Duff v Southport RSL Memorial Club Inc and Returned Services League

[2001] QSC 346

SUPREME COURT OF QUEENSLAND

CITATION:              Duff  v  Southport  RSL  Memorial  Club  Inc  and  Returned

Services League [2001] QSC 346

PARTIES:                 ROBERT JACK DUFF

(applicant)

v

SOUTHPORT          RSL          MEMORIAL          CLUB INCORPORATED

(first respondent)

and

TRUSTEES  OF  THE  RETURNED  AND  SERVICES LEAGUE OF AUSTRALIA (QUEENSLAND BRANCH) SOUTHPORT SUB-BRANCH

(second respondent)

FILE NO:                  S7844 of  2001

DIVISION:               Trial Division

DELIVERED ON:    25 September 2001

DELIVERED AT:     Brisbane

HEARING DATE:     19 September 2001

JUDGE:  Mackenzie J

ORDERS:                 1. It is declared, pursuant to s 418A and s 424 of the

Corporations Act that:

(a) The appointment of Robert Jack Duff as receiver and manager to the Club and the Sub-Branch dated 29

August 2001 is valid;

(b) That the receiver and manager be entitled to exercise his powers under the following security documents:

(i)Mortgage of Crown Lease dated 9 May 1996 given by  the  Sub-Branch  in  favour  of  the  National Australia   Bank   Limited   (“Bank”)   (registered number 701480475);

(ii)Mortgage   over   Sub-Lease   Number   701730260 dated 9 May 1996 given by the Club in favour of the Bank (registered number 701860709);

(iii)     Bill of Sale dated 4 November 1998 given by the

Club  in  favour  of  the  Bank  (registered  number

03846/98);

(iv)     Bill of Sale dated 20 January 1999 given by the

Club  in  favour  of  the  Bank  (registered  number

2

00403/99); and

(v)Bill of Sale dated 3 April 2000 given by the Sub- Branch in favour of the Bank (registered number

49180508 001114).

2.   The  application  for  costs  of  and  incidental  to  the proceedings, including reserved costs, is adjourned.

3.   I direct that notice of any application that the costs be paid by John David Evans be served on him within 3 days of delivery of judgment, together with a copy of this judgment.

4.   That written submissions concerning the appropriate order for costs be delivered to my Associate no later than 4pm on Wednesday 10 October 2001.

CATCHWORDS: PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – DECLARATIONS – application for a declaration pursuant to s 418A and s 424 Corporations Act – whether applicant has been validly appointed as receiver – whether member should have leave to be joined as party - whether  committee  has  power  under  rules  to  deal  with property.

Corporations Act 2001 (Cth), s 418A, s424

The Returned and Services League of Australia (Queensland

Branch) Act 1956 (Qld), s 3, s 4

Uniform Civil Procedural Rules (UCPR), r 69(1)(b)(i), r 69(1)(b)(ii)

The Returned and Services League of Australia (Queensland

Branch) Rules and By-Laws, r 74, r 75, r 78, r 87

Rendell-Short v Grier (1980) QdR 100, considered

COUNSEL:                J W  Peden for the applicant

SOLICITORS:          Mallesons Stephen Jaques for the applicant

[1]     MACKENZIE  J:     On  29  August  2001  Moynihan  SJA  granted  an  interim injunction restraining the Southport RSL Memorial Club Incorporated (“the Club”) and its servants and agents from interfering with the receiver and manager or his agents in dealing with the Club’s assets.  The receiver and manager had been appointed by the National Australia Bank (“the Bank”) in reliance on a variety of security  documents  executed  between  9  May  1996  and  3  April  2000.    The injunction was extended on 4 September 2001 by Mullins J and again by me, until delivery of judgment, on 19 September 2001.

[2]     The Returned and Services League of Australia (Queensland Branch) – Southport Sub-Branch (“the Sub-Branch”) also enters into the picture because the structure of the enterprise involves the Club, the Sub-Branch and the Sub-Branch’s Trustees

(“the Trustees”).    The Returned and Services League of Australia (Queensland

3

Branch) Act 1956 made provision for vesting of real and personal property of a Sub-Branch in Trustees appointed under the rules of the Sub-Branch (s 3).  So far as a person dealing with such Trustees is concerned, the Trustees are deemed to have the  same  powers  of  sale,  lease,  mortgage  and  disposition  over  property  as  if absolute owner (s 4).

[3]     In the present case there is a Crown Lease held by the Trustees over which the Club has a Sub-Lease.  On 9 May 1996 the Trustees gave a Bill of Mortgage over the Crown Lease to the Bank and the Club gave a Bill of Mortgage over the Sub-Lease. Subsequently, securities in the form of Bills of Sale were given in November 1998 and January 1999 by the Club and in April 2000 by the Sub-Branch.  The security extended to the Club’s business as well.  The current facilities are reflected in an amended and restated facility agreement dated 3 April 2001, amended on 31 May

2001.  There are cross-guarantees between the Club and the Trustees.

[4]     It is apparent that there have been financial problems in respect of the enterprise and proposals involving commercial entities for redevelopment of the site have been under discussion.  There has been internal dissension in which the genesis of the present proceedings lies.  When the matter was before me, Mr Evans, a member of  the  Sub-Branch  and  the  Club  sought  to  intervene  on  the  basis  of  UCPR r 9(1)(b)(i) and/or (ii). Prima facie, it seems he has been involved in a sub- committee concerned with a development proposal, propounded the interpretation of the rules relied on to challenge the validity of the receiver in correspondence and discussion, and supported the callings of a meeting in an abortive attempt to direct the trustees to oppose the application.

