In the matter of Old Newingtonians' Union Incorporated

[2024] NSWSC 619

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Old Newingtonians’ Union Incorporated [2024] NSWSC 619

Hearing dates:

20 May 2024

Date of orders:

20 May 2024

Decision date:

20 May 2024

Jurisdiction:

Equity - Corporations List

Before:

McGrath J

Decision:

Interlocutory injunction restraining council from appointing members as casual vacancies granted (see [45]).

Catchwords:

CORPORATIONS — meeting of members — requisition of special general meeting — where resolution for immediate vacation and re-appointment by election of elected council positions passed — where immediate re-election at special general meeting not practicable — where council instead proposes to fill vacancies on a casual basis — where there is a seriously arguable case that the council’s chosen approach is inconsistent with its governing rules and resolution — where the balance of convenience favours the grant of interlocutory injunctive relief

Legislation Cited:

Newington College Council Act 1922 (NSW)

Cases Cited:

Countouris v Kallos (2008) 67 ACSR 543; [2008] NSWSC 840

Cox v The Animal Welfare League of New South Wales [2017] NSWSC 374

Jaken Properties Australia Pty Limited v Anthony Naaman [2024] NSWSC 216

JC Jewels Pty Limited [2024] NSWSC 532

May v Walker [2023] NSWSC 1628

Nature’s Care Holdings Pty Limited v Chen [2024] NSWSC 14

Sri Guru Singh Sabah, Sydney Inc (The Sikh Association of Sydney) [2017] NSWSC 1092

Category:

Principal judgment

Parties:

Peter Prilis, John Venetoulis, Rodney Michael Bosman, Luke Raymond Webber, Herman Benjamin Smit, Adam William Paul Latham, Dallas Carrington Morgan (First to Seventh Plaintiffs)
Old Newingtonians’ Union Incorporated (Defendant)

Representation:

Counsel:
D Barlin (Plaintiffs)
No appearance (Defendant)

Solicitors:
Garland Hawthorn Brahe (Plaintiffs)
No appearance (Defendant)

File Number(s):

2024/00183766

Publication restriction:

Nil

Judgment – EX TEMPORE (rEVISED 23 MAY 2024)

INTRODUCTION

1. This application has been brought by originating process filed in court on 17 May 2024 by seven plaintiffs, the first of whom is Peter Prilis, against the defendant, Old Newingtonians’ Union Incorporated (ONU). The plaintiffs seek an order that the ONU, by its Council, be restrained from appointing members to the Council of the ONU pursuant to r 19.3 of the rules of the ONU (Rules).

2. The issue has arisen following a special general meeting of the ONU which was held on 27 March 2024. It is the outworkings of the resolutions said to have been passed at that meeting which form the subject of this application.

3. I note that the plaintiffs give the usual undertaking as to damages with respect to the interlocutory relief that they seek.

4. The application is supported by an affidavit of Peter Prilis sworn 17 May 2024, together with the documents which are exhibited to that affidavit.

5. I am satisfied from the affidavit of service of Brenden John Miller sworn 20 May 2024 that there has been service on the ONU in accordance with the orders that were made on 17 May 2024 by Black J, with that service taking place by email to particular email addresses. There has been no appearance on behalf of the ONU at the hearing today, including after the proceedings were called outside the court.

FACTUAL MATTERS

6. The ONU was created by those who have attended Newington College, which is an independent Uniting Church school located in Stanmore in Sydney. Newington was founded in 1863 at its initial location, Newington House, Silverwater, Sydney. In 1880, Newington moved to its present location in Stanmore.

7. Newington is administered by the Council for Newington College (College Council). The College Council was established pursuant to the Newington College Council Act 1922 (NSW), which also vested the property of Newington in the College Council to be held on trust, pursuant to the trusts contained in an indenture dated 23 October 1873. The College Council is distinct from, has a completely different role to, and is not to be confused with, the Council of the ONU.

