Lukaszewicz v Polish Club Ltd

[2019] NSWSC 446

Supreme Court

New South Wales

Medium Neutral Citation:

Lukaszewicz v Polish Club Limited [2019] NSWSC 446

Hearing dates:

29 – 31 January; 1 February; 6 February; 22 February; 26 – 28 February; 1 March; 5 – 8 March 2019

Decision date:

23 April 2019

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Declarations to be made in respect of conduct as to admission and exclusion of members of the Club. Other declarations sought by the Plaintiffs not made and relief sought by the Plaintiffs not granted.

 Directions to be made for the conduct of an inquiry as to damages suffered by the Club, and to the extent applicable the other Defendants and any third parties, which may fall within the scope of the Plaintiffs’ undertaking as to damages given in support of interlocutory relief.

Catchwords:

CORPORATIONS – members’ rights and remedies – oppression – admission of applicants to membership of a social club – where board of the club has rejected many applicants for admission to membership – whether the conduct resulting in the rejection of those applications constituted oppression – whether a declaration should be made to that effect if that conduct was oppressive – whether a receiver should be appointed if the conduct constituted oppression.

 

CORPORATIONS – members’ rights and remedies – oppression – conduct of general meeting – where members were excluded from general meeting – whether exclusion of members from meeting was oppressive – whether resolution passed at general meeting should be set aside.

  CORPORATIONS – members’ rights and remedies – oppression – whether the appointment of a court-appointed receiver would be appropriate relief.

Legislation Cited:

- Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)
- Corporations Act 2001 (Cth) ss 53, 232, 233, 233(1)(h), 233(1)(j), 237
- Evidence Act 1995 (NSW) ss 136, 140
- Registered Clubs Act 1976 (NSW) s 41J

Cases Cited:

- Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyd’s Rep 1
- Bale v Mills [2011] NSWCA 226; (2011) 81 NSWLR 498
- Briginshaw v Briginshaw (1938) 60 CLR 336
- Browne v Dunn (1893) 6 R 67
- Bull v The Australian Quarter Horse Association [2014] NSWSC 1665
- Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
- Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39
- Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55; (2014) 314 ALR 62
- CECA Institute Pty Ltd v Australian Council for Private Education & Training (2010) 30 VR 555
- Craig v Silverbrook [2013] NSWSC 1687
- Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
- Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672
- Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
- Gaiman v National Association for Mental Health [1971] Ch 317
- Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd [2011] FCA 1154; (2011) 86 ACSR 393
- John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1
- John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63
- Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc [2015] NSWSC 638
- LPD Holdings (Aust) Pty Ltd v Phillips [2013] QSC 225; (2013) 281 FLR 227
- McInnes v Onslow-Fane [1978] 1 WLR 1520
- Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1
- Mopeke Pty Ltd v Airport Fine Foods Pty Ltd [2007] NSWSC 153; (2007) 61 ACSR 395
- Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692
- Munstermann v Rayward [2017] NSWSC 133
- Pettit v South Australian Harness Racing Club Inc [2006] SASC 306; (2006) 95 SASR 543
- Re Carlton Football Club Ltd; Gratton v Carlton Football Ltd [2004] VSC 379; (2004) 51 ACSR 29
- Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233
- Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd [2018] NSWSC 1315
- Re JGS Investment Holdings Pty Ltd [2014] NSWSC 1532
- Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) [2018] WASC 124; (2018) 126 ACSR 370
- State of New South Wales v Hunt [2014] NSWCA 47
- Taxa Australia Pty Ltd v Wang [2016] NSWSC 1913
- Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610
- Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104
- Watson v Foxman (1995) 49 NSWLR 315
- Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1994) 180 CLR 459
- Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 89 ACSR 1

Category:

Principal judgment

Parties:

Kazimiera Lukaszewicz (First Plaintiff)
Mick Wykrota (Second Plaintiff)
Waclaw Jagoszewski (Third Plaintiff)
Dariusz Plust (Fourth Plaintiff)
Polish Club Limited (First Defendant)
Ryszard Borysiewicz (Second Defendant)
Hania Geras (Third Defendant)
Robert Czernkowski (Fourth Defendant)
Mateusz Konopka (Fifth Defendant)
Eleonora Olivia Danuta Paton (Sixth Defendant)

Representation:

Counsel:
M B Evans/E P Anderson (Plaintiffs)
M T McCulloch SC/R W Notley (Defendants)

  Solicitors:
Knap Lawyers (Plaintiffs)
Wotton + Kearney (Defendants)

File Number(s):

2017/90789

Judgment

Background

1. By a sprawling Second Further Amended Statement of Claim (“SFASC”), the Plaintiffs seek a range of relief in respect of the affairs of the First Defendant, Polish Club Limited (“Club”). The First Plaintiff, Ms Lukaszewicz (“KL”) is a life member of the Club and has been a member for many years (SFASC [12], Defence [12]). The Second Plaintiff, Mr Wykrota (“MW”), has been a general or ordinary member of the Club for many years (SFASC [13], Defence [13]). The Third Plaintiff, Mr Jagoszewski (“WJ”) claims to have been an ordinary member of the Club from 1991 until 16 May 2014, a director of the Club for a period that is in dispute and was suspended indefinitely as a member of the Club in May 2014 (SFASC [15], Defence [15]). The Fourth Plaintiff, Mr Plust (“DP”), was an ordinary member of the Club from 2011 or 2012 until May or June 2014 and, in May 2014, he was suspended indefinitely as a member of the Club (SFASC [17], Defence [17]).

2. As I noted above, the Club is the First Defendant to the proceedings. The Club is a company limited by guarantee and is also a registered club under the Registered Clubs Act 1976 (NSW). The Club operates as a licensed social club catering primarily to the Polish community of Sydney, in particular the Polish community in and around the inner western suburbs of Sydney, and has operated as a social club of that kind since about 5 August 1964 (SFASC [2]-[3], Defence [2]-[3]). The Club is the registered proprietor of real property known as 73-75 Norton Street, Ashfield (SFASC [5], Defence [5]). The Club’s current premises are located at 73 Norton Street and the adjoining land at 75 Norton Street contains a building that has not been occupied since it was damaged by fire in 2003 and a car park that the Club makes available for paid use during the day.

