Bell v Umina Beach Bowling Club Ltd

[2003] NSWSC 809

CITATION:	Bell v Umina Beach Bowling Club Ltd [2003] NSWSC 809
HEARING DATE(S):	20/08/03
JUDGMENT DATE:	11 September 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	The suspension of the plaintiff from the defendant club is invalid.
CATCHWORDS:	ASSOCIATIONS & CLUBS [25]- Expulsion or suspension- Natural justice- Prosecutors acting as judges- Suspension invalid. CORPORATIONS [101]- Meetings of directors- Requirement of notice- Proper notice of agenda required- Need for proper minutes.
CASES CITED:	Calvin v Carr [1979] 1 NSWLR 1 Ethell v Whalan [1971] 1 NSWLR 416 John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63 Leeson v General Council of Medical Education and Registration (1889) 43 Ch D 366 McKinnon v Grogan [1974] 1 NSWLR 295 Thomson v Earlwood-Bardwell Park RSL [1999] NSWSC 243
PARTIES :	John Bell (P) Umina Beach Bowling Club Limited (D)
FILE NUMBER(S):	SC 3579/03
COUNSEL:	G George (P) R A Pepper (D)
SOLICITORS:	O'Connor & Co (P) Walker Herceg (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Thursday 11 September 2003

3579/03 – BELL v UMINA BEACH BOWLING CLUB LTD

JUDGMENT

1 HIS HONOUR: The plaintiff, by summons filed 2 July 2003 seeks a declaration that his purported suspension as a member of the defendant is void.

2 The decision allegedly made by the board of the defendant on 5 June 2003 was that the plaintiff was suspended from membership commencing 26 May 2003 up until 26 November 2003, though as the plaintiff was a director, his suspension was not to affect his attendance at the club for meetings of the board.

3 The defendant is a registered club incorporated under the Corporations Act 2001. Its constitution, subject to the Registered Clubs Act 1976 provides that (I will put the number of the articles in brackets) there shall be a board consisting of not less than four nor more than seven directors being a chairman, two deputy chairmen, a finance director and up to three other directors (27) who are elected at the annual general meeting for one year (28). The annual general meeting is held in September. The board has full and absolute authority in the administration of the affairs and business of the club (39). It shall meet at least once every month (41) with a quorum of four (41) and the chairman may at any time, and the secretary on the requisition of not less than three directors, convene a meeting of the board (42). Vacancies in the office of director are to be filled by the remaining directors (45).

4 Article 16, so far as is relevant, provides:

"16(a) If a member shall wilfully infringe any of these Articles or the By-laws or be in the opinion of the Board guilty of any conduct prejudicial to the interests of the Club or be guilty of any conduct which in the opinion of the Board shall render him or her unfit for membership the Board shall have the power by resolution to reprimand, suspend from the exercise of all or any of the privileges of membership for such period as it considers fit, accept the resignation, or expel such member PROVIDED THAT;
(i) At least seven (7) days before the meeting at which any resolution is passed the member concerned shall have been notified in writing by certified post sent to his registered address of the intention of the Board to consider the matter and requested to be present at the meeting and that he shall at such meeting and before any such resolution is moved have had an opportunity of giving in writing or orally any explanation or defence he may think fit.
If the member fails to attend at the time and place specified without reasonable excuse the matter shall be heard and dealt with and the Board will decide on the evidence before it his absence notwithstanding. Any decision of the Board on such hearing or any adjournment thereof shall be final and the Board may at its discretion order the refund of any subscription or any part of it to any member during the current financial year.
(ii) The meeting shall be held within one (1) month of the date that the alleged offence infringement or misconduct is raised at a meeting of the Board.
(iii) Any resolution under this Article shall be by secret ballot and passed by not less than two-thirds of the members of the Board present at such meeting.
…
(c) Any resolution of the Board pursuant to paragraph (a) need not state the grounds, facts or opinions upon which it is based."

5 It would seem that the present problems can be traced back to an extraordinary general meeting (EGM) of the defendant held on 13 April 2003. The matter dealt with at the meeting is of no moment, but the chairman of the board, a Mr Menzies, became concerned that an alleged confidential document was distributed to persons who should not see it.

