not have been incurred unless legal action had been brought against the Club (T857).
As I noted above, the Defendants accept that the financial circumstances of the Club have declined in the period since July 2013 to the point at which the Club's financial viability is threatened, although the evidence indicates the Club has been suffering losses for many years and that it has recently achieved improvement in its revenue, while continuing to incur an overall loss, exacerbated by continuing costs of litigation. The Defendants submit that there is no evidence that the financial circumstances of the Club have declined as a result of the wrongful suspension and expulsion of members; the wrongful refusal to admit suitable applicants as full members of the Club; the conduct of the March 2017 AGM; and the defence of these proceedings. They point out, and I accept, that the Club's financial statements for the financial years ended 30 June 2013 to 30 June 2018 suggest that the decline in the Club's financial circumstances has been principally due to the costs and liabilities incurred by the Club as a result of the proceedings involving Mr and Mrs Gnych and, possibly, these proceedings. The Plaintiffs abandoned any attack on the Club's conduct of those proceedings.
The Plaintiffs have not established that the Club's borrowings were applied to fund the costs of the specified decisions, although not doubt its cashflow and borrowings have funded its activities as a whole, including the defence of the proceedings initially brought by Mr and Mrs Gnych and the appeals in them, and the Club's insurance costs have likely been increased by the extent of the litigation involving it. I am not persuaded that a reduction in poker machine revenue is a matter for criticism, where the Club has focused its efforts on other forms of revenue including from its restaurant offerings, and I have noted above that membership fees are not a significant revenue source. It has not been established that the application of funds and liabilities to incurring of legal expenses, administration costs, insurance premiums or the funding of action in respect of Mr and Mrs Gnych (in which the Club succeeded in the Court of Appeal, before failing in the High Court), or the monies paid in the resolution of those proceedings was wrongful or oppressive, where the Plaintiffs abandoned their attack on the conduct of those proceedings. It is not established that the Club's position is presently at "grave risk", which will depend on its ability to refinance its borrowings on an ongoing basis as to which the Plaintiffs led no admissible evidence, although I have referred above to the Defendants' concession that its viability is under threat. The Plaintiffs also plead various statistics as to the membership of the Club which do not establish the alleged "degradation" in membership. The claim against MK and EP is not tenable where the Plaintiffs have not identified what they are alleged to have done to support it.