[5]     I formed the view that his presence as a party was not necessary, desirable, just or convenient  to  enable  the  court  to  adjudicate  effectively  and  completely  on  all matters  in  dispute  connected  with  the  proceedings.    Further,  the  nature  of  his resistance to the appointment of a receiver was clear enough from correspondence and other material before me.  It is essentially a question of interpretation of the relevant rules.  If the objection is ill-founded the case is not in a category where a member might have standing to commence proceedings to insist on compliance with the organisation’s rules, as in Rendell-Short v Grier (1980) QdR 100.

[6]     The receiver has been appointed under all of the securities, that is to say, over the mortgages and the Bills of Sale given by the Trustees over the Crown Lease and those over the Club’s Sub-Lease and business.  It was not submitted that there was any irregularity with respect to the process concerning securities over the Club’s assets.  However, interpretation of the Sub-Branch’s rules is advanced in support of the allegation that, in so far as the transactions were not approved by a general meeting of the Sub-Branch, there was no authority to enter into them.

[7]     Rule 74 of  The Returned and Services League of Australia (Queensland Branch) Rules and By-Laws provides that the management of each Sub-Branch is vested in a committee.  Pursuant to r 75 the committee is elected at an annual general meeting. Any  officer  may  be  removed  by  a  two-thirds  vote  of  those  present  at  an extraordinary  general  meeting  called  for  that  purpose  and  duly  convened  in accordance with the rules.  Rule 78 provides for an extraordinary general meeting to be called by requisition which specifies the object of the meeting.  Rule 87 provides for Trustees to be appointed by the Sub-Branch.  The property of the Sub-Branch is

4

vested in them.  They are required to “deal with property vested in them as the Sub- Branch shall by resolution direct ... “.  The argument concerning the alleged defect rests on r 87.

[8]     In my view, the construction relied on is without foundation.  A duly elected committee has vested in it the management of the Sub-Branch.  A decision taken by the Sub-Committee (the validity of which in this case was not questioned at the time) is for the purposes of the rules a decision of the Sub-Branch.  Accordingly, the resolution by the committee of the Sub-Branch that the Trustees deal with property in a particular way is valid.

[9]     There is evidence that a meeting on 2 May 1996, a minute of which is in evidence, was a meeting of the committee of the Sub-Branch.  There is also evidence that there was a meeting of the committee of the Sub-Branch on 25 May 2000 at which the Trustees were authorised to sign and deliver the variation documents referred to above.  Each of the security documents authorises appointment of a receiver and manager and the circumstances in which that may occur have arisen.  Accordingly, the receiver and manager is entitled to the relief sought in paragraph 1 of the originating application filed by leave on 29 August 2001.

[10]     Since  the  question  whether  the  person  who  attempted  to  intervene  should  be ordered to pay costs instead of the Club and/or the Sub-Branch was raised and it was intimated that Mr Evans would be put on notice in that regard, it is appropriate to  reserve  the  question  of  costs,  including  costs  reserved  on  the  two  previous occasions the matter was before the court.  To save expense of an appearance by counsel on this issue, I will make a direction that in the event of the applicant wishing to pursue the question of costs against Mr Evans, he be given notice of that intention within 3 days of delivery of this judgment.

[11]     An oral hearing will be only considered if it seems necessary to do so in the interests of justice.  Written submissions must be in the hands of my Associate no later than 4pm on Wednesday 10 October 2001.  In the event that no written submissions are received by that time, I will proceed on the assumption that it is not intended to make such submissions.  I will also hear the applicant forthwith on the question of whether it is necessary for the injunction to be further extended or not. I note, for reasons that are not apparent on the material before me, the original injunction was granted only against the Club and not the second respondent or the Sub-Branch.

[12]     The orders are as follows:

1. It is declared, pursuant to s 418A and s 424 of the Corporations Act that:

(a)The  appointment  of  Robert  Jack  Duff  as  receiver  and manager to the Club and the Sub-Branch dated 29 August

2001 is valid;

(b)That the receiver and manager be entitled to exercise his powers under the following security documents:

(i)        Mortgage of Crown Lease dated 9 May 1996 given by   the   Sub-Branch   in   favour   of   the   National Australia Bank Limited (“Bank”) (registered number

701480475);

5

(ii)       Mortgage over Sub-Lease Number 701730260 dated

9 May 1996 given by the Club in favour of the Bank

(registered number 701860709);

(iii)      Bill of Sale dated 4 November 1998 given by the

Club  in  favour  of  the  Bank  (registered  number

03846/98);

(iv)Bill of Sale dated 20 January 1999 given by the Club in favour of the Bank (registered number 00403/99); and

(v)Bill of Sale dated 3 April 2000 given by the Sub- Branch  in  favour  of  the  Bank  (registered  number

49180508001114).

2.The application for costs of and incidental to the proceedings, including reserved costs, is adjourned.

3.I direct that notice of any application that the costs be paid by John David Evans be served on him within 3 days of delivery of judgment, together with a  copy of this judgment.

4.That written submissions concerning the appropriate order for costs be delivered to my Associate no later than 4pm on Wednesday 10 October

2001.