3. Clause 50 of the Club’s articles of association provides that it is to be managed and controlled by a committee consisting of a President, a Senior Vice-President, a Junior Vice-President, Honorary Secretary, Honorary Treasurer and four members of the Club. I will refer to that committee as the “management committee” or “board” and to its members as “directors”. The Second to Sixth Defendants are currently members of the Club’s management committee. They became members of that committee at different times, a matter that is of significance to some of the findings that I reach below.

4. The Second Defendant, Mr Borysiewicz (“RB”) has been a director and President of the Club since early 2013 (SFASC [6]-[7], Defence [6]-[7]). The Third Defendant, Ms Geras (“HG”) has been a director of the Club since 6 December 2015 and is currently its Junior Vice-President. The Plaintiffs plead that, since about August 2013, she has also acted as Secretary or de facto Secretary of the Club (SFASC [8], Defence [8]), although that allegation did not appear to have any significance for the issues to be determined in the proceedings. The Fourth Defendant, Mr Czernkowski (“RC”) has been a director of the Club since 3 May 2015 and is currently its Deputy Treasurer (SFASC [9], Defence [9]). The Fifth Defendant, Mr Konopka (“MK”) has been a director of the club since 8 April 2013 and is currently its Treasurer (SFASC [10], Defence [10]). The Sixth Defendant, Ms Paton (“EP”), has been a director since 16 March 2014 and is currently its Secretary (SFASC [11], Defence [11]), although HG in fact performs a number of functions often associated with a company secretary’s role.

5. These proceedings were commenced by the Plaintiffs on 24 March 2017 by the filing of a Summons in Court with the leave of the Equity Duty Judge, and the Plaintiffs then obtained an ex parte order restraining the Defendants from taking any steps to sell or dispose of the Club’s real property. The Defendants subsequently consented to the injunction continuing until further order on a without admissions basis. On 16 July 2018, the injunction was varied so that the Defendants were permitted to undertake discussions with third parties about possibilities for development and/or sale of 75 Norton Street; receive expressions of interest, including but not limited to plans and proposals for the development of 75 Norton Street; and engage in discussions with persons who submit, or who may submit, expressions of interest. That injunction, as subsequently varied, remains in effect. I will address the question whether it should be continued on a final basis or discharged below.

The applicable legal principles

6. I now turn to the applicable legal principles; then to the extensive affidavit evidence; and then reach findings as to the range of matters in issue. The Plaintiffs’ case was largely brought as an oppression claim. Both parties addressed the case law in submissions and there was a degree of common ground as to the applicable principles.

7. Section 232 of the Corporations Act 2001 (Cth) provides that the Court may make an order under s 233 if the conduct of a company’s affairs; an actual or proposed act or omission by or on behalf of a company; or a resolution, or a proposed resolution, of members or a class of members of a company, is either contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. Section 53 of the Corporations Act in turn identifies the “affairs” of a company for the purposes of s 232 as including specified matters. If one or more of the grounds identified in s 232 are established, the Court may “make any order under this section that it considers appropriate in relation to the company” under s 233 of the Act. That section identifies several orders that can be made, including an order restraining a person from engaging in specified conduct or from doing a specified act; or requiring a person to do a specified act.

8. Section 232 of the Corporations Act and its predecessors broadly extend to conduct involving “commercial unfairness”; or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play; or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair, or that is, in light of all the relevant circumstances, “inequitable or unjust”: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459; Mopeke Pty Ltd v Airport Fine Foods Pty Ltd [2007] NSWSC 153; (2007) 61 ACSR 395 at [25]. Mr Evans, who appears with Mr E Anderson for the Plaintiffs, points out that the Club is a social club and does not operate for the profit of its members, and submits that a test of whether the conduct is “inequitable or unjust” should be preferred to one of “commercial unfairness” in those circumstances. It seems to me that the application of each test in the present circumstances would lead to the same result.

9. In Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610, Richardson J observed (at 618) that:

“Fairness cannot be assessed in a vacuum or simply from one member’s point of view. It will often depend on weighing conflicting interests of different groups within the company. It is a matter of balancing all the interests involved in terms of the policies underlying the companies legislation in general and sec. 209 [of the NZ legislation] in particular: thus to have regard to the principles governing the duties of a director in the conduct of the affairs of a company and the rights and duties of a majority shareholder in relation to the minority; but to recognise that sec. 209 is a remedial provision designed to allow the Court to intervene where there is a visible departure from the standards of fair dealing; and in the light of the history and structure of the particular company and the reasonable expectations of the members to determine whether the detriment occasioned to the complaining member’s interests arising from the acts or conduct of the company in that way is justifiable.”

10. Both parties also refer to Wayde v New South Wales Rugby League above at 472-473, where Brennan J observed, in respect of a predecessor section to s 232 of the Corporations Act:

“Section 320 requires proof of oppression or proof of unfairness: proof of mere prejudice to or discrimination against a member is insufficient to attract the court's jurisdiction to intervene. In the case of some discretionary powers, any prejudice to a member or any discrimination against him may be a badge of unfairness in the exercise of the power, but not when the discretionary power contemplates the effecting of prejudice or discrimination. It is not necessary now to decide whether “oppressive” carries in the context of s. 320 the meaning which it carried in the context of the statutory precursors of s. 320. At a minimum, oppression imports unfairness and that is the critical question in the present case.

It is not necessarily unfair for directors in good faith to advance one of the objects of the company to the prejudice of a member where the advancement of the object necessarily entails prejudice to that member or discrimination against him. Prima facie, it is for the directors and not for the court to decide whether the furthering of a corporate object which is inimical to a member's interests should prevail over those interests or whether some balance should be struck between them … The question of unfairness is one of fact and degree which s. 320 requires the Court to determine, but not without regard to the view which the directors themselves have formed and not without allowing for any special skill, knowledge and acumen possessed by the directors. The operation of s. 320 may be attracted to a decision made by directors which is made in good faith for a purpose within the directors' power but which reasonable directors would think to be unfair. The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision.”