Claim for breach of duty and oppression by RB and other individual Defendants

The Plaintiffs plead (SFASC [135]) that RB, by his conduct in regard to specified matters, has acted in breach of his duty as a director of the Club to act in the best interests of the Club as a whole and the membership as a whole, in particular by: "placing himself in a position of conflict between his personal interest in preserving and maintaining his position as President of the Club and the position of cronies or supporters of his as members of the Committee or board of the Club and his duty to the Club to exercise his powers as President and as a directors [sic] for the benefit of the Club and its members as a whole." The specified matters repeat earlier allegations, namely the alleged wrongful suspension and expulsion of members from about July 2013; the alleged wrongful refusal to admit otherwise qualified applicants for full membership of the Club in the period from July 2013 to March 2017; the alleged refusal to permit members access to Club membership records; the purported suspension of SZ, RAD and WJ as directors and as members in December 2016; the purported resolution of the management committee of 18 March 2017 to admit new members sponsored or nominated by relatives or associates of RB; the conduct of the March 2017 AGM and the core property resolution; the management and operation of the Club's restaurant by RB's wife and sister since about 1 May 2016; and the alleged "degradation" of the financial position of the Club under the Presidency of RB.
I proceed on the basis that the applicant in an oppression claim can bring a claim for breach of general law and statutory duties owed to a company, without necessarily seeking a separate order for leave to bring a statutory derivative action under s 237 of the Corporations Act, although such a claim could only extend to loss which the company had suffered and not loss that the shareholder had suffered personally: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672; LPD Holdings (Aust) Pty Ltd v Phillips [2013] QSC 225; (2013) 281 FLR 227 at [53]; Re JGS Investment Holdings Pty Ltd [2014] NSWSC 1532; Taxa Australia Pty Ltd v Wang [2016] NSWSC 1913 at [23].
This allegation invokes both a director's best interests duty and principles of conflict of interest, although the Plaintiffs did not make submissions of substance as to their content. Broadly, a director of a company must, inter alia, exercise his or her powers in the interests of the company and must not misuse or abuse their power and must avoid conflict between his or her personal interests and those of the company: Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 89 ACSR 1; Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd [2011] FCA 1154; (2011) 86 ACSR 393 at [149]; Re Colorado Products Pty Ltd (in prov liq) above at [419].
The Plaintiffs did not seek to support the allegation other than by reference to the matters identified in the paragraph, and I have dealt with those matters above. The allegations as to wrongful suspension and expulsion of members from about July 2013 have not been established and the claim that RB's participation in those decisions had the purposes alleged or was not in the Club's best interests is not established, particularly where the purposes of the majority of the management committee who made them are not impugned. A real or sensible conflict in respect of those decisions is not established, where RB's participation in them could not realistically achieve the suggested results, where they were made by a majority whose purposes are not impugned. The alleged "wrongful" refusal to admit otherwise qualified applicants for full membership of the Club is not established, where it has not been shown those persons should have been admitted as a matter of law or on the merits, for the reasons noted above. The claim that RB's participation in that matter had the purposes alleged or was not in the Club's best interests or was made in conflict of interest by RB is not established for the same reasons that the claim against him in respect of suspension and expulsion of members is not established.
The alleged refusal to permit members access to Club membership records is not established as a matter of fact and cannot support the alleged breaches by RB of the best interests or conflict duties. The alleged breaches of those duties in respect of the purported suspension of SZ, RAD and WJ as directors and as members does not rise to the level of a breach of director's duties, where there were issues warranting consideration to which I referred above, the suspension continued by reason of the lack of a quorum at the management committee meeting in March 2017 and it was then revoked. The alleged breaches of those duties are not established in respect of the admission of new members, whether sponsored or nominated by relatives or associates of RB or not, where the evidence, so far as it goes, indicates those persons were generally well qualified for admission. The alleged breaches of duty are not established in respect of the conduct of the March 2017 AGM and the core property resolution where the steps taken to respond to the proposed demonstration were reasonable and ultimately did not affect the outcome of the March 2017 AGM. The factual basis of the claims in respect of the management and operation of the Club's restaurant and the alleged "degradation" of the financial position of the Club by reason of the alleged matters was not established and those matters cannot support the alleged breaches of duty.
The Plaintiffs also plead (SFASC [136]), in a paragraph containing incorrect references to other paragraphs, that RB has acted oppressively in the conduct of the affairs of the Club in the terms of s 232 of the Corporations Act, in that he has acted in a manner contrary to the interests of the members as a whole and has acted in a manner unfairly prejudicial to members of the Club, or potential members, in particular, with respect to members who, in his opinion were or might be opposed to him and/or his policies. This allegation depends on the matters which I have addressed above and is also not established on the findings that I have reached above, other than for the limited finding in respect of oppression as to the Club's membership procedures generally, which is referable to the Club and the numerous members of its management committee over the relevant period, including not only RB but also the other individual Defendants; several persons who gave evidence in the Plaintiffs' case; and other persons who took no role in the proceedings.
The Plaintiffs seek consequential declarations that RB has acted in breach of his duty as a director of the Club and has engaged in conduct oppressive of the members of the Club or some of them for the purposes of s 232 of the Corporations Act in respect of the matters I have addressed above (SFASC, prayers for relief, [5]-[6]). I have not been persuaded by the Plaintiffs' claims in respect of the non-admission or admission of particular groups of members, although I have noted above that I will make a limited declaration in respect of the Club's membership procedures generally. I would not make such a declaration directed specifically to RB, where that would not fairly reflect the findings that I have reached above.
The Plaintiffs also plead (SFASC [137]) that HG, RC, MK and EP have, since the dates of their respective appointments as directors or committee members of the Club: "(a) Acted in breach of their duty as directors to act in the interests of the Club and its members as a whole; and, (b) Acted in a manner oppressive of the members of the Club as a whole of a class of members, or potential members, being those members seen by [RB] as opposed to him and/or his policies. (c) Exercised their powers as directors or as members of the Committee of the Club in respect of: (i) The refusal to admit applicants for membership as full members in cases in which the said applicants were sponsored or nominated by the [P]laintiffs or persons perceived to be affiliated with the [P]laintiffs; (ii) The decision made in December 2016 to effectively expel both as members and as directors [SZ, RAD and WAJ]; for the improper purpose of ensuring that they and, in particular [RB], retained control of the Club by means of their retention of office as directors and [RB]'s retention of office as a director and as President of the Club."
This allegation depends on the matters which I have addressed above in respect of the claims for breach of duties by RB and is not established on the facts, at least at a level that would support a claim for breach of the pleaded duties rather than the limited finding of oppression that I have reached in respect of the Club's membership procedures generally.
The Plaintiffs also seek a declaration that, "to the extent" that HG, RC, MK and EP were involved in specified matters from the respective dates of their appointments as directors, have acted in breach of their duties as directors of the Club and have engaged in conduct oppressive of the members of the Club or some of them for the purposes of s 232 of the Corporations Act (SFASC, prayers for relief, [7]-[8]). A declaration cannot be made in that form, which does not adequately identify the conduct alleged to constitute the breach on the part of those Defendants. I do not consider that the Court should seek to formulate the elements of that claim for the Plaintiffs, where they do not choose to do so for themselves and the Defendants will have no opportunity to respond to a claim that has not been adequately articulated.