6 The alleged confidential document appears to be a letter from a former secretary/manager of the club complaining that chairman Menzies had no conception of the difference between the functions of a board in setting policy of a club and the functions of a secretary/manager in managing it. There was also a piece of paper circulating which showed a very large amount had been recorded against free drinks for members of the board.

7 In his affidavit, Mr Menzies says: "I was concerned about from where members had obtained confidential financial information regarding directors' expenses and how the confidential letter addressed to the Board had come to be distributed to members at the EGM. … I believed that it was probable that John Bell [that is, the plaintiff] had provided confidential information to some members. I formed that belief as a result of a conversation I had had with the Club's accountant, David Falconer, on 17 March 2003."

8 I should note that the affidavits prepared and filed on behalf of the defendant were probably the worse set of affidavits I have ever seen. Mr George of counsel, who appeared for the plaintiff, very properly objected to the majority of what was set out in the affidavits. However, it seemed to me that with an expedited matter I had really no alternative but to admit the whole of the defendant's affidavits and merely discount the weight for material that was not in proper form or hearsay etc. Accordingly, readers of these reasons should not be surprised if I quote material which is obviously in quite inadmissible form.

9 I should add that Bergin J had made consent directions on 4 July that all the defendant's evidence be filed and served no later than 25 July, the defendant did not comply with that order. On 25 July the matter was stood over in the expedition list for a further week. The defendant still had not filed any evidence by that date and an indemnity order for costs was made against it. The matter was fixed for hearing on 20 August. On 6 August the three badly prepared affidavits were filed. On 19 August at 8.08 pm the defendant's solicitors faxed my Associate a copy affidavit by a Mr Harry Lake who was said to be a vital witness for the defendant, and at the commencement of the hearing on 20 August, Ms Pepper who appeared for the defendant, sought leave to read that affidavit on the basis that it would not cause any prejudice. That proposition was contested by Mr George. No explanation at all was offered as to why this affidavit was not filed by 25 July or even when the other affidavits were filed. Furthermore, it seemed to go to the issue as to whether in fact the plaintiff was the source of the distribution of the alleged confidential document, rather than the question that concerned me, and that was whether the board had been able to reach the conclusion that he had done so at its meeting on 5 June. Accordingly I rejected the application to file and read the affidavit, though in case the matter went further, I had it marked for identification.

10 Returning to the narrative, a "special board meeting" was held on 24 April 2003.

11 I should say something about meetings of the board of the defendant.

12 Although the passages from the Articles of Association which I have already set out clearly show that there should be notices convening meetings of the board, the custom has been that the board meets regularly on a certain day each month at 9 o'clock or thereabouts, and that no notice of meeting is ever given, but when members of the board reach the meeting they are handed an agenda. The agenda usually concerns the same matters each month, such as receiving the secretary/manager's report and other routine matters.

13 However, on 24 April 2003, there was held what Mr Menzies described as a special board meeting to discuss the result of the EGM. There is no evidence at all that any notice convening the meeting was given to anybody, nor that there was any indication of what business was to be dealt with at the meeting. According to the so-called minutes, the meeting commenced at 5.10 pm and the chairman advised the purpose of the meeting, viz: (1) Confidentiality agreement; (2) Secretary/Manager's appointment; and (3) Concerns from General Meeting 13.04.03. The minutes start as follows:

"Chairman – I wish to inform The Board that I have received written resignations from Directors T Hobbs 14-04-03 and Bill Sheehan 24-04-03 and that I have asked D Glackin to join the Board as Finance Director. Moved by AG (Mr Gabriel) and seconded by WR (Mr Raper) that D Glackin be appointed as Finance Director – carried. Chairman then invited DG into the Boardroom and advised him that the Board has sanctioned his position as Finance Director. D Glackin accepted the appointment."

14 Whilst the board had power to fill up vacancies in its number there must be grave doubts as to whether Mr Glackin was ever appointed a director as there was no notice of the meeting given, and not all the directors were present. It should be noted that the evidence showed that Mr Glackin had twice before been unsuccessful as a candidate for the board but was clearly aligned with the position taken by Messrs Menzies and Gabriel.

