Stuart v Mordialloc Sporting Club Inc
[2023] VSC 110
•14 March 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2018 01124
BETWEEN:
| RAYMOND JOHN STUART | Plaintiff |
| v | |
| MORDIALLOC SPORTING CLUB INCORPORATED (ARN A0027737R) & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | Matthews AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 February 2023 |
DATE OF RULING: | 14 March 2023 |
CASE MAY BE CITED AS: | Stuart v Mordialloc Sporting Club Inc & Ors |
MEDIUM NEUTRAL CITATION: | [2023] VSC 110 |
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PRACTICE AND PROCEDURE – Application by plaintiff for judgment based on admissions made in the defence of the first defendant – Supreme Court (General Civil Procedure) Rules 2015, r 35.04 – ACT International Investment Pty Ltd v Li [2019] VSC 759; Chikabo Pty Ltd v Zphere Pty Ltd (No 2) [2019] VSC 580.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Stark | Mahons with Yuncken & Yuncken Lawyers |
| For the First Defendant | Mr E Kelly | Fitzpatrick Legal |
| For the Eighth Defendant | Mr N Frenkel | HWL Ebsworth |
| For the Ninth Defendant | Mr T North KC, with Mr D O’Brien | McDonald Slater & Lay |
HER HONOUR:
Introduction
This is an application made by the plaintiff (‘Stuart’) by summons filed 25 August 2022 for judgment in respect of some of the relief sought by him in this proceeding, based on admissions made by the First Defendant, the Club in its defence. The application is made pursuant to r 35.04 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’). By order made on the Court’s own motion on 8 February 2023, the application was referred to me for hearing and determination.
Stuart’s summons filed 25 August 2022 was addressed to the first defendant (‘MSC’, at times referred to as ‘the Club’) only. At a directions hearing in respect of the summons, I gave leave to the other defendants, being the eighth defendant (‘528 Main’) and the ninth defendant (‘JBI’), to file evidence and submissions in respect of the application, having heard argument and accepted that they ought be heard on the application.
Stuart relies on the affidavit of his solicitor, Richard John Ashley sworn 25 August 2022 and 528 Main on the affidavit of its solicitor, Nicholas Mark Holt sworn 13 December 2022.
All of the parties filed written outlines in respect of the application: Stuart on 22 December 2022; MSC on 23 January 2023; 528 Main on 11 January 2023; and JBI on 18 January 2023.
The relevant pleadings are Stuart’s further amended statement of claim filed 1 April 2022 (‘FASOC’); his second further amended statement of claim filed 10 October 2022 (‘SFASOC’); MSC’s defence dated 10 June 2022; and 528 Main’s defence 7 November 2022. As is clear from these dates, MSC’s defence was to the FASOC and it did not file an amended defence in response to the SFASOC, but nothing turns on that for the purposes of this application.
By the time Stuart’s submissions were filed, the precise relief sought had altered from that contained in the summons. As stated in Stuart’s outline at [23], the judgment on admissions now sought is (‘Judgment Sought’):
A.Declarations that:
(a)MSC did not have a properly constituted board of directors on and from 2 December 2016 until the Annual General Meeting on 18 March 2019 (under rule 3.11.2 and rule 3.13.3.2 of the MSC Rules).
(b)MSC had no power to enter into the Deed of Understanding dated 22 December 2016 and the Supplementary Deed dated 13 January 2017.
(c)The Deed of Understanding dated 22 December 2016 and the Supplementary Deed dated 13 January 2017 were ultra vires.
(d)The Deed of Understanding dated 22 December 2016 and the Supplementary Deed dated 13 January 2017 are void and of no effect in that they are contrary to the best interests of MSC and its members.
(e)The Option to Purchase (as defined in paragraph 16 of the SFASOC) was not validly exercised by MSC as set out in paragraph 104 of the SFASOC.