11. Mr Evans also referred to Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 as authority that oppression can be established by conduct on the part of one who thinks that he or she is acting rightly. Mr Evans also pointed out that it is not a complete defence to the Plaintiffs’ claim of oppression for the Defendants to say that they were acting in accordance with the terms of the Club’s constitution, as a contract between the Club and its members, and referred to Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104 where Campbell JA noted at [176] that:

“It is perfectly possible for there to be the type of commercial unfairness that generates a remedy under section 232 even if no breach of contract is involved, and even if there is no departure from a position to which a party is bound by an estoppel: [Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672] at [4] per Spigelman CJ ( "... the jurisdiction should not be confined by technical distinctions..." ), O'Neill v Phillips [1999] 1 WLR 1092 at 1098-1101. As Lord Hoffmann said in O'Neill, at 1098, the legislative history of the corresponding English provision shows that Parliament "chose this concept [of unfairly prejudicial] to free the court from technical considerations of legal right and to confer a wide power to do what appeared just and equitable" , where that notion of "just and equitable" must itself be guided by principle. His Lordship recognised, at 1099, that "unfairness may consist in a breach of the rules" (by which he meant the articles of association or collateral agreements between the shareholders) "or in using the rules in a manner which equity would regard as contrary to good faith" . He also recognised, at 1101, that it was incorrect "that exercising rights in breach of some promise or undertaking is the only form of conduct which will be regarded as unfair for the purposes of s 459." He recognised, at 1099-1100, that "the notion of fairness in s 459 does not mean that conduct will not be unfair unless it would have justified an order to wind up the company".

12. In Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55; (2014) 314 ALR 62 at [9], the Full Court of the Federal Court of Australia observed that:

“The test of unfairness requires an objective assessment of the conduct in question with regard to the particular context in which the conduct occurs. The question is whether objectively in the eyes of the commercial bystander there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the conduct or decision fair. As the test is objective, whether or not the conduct is oppressive will not depend upon the motives for what was done. It is the effect of the acts that is material …”

13. Mr McCulloch, who appears with Mr Notley for the Defendants, also refers to Hallen J’s observation in Bull v The Australian Quarter Horse Association [2014] NSWSC 1665 at [326] that:

“In a non-commercial corporation, fairness and conversely, unfairness, are to be assessed from the vantage point of a hypothetical, reasonable observer associated with the relevant corporation.”

14. The principles applicable to an oppression claim were identified by Stevenson J in Munstermann v Rayward [2017] NSWSC 133 at [22] as including the following:

“(1)    The test of oppression is an objective one of unfairness ...

(2)    The court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly …

(3) A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director ...

(4)    Conduct of a company’s affairs may be oppressive even though the conduct is otherwise lawful ...

(7) The court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined as at the date of the hearing …

(8) The discretion under s 233 is wide as to the appropriate remedy …

(9) The nature of the remedy chosen by the court under s 233 will be dependent upon the conclusions drawn by the court as to the type of oppression with which the court is dealing and the court will choose the remedy which is least intrusive ….

(10) The aim of any order under s 233 must be to put an end to the oppression …” (citations omitted)

15. Mr McCulloch in turn refers to Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 4) [2018] WASC 124; (2018) 126 ACSR 370 at [99]-[103], dealing with the equivalent provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), where Pritchard J observed that:

“The meaning of the phrase 'contrary to the interests of the members as a whole' in the corporations legislation has been equated with 'the benefit of the company as a whole'.

The interests of the members, considered as a whole, are 'circumscribed by, and found within, the constituting documents of the company'. So, for example, to exclude a member from membership of a corporation, contrary to its articles, may be contrary to the interests of the members of the company as a whole.

The requirement that an exercise of a corporation's powers be for the benefit of the members as a whole is to exclude their exercise for 'ulterior special and particular advantages'. The provision is directed to 'purposes foreign to the association's operations, affairs and organizations'.

Conduct by a board of directors will be contrary to the interests of the members as a whole if no board, acting reasonably, could have engaged in that conduct. It is not necessary to show bad faith on the part of the directors. In other words, conduct may be contrary to the interests of the members as a whole even though the board of directors does not act in bad faith.

In considering an allegation that conduct was contrary to the interests of the members as a whole, the courts will not assume the management of corporations, so as to substitute their decisions and assessments (about the merits of particular management decisions) for those of the directors. Consequently, in order to show that a decision was not in the overall interests of the members as a whole, it has to be shown that the decision of the board of directors was such that no board acting reasonably could have made it.” (citations omitted)

16. Her Honour also there observed at [115] that:

“In determining whether conduct is oppressive within the meaning of the section, the courts are not concerned with reviewing the underlying merits of the decisions of the directors. The courts do not substitute their discretion for the discretion exercised in good faith by the board. Actions for oppressive conduct are not the vehicle for de facto appeals on the merits of management decisions. By way of example, in the context of membership disputes, it is not for the Court to determine whether membership applications are bona fide. In those cases where the decision making body (whether the directors, a management committee or otherwise) has a very broad discretion to accept or reject membership applications, the Court will be very slow to interfere with decisions made in good faith. That principle recognises that there may be many legitimate reasons why a decision maker for a corporation or association would reject a membership application, ranging from a determination that the aims and aspirations of the applicant are not consistent with the objects of the corporation or association, to questions of capacity where the association does not have the ability to cater for an influx of members.” (citations omitted)

17. Mr McCulloch also refers to my summary of the relevant principles in several cases involving family and commercial companies, most recently in Re ICB Medical Distributors Pty Ltd and The International College of Biomechanics Pty Ltd [2018] NSWSC 1315 at [67] as follows:

“Section 232 of the Corporations Act and its predecessors extend to conduct involving “commercial unfairness” or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play, or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459. In Morgan v 45 Flers Avenue Pty Ltd above at 704, Young J observed that the phrases “oppressive, unfairly prejudicial or unfairly discriminatory” in a predecessor to s 232 of the Corporations Act should be construed as “a composite whole and the individual elements mentioned in the section should be considered merely as different aspects of the essential criterion, namely commercial unfairness”. His Honour also there noted that whether oppression was established was to be determined by reference to the nature of the business carried on by the company and the nature of the relations between its participants and:

‘whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair.’”