15 The minutes then continued:

" CONFIDENTIALITY AGREEMENT: Chairman invited G Strong to take the Board through Agreement, at this stage 5.20 pm JB [the plaintiff] joined the meeting stating sorry I'm late I have been to Sydney, he also stated he did not know the meeting was on. All other Directors said it was agreed at the last meeting that this meeting would take place at 5 pm prior to welcoming G Rand to the Club.
Chairman then advised JB what had taken place prior to his arrival. JB expressed his disapproval of not being involved in the Finance Director's appointment. The Board replied saying that the meeting took place as scheduled and the Board has endorsed the decision."

How it could be that "the Board" had said this is left obscure.

16 However, whether Mr Glackin is a director or not is of little moment as the board is about to be reconstituted next month in any event.

17 There was then a long discussion as to the general meeting of 13 April and the "confidential correspondence" and "internal financial records" that should not have been made available to members.

18 People experienced in running companies know what to put in minutes and what not to put in minutes. In my longer judgment in John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63 at 89 and following, I set out the requirements of minutes. These requirements included "(4) Minutes must be as concise as circumstances permit. The reasons for resolutions etc are seldom recorded. (5) Minutes must be phrased in non-emotive language and on the face of them must appear impartial and above suspicion. (6) A minute is not a report. Therefore speeches and arguments normally do not appear in minutes." It would be useful if members of this board could read that judgment or any of the standard books on meetings before creating any further minutes. However, the so-called minutes of the meeting of 24 April include the following:

"JM [Mr Menzies] asked JB [the plaintiff] how did S Hill obtain a copy of David Galea's letter dated 18.02.01. JB replied he did not know how he got a copy. JM stated, well you have a copy because you have shown the letter to a member. JB asked whom did I show it to. JM replied Harry Lake; you showed it to him at your place. JB said no I did not, it was on the table and he must have read it when I was out of the room."

There was then a long set of conversations about the problem of telling the members just how much free drink members of the board had consumed. Of course, all members of clubs expect that because the members of the board will be devoting time to the functions of the club, it is only fair and reasonable that whilst they are giving their time to the affairs of the club they may have free meals and a reasonable amount of liquid refreshment. The tenderness with which the chairman and others were concerned about revealing just how much liquor had been consumed by the board is a fair indication that it was recognised that what was consumed was far above what could be justified. However, again, this was not an issue in the case.

19 There was then a part of the alleged minutes devoted to the appointment of G Rand as secretary/manager. Mr Glackin asked if any director had a personal conversation with Mr Rand prior to his appointment and the plaintiff said he had a cup of coffee with him, but only made small talk.

20 Mr Menzies' affidavit says that at that meeting, after hearing John Bell's answers to his questions, he was not satisfied that the plaintiff had not shown the report to Harry Lake. He said that even if that were not right, the plaintiff had been careless with confidential board papers and he was concerned about a careless breach of confidentiality. He was surprised that JB thought that there was nothing wrong with the memorandum which contained untrue allegations and offensive imputations about the directors, and noted that the plaintiff was the only person present who did not reject those allegations. He said he did not believe John Bell's responses to questions about the report on directors' expenses. He says he did not accept John Bell's answer that he had only spoken to Mr Rand in small talk.

21 Mr Gabriel said that he was unsatisfied with the plaintiff's responses to certain of the questions.

22 The minutes contain this note: "Moved AG that approval be given for permission for the Board's representatives to obtain legal advice on matters stated. Seconded by WR. Carried by the Board."

23 It would then appear that Messrs Menzies, Gabriel and Glackin called at the office of a firm whose letterhead describes it as "Walker Herceg Lawyers". It would seem that this is a business name used by a Ms Kathryn Roach. Ms Roach wrote Mr Menzies a letter of 19 May which commenced: "Thank you for your instructions to advise the Board of the Umina Beach Bowling Club Ltd (the Club) regarding the grounds upon which a director might be removed from office." Just pausing there it does not really appear that this was in accordance with what the board had resolved to seek legal advice. The letter indicated that it would be difficult to remove a director and that this was a power of the members, however article 16 gave the power to the board to suspend or cancel a membership. She pointed out that in employing article 16 common law principles of procedural fairness apply and that there are additional procedural requirements. The letter said that the board should meet to see whether the matters alleged were sufficiently grievous to warrant a hearing, it should then notify the member of a meeting for not less than seven days nor more than a month away, and that if there are any witnesses to be called to provide evidence of the alleged misconduct, written statements should be prepared and provided to the member a reasonable time before the second meeting. At the second meeting the board must put to the member each allegation, the member must be permitted to cross examine any witnesses and to call witnesses. The letter then went on to show that there must be reasonable proportionality in "penalty". She noted that suspension was less likely to be set aside by a court.