8. The ONU was founded in 1895. The ONU is governed by the Rules. The Rules relevantly provide as follows:

1. Membership of the ONU (rr 3–7).

2. Establishment and maintenance of a register of members of the ONU (r 8).

3. The establishment of the Council which comprises members of the Executive, all Past Presidents of the ONU, the candidates nominated by the Council pursuant to r 45 who are elected to the College Council, Metropolitan Vice Presidents, Regional Vice Presidents, not more than 10 nor less than six eligible members of the ONU elected under r 16 who are known as Councillors and six ex officio members consisting of three school leavers of the two immediately preceding years (r 15.1).

4. An Executive who are the office bearers of the Council comprising the President, the Immediate Past President, the Honorary Secretary, the Assistant Honorary Secretary, the Honorary Treasurer, the Assistant Honorary Treasurer and the Chairman of the 70 Club or his delegate (r 15.2).

5. The last retiring President of the ONU is to assume the position of Immediate Past President of the Executive and shall, subject to the Rules, continue to hold office until the next annual general meeting, when the then President of the ONU retires and assumes the position of Immediate Past President, and all other Past Presidents of the ONU shall hold office on the Council until each one of them ceases to be a member of the ONU (r 15.3).

6. Election of members of the Executive or as Councillors (other than the Immediate Past President), which provides for the nomination of candidates to be made in writing and delivered in a particular manner to the Honorary Secretary and the ballot for the election to be conducted at the annual general meeting (r 16).

7. Casual vacancies in the office of a Council member (rr 19.1–19.3), which provisions state:

19.1   For the purposes of these Rules, a casual vacancy in the office of a Council member occurs if the Council member

(a)   Dies

(b)   ceases to be a member of the Union

(c) becomes and insolvent under administration with the meaning of the Corporations Law

(d)   resigns office by notice in writing given to the Honorary Secretary

(e)   If removed from office under Rule 20, or

(f)   becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental health.

19.2   (1) A Council member is deemed to offer his resignation if the Council member is absent without consent of the Council from three consecutive meetings of the Council.

(2) The Council shall at its next meeting determine whether to accept or reject the deemed resignation of that Council Member.

(3) A casual vacancy in the office of that Council member occurs if the Council determines to accept his deemed resignation.

(4) This Rule 19.2 shall not apply to Metropolitan Vice Presidents, Regional Past Presidents and Past Presidents.

19.3   In the event of a casual vacancy occurring in the Executive or the Councillors, the Council may appoint an eligible member of the Union to fill the vacancy and the member so appointed shall hold office, subject to these Rules, until the conclusion of the annual general meeting next following the date of appointment.

8. Removal of a Council member (r 20), which provisions state (all grammatical and typographical errors corrected in mark up):

(1) The Union in general meeting may by resolution remove any Council members from the Council before the expiration of that member's term of office and may be by resolution appoint another person to hold office until the expiration of the term of office of the Council member so removed.

(2) Where a Council member to whom a proposed referred to in Clause (1) of this Rule relates makes representations in writing to the Honorary Secretary, the Honorary Secretary may send a copy of the representations to each member of the union. If the representations are not so sent, the Council member is entitled to require that the representations be read out at the meeting at which the resolution is considered.

9. The procedure for meetings of the Council to take place, including that any 10 Councillors constitute a quorum for the transaction of the business of a meeting of the Council (r 21).

10. Delegation by the Council to committees (r 22).

11. Voting and decisions to be made by the Council (r 23).

12. Holding annual general meetings of the ONU not later than November in each calendar year and within six months after its expiration of each financial year (rr 24–25).

13. Holding special general meetings of the ONU (r 26), which provisions state:

(1) The Council may, whenever it thinks fit, convene a special general meeting of the Union.

(2) The Council shall, on the requisition in writing of not less than 20 members entitled to vote, convene a special general meeting of the Union

(3) A requisition of members for a special general meeting:

(a) shall state the purpose or purposes of the meeting

(b) shall be signed by the members making the requisition

(c) shall be lodged with the Honorary Secretary, and

(d) may consist of several documents in a similar form, each signed by one or more of the members making the requisition.

(4) If the Council fails to convene a special general meeting to be held within one month after the date on which a requisition of members for the meeting is lodged with the Honorary Secretary, any one or more of the members who made the requisitions may convene a special general meeting to be held not later than three months after that date.