Affidavit evidence

18. A substantial volume of affidavit evidence was read, and there were significant differences in the witnesses’ evidence as to contested conversations, with limited contemporaneous correspondence that would assist in resolving those differences. I have had regard to the fallibility of human memory, particularly when disputes intervene, in determining these proceedings. In an often quoted observation in Watson v Foxman (1995) 49 NSWLR 315 at 319, McLelland CJ in Eq observed that:

“… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

19. In Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 129, Gleeson CJ, Gummow and Kirby JJ similarly observed that:

“Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical.”

20. I have also had regard to the fact that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness’s motives and the overall probabilities: Armagas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyd’s Rep 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56]. I summarised the applicable principles in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 at [10] and in Re ICB Medical Distributors Pty Ltd above at [32], on which I have drawn for the summary which appears above. To the extent that credit issues need to be determined in respect of particular conversations, I have had regard to the fact that objective evidence is likely to be the most reliable basis for determining them, although that principle is of limited practical assistance in this case.

21. The Plaintiffs read numerous affidavits and a number of witnesses they called were not cross-examined. There were significant difficulties with the form of a number of those affidavits and I admitted significant parts of those affidavits with limiting orders under s 136 of the Evidence Act 1995 (NSW) as submission or as evidence of that witness’s understanding of particular matters. I took that course because it seemed to me preferable to admit that evidence, despite the difficulties of its form, with appropriate limiting orders rather than to leave those witnesses with an impression that they had been deprived of an opportunity to be heard. The evidence admitted as submission was not itself probative of facts that were not otherwise proved, and the evidence admitted as evidence of that witness’s understanding was only significant where that understanding was itself a significant matter.

22. Several statements alleged to have been made by individual Defendants and recorded in the Plaintiffs’ affidavit evidence might amount to admissions of improper purpose on the part of members of the Club’s management committee. I have been conscious of the risk, which seems to me to be substantial given the animosity between the parties, that that evidence might have been consciously or unconsciously tailored to support the Plaintiffs’ case. I have also taken into account the fact that comments against interest, or in the nature of admissions, are less likely to be made to the opposing party in an adversarial setting. Some of those comments are consistent with views expressed or inferences that can be drawn from contemporaneous correspondence.

The Plaintiffs’ affidavits

23. I will first refer to the affidavits of the Plaintiffs and then to other affidavits read in their case. The Plaintiffs relied on several affidavits of the First Plaintiff, KL. KL was cross-examined, giving her evidence in cross-examination through an interpreter although she had sworn her affidavits without the assistance of an interpreter. I accept her evidence that she took that course because of her concern that she might not be able to understand questions in a spoken environment, where English was not her first language, although it was apparent that she largely understood questions without the need for translation and she often answered them in English. KL often did not respond to questions in a direct manner, although I was not left with any impression that she was deliberately seeking to avoid engaging with the substance of those questions. There were also occasions on which I had the impression that KL did not understand questions that were put to her in cross-examination, and difficulties may also have arisen from the process of translation of the questions and some of her answers. KL’s evidence was inevitably coloured by her views as to the issues in dispute.

24. In her first affidavit dated 22 March 2017, KL gave evidence of a general meeting of the Club held on 19 March 2017 (“March 2017 AGM”), to which I refer in dealing with that matter below. The Plaintiffs also read a second affidavit of KL dated 23 August 2018 which referred (in evidence largely admitted as evidence of her understanding with a limiting order under s 136 of the Evidence Act) to some members’ support for Mr and Mrs Gnych, who had previously operated a restaurant at the Club and ceased to do so in circumstances that were the subject of other proceedings involving the Club. I will refer further to those proceedings below. KL also referred to her attendance at a meeting in July 2015 at which a resolution was proposed to amend cl 11 of the Club’s constitution and to her attendance at a meeting at which she was asked to explain her support for Mr and Mrs Gnych, to which I refer below.

25. The Plaintiffs relied on MW’s affidavit dated 24 March 2017 and he was not required for cross-examination. I will address his evidence as to the conduct of the March 2017 AGM in dealing with that issue below. The Plaintiffs also relied on WJ’s affidavit dated 16 June 2017, large parts of which were not in admissible form and were not read. WJ there referred to his having been an ordinary member of the Club from 1991 until his suspension in May 2014; to having been a member of the board of directors of the Club from 2005 to 2006, and to having been nominated for election to the board again in February 2014; and to his suspension as a member of the Club on 16 May 2014. WJ’s evidence was that, if he was still a member of the Club and had been allowed into the meeting to consider the resolution to change the status of Club property from core to non-core property, he believed he would have voted against it. The Plaintiffs also relied on WJ’s affidavit dated 7 August 2018, which referred to his history within the Polish community and, in evidence admitted with a limiting order under s 136 of the Evidence Act, to his continued interest in the encouragement and promotion of the Club and its objects; and his concern that he is still excluded from being a member of the Club; and his belief that the Polish character of the Club has changed since RB was elected as President. WJ’s further affidavit dated 23 August 2018 was not read.

26. The Plaintiffs read DP’s affidavit dated 23 June 2017, and he was also not required for cross-examination. DP referred to his suspension as a member of the Club for an indefinite period from 16 May 2014. Significant parts of his affidavit were not read and other aspects were admitted as submission or as evidence of his understanding with limiting orders under s 136 of the Evidence Act.