24 The next meeting was a regular meeting which was held at 9.15 am on 23 May 2003. All directors were present. There was no notice convening the meeting. However, when directors arrived they were given a photostat of a typed form, but there was written on in hand at the bottom:

"Close"
"Walker & Herceg – Letter"
"Date of Next Meeting".

25 Mr Menzies said that "I mentioned quickly each of the agenda items to be discussed that day and then said "There's a matter concerning a director which will be discussed at the end of the meeting. We will have to decide what is to be done, if anything, in relation to the director." John Bell did not make any response to that statement. Mr Glackin says that shortly after the meeting started, John Bell said: "I've got to leave at 12 today, there's something wrong with my leg and I've got to go to a doctor's appointment."

26 Mr Bell says that when he saw the agenda he did not know who Walker & Herceg were. At about noon John Bell said: "I need to be excused. I have a doctor's appointment". At that stage Mr Menzies said: "You are the director to be discussed at the end of this meeting." Mr Menzies said "John Bell shrugged his shoulders and did not say anything to me. He left the room and the meeting continued."

27 It is fairly plain that there was no proper notice given to Mr Bell as to what was to be discussed. Even if one can assume that there was a general dispensation with the giving of notices of meeting, at the very least special business had to be properly notified and the mere note "Walker & Herceg" at 9 am and being told at 12 noon when everyone knew, according to Mr Glackin, that Mr Bell had to leave at noon for a doctor's appointment, was completely inadequate.

28 However, the minutes show that a separate meeting called an extraordinary meeting of the board of directors opened at 12.20 pm. The minutes start by saying "John Bell was advised he is the subject of this meeting and was not present at the meeting." The minutes show that the letter from the lawyers was tabled and read. The minutes then said that "Annette" was called into the meeting and she was asked questions by the board. Then that David Falconer was called into the meeting. He gave various evidence to the board and then the minutes continued:

"JM [that is, Mr Menzies] summarised the evidence relating to points in the letter as follows.

1(b) Has been proven.

1(c) Shane Hill circulating the letter is an assumption.

1(d) Financial information was obtained from David Falconer. This is a fact.

1(e) Don Jolly knew expenses were up from last year. This is a fact.

Before GR was employed John Bell told him that he would show him a letter stating 'JM interferes with the running of the Club'.

There was general discussion.

BR [that is, Mr Raper] confirmed he believes there is reasonable evidence to bring John Bell up before the Board to give him the opportunity to resign. The meeting agreed.

Moved AG, Seconded PG that John Bell be brought before the meeting for conduct unbecoming and acting prejudicially towards the Club."

GR to draft letter to John Bell listing the charges and attaching these minutes.

There being no further business this meeting closed 1.05 pm."

29 Despite the way the minutes are worded for a three-quarter meeting, Mr Glackin swore that the discussion lasted three hours and Mr Gabriel, that it lasted approximately an hour.

30 After the meeting, it was not Mr Rand, the club secretary/manager, who drew up the charges. The evidence was that there was a meeting attended between Messrs Rand, Menzies and Gabriel. There was some evidence that Gabriel was the man who drew up the initial version of the charges. Whether this be so or not, it is quite clear that all three were involved. The statement of charges was then sent to the plaintiff. It was received a day late, so that the seven days' notice required by the Articles was not given, but the plaintiff deliberately waived this point when the meeting was put back a day.