(5) A special general meeting convened by a member or members as referred to in Clause (4) of this Rule shall be convened as nearly as is practicable in the same manner as general meetings are convened by the Council and any member who thereby incurs expense is entitled to be reimbursed by the Union for nay expense so incurred.

14. Notice for the holding of a general meeting of the ONU (r 27).

15. Procedure at general meetings of the ONU (r 28).

16. The President or the Immediate Past President is to preside as chairman at each general meeting of the ONU (r 29).

17. Adjournment of general meetings of the ONU (r 30), which provisions state:

30   (1) The chairman of a general meeting at which a quorum is present may, with the consent of the majority of the members present at the meeting, adjourn the meeting from time to time and place to place, but no business shall be transacted at an adjourned meeting other than the business left unfinished at the meeting at which the adjournment took place.

(2) Where a general meeting is adjourned for 14 days or more, the Honorary Secretary shall give written or oral notice of the adjourned meeting to each member of the Union stating the place, date and time of the meeting and the nature of business to be transacted at the meeting.

(3)   Except as provided in Clauses (1) and (2) of this Rule, notice of an adjournment of a general meeting or of the business to be transacted at an adjourned meeting is not required to be given.

18. Making of decisions at general meetings of the ONU (r 31), which provisions state:

31   (1) A question arising at a general meeting of the Union shall be determined on a show of hands and, unless before or on the declaration of the show of hands poll is demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously or carried by a particular majority or lost, or an entry to that effect in the minute book of the Union, is evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against that resolution.

(2) At a general meeting of the Union, a poll may be demanded by the chairman or by not less than 12 members present in person or by proxy at the meeting (being members entitled under these Rules to vote at a general meeting).

(3)   Where a poll is demanded at a general meeting, the poll shall be taken:

(a)   immediately in the case of a poll which relates to the election of the chairman of the meeting or to the question of an adjournment, or

(b)   in any case, in such manner and at such time before the close of the meeting as the chairman directs, and the resolution of the poll on the matter shall be deemed to be the resolution of the meeting on that matter.

19. Voting at general meetings of the ONU and the appointment of proxies at general meetings of the ONU (rr 33–34).

9. On 28 February 2024, 26 members of the ONU requisitioned the Honorary Secretary of the ONU to convene a special general meeting of the ONU. Amongst those members were all of the plaintiffs in these proceedings, other than Mr Prilis.

10. The requisition for the special general meeting sought the passing of a number of ordinary resolutions of the members of the ONU, amongst which was resolution 2 which sought:

That all of the elected positions on the ONU Council be immediately declared vacant and that there be elections of all the elected positions on the ONU Council immediately and at the [special general meeting].

11. On 13 March 2024, the Honorary Secretary of the ONU gave notice to its members of a special general meeting of the members of the ONU to be held on 27 March 2024 at the Wesley Conference Centre, Wesley Theatre, 220 Pitt Street, Sydney with registration from 6pm for a 7:30pm start. The form of the ordinary resolutions proposed was set out in the notice, including resolution 2 in the same form in which it had been stated in the requisition.

12. In advance of the special general meeting, there was correspondence regarding the way in which the meeting would proceed, and whether or not the resolutions sought would be put to the meeting. But by the time of the special general meeting on 27 March 2024, it was agreed that each of the resolutions the subject of the notice would be put to it.

13. The terms of the notice of the special general meeting stated that registration would take place from 6pm, and that the meeting would commence at 7.30pm. There was a very large turnout of members of the ONU at the special general meeting (estimated at around 1,000 members), such that it was not possible for the registrations to be completed within the 90 minutes which had been envisaged. Instead, the meeting did not commence until sometime around 9pm.

14. The voting at the special general meeting took place in person and also by proxy. Each of the resolutions, including proposed resolution 2, was put to a vote at the meeting and by proxy, but by the time the meeting completed, the outcome of the voting on each of those resolutions was not known. It was not until the following day that the results of the resolutions were announced. In the case of resolution 2, the total of the votes by poll and by proxy was 51.2% in favour and 48.74% against, meaning that resolution 2 was carried.

