By their Second Further Amended Statement of Claim, the Plaintiffs sought a range of relief in respect of the affairs of the First Defendant, Polish Club Limited ("Club"). I delivered my substantive judgment on 23 April 2019 ([2019] NSWSC 446) ("Primary Judgment").
I delivered a further judgment dealing with the form of declaration to be made in respect of conduct as to the admission and exclusion of members of the Club on 21 May 2019 ([2019] NSWSC 595) ("Further Judgment"). I there indicated that I would not make declarations in the form sought in paragraphs 1 and 2 of the draft orders proposed by the Plaintiffs or in the alternative form proposed by the Defendants. I indicated that I would, with hesitation, formulate a declaration that would give effect to the Primary Judgment, when read in the context of that judgment, and allow the parties a brief opportunity to make submissions in respect of it. The proposed form of that declaration, as set out in the Further Judgment, was as follows:
"DECLARE that, between [start date and end date] the affairs of Polish Club Limited ("Club") were conducted in a manner that was oppressive within the meaning of s 232 of the Corporations Act 2001 (Cth) in that the focus in considering membership applications on whether individual members of the management committee knew particular applicants through their dealings with the Club, rather than other relevant matters including the sponsors' assessment of those applicants and objective information as to their history, when combined with active steps taken to seek out and admit new full members who shared the management committee's views and the exercise of disciplinary powers against dissenting members, had the capacity to alter the Club's membership by increasing the number of members who were likely to share the views of the management committee."
Lukaszewicz v Polish Club Limited [2019] NSWSC 669 | Case summary | Zoe
I also afforded the parties an opportunity to make submissions as to an appropriate starting date and an end date for the declaration. I noted that the starting date could not be before the date when the individual Defendants together constituted a majority of the management committee, since the Plaintiffs advanced no criticism of other members of the management committee, who have not had an opportunity to be heard, and the end date could not be after the determination of the last of the applications within Schedule 1 to the Second Further Amended Statement of Claim.
Each of the parties made submissions as to that matter. On 29 May 2019, without leave, the Defendants made supplementary submissions as to the form of declaration. On 30 May 2019, also without leave, the Plaintiffs also made supplementary submissions, including referring to a spreadsheet of membership application records tendered by the Plaintiffs, to which reference had been made, without explanation, in their initial submissions. The Court would not ordinarily receive further submissions for which it has not granted leave: Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 at 257-258; Bull v Lee (No 2) [2009] NSWCA 362 at [8]. I will reluctantly grant leave, nunc pro tunc, for the parties' supplementary submissions, so far as they address new matters raised in the Plaintiffs' submissions dated 28 May 2019 to which the Defendants had previously not had an opportunity to respond; correct a typographical error in the Defendants' initial submissions; and to some extent narrow the matters in dispute.
[3]
The date range to be included in the declaration
Mr Evans, who appears for the Plaintiffs, submitted that the start date of the declaration should be 6 December 2015 when Ms Geras was appointed as director, giving rise to a majority on the part of the individual Defendants in the management committee.
Mr McCulloch and Mr Notley, who appear for the Defendants, initially submitted that the appropriate starting date for the declaration was 31 (later corrected to 1 January 2017), on the basis that the articles of association of the Club were amended to provide that the management committee would comprise 11 members of the Club from November 2014, although the number of members was reduced to nine persons from 1 January 2017 by reason of s 10(1)(k1) of the Registered Clubs Act 1976 (NSW) and reg 36 of the Registered Clubs Regulation 2015 (NSW). Mr McCulloch and Mr Notley initially submitted that a majority of the management committee, prior to January 2017, required at least six members. However, that submission seems to be directed to the maximum number of members specified in the articles of association, rather than the number of members attending management committee meetings and voting on relevant resolutions. In their supplementary submissions, the Defendants accepted that (as the Plaintiffs had contended) the individual Defendants together constituted a majority of the management committee from the point at which Ms Geras became a member of that committee on 6 December 2015.
In their supplementary submissions, the Defendants submitted that the starting date for the declaration should be 30 March 2016, which was the earliest meeting of the management committee after 6 December 2015 at which an application for which full membership was declined and an applicant was offered associate membership, and at which a majority of the individual Defendants were present. In particular:
1. The Defendants point out that no membership applications were considered at the meeting on 14 December 2015, after Ms Geras had become a member of the management committee. I accept that oppression could not be established from that date, where the conduct in issue related to the consideration of such applications.