27. The Plaintiffs also relied on an affidavit of Dr Adams-Dzierzba (“RAD”) dated 29 March 2017, and he was not required for cross-examination. RAD referred to his role as a director of the Club for approximately two years from 2000 and again from 2014 until 2017. I will refer to RAD’s evidence as to his suspension as a member and purportedly, for a period, as a director of the Club, in dealing with that matter below. The Plaintiffs relied on an affidavit of Mr Roman Korban dated 29 March 2017, who was not required for cross-examination. Significant parts of that affidavit were not pressed, but I will refer to his evidence of his exclusion from the March 2017 AGM below. The Plaintiffs also relied on an affidavit of Mr Janusz Nawrocki dated 30 June 2017, who was also not required for cross-examination, referring to his suspension as a member of the Club. I will refer to that affidavit in dealing with that issue below. The Plaintiffs withdrew reliance on an affidavit of Mr Ryszard Czeczucha dated 29 March 2017, where issues arose as to his capacity to give evidence and the weight that could be given to that evidence. The Plaintiffs relied on affidavits of Mrs Marianna Lacek dated 16 August 2018 and 18 January 2019, and I will refer to aspects of her evidence in dealing with several issues below.

28. The Plaintiffs also relied on an affidavit of Mrs Joanna Fenik dated 11 May 2017 and she was not required for cross-examination. Mrs Fenik referred to the circumstances in which she was not admitted to membership of the Club in September 2013 and was not permitted to attend the Club’s premises on the date of the March 2017 AGM, having then claimed, with a degree of implausibility, that she wished to attend the Polish delicatessen inside the Club rather than that meeting. I will deal with the issue as to her membership of the Club below. The Plaintiffs also relied on the affidavit of Mr Piotr Fenik dated 7 August 2018. I will refer to his evidence of being admitted only as an associate member of the Club below. The Plaintiffs also relied on an affidavit of Mr Wojciech Wawrzynski dated 8 August 2017, who was not required for cross-examination. I will refer to his evidence as to not being admitted as a full member of the Club below. The Plaintiffs also relied on the affidavit of Mr Joseph Bernecki dated 8 August 2018. Significant parts of that affidavit were admitted with limiting orders under s 136 of the Evidence Act as evidence of his understanding and he was not required for cross-examination. I will refer to his evidence that he and his wife were not admitted as full members of the Club in dealing with that issue below.

29. The Plaintiffs relied on the affidavits dated 9 May 2017, 24 August 2018 and 4 February 2019 of Mr Maciej Jarysz (“MJ”). MJ’s evidence was that he had been a full member of the Club since about 2014, when he also became a member of its management committee. He referred to a conversation with RB at the beginning of 2016, in which RB advised him that he needed to follow all of RB’s decisions as President and he responded by suggesting that RB was trying to threaten him and he would not support RB from then on. MJ also referred (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding only) to his belief that RB was “attempting to rule the Club” in a way that he did not consider represented its best interests. He also referred to a disagreement with RB as to whether he was entitled to share his concerns as to RB’s conduct as President of the Club with members of the Club. I will refer to his evidence as to disciplinary actions taken against RAD, Mr Stanislaw Zak (“SZ”) and him in dealing with that matter below. I will also refer to MJ’s evidence as to the admission, suspension and expulsion of members of the Club and the operation of the Club’s restaurant in dealing with those matters below. MJ also refers to a discussion in which he had suggested that meetings be recorded by a recording device to address inaccuracies in the minutes and the rejection of that suggestion by RB. In his further affidavit dated 4 February 2019, MJ referred to the circumstances of an extraordinary general meeting of the Club on 7 August 2016 and to his opposition to an option for the redevelopment of the Club’s property which (he contends) RB and some other members of the board preferred, and to his wish to obtain further expert input and to expose the issues more widely to members.

30. MJ was cross-examined at considerable length (T320ff), including as to the process for taking minutes at the Club and as to the disciplinary action taken against Mrs Lacek; and as to a debate as to whether the meetings of the board of the Club should be recorded; and as to the circumstances of his suspension as a member of the Club. I formed the view that he was doing his best to give honest evidence of his perception of events, although his and other witnesses’ evidence was coloured by the strength of his and their views as to the issues in dispute. He was cross-examined as to a suggested failure to insist on the correction of minutes of earlier meetings, which seemed to me to be readily explicable by his evidence of the limited time made available to directors to review minutes and a hesitation in provoking further confrontation within an already contentious board. It was put to MJ in cross-examination that RB had not told him that RB regarded some members of the Club as “toxic” and MJ responded that RB constantly expressed himself in that way at board meetings. I formed the view, when that evidence was given, that MJ was likely telling the truth, although it is not necessary to find whether the particular term “toxic” (or any Polish equivalent) was used. That assessment is supported by emails in which RB and other directors of the Club have expressed their negative views of some dissentient members of the Club in direct terms. I will return to that issue below.

31. The Plaintiffs rely on SZ’s affidavits dated 29 March 2017, 10 August 2018, 18 January 2019 and 31 January 2019. I will refer to SZ’s evidence concerning the suspension of RAD as a member of the Club’s board and as a member of the Club in dealing with that matter below. Significant parts of SZ’s further affidavit dated 10 August 2018 were not read. I will refer to his evidence of RB’s attitude to dissenting members of the Club below. He also gives evidence, in that affidavit, of having expressed objections to the arrangement by which the Club’s restaurant was run and to RB’s claim that the Club, or possibly the restaurant, was making a profit. SZ’s further affidavit dated 18 January 2019 referred to the Club’s annual general meeting on 2 December 2018 and to the disclosure of the level of the Club’s debt at that meeting.