15. Unfortunately, because of the late start of the meeting and that it was not known until the following day whether or not resolution 2 had been passed during the course of the meeting, the further steps required to be taken to carry out resolution 2 (the elections of all the elected positions on the ONU Council) could not occur at the special general meeting. During the course of the meeting the chair (and President of the Council of the ONU), Alexander Pagonis, stated the following:

The meeting is opened. It is getting late and we are concerned that everyone is getting tired. We have opened the meeting so that ballots can start to be collected. There isn’t going to be time for an election tonight. If resolution 2 is successful then a committee made up of ex-officio past presidents will be tasked with holding an election within 4 weeks.

16. Subsequent to the special general meeting, there was correspondence which was issued on behalf of the Council of the ONU.

17. On 28 March 2024, a letter was sent out by Mr Pagonis as the outgoing President of the ONU to “Old Newingtonians” which referred to the special general meeting the previous evening and set out the results of the votes on each of the resolutions. At the conclusion of the letter, Mr Pagonis said:

On the basis of the above results, and as was advised at last night’s SGM, the ex-officio members of the ONU Council will now organise for an election of the elected members on the ONU council to be conducted in due course.

18. Unfortunately, what was anticipated to occur in the letter on 28 March 2024 does not seem to have continued to be held as the view of the Council of the ONU or, more accurately, some members of it.

19. On 2 May 2024, a letter was sent from the “ONU Past Presidents Committee” to “Old Newingtonians” which was titled “Call for Expressions of Interest - ONU Council Elected Positions”. This letter relevantly stated:

Following the outcomes of the recent SGM, a committee of Past Presidents of the ONU has been charged with the responsibility of convening an election for the (up to) 15 elected positions on the ONU Council. A group of 11 Past Presidents have been engaged in coordinating how this can best and most efficiently be done in accordance with the ONU’s Rules.

This has not been a straightforward undertaking. The constraints of the Rules are such that any election is only contemplated to take place at an AGM. Given the outcome of the SGM, any vacancies that currently exist on the ONU Council are casual vacancies and do not necessarily require an election, they can be filled by selections made by the ONU Council and hold their positions until the next AGM.

…

On this basis, the committee wishes to advise the following will occur in relation to the elected positions on the ONU Council:

1.    the ONU AGM in 2024 will be moved forward to the earliest possible date under the Rules so that an election can be facilitated at the earliest opportunity; and

2.    In order to fill the casual vacancies in the current ONU Council until the AGM, the committee is calling for expressions of interest from those members who wish to be selected for the (up to) 15 positions. The specifics of this process are set out below.

Following the SGM, casual vacancies exist in each of the following positions on the ONU Council:

· President

· Secretary

· Treasurer

· Assistant Secretary

· Assistant Treasurer; and

· Up to 10 Councillors.

Any members of the ONU who would like to express their interest in being appointed to these positions are welcome to do so. …

Following collation of all EOI’s, if there are more EOI’s than positions available for each role, a meeting of the ONU Council will be convened to give consideration to the fair means for the appointments to be made.

…

20. This letter appeared to suggest that the way in which the Council intended to deal with the vacancies that had been created by resolution 2 and the filling of those vacancies was by not immediately having an election as had been contemplated in resolution 2 but instead filling the vacancies on a casual basis in accordance with rule 19.3 of the Rules.

21. There then followed a series of communications in early May 2024 between Mr Prilis and Peter Hedge (one of the Past Presidents of the ONU) in which the disagreement as to the manner in which the Council proposed to proceed was voiced.

22. In summary, the respective positions put were:

1. Mr Hedge said that it was within the power of the ONU Council to fill casual vacancies and that those casual vacancies would be filled and those appointments would hold office until the end of the next annual general meeting at which time those elected at the annual general meeting would take office.

2. Mr Prilis said that the statement made at the conclusion of the special general meeting by the Chair that a committee made up of ex officio Past Presidents would be tasked with holding an election within four weeks was required to be pursued.

23. There is no evidence of whether there has been any meeting of the Council since the special general meeting on 27 March 2024. There is no evidence that there has been any resolution of the Council appointing the Past Presidents to act on behalf of the ONU Council. It is, however, evident that whatever is occurring is not what was contemplated by resolution 2 or the Chair’s statement at the special general meeting.