Alleged oppressive conduct in respect to the FMC facility

Finally, the Plaintiffs advance allegations in respect of a borrowing by the Club from FMC. Mrs Lacek addressed this allegation in her second affidavit dated 18 January 2019, which referred to her attendance at an AGM of the Club on 2 December 2018; to comments made by RB at that meeting in respect of the Club's financial position; and to the borrowing of further monies by the Club from FMC. Other affidavit evidence led in the Plaintiffs' case also addressed those matters.
The Plaintiffs plead (SFASC [147]) that the individual Defendants did not disclose their intention to mortgage the Club's real property to FMC nor did they disclose their intention to increase the Club's secured debt to over $4.6m before entering into the FMC facility. There is no allegation of any duty to make such a disclosure. On its face, the entry into a new finance facility is a management decision for the Club's management committee. The Plaintiffs also plead (SFASC [148]) that, with the possible exception of a sum in the order of about $84,000 spent on improvements to the café/restaurant in the Club in 2016-2017, the monies borrowed from FMC have not been applied in any way to improve or increase the profit-making potential of the Club. No evidence supported that allegation, quite apart from the fact that monies were borrowed only several months ago, and it is not self-evident that there would be anything inappropriate with their being applied largely to refinance the earlier facility which they replaced.
The Plaintiffs plead (SFASC [149]) that the individual Defendants, and in particular RB as President of the Club, HG as Secretary of the Club and MK as Treasurer of the Club, by taking out a further loan, and increasing the Club's secured debt by a sum in the order of $1.5m; taking out the further loan without first making full and frank disclosure of their intentions to further burden the Club with additional "massive debt" to the Club members; and increasing the secured debt of the Club in this manner notwithstanding the qualifications recorded by the auditors to the 2017 accounts, have engaged in conduct that was contrary to the interests of the members of the Club as a whole and/or oppressive to, or unfairly prejudicial and discriminatory against the members in the terms of s 232 of the Corporations Act.
The Defendants accept that the management committee did not inform the members of the Club prior to entering into the loan facility with FMC. As Mr McCulloch points out, cll 26 and 27 of the Club's articles of association respectively provide that: "The Committee may from time to time as its discretion rise or borrow any sum of money for the purpose of the Club with or without security and on such terms as it shall see fit." The Committee may secure the repayment of moneys raised or borrowed pursuant to [cl 26] by mortgage or charge of all or any part of the property rights and undertaking of the Club or by the issue of debentures or debenture stock of the Club charge upon all or any part of the property of the Club either present or future or in such manner and upon such terms and conditions as the Committee may think fit."
Those clauses gave the management committee power and authority to enter into the loan facility with FMC without informing the members of the Club or seeking their approval of that course. The Defendants also point to RB's evidence that the facility that the Club previously had with Eclipse Prudent Mortgage Corporation Ltd ("Eclipse") was repayable on 18 September 2018 and that Eclipse had declined to offer an increase in the loan facility or to extend it (RB 21.2.19 [38]). There is no suggestion the Club had liquid funds available to repay that borrowing and, in those circumstances, as the Defendants point out, the management committee had no option other than to refinance that facility with Eclipse or another lender. The alternatives to taking out that loan, including the appointment of receivers to the Club by Eclipse, were not recognised by the Plaintiffs' submissions. The Plaintiffs have not succeeded in this claim.

