Bell v St Michael's Golf Club - [2003] NSWCA 159

Reported Decision:
(2003) 46 ACSR 113

Court of Appeal

CITATION: Bell v St Michael's Golf Club [2003] NSWCA 159

HEARING DATE(S): 20 May 2003

JUDGMENT DATE:
25 June 2003

JUDGMENT OF: Sheller JA at 1; Ipp JA at 2; Tobias JA at 3

DECISION: 1.Declaration 3 made by Gzell J on 19 February 2002 be set aside and the following declaration substituted:; "DECLARES that int he circumstances which have occurred, the opinion expressed by the defendant in his Independent Audit Report dated 25 October 2001 with respect to the Financial Statements of the plaintiff for the year ended 30 June 2001 to the effect that the remuneration reported in Note 17 to those Statements (for fees of $4,860.00 paid to Stafford and $600.00 paid to Stockford) was received by an honorary member of the Committee of the plaintiff in contravention of Article 74 of the Articles of Association of the plaintiff, was in error."; 2. Appeal Dismissed; 3. Appellant to pay the respondent's costs of the appeal

CATCHWORDS: Declaratory relief sought - Construction of company constitution - Accounting services provided by honorary member of committee - Challenge to correctness of annual financial report by independent auditor - D

LEGISLATION CITED: Corporations Act 2001 ss 308(1), 295(3) , 314(1) 319(1), 285(1), 292(1), 322(1)
Accounting Standard AASD 1017 [3.1.1]
Supreme Court Act s 75
Administrative Decisions (Judicial Review) Act 1977 (Cth)

CASES CITED: Ainsworth v Criminal Justice Commission (1992) 174 CLR 564
Russian Commercial & Industrial Bank v British Bank For Foreign Trade Ltd (1921) 2 AC 438
Telstra Corporation Ltd v Australian
Telecommunications Authority (1995) 133 ALR 417
Gardner v Dairy Industry Authority (1977) 18 ALR 55
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504

PARTIES :
Donald Bell
St Michael's Golf Club

FILE NUMBER(S): CA 40186/02

COUNSEL: A: Mr B Coles
R: Mr R D Wilson

SOLICITORS: A: Herbert Geer & Rundle
R: Tress Cocks & Maddox

LOWER COURTJURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 5485/01

LOWER COURT
JUDICIAL OFFICER : Gzell J

CA 40186/02

SHELLER JA
IPP JA
TOBIAS JA
25 June 2003

DONALD BELL v ST MICHAEL’S GOLF CLUB

Judgment

1 SHELLER JA: I agree with Tobias JA.

2 IPP JA: I agree with Tobias JA.

3 TOBIAS JA: At all material times the respondent was a golf club and the appellant was its duly appointed auditor. Pursuant to s 308(1) of the Corporations Act 2001 (the Act) the appellant prepared a report to the members of the respondent with respect to the annual financial report of the respondent prepared pursuant to s 295 of the Act with respect to the year ending 30 June 2001. In his report the appellant qualified the financial report in a manner unacceptable to the respondent.

4 On 14 November 2001 the respondent instituted proceedings in the Equity Division of the Supreme Court seeking (apart from costs) only declaratory relief. The proceedings were heard by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NSWCA 159
Decision Date: 25 June 2003

CaseChat Overview and Summary

Bell (the appellant) sought declaratory relief against St Michael's Golf Club (the respondent) concerning the construction of the club's constitution. The dispute arose from an independent auditor's challenge to the correctness of the club's annual financial report. Specifically, the auditor questioned whether accounting services provided by an honorary member of the committee had been paid in contravention of the club's articles of association. The matter was heard in the Court of Appeal of New South Wales.

The primary legal issue before the court was whether the payment of fees for accounting services to an honorary member of the committee, as reported in the club's financial statements, constituted a breach of Article 74 of the club's articles of association. This article likely governed the conduct of committee members and the circumstances under which they could receive remuneration. The court was required to interpret Article 74 in light of the facts presented and determine the correctness of the auditor's opinion.

The Court of Appeal, comprising Sheller, Ipp, and Tobias JJA, ultimately found that the auditor's opinion was in error. The court substituted a declaration stating that the auditor's conclusion that the remuneration paid to the honorary member contravened Article 74 was incorrect. The appeal was dismissed, and the appellant was ordered to pay the respondent's costs.

Orders

Orders of the court

1.Declaration 3 made by Gzell J on 19 February 2002 be set aside and the following declaration substituted:; "DECLARES that int he circumstances which have occurred, the opinion expressed by the defendant in his Independent Audit Report dated 25 October 2001 with respect to the Financial Statements of the plaintiff for the year ended 30 June 2001 to the effect that the remuneration reported in Note 17 to those Statements (for fees of $4,860.00 paid to Stafford and $600.00 paid to Stockford) was received by an honorary member of the Committee of the plaintiff in contravention of Article 74 of the Articles of Association of the plaintiff, was in error."; 2. Appeal Dismissed; 3. Appellant to pay the respondent's costs of the appeal

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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CITATION:	Bell v St Michael's Golf Club [2003] NSWCA 159
HEARING DATE(S):	20 May 2003
JUDGMENT DATE:	25 June 2003
JUDGMENT OF:	Sheller JA at 1; Ipp JA at 2; Tobias JA at 3
DECISION:	1.Declaration 3 made by Gzell J on 19 February 2002 be set aside and the following declaration substituted:; "DECLARES that int he circumstances which have occurred, the opinion expressed by the defendant in his Independent Audit Report dated 25 October 2001 with respect to the Financial Statements of the plaintiff for the year ended 30 June 2001 to the effect that the remuneration reported in Note 17 to those Statements (for fees of $4,860.00 paid to Stafford and $600.00 paid to Stockford) was received by an honorary member of the Committee of the plaintiff in contravention of Article 74 of the Articles of Association of the plaintiff, was in error."; 2. Appeal Dismissed; 3. Appellant to pay the respondent's costs of the appeal
CATCHWORDS:	Declaratory relief sought - Construction of company constitution - Accounting services provided by honorary member of committee - Challenge to correctness of annual financial report by independent auditor - D
LEGISLATION CITED:	Corporations Act 2001 ss 308(1), 295(3) , 314(1) 319(1), 285(1), 292(1), 322(1) Accounting Standard AASD 1017 [3.1.1] Supreme Court Act s 75 Administrative Decisions (Judicial Review) Act 1977 (Cth)
CASES CITED:	Ainsworth v Criminal Justice Commission (1992) 174 CLR 564 Russian Commercial & Industrial Bank v British Bank For Foreign Trade Ltd (1921) 2 AC 438 Telstra Corporation Ltd v Australian Telecommunications Authority (1995) 133 ALR 417 Gardner v Dairy Industry Authority (1977) 18 ALR 55 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504
PARTIES :	Donald Bell St Michael's Golf Club
FILE NUMBER(S):	CA 40186/02
COUNSEL:	A: Mr B Coles R: Mr R D Wilson
SOLICITORS:	A: Herbert Geer & Rundle R: Tress Cocks & Maddox

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 5485/01
LOWER COURT JUDICIAL OFFICER :	Gzell J