23. On 13 May 2024, the solicitors acting for the plaintiffs, Garland Hawthorn Brahe, sent a letter to Mr Ross Xenos (chief operating officer at Newington College) requesting an undertaking not to appoint members to the Council of the ONU via the method of expressions of interest as opposed to members being elected to the Council via an election process. There has been no response to that letter, and the undertaking that was requested in it has not been provided.

24. As I mentioned earlier, there has been no appearance on behalf of the Council of the ONU at this hearing.

LEGAL PRINCIPLES

26. In May v Walker [2023] NSWSC 1628 at [130]–[142], I set out the longstanding and orthodox principles for the determination of whether an interlocutory injunction of the type sought in these proceedings should be granted:

[130]   The task of a court determining whether to exercise the power to grant an interlocutory injunction is to do so in a manner which achieves justice between the parties pending the final hearing of the proceedings.

[131]   This was expressed in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2009] HCA 63, Gleeson CJ at [12] stating:

The justice and convenience of imposing interim restraint, pending the hearing of the final action, if it exists, lies in the need to prevent the practical destruction of that right before there has been an opportunity to have its existence finally established.

[132]   The principal inquiries to be made in deciding whether to grant an interlocutory injunction have been expressed in slightly different terms but to the same effect.

[133]   In Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; [1968] HCA 58, Mason ACJ at [11] said:

In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.

[134]   In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46, Gleeson CJ and Crennan J at [19], after repeating these inquiries, described them as:

…the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed.

[135]   In O’Neill, Gummow and Hayne JJ (with whose reasoning Gleeson CJ and Crennan J agreed) at [65] expressed the first inquiry in this manner (footnotes omitted):

The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:

The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.

[136]   The inquiry involving the balance of convenience is determined by whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1, Kitto, Taylor, Menzies and Owen JJ at 622–623. The plaintiff bears the onus of establishing that the balance of convenience lies in favour of granting the interlocutory injunction: O’Neill, Gummow and Hayne JJ at [71].

[137]   While the factors to be taken into account in determining where the balance of convenience lie will vary with the circumstances of each case, common ones include the strength of the plaintiff’s case, the hardship to the parties and third parties, delay, the utility of the proposed orders and the sufficiency of the plaintiff’s undertaking as to damages.

[138]   The strength of the party’s case for final relief is an important consideration in determining where the balance of convenience lies, there being a connection between the inquiry about the serious question to be tried and the balance of convenience. In Warner-Lambert Company LLC v Apotex Pty Ltd (2014) 106 IPR 218; [2014] FCAFC 59, Allsop CJ, Jagot and Nicholas JJ at [70] said:

Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party’s case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate.

[139]   The stronger the case for final relief and therefore the likelihood of success, the less is needed for the balance of convenience in favour of the grant of the interlocutory injunction: BMW Australia Ltd v Brewster (2019) 269 CLR 574; [2019] HCA 45, Edelman at [216].

[140]   The hardship to the parties and the nature of it is a central feature in the discretionary considerations to be addressed in the balance of convenience because it requires the court to assess the harm to the plaintiff if there is no injunction and the prejudice or harm to the defendant if the injunction is granted: Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238; [2011] FCAFC 156, Dowsett, Foster and Yates JJ at [62]. The question of whether damages would be an adequate remedy for the plaintiff must always be considered as part of this inquiry, which “involves an assessment by the court as to whether the plaintiff would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted”: Samsung at [62].

[141]   The interests of third parties are also relevant to the balance of convenience, including any detriment caused to them if an injunction were refused, and whilst the weight of those matters depends on the circumstances of the case, they will rarely be decisive: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1; [1998] HCA 30, Brennan CJ and McHugh, Gummow, Kirby and Hayne JJ at [65]–[66].