23. SZ was cross-examined, inter alia, as to occasions on which he, MJ and RAD voted together but were in the minority of the Club’s board in respect of particular issues. SZ emphasised his view, in cross-examination, that proposals for development of the Club should be discussed in an open forum, so that those proposals could be tested and the best option for the community identified. SZ was also cross-examined as to the circumstances in which disciplinary proceedings took place against RAD at the meeting on 21 December 2016, and he and MJ left that meeting with RAD. SZ was also cross-examined as to what occurred at the general meeting held in August 2017; and as to his understanding of the effect of the resolution purportedly passed at that meeting declaring part of the Club’s property to be non-core property; and also as to the approach adopted to the admission of persons as associate members of the Club. SZ also gave evidence in cross-examination of having requested more time, while he was a director of the Club, to review board minutes. He was also cross-examined as to an occasion in which there was a vote of confidence in RB at a meeting on August 2016, but indicated he had no recollection of that matter. He was also cross-examined as to the alternative approaches to the redevelopment of the Club’s premises that were under consideration during 2015 and as to the matters which took place at an extraordinary general meeting of the Club in August 2016. SZ’s evidence in cross-examination was that there were occasions on which the minutes of directors’ meetings were “not false” but misleading, and he had drawn that matter to the attention of members of the board at the next meeting.

24. SZ’s evidence in cross-examination was that he was denied entry to the March 2017 AGM, at a time he was suspended from membership of the Club but remained a director of the Club (T247–T248). SZ also maintained in cross-examination that RB referred to KL and persons associated with her as “enemies of the Club” in the course of directors’ meetings (T251) and that RB said, at a directors’ meeting at which SZ was present at about the time of the conflict with Mr and Mrs Gnych in respect of the restaurant, that the board could not expel KL because she was a life member but could expel her supporters and that would send a strong message to the rest (T253). SZ’s evidence was that other persons on the board, including HG and EP shared RB’s view as to that matter (T255) and that there was little point in SZ, RAD and MJ protesting that matter, where they were a minority as to that issue (T255). SZ also maintained in cross-examination that the members of the board used to call KL and the people who supported her a “gang” or “toxic gang”. I will return to the use of those terms below.

25. The Plaintiffs also read an affidavit of Mrs Elizabeth Lipinski dated 7 August 2018. I will refer to that evidence in dealing below with issues as to the suspensions of members of the Club and the conduct of the March 2017 AGM. Mrs Lipinski also gave evidence, admitted as evidence of her understanding with a limiting order under s 136 of the Evidence Act; of a change in the character of the Club since RB was elected President. Mrs Lipinski evidenced her strong dislike of RB in cross-examination; she maintained her evidence as to an angry exchange with RB, at a time she claimed that he was eating a piece of cheesecake; and she was otherwise largely not prepared to focus upon the questions she was asked or answer them, notwithstanding Counsel’s and my request that she do so. I obtained little assistance from Mrs Lipinski’s evidence in cross-examination and I give little weight to her evidence in chief, where her approach in cross-examination did not allow it adequately to be tested.

26. The Plaintiffs relied on the affidavit of Mrs Teresa Wolak dated 9 August 2018, which annexed an affidavit dated 14 February 2014 previously sworn by Mrs Wolak in other proceedings. Mrs Wolak referred to her expulsion as a member of the Club and (in evidence admitted with a limiting order under s 136 of the Evidence Act) to her continuing interest in the encouragement and promotion of the Club and to her concern as to the position of the Club under RB’s leadership. I will refer to Mrs Wolak’s further evidence concerning the suspension of members from the Club in dealing with that question below. Mrs Wolak also referred to the circumstances in which her company was removed as a supplier of alcohol to the Club.

27. Mrs Wolak was cross-examined, including as to her previous arrangements for alcohol supply to the Club, and as to the process in respect of her expulsion as a member of the Club. She acknowledged in cross-examination that she was unhappy about the termination of that relationship, as she was losing a customer (T296); denied that she had a grudge against RB; and expressed her view that he had been rude to her and her mother and was not a “pleasant person” (T298). Mrs Wolak was also cross-examined about the fact that RB had provided information to her, on a confidential basis in December 2013, to explain the funding of the proceedings in respect of Mr and Mrs Gnych and was also cross-examined as to the circumstances of her attendance at the Club’s board to discuss the disciplinary action against her in July 2014.

28. The Plaintiffs read affidavits of Mr Peter Wieczorkowski (“PW”) dated 16 August 2018 and 21 January 2019. PW was previously named as a defendant in the proceedings; resigned as a director on 29 September 2017; and was then also removed as a defendant in the proceedings. Significant parts of PW’s first affidavit were rejected for form with leave, and other parts were admitted with limiting orders under s 136 of the Evidence Act as directed to his understanding or by way of submission only. Significant parts of his second affidavit were rejected on the basis that they were expert evidence given without leave, or by reason of lack of relevance to the matters in issue in the proceedings, and other parts were admitted with limiting orders under s 136 of the Evidence Act as submission only. The Plaintiffs also relied on PW’s further affidavit dated 13 February 2019 which led evidence, largely in admissible form, as to aspects of his earlier affidavit which had been rejected for form with leave. I will refer to his evidence of individual Defendants’ attitude to dissenting members of the Club below.

29. The Plaintiffs relied on Mrs Gad’s affidavit dated 9 August 2018, which refers to her history with the Club; to the fact that her applications for full membership by members of her family were not approved, although her son performed at musical concerts organised at the Club for many years; and, in evidence admitted with a limiting order under s 136 of the Evidence Act, to her continued interest in the encouragement and promotion of the Club and her concern that she is still prevented from becoming a full member of the Club. The Plaintiffs also relied on the affidavit of Mr Marek Zmuda dated 13 August 2018, which referred to his involvement in the Club and in Polish sporting activities; to his application for full membership of the Club in May 2017, which was sponsored by SZ and RAD; and to the rejection of his application in July 2017, when he was offered associate membership only, and to his shock and defence at that result, and his not accepting associate membership of the Club. In evidence admitted with a limiting order under s 136 of the Evidence Act, he also referred to his continued interest in the encouragement and promotion of the Club and his concern that he is excluded from being a full member of the Club.