Application for appointment of receiver and exclusion of individual Defendants from the Club

The Plaintiffs plead (SFASC [150]) that the Court should appoint a receiver and manager of the Club and should make orders excluding the individual Defendants from any involvement in the Club, at least for a period of time to enable the Club, in receivership and subsequently to recover, if possible, from the "depredations" allegedly imposed on it. Specifically, the Plaintiffs seek an order under s 233(1)(h) of the Corporations Act appointing some suitable person, or some suitable persons, as receiver and manager of the Club, upon such terms as the Court may consider appropriate in the circumstances, to the extent that such person or persons would exercise the powers of the board or the management committee under the Club's memorandum and articles of association to determine the proper membership of the Club, including the admission of applicants for membership and the admission as full members of persons currently holding only associate membership, and to hold a proper election to appoint a management committee or board that properly reflects the full membership of the Club (SFASC, prayers for relief, [9]).
I recognise that a receiver could, in an appropriate case, be appointed to deal with matters constituting oppression, including the treatment of membership applications. It seems to me that, as Pritchard J observed in Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) above at [1111], such an appointment should be treated as a "last resort". I note that, although oppression was established in respect of dealing with membership applications in that case, the court was not persuaded (at [710]) that the appointment of a receiver was a proper course in the particular circumstances. I recognise that a determination whether persons should be admitted as members of the Polish Club would likely not give rise to the particular difficulties of a person outside an Aboriginal group determining whether a member should be admitted to an organisation representing that group. However, her Honour did not there make an appointment on the wider ground that the organisation should itself be given a further opportunity to resolve membership disputes, within the confines of declaratory relief given by the Court as to the framework within which those membership decisions must be made.
The Plaintiffs did not seek to address the costs that would be associated with the appointment of a receiver to the Club, or whether the Club could remain solvent after incurring those costs. The costs incurred by a receiver appointed both to conduct the Club's affairs and to conduct elections would likely be substantial, particularly if he or she were required to employ staff to perform functions that have previously been undertaken voluntarily by members of the management committee, their family and their associates. There is also a further, and fundamental, difficulty with the appointment of a Court-appointed receiver in this case. Mr Evans accepted in closing submissions that there is at least a substantial risk that the relief sought by way of appointment of a receiver to the Club would bring about an "Event of Default" under its loan arrangements with FMC, although he indicated he was instructed to seek that relief.
The appointment of a "Controller" (defined to have the same meaning as in the Corporations Act) or receiver or receiver and manager to the Club would amount to a "Corporate Insolvency Event" and an "Insolvency Event" (as defined) under the mortgage granted by the Club to FMC (Ex P15) which would constitute a "Event of Default" allowing FMC to require immediate repayment of the secured money and to exercise any rights conferred on it under the mortgage, including taking possession of the mortgaged property and selling that property in such manner as it determined. An "Event of Default" (as defined) also includes an event that has, in FMC's opinion, a "Material Adverse Effect" (as defined) on the Club's financial condition and/or any business conducted by the Club, and "Material Adverse Effect" is defined as, in FMC's opinion a material adverse effect on, inter alia, the financial position of the Club or its business or FMC's ability to exercise any of its rights arising under the mortgage. There seems to me to be a substantial risk that FMC could form the view that the appointment of a Court-appointed receiver had that effect and was also an Event of Default under the mortgage on that basis. I do not consider that the Court should grant that relief, given the significant adverse consequences for the Club that would likely arise under its financing arrangements from that appointment. Given the views that I have reached on other grounds, it is not necessary to consider whether an order for the appointment of a receiver could have been made, where that appointment might potentially affect FMC's rights under its mortgage, and it was not joined as party to the proceedings: compare John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 at [131]ff.
In oral closing submissions, Mr Evans accepted that the relief that would likely be granted was the appointment of a receiver or no relief (T879), although he also raised the possibility of the appointment of an interim board, free from the divisions that have characterised the affairs of the Club to date. However, the Plaintiffs did not identify persons who might be suitable for such an appointment, or lead evidence that such persons would consent to that appointment. It is by no means apparent that it would be straightforward to identify persons within or outside the Polish community who were not only "neutral" in the relevant sense, but would assume the substantial responsibility of appointment to the board of a Club in financial difficulty, with a history of internal differences and litigation, and where its financial resources are likely not sufficient to remunerate them in a manner that would be proportionate to the risks they would assume.
The Plaintiffs also seek an order requiring RB forthwith to execute a form of resignation as a director and as a member of the Club and restraining RB from going to the premises of the Club and from being involved or attempting to be involved in the affairs and business of the Club for a period of five years from the date of the order (SFASC, prayers for relief, [10]-[11]). Mr Evans did not make any substantive submissions in support of these orders and I am not satisfied that they could be made on the basis of the findings that I have reached above.