31 On 5 June, the meeting commenced at 9.10 am.

32 Minutes were produced, but the evidence shows that the minutes were quite inadequate, at least in so far as the recording of the voting on the question of "penalty". The minutes show that Mr Bell was asked to vacate the boardroom so that the issue of his citation could be discussed. He left, there was discussion as to procedure, and then he was asked to re-enter. The plaintiff says that he requested the board to disqualify itself and have an independent arbitrator determine the matter, to make available to him any documentation that it was relying upon, and that two of the directors sitting on the board were involved in the assertion that his conduct was prejudicial to the club. He says all these objections were overruled. Mr Menzies agrees that the first of these objections was made and that he overruled it. Mr Menzies also said: "I did not believe there was any conflict of interest in either I or any of the other directors conducting the citation meeting. As chairman of the board it is my responsibility to ensure that the interests of the club are protected, and it is my responsibility to ensure that the citation meetings are properly conducted. I do not allow my personal feelings to interfere with making a fair, honest and unbiased assessment of the evidence at a citation meeting. In the nine years that I have been on the board I have chaired more than 30 citation meetings, and attended many more as director. I have never had any allegations made against me that I have been biased or unfair when participating in a citation meeting."

33 It would appear that there are a very large number of disciplinary hearings before this board for members who are drunk or who break out into a fight. It would seem that there had not been many, if any, meetings in which the question was conduct of a director which was not appreciated by other members of the board.

34 Mr Gabriel said that "With the letter of 26 May 2003, John Bell was supplied with a copy of the letter written by Greg Rand, a copy of the statement of Harry Lake, a copy of the print-out from the general ledger, and a copy of the club's constitution. John Bell, as a director of the club, would also have a copy of all the minutes of the meetings. … John Bell did not at any time prior to or during the citation meeting ask for any witnesses to be present or to be made available for questioning."

35 There is no actual evidence that Mr Bell did receive a copy of the minutes of 23 May. These minutes were not annexed to the club's letter of charge on page 59 of the bundle. There is no evidence that the "evidence" given to that meeting by Annette and David Falconer was ever put to Mr Bell. It is true that Mr Bell made it quite clear that he considered that the board had already made up its mind on the questions and it was just a waste of time taking their hearing of 5 June seriously. However, he did ask that he be given a fair hearing which was summarily denied by the chairman. Each of the "charges" was discussed for a while. The plaintiff denied most of what was put to him. On one occasion the chairman asked "Did you pass the letter on to Shane Hill?" to which the plaintiff replied "Why don't you ask Shane Hill?" The chairman's riposte was "We will" though as far as can be seen, he never did.

36 At the end of the "hearing", the chairman said "Now John Bell do you have any questions about the proceeding?" The plaintiff said he wanted to know who Walker Herceg is, to which the chairman said that they were solicitors in Sydney and the documents were subject to "legal and professional privilege". In other words, the plaintiff was never shown the documents which his prosecutors had received, doubtless at the cost of the board, which had been considered by the alleged board meeting on 23 May.

37 The minutes then record that Mr Bell was asked to vacate the room which he did; there was then a vote on the seven charges. On the first five the board voted decision was guilty and the last two, not proven. The minutes do not record that the voting was by secret ballot or that there was a two-thirds majority, both of which are required by the Articles. There was some evidence given that a secret ballot was in fact held. The minutes then record that John Menzies asked John Bell what he would consider a fair suspension, to which the plaintiff made no comment.

38 The minutes then say "John Menzies asked for a secret ballot". On the expressio unius rule, this would tend to suggest there was no secret ballot on the question of guilt. The minutes then record:

"Once votes completed these were handed back to Secretary Manager for counting the vote count was (5) five votes. All for a period of suspension of six months."

39 The oral evidence, especially that of Mr Glackin, shows that this was quite wrong. There was more than one ballot taken and the opinions of various members of the board were ranging from expulsion to suspension for 12 months and suspension for six months until on a final ballot the necessary majority for a six month suspension was carried.

40 I should note here that it is not at all clear that the plaintiff was aware of all the material which the board was likely to take into consideration either on the question of whether the charges were made out or "penalty".

41 "Penalty" may well be an inappropriate word to employ as the purpose of the procedure under article 16 is purely protective.

42 As I said, shortly afterwards the present summons was filed.

43 It was agreed between the parties that there would be points of claim and points of defence filed. I personally would not have agreed to such an order because there is little advantage in doing so. A statement of claim and a statement of defence define the issues properly, require the parties to put their oaths to what they are saying, and there can be deemed admissions. With points of claim, one tends to get a series of statements, some of which will be pressed at the trial, and others not.