B.A permanent order under section 35(3)(a) and 36(3) of the Associations Incorporation Reform Act 2012 that MSC be restrained from taking any steps to purchase, sell, transfer, or otherwise deal with its interest in the Property pursuant to the Deed of Understanding dated 22 December 2016 and the Supplementary Deed dated 13 January 2017.
C. The Club pay the Plaintiff’s costs of the application.
For the reasons which follow, Stuart’s application for judgment on admissions will be refused.
Background
The ruling of Randall AsJ in Stuart v Mordialloc Sporting Club Inc; John Barr Investments Pty Ltd v Mordialloc Sporting Club Inc[1] contains information about this proceeding and the various claims made in it.
[1][2021] VSC 244.
For the purposes of this ruling, I can be brief as to what the proceeding is about.
As MSC puts it, in this proceeding Stuart relies on two causes of action available to him under the Associations Incorporation Reform Act 2012 (AIR Act), being:
(a) s 35(3)(a) of the AIR Act which provides that a member may allege that an act, conveyance or transaction of an incorporated association (of which that person is a member) was invalid because the association was without capacity or power to do such act or execute or take such conveyance or transfer (Want of Authority Claim); and
(b) s 68 of the AIR Act provides that a member may seek relief if an association (of which that person is a member) has engaged, or proposes to engage, in conduct that is unfairly prejudicial to, or unfairly discriminatory against, that member or is otherwise contrary to the interests of the members of that association as a whole (Oppression Claim).
In this proceeding, Stuart seeks to impugn a number of agreements entered into by MSC on one or both of these bases. Relevantly, the two agreements he seeks relief in respect of are the Deed of Understanding dated 22 December 2016 (‘Deed’) and the Supplementary Deed dated 13 January 2017 (‘Supplementary Deed’) and he also seeks relief in respect of the Option To Purchase (together, these three transactions are referred to as the Impugned Transactions).
Relevant admissions
In effect, through the combination of allegations in the SFASOC and admissions in MSC’s defence, Stuart contends that he is entitled to the Judgment Sought as it is admitted by MSC that at the time MSC’s Board entered into the Impugned Transactions, the Board did not have the minimum number of 6 directors appointed to it as required by MSC’s rules and the Board meetings at which resolutions were passed to enter into the Impugned Transactions and to sign the relevant documents and affix MSC’s seal to them were not meetings at which a quorum of 4 directors were present.
This alleged lack of the minimum number of directors and the meetings without a quorum of directors is based on the following admissions:
(a) Julian Knipe (‘Knipe’) was not an ordinary member of MSC on 29 November 2015 when a motion was passed at the AGM appointing him to the Board and hence he was not validly appointed as a director: [48(b) MSC defence];
(b) On and from 2 December 2016, there were only 4 members of the Board, being Lance Draper (‘Draper’), Trevor Warren (‘Warren’), Andrew Wise (‘Wise’) and Aaron Martello (‘Martello’): [49 MSC defence];
(c) The Board meeting on 6 December 2016 appointed Kevin Said (‘Said’) and Nick Mazzeo (‘Mazzeo’) as directors to fill casual vacancies; [49 MSC defence];
(d) The Board meeting on 6 December 2016 was attended by Draper, Wise, Warren and Knipe, which since Knipe was not validly appointed as a director the meeting did not have a quorum and hence no business could be transacted; [49 MSC defence];
(e) As at 6 December 2016 Said and Mazzeo were not ordinary members of the Club as they had not paid the entrance fee and hence were not eligible to be directors; [49, 51 MSC defence];
(f) For one or both of these reasons, Said and Mazzeo were not validly appointed as directors; [49 MSC defence];
(g) On and from 19 December 2016, there were only three valid members of the Board, being Draper, Warren and Wise, as Martello resigned that day; [49 MSC defence];
(h) From 2 December 2016, the Board could no longer exercise the powers given to it as a Board under the Club’s rules [50 MSC defence];
(i) The resolutions passed at the Board meeting on 6 December 2016 were invalid [55 MSC defence];
(j) The resolutions passed at the Board meeting on 19 December 2016 were invalid [56 MSC defence]; and
(k) If the appointments of Said and Mazzeo were invalid, then the Board could not exercise the powers given to it under the Club’s rules, including to exercise the power to exercise the Option to Purchase [104 MSC defence].