30. The Plaintiffs relied on the affidavit of Mr Krzysztof Frankowski dated 13 August 2018, which referred to his involvement in Polish sporting activities, including events organised at the Club; to his application for full membership of the Club made in April 2017; and to the rejection of that application, and the offer of associate membership. He also referred, in evidence admitted with a limiting order under s 136 of the Evidence Act, to his continued interest in the Club and his disappointment that he is not allowed to become a full member of the Club. The Plaintiffs also relied on the affidavit of Mr Zygmunt Komorowski dated 16 August 2018, which referred to his admission as a full member of the Club in 2006; to events at a meeting in July 2015, following the High Court’s decision in favour of Mr and Mrs Gnych; and to his having proposed that directors be required to give reasons when rejecting applications for membership of the Club. Mr Komorowski also gave evidence as to events at the March 2017 AGM. The Plaintiffs relied on the affidavit of Ms Genowefa Kozek dated 8 November 2018 which referred to her attendance at cultural events organised at the Club over many years; and to her application for full membership of the Club in April 2017, sponsored by KL and Dr Rumianek (who it appears is a dentist who shares premises with KL); and to her conversation with HG in respect of that matter. Ms Kozek was cross-examined through an interpreter.

The Defendants’ affidavits

40. The Defendants relied on RB’s affidavit dated 19 October 2018, which referred to his professional background and to the terms of the Club’s constitution which conferred powers on the Club’s management committee. RB also referred to the history of the proceedings against Mr and Mrs Gnych and addressed the suspension or expulsion of several members of the Club and the alleged wrongful refusal to admit suitable applicants for membership to the Club. That affidavit also addresses the Plaintiffs’ allegations of a refusal of access to membership records of the Club and that the management committee refused to hold an extraordinary general meeting of the Club on a requisition by members and refers to the circumstances of the March 2017 AGM and to the Club’s financial circumstances. I will address RB’s evidence as to those matters in dealing with those issues below.

41. By his further affidavit dated 21 February 2019, RB responded to PW’s affidavit dated 13 February 2019. I will address that evidence below. In that affidavit, RB also addressed the admission of members prior to the extraordinary general meeting on 21 May 2017 and the circumstances in which the existing lender to the Club declined to offer an increase in the loan facility or extend its existing facility, in about May 2018, so that the existing facility of $3 million was repayable on 18 September 2018, and the Club applied to refinance that facility, including with First Mortgage Capital Pty Ltd (“FMC”) and that additional facility was approved. I address that evidence in dealing with those matters below.

42. Mr McCulloch accepted that RB gave his evidence in a way which might be thought to be “somewhat truculent” at times and submitted that he is an intelligent and proud man and obviously takes a great deal of pride in the Club and the volunteers who support it. While I broadly accept that submission, it seems to me that RB was not prepared to acknowledge aspects of his approach and conduct which plainly emerged from contemporaneous correspondence and the objective probabilities or to make concessions that should properly have been made. I have not accepted parts of his evidence below.

43. The Defendants also rely on HG’s affidavit dated 19 October 2018. HG’s evidence is that she has attended meetings of the Club’s management committee to take minutes and interpret documents since about 2001, but she did not have any voting rights at meetings of the management committee until she became a member of the management committee and a director of the Club on 6 December 2015. She later became licensee of the Club in June 2018, in place of her husband who previously held that role. I will refer to HG’s evidence as to the process for dealing with membership applications, disciplinary proceedings and the March 2017 AGM in dealing with those issues below. By her further affidavit dated 21 February 2019, HG responds to PW’s affidavit dated 13 February 2019. I will also address that evidence below.

44. HG was cross-examined at considerable length. Mr McCulloch submitted that HG was a dispassionate and highly intelligent witness who had a keen interest in the Club’s affairs and possessed significant commercial acuity, and that she gave her evidence in a forthright way and was not shaken in cross-examination. It also seems to me that HG was not prepared to acknowledge aspects of her, RB’s and possibly EP’s, approach and conduct which emerged from contemporaneous correspondence and the objective probabilities or to make concessions that should properly have been made. I have also not accepted parts of her evidence below.

45. HG distinguished, in cross-examination, between applications for membership being “rejected” and applications being “declined” and members being invited to accept an associate membership (T577). While there is some force in that distinction, the difference between full membership and associate membership is real so far as voting rights are concerned. HG explained the numerous persons admitted to membership in the period immediately prior to the March 2017 AGM on the basis that membership applications must have “matured” by that time, with the implication that such applications had arrived and been considered in the ordinary course (T640–T641, T697). HG also denied that she was anxious to get applicants voted on as new members in advance of that meeting on the basis that their applications had simply “matured” so they were entitled to vote (T641). It seems to me that evidence should be approached with scepticism. There were points at which HG took a somewhat literal approach to questions, which resulted in evidence that was potentially misleading, or at least not a fair representation of the true position. For example, she was asked whether Ms Mendel, the sponsor of an applicant for membership, was related to RB, and responded that Ms Mendel was neither related to RB nor to any other member of the board (T652) without disclosing that Ms Mendel was the fiancée of RB’s nephew (T654). HG accepted in cross-examination that she could not recall any occasion, other than the March 2017 AGM, when members attending the Club for a meeting or other reasons have been required to produce any identification in addition to their membership card (T670).

46. The Defendants also relied on RC’s affidavit dated 19 October 2018. RC referred to his background; the manner in which meetings of the membership committee were conducted; and the process for considering membership applications, which he described in substantially the same terms as in RB’s affidavit evidence. I will refer to his evidence as to the criteria he applied in dealing with applications for membership and as to the March 2017 AGM in dealing with those issues below. RC otherwise denied the allegations made by the Plaintiffs in substantially the same terms as RB and HG. By his further affidavit dated on 21 February 2019, RC responded to PW’s affidavit dated 13 February 2019. I will address that evidence below.