[142]   The giving of an undertaking as to damages by the plaintiff is generally an essential condition to the grant of an interlocutory injunction, unless there are exceptional circumstances: First Netcom Pty Ltd v Telstra Corp Ltd (2000) 101 FCR 77; [2000] FCA 1269, Beaumont, Burchett and Emmett JJ at [22]; Goater v Commonwealth Bank of Australia [2014] NSWCA 265, Ward JA (as her Honour was then) at [92]. If it is demonstrated that the plaintiff has no assets, the undertaking offered may be of no assistance, although there is no inflexible rule that plaintiff should be denied interlocutory relief unless a meaningful undertaking is given: Organic Marketing Australia Pty Ltd v Woolworths Ltd [2011] FCA 279, Katzman J at [69], citing Caravelle Investments Ltd v Martaban Ltd (1999) 95 FCR 85; [1999] FCA 1505 Finkelstein J at [25]. If it is known that a plaintiff does not have sufficient resources to satisfy an undertaking as to damages, it may provide a basis on which to refuse an interlocutory injunction: Bond v Gray [2013] NSWSC 1793 at [29]–[30].

27. Those principles are well known and the essence of them was recently repeated in JC Jewels Pty Limited [2024] NSWSC 532 by Pike J at [41]:

Whether the Court should grant the interlocutory relief sought in the present case involves application of the well understood test of:

(a)   Whether the plaintiff has established a prima facie case/serious question to be tried; and

(b)   Whether the balance of convenience favours the grant of relief.

(see, generally, ABC v O’Neill (2006) 227 CLR 57 at [65]ff per Gummow and Hayne JJ; Samsung v Apple (2011) 217 FCR 238 at [52]).

28. They were also stated in Nature’s Care Holdings Pty Ltd v Chen [2024] NSWSC 14 by Rees J at [41]:

The test in Australian law as to whether an interlocutory injunction should be granted is set out in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 by Gummow and Hayne JJ (with whom Gleeson CJ and Crennan J agreed) at 81 [65] (quoting with approval Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1):

The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

29. In addition, in terms of the serious question to be tried test, Richmond J in Jaken Properties Australia Pty Limited v Anthony Naaman [2024] NSWSC 216 at [46] observed:

By “serious question to be tried” is meant that the caveator must make out a prima facie case in the sense that, if the evidence remains as it is, there is a probability that at the trial of the action, the plaintiff will be entitled to relief: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at [620]. This does not mean that the Court must conclude that there is greater than an even chance of the plaintiff succeeding at trial; rather the degree or probability of success required is simply that which the Court thinks sufficient, in the particular case, to warrant preservation of the status quo: Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 737; Australian Broadcasting Corporation v Neill (2006) 227 CLR 57; [2006] HCA 46 at [65]. In my view, that test is satisfied in the present case for the same reasons that lead to the conclusion that Mr Naaman still has a good arguable case in respect of both his claim for equitable compensation based on breach of fiduciary duty and his claim based on s 37A of the Conveyancing Act.

CONSIDERATION

Serious question to be tried

30. Turning first to the question of whether there is a serious question to be tried in this case, I direct my attention to the way in which the Council appears to be pursuing the filling of vacancies on the Council by reference to the casual vacancy provision in r 19.3 of the Rules. In my consideration, there is a seriously arguable case that the Council cannot proceed pursuant to r 19.3 in light of the terms of resolution 2 which was passed at the special general meeting on 27 March 2024 and which requires an election to be held.

31. There is a seriously arguable case that the terms of resolution 2 as carried at the special general meeting requires there to be an election of the elected positions on the ONU Council immediately, and at the special general meeting. But this election did not take place because the Chair of that meeting determined that such an election would not be able to be completed at the meeting because of the lack of time, and instead directed, as contemplated by r 31(3), that a poll should be taken as the Chair directed, which was to be by the holding of an election within four weeks.

32. In my consideration, there is a seriously arguable case that the Chair in fact made such a direction at that meeting and therefore, the manner and time at which that poll was to take place is as contemplated by what was directed by the Chair.

33. Argument was put to me in relation to the operation of r 20 of the Rules. Unfortunately, r 20 is unhappily drafted, replete with several important drafting errors which make it difficult to read. However, it would appear that what is contemplated by r 20, should those drafting errors be overlooked and on a proper construction that gives it meaning, is that what should have in fact taken place at the special general meeting was that there should have been a further resolution that was required to appoint a person to hold office until the expiration of the term of the office holder of the Council member(s) who had been removed.