44 Paragraph 7 of the points of claim says "The suspension was invalid". There are then listed 20 particulars including a suggestion that each of the allegations was ambiguous and meaningless. The important particulars and the ones which occupied time at the hearing were:

"xiii. The defendant breached the rules of natural justice because the directors decided to suspend the plaintiff at the meeting of 23 May 2003.
xiv. The defendant breached the rules of natural justice because the directors failed to consider, evaluate and form an opinion about the suspension in an honest and unbiased way at the suspension hearing.
xv. The defendant breached the rules of natural justice because the directors failed to consider, evaluate and form an opinion about the suspension at the suspension hearing, unaffected by an ulterior, or extraneous motive.
xvi. The defendant breached the rules of natural justice because the directors determined that the plaintiff would be suspended before hearing the evidence.
xvii. The defendant breached the rules of natural justice because a statement of 'evidence' was not provided to the plaintiff before the hearing."

45 The reason why I was relaxed about allowing all the defendant's inadmissible material into evidence was that that material alone made it fairly clear that the plaintiff's case was made out.

46 Ms Pepper for the club said that when considering questions of natural justice in a bowling club, one must not apply the same strict criteria as one might when adjudicating whether there had been natural justice afforded to the propositus on a more serious occasion.

47 Ms Pepper cited to me the decision of Bryson J in Thomson v Earlwood-Bardwell Park RSL [1999] NSWSC 243, where at [17] his Honour said:

"The application of the requirement to observe natural justice in a particular case must be considered in view of the facts of the case, the events and their circumstances, and an appraisal must be made for the particular case of the fairness of the procedure actually followed. There is no established table of rules of fair procedure for this purpose, except for requirements which can be stated in outlines of the broadest kind. It is necessary to keep in view the nature of the tribunal, of the functions which it is exercising and of the interests which are affected by the outcome. Conclusions about what procedural fairness requires expressed in cases relating to decisions by statutory bodies in public administration, affecting entitlement to hold public office or valuable private rights, cannot be applied readily or directly to decisions relating to proceedings of a social or sporting club, which affect interests of a different kind, important in themselves but not of high economic value and not affecting a person's livelihood. Decisions in clubs are made by voluntary officers without a regular or established course of procedure; disciplinary questions do not arise often enough for there to be an established course of procedure or any high degree of expertise in dealing with them, and there is a marked contrast with the situation of decisions by salaried public officers and tribunals which have powers under public law and are regularly resorted to."

48 Bryson J then cited from Calvin v Carr [1979] 1 NSWLR 1, 12, the following extract:

"While flagrant cases of injustice, including corruption or bias, must always be firmly dealt with by the Courts, the tendency, in their Lordships' opinion, in matters of domestic disputes should be to leave these to be settled by the agreed methods without requiring the formalities of judicial processes to be introduced."

49 One would have thought all that was non-controversial but of no assistance in the instant case.

50 Although decisions about expulsion from a bowling club do not have the same consequences as, for instance, suspension of a professional jockey, courts are not to ignore the rights of members of bowling clubs to a fair hearing. As Wootten J said in McKinnon v Grogan [1974] 1 NSWLR 295, 298:

"I consider that citizens are entitled to look to the courts for the same assistance in resolving disputes about the conduct of sporting, political and social organizations as they can expect in relation to commercial institutions. If it is not forthcoming, a vast and growing sector of the lives of people in the affluent society will be legal no man's land, in which disputes are settled not in accordance with justice and the fulfilment of deliberately undertaken obligations, but by deceit, craftiness, arrogant disregard of rights and other means which poison the institutions in which they exist, and destroy trust between members."

51 There are many reasons why the decision of the board on 5 June was so flawed as to be unsustainable. I will put aside matters that might be called technicalities, but in other circumstances would lead to a declaration of invalidity, such as the failure to convene meetings properly, the failure to notify members of the board of special business to be dealt with at regular meetings in due time, the probable invalid election of Mr Glackin to the board and relatively minor matters of this nature.

52 The basal reasons why the decision was invalid was that the leading members of the board, the chairman and the deputy chairman, Messrs Menzies and Gabriel, had clearly made up their minds on the issue of fact many months before and had acted as prosecutors as well as judges.