2. The Defendants point out that membership applications were considered at the next meeting of the management committee on 9 January 2016 and it appears that several persons were admitted as full members on that date and others as associate members. They submit that the individual Defendants did not form a majority of the management committee on that date, as Mr Zak held a proxy for Dr Adams-Dzierzba and Mr Wieczorkowski held a proxy for Ms Paton. I do not accept that matter makes any difference. To the extent that the management committee proceeded on the basis that one director could hold a proxy for another, then the individual Defendants constituted the majority at that meeting. However, it does not seem to me that the declaration of oppression should commence at that date, where there was no focus at the hearing or in the Primary Judgment on the admission of associate members at that meeting.
3. The Defendants point out that no applications for full membership were declined at the next meeting of the management committee on 17 February 2016 and the next occasion on which that occurred was the meeting on 30 March 2016, when an offer of associate membership was made and the individual Defendants formed a majority of the management committee. I accept that that date provides a proper starting date for the period to be specified in the declaration.
The parties have reached a degree of common ground as to the appropriate end date for the period to be specified in the declaration. Mr Evans submits that the management committee considered Ms Kozek's second application for full membership and resolved to offer her associate membership in April 2018. He acknowledges that the rejection of that application was not listed in Schedule 1 to the Second Further Amended Statement of Claim, as to which the relevant finding of oppression was directed, and provides an explanation of that matter. The Defendants accept that, although the last date referred to in Schedule 1 of the Second Further Amended Statement of Claim is 14 November 2017, the appropriate end date for the declaration should be 30 April 2018, when the management committee declined Ms Kozek's application for full membership and offered her associate membership. I will proceed on that basis where, subject to the Plaintiffs' submissions noted below, it is common ground between the parties.
I note, for completeness, that, in their initial submissions, the Plaintiffs indicated that they "do not … concede" that the oppression they complain of had ended at the date the last relevant application for full membership was considered, where they submit that the effects of that oppression continue. It seems to me that submission is not to the point, where the declaration is directed to identifying the conduct constituting the oppression. The Plaintiffs also submit that the word "was" should be inserted between the phrase "considering membership applications" and "on whether individual members" in the proposed form of declaration that I had set out in the Further Judgment. I do not consider that amendment is necessary.
In their supplementary submissions, the Plaintiffs submitted that the Court should have regard to steps made outside of management committee meetings that are not recorded in the minutes in determining the start and end date of the oppressive conduct noted in the declaration. They refer to email exchanges that are said to demonstrate an alleged pattern of conduct and repeat, and to some extent elaborate, on submissions made at the hearing as to the strategies of members of the management committee, and advance criticisms of persons admitted to membership after January 2017. They reiterate that the appropriate start date for the declaration should be December 2015. It seems to me that that does not follow from the findings that I had made, or indeed from the further submissions that the Plaintiffs make, so far as the declaration is directed to the factors taken into account in considering membership applications, combined with the process for admission of new members and the exercise of disciplinary powers. The Plaintiffs have also not identified any step taken prior to March 2016 in the nature of the oppressive conduct that I found in paragraphs 193-194 of the Primary Judgment.
[4]
Other aspects of the declaration
In their initial submissions, the Defendants submitted that the words "rather than" in line 5 of the proposed declaration should be replaced with the words "to the exclusion of" and submit that the words "rather than" suggest that the management committee should not take into account their knowledge of particular applicants through their dealings with the Club. They submit that the Court's finding in paragraphs 193-194 of the Primary Judgment was that it was inappropriate for the management committee to focus solely on its members' knowledge of particular applicants to the exclusion of other relevant matters. The terms of the declaration reflect the finding that I made, as to past conduct, and it does not imply that in the future the management committee could not give appropriate weight to any or all of their knowledge of particular applicants, the sponsors' assessment of those applicants, objective information as to their history or other relevant matters.
The Defendants also submit that the words "albeit they were not wrongly exercised" should be inserted after the words "the exercise of the disciplinary powers against dissenting members" and submit that there was a finding by the Court that disciplinary powers had not been wrongly exercised in paragraph 194 of the Primary Judgment. I will not make that amendment. The finding in that paragraph was that the Plaintiff had not established that the disciplinary powers had been wrongly exercised, not an affirmative finding in the Defendants' favour.
[5]
Further orders
Accordingly, I make the following further orders:
The Court declares that, between 30 March 2016 and 30 April 2018, the affairs of Polish Club Limited ("Club") were conducted in a manner that was oppressive within the meaning of s 232 of the Corporations Act 2001 (Cth) in that the focus in considering membership applications on whether individual members of the management committee knew particular applicants through their dealings with the Club, rather than other relevant matters including the sponsors' assessment of those applicants and objective information as to their history, when combined with active steps taken to seek out and admit new full members who shared the management committee's views and the exercise of disciplinary powers against dissenting members, had the capacity to alter the Club's membership by increasing the number of members who were likely to share the views of the management committee.
The injunction granted by the Court on 24 March 2017, and varied by the Court on 16 July 2018, be discharged.
[6]
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Decision last updated: 07 June 2019