Claim for restitution or compensation against RB

The Plaintiffs seek an order under s 233(1)(j) of the Corporations Act that RB make restitution or otherwise pay compensation to the Club for losses suffered by the Club, including but not limited to non-receipt of membership fees that would otherwise have been received from members suspended or expelled from the Club in the period from July 2013 to the date of the order and from persons who would, otherwise, have been admitted as, or otherwise would have continued as, members of the Club in that time (SFASC, prayers for relief, [12]). No basis for a claim in restitution has been established since there is no evidence that RB obtained any financial gain from the suspension or expulsion of members of the Club or from the non-admission of some new members to the Club and, I should add, the admission of other persons to the Club. No basis for a claim for compensation has been established since the Plaintiffs did not quantify any such loss, which would have needed to take account not only of revenue from membership fees but also of the costs of admitting new members and providing services to them.

Orders and costs

I will hear the parties as to the form of the declarations that I have indicated I will make above. The injunction restraining the Defendants from taking any steps to sell or dispose of the Club's real property must be discharged, although that will not authorise such a sale of property of the Club other than in accordance with the necessary procedures under the Club's constitution. I will make directions for the conduct of an inquiry as to damages suffered by the Club, and to the extent applicable the other Defendants and any third parties, which may fall within the scope of the Plaintiffs' undertaking as to damages given in support of interlocutory relief. The Plaintiffs have had only limited success in the proceedings and I will hear the parties as to costs.

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: 23 April 2019

Corporations Act 2001(Cth)ss 53, 232, 233, 233(1)(h), 233(1)(j), 237

Evidence Act 1995(NSW)ss 136, 140

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