53 As I have already said, Mr Menzies swore in his affidavit that when he was concerned after the EGM on 13 April 2003 that confidential documents had been leaked, he made enquiries, he was given answers by Mr Bell which he candidly said he did not believe. How is such a person to be able to perform a quasi judicial task in considering whether or not he believes the defendant at the so-called citation hearing of 5 June?

54 However the conceded evidence goes even further than this. Not content merely to bring the matter to the attention of the board on 24 April, Messrs Menzies and Gabriel under the supposed authority of a fairly general board resolution, go to see solicitors to see how to remove Mr Bell from the board, take legal advice, without any prior notice add matters to the end of the ordinary meeting, know three hours before that meeting starts that Mr Bell cannot participate, call evidence from staff of the club, formulate their views as to that evidence, not only as to whether it constituted an answerable case, but whether it was correct and proved the case against Mr Bell, sat down with the manager to formulate the charges and then over opposition presided at the hearing. A clearer case of a prosecutor sitting in judgment could not be imagined.

55 Mr Glackin also participated in some of the prosecution style activities. He, however, does not appear to be as trenchantly opposed to the plaintiff as the others. I have thus merely concentrated on the activities of the ringleaders Messrs Menzies and Gabriel.

56 In Ethell v Whalan [1971] 1 NSWLR 416, Hope J in this Court, made it very clear that the test to be applied to disqualify a person from bias is: "Could that person be reasonably or substantially suspected of bias so that he is in substance and in fact an accuser"; see p 428. As Hope J pointed out, this test has been of long standing, originating from the decision of Leeson v General Council of Medical Education and Registration (1889) 43 Ch D 366.

57 It is not necessary to go into other aspects of the case. However, I will briefly note some of the points in case there is a retrial before the board.

58 I wholeheartedly agree that the question of whether the charges are made out is one for the board and not for the Court. However, because of that it is necessary that the board be unbiased and provide a fair hearing which it has not done.

59 Secondly, there was a goodly amount of material to suggest that the documents which Mr Bell was supposed to have distributed were confidential board documents. The suggestion seemed to be that merely because a document was produced at a board meeting or a director got hold of the document because he was at a board meeting, it was therefore confidential. That is putting the proposition far too highly. It may be that certain boards have policies as to confidentiality. There is no evidence in the instant case that that was so with this board. There are many documents which by their very nature cry out that they are confidential. Prime examples are documents dealing with the value of property which the board is contemplating buying or selling. However, the majority of documents which come before a board are documents which members of the board may need to discuss with other persons in order to be fully informed or to gain members' views or otherwise.

60 There was then a charge of misleading the board. Whilst under the Corporations Act all directors must act honestly, a board is not a Parliament and the convention of the constitution which requires a member of Parliament who has wilfully misled Parliament to resign, does not apply to them. The conduct must be something that impugns on the person's unfitness to be a member. It is hard to see how breach of a duty as a director falls into this category.

61 It is said that it was impossible for Messrs Menzies and Gabriel to recuse, because had they done so, the board would be left without a quorum. This was not the reason given by Mr Menzies when asked to step aside, rather that he could not contemplate his impartiality being questioned. The solution would have been to have appointed a committee to find the facts or, as suggested by the plaintiff, had an independent arbitrator, so that even though the board may have had to make the final decision, there would be an unbiased fact finder.

62 There was some suggestion that the whole manoeuvre was a ploy by the majority to ensure that as a person suspended in the month of September, Mr Bell would not be able to stand again as a director. I am not convinced that this conspiracy theory has been established. However, it was reinforced by the extreme reluctance of the board to put any evidence before the court in a matter in the expedition list and to disobey the orders of the Court requiring its evidence to be filed within the agreed time.

63 I made an order at the end of the hearing that the suspension be declared invalid and the plaintiff should receive indemnity costs. When I said this, Ms Pepper as she was entitled to do, contested the point, but having heard her, I confirmed what I had said. As I have indicated above, on the defendant's own case, the suspension was unsupportable. Despite that, the matter was fought out to the very end. When court time is wasted like this, indemnity costs must follow.

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Last Modified: 09/15/2003