47. Mr McCulloch submitted that RC gave his evidence with precision and in an impressive way. RC was plainly an intelligent witness and seemed to me (as the contemporaneous correspondence indicated) to be loyal to RB’s leadership of the Club which he perceives as maximising the prospect of its survival. There were aspects of RC’s evidence on cross-examination that struck me as implausible, including his suggestion that, absent context, a reference to “[e]nemy of the Club” or “[e]nemies of the Club” “could be anything” (T721), and his unwillingness to acknowledge that RB regarded Mr and Mrs Gnych and their associates as “[e]nemies of the Club”, where that language was often used in correspondence between the individual Defendants (T725). RC’s lack of recollection of references to those terms or to the term “gang” used to refer to associates to KL was also surprising, given the extent of use of those terms in contemporaneous correspondence. I accept RC’s evidence as to his own approach to membership applications and financial matters, but I treat his evidence, to the extent that he was asked about RB’s and HG’s approach, with caution, since it seems to me that he would not have given evidence adverse to them in a manner that he would have perceived as disloyal to them and to the Club’s interests.

48. The Defendants rely on EP’s affidavit dated 19 October 2018. EP became a member of the management committee and a director of the Club on 16 March 2014 and is the Secretary of the Club. I will refer to her evidence as to her criteria for admitting members of the Club; disciplinary proceedings; and the March 2017 AGM in dealing with those matters below. By her second affidavit dated 4 February 2019, EP took issue with an aspect of SZ’s affidavit dated 10 August 2018. By her further affidavit dated 21 February 2019, EP responded to PW’s affidavit dated 13 February 2019, and I will refer to her evidence in that respect below.

49. EP was cross-examined at some length, including as to the process for dealing with applications for membership of the Club. She was cross-examined as to the reference in the email to which I referred above to the earlier termination of the membership of KL’s “minions”, and fairly accepted that was a reference to KL’s friends, although she denied that it was the board’s policy to isolate KL, as far as possible, or that one of the methods employed to do so was to terminate the membership of her friends and supporters. EP was precise in her response to questions in cross-examination, which often had a lack of clarity about them, and that reduced the utility of that cross-examination.

50. The Defendants relied on MK’s affidavit dated 23 October 2018. MK referred to the circumstances in which he joined the management committee and to the process adopted for consideration of applications for membership at meetings of the management committee. I will refer to his evidence as to the criteria he adopted for determining applications for membership to the Club, and as to disciplinary proceedings and the March 2017 AGM in dealing with those questions below. MK otherwise denied the Plaintiffs’ allegations in substantially the same terms as other individual Defendants. The Defendants also relied on MK’s further affidavit dated 21 February 2019, which responded to PW’s affidavit dated 13 February 2019, and I will address that evidence below. He denied other parts of PW’s affidavit in terms that broadly corresponded to other individual Defendants’ responses to that affidavit.

51. MK was cross-examined. Mr McCulloch submitted that MK gave his evidence in a straightforward manner and was an impressive witness. It seemed to me that MK fairly acknowledged the adverse views that several individual Defendants held of persons associated with Mr and Mrs Gnych and KL in cross-examination; fairly acknowledged his inability to speak to the motivations of others; and honestly outlined his approach to the admission of members, which would have admitted few rather than more full members and was not consistent with that of the majority of the Club’s management committee and did not prevail. MK’s evidence on cross-examination, which I accept, was that the exclusion of a member had little impact on the finances of the Club by way of membership fees, although earnings from persons attending the Club were of greater significance. His evidence in cross-examination was also that he did not favour allowing full membership status generally, on the basis that persons should first be associate members of the Club or, more precisely, that he neither supported nor declined an application for full membership which other members of the board wished to grant (T523). MK’s evidence in cross-examination was that he did not take a stance as to the persons admitted to full membership on 21 April and 12 May 2017 and he was the only member of the management committee who held the view that persons should generally be admitted to associate membership before full membership (T525). I understand him there to be contrasting his view with that of other members of the management committee who would admit persons they knew through other involvements with the Club or the Polish community to full membership rather than first admitting every applicant as an associate member. MK accepted in cross-examination that some 60 or 70 applicants were admitted as full members of the Club, over three meetings on 18 March, 21 April and 12 May 2017, and explained the influx of membership as reflecting improvements in the condition of the Club in the period since he had joined the board (T526–527). I give weight to that explanation given the view that I formed as to MK’s credit and the cogency of his evidence generally.

285. The Plaintiffs also seek an order requiring RB forthwith to execute a form of resignation as a director and as a member of the Club and restraining RB from going to the premises of the Club and from being involved or attempting to be involved in the affairs and business of the Club for a period of five years from the date of the order (SFASC, prayers for relief, [10]-[11]). Mr Evans did not make any substantive submissions in support of these orders and I am not satisfied that they could be made on the basis of the findings that I have reached above.

Claim for restitution or compensation against RB

291. The Plaintiffs seek an order under s 233(1)(j) of the Corporations Act that RB make restitution or otherwise pay compensation to the Club for losses suffered by the Club, including but not limited to non-receipt of membership fees that would otherwise have been received from members suspended or expelled from the Club in the period from July 2013 to the date of the order and from persons who would, otherwise, have been admitted as, or otherwise would have continued as, members of the Club in that time (SFASC, prayers for relief, [12]). No basis for a claim in restitution has been established since there is no evidence that RB obtained any financial gain from the suspension or expulsion of members of the Club or from the non-admission of some new members to the Club and, I should add, the admission of other persons to the Club. No basis for a claim for compensation has been established since the Plaintiffs did not quantify any such loss, which would have needed to take account not only of revenue from membership fees but also of the costs of admitting new members and providing services to them.

Orders and costs

292. I will hear the parties as to the form of the declarations that I have indicated I will make above. The injunction restraining the Defendants from taking any steps to sell or dispose of the Club’s real property must be discharged, although that will not authorise such a sale of property of the Club other than in accordance with the necessary procedures under the Club’s constitution. I will make directions for the conduct of an inquiry as to damages suffered by the Club, and to the extent applicable the other Defendants and any third parties, which may fall within the scope of the Plaintiffs’ undertaking as to damages given in support of interlocutory relief. The Plaintiffs have had only limited success in the proceedings and I will hear the parties as to costs.

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Decision last updated: 23 April 2019