34. In other words, whilst there was provision in resolution 2 for the removal of Council members by resolution, there was not in resolution 2 or in any other resolution, the provision for the appointment of nominated persons to immediately fill the vacancy. For that reason, whilst resolution 2 was carried, it did not resolve who in fact was to be appointed in place of those who were to be removed.

Balance of convenience

35. Turning to the question of the balance of convenience, the evidence indicates that the nominations which have been sought by the Committee of Past Presidents of the Council close at the end of today. There is obviously in train a process pursuant to which people are nominating for the vacant positions on the Council, but it seems to me that to allow that process to continue where it is seriously arguably not in accordance with the Rules will cause significant prejudice by allowing people to be appointed rather than elected to the Council.

36. As matters presently stand, it appears that no appointments of any new members to the Council have occurred. The status quo which should be preserved is that there should be no appointments of such persons pursuant to r 19.3.

37. There has been no delay on the part of the plaintiffs in bringing this matter to court. It has only been in the past three weeks that it has become clear exactly how the Council proposed to proceed after the resolutions passed at the special general meeting.

38. Whilst the making of any interlocutory order of the sort for which application is made by the plaintiffs does not mandate the procedure by which the vacancies on the Council will be filled, at least the interlocutory injunction would restrain the Council from proceeding in a way in which I consider it is seriously arguable they are not permitted to do.

39. One of the matters to which I need to give consideration in the balance of convenience is the strength of the case that is made for final relief. I do not consider the plaintiffs’ case to be overwhelmingly strong, but it does seem to me that it is sufficiently strong that the balance of convenience lies in favour of the grant of the interlocutory injunction.

40. The matter which is of primary concern to me is that resolution 2 was passed by a vote of the members at the special general meeting, but what appears to have taken place subsequent to that is not in keeping with what one would expect resolution 2 permits.

41. I am also guided by the fact that the members of the Council who were removed by resolution 2 do not comprise the whole of the Council. From my understanding of the position, when all of the members of the Council are present, there is something in the order of 30 plus members of the Council. It appears that the vacancy has been created in respect of 15 of those positions, which means that the Council can still continue to operate, as under r 21(5) there is a required quorum of 10 Council members pending the holding of and the declaration of any election which might be held in due course to fill the vacancies.

42. It does not seem to me that there are any significant adverse practical consequences to the ONU if the interlocutory injunction is granted.

43. On the other hand, if the interlocutory injunction is not granted and the vacancies on the Council are filled by way of the process that the Council appears to have in mind, the effect of resolution 2 that was passed by the members would be rendered nugatory, and the wish of the majority of the members of the ONU would effectively be ignored. The courts have been reticent to become involved in the affairs of organisations where it would have the effect of subverting the will of the members in matters such as election processes: see Countouris v Kallos (2008) 67 ACSR 543; [2008] NSWSC 840, Young CJ in Eq at [14]; Cox v The Animal Welfare League of New South Wales [2017] NSWSC 374, Ward CJ in Eq (as the President then was) at [30]–[31]; In the matter of Sri Guru Singh Sabah, Sydney Inc (The Sikh Association of Sydney) [2017] NSWSC 1092, Brereton J at [37]. But in my view, the obverse is true: the court should become involved in election processes where what is envisaged is not in keeping with the will of the members.

44. Taking all these matters into account, it appears to me that the balance of convenience lies in favour of the grant of the interlocutory injunction sought.

ORDERS

45. For the reasons expressed above, I propose to order:

1. Upon the plaintiffs giving the usual undertaking as to damages, until 20 June 2024 or further order, order that the defendant, by its Council, be restrained from appointing members to the Council of the defendant pursuant to r 19.3 of the Rules of the defendant.

2. Reserve all question of costs.

3. Order that the plaintiffs file and serve any further evidence in support of the originating process filed on 17 May 2024 on or before 4pm on 10 June 2024.

4. Order that the matter be listed for further directions in the Corporations’ Directions List on 17 June 2024.

5. Order that these orders be entered forthwith.

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Decision last updated: 23 May 2024