These admissions all go to the Want of Authority Claim. In its submissions, MSC acknowledged that its defence makes each of these admissions.
There are other allegations relied upon which are no longer necessary for me to go through. These are ones relevant to the Oppression Claim, which MSC does not accept it has made admissions in respect of which would justify judgment on admissions being made. MSC says that to the extent the Oppression Claim is relied upon for the Judgment Sought, then it opposes the application. MSC stated that this means that paragraph [A(d)] of the Judgment Sought should not be made. In response at the hearing, Stuart withdrew that and indicated that he no longer sought that that declaration be made as part of this application.
Applicable principles
There was no dispute between the parties as to the principles applicable to an application for judgment on admissions. All parties referred to the decision of Connock J in ACT International Investment Pty Ltd v Li.[2]
[2][2019] VSC 759, [22]-[26] (‘ACT International’).
The Rules provide as follows:
35.04 Judgment on admissions
(1) Where a party makes admissions of fact in a proceeding, whether by that party's pleading or otherwise, the Court may, on the application of any other party, give the judgment or make the order to which the applicant is entitled on those admissions.
(2) The Court may exercise its powers under paragraph (1) without waiting for the determination of any other question in the proceeding.
It is clear from r 35.04 of the Rules itself that granting judgment on admissions involves an exercise of the Court’s discretion.
ACT International and the authorities cited therein make it clear that:
(a) granting judgment on admissions is discretionary;
(b) the power to grant judgment on admissions must be exercised with great caution, and that in a clear case a proper exercise of the power will obviate the delay and expense involved in a full trial;
(c) the Court needs to be satisfied that it is just to award judgment without regard to the merits of the parties’ contentions because (i) the allegations of facts are clearly pleaded and as clearly and unambiguously admitted and (ii) make it impossible for the party making those admissions to succeed; and
(d) where any difficult question of law is raised, the second limb cannot be satisfied and judgment will not be summarily entered.
The parties’ submissions
There is no need for me to set out all of the parties’ submissions here. They are amply contained in their respective written outlines and their extensive oral submissions are recorded in the transcript of the hearing held on 8 February 2023. I have taken all submissions into account.
Stuart’s submissions
In very brief compass, Stuart submits that he is entitled to the Judgment Sought based on the admissions made by MSC in its defence. He says that this is a clear case, that the allegations are clear as are the admissions, and that MSC cannot succeed in respect of the Want of Authority Claim. He says that the relevant defendant in respect of the Want of Authority Claim is MSC and that none of the other defendants raise factual disputes about the admissions relied upon. Stuart says that to the extent that 528 Main relies on evidence about related proceedings or affidavits made in those proceedings, they have no impact on the claim made by him. He also says that there is no difficult question of law precluding judgment being given on admissions.
MSC’s submissions
MSC submits that in respect of the relevant admissions, three discrete questions of law are raised, being:
(a) with respect to the absence of quorum at the meetings on 6 December 2016 and 19 December 2016, did Rules 3.15.2.1 and 3.15.2.2 of the MSC Rules preclude:
(i) the passing of the 6 December 2016 Resolution?
(ii) the passing of the 19 December 2016 Resolution?
(b) with respect to the number of directors being less than six at the time of the purported passing of the 6 December 2016 Resolution (i.e.. before the resolution purporting to appoint Said and Mazzeo), did this mean that the board could no longer exercise the powers given to it under the MSC Rules, including the power to approve/enter/seal agreements/contracts?
(c) with respect to Said and Mazzeo not being validly appointed as directors at the meeting on 6 December 2016:
(i) could Said and Mazzeo, not being “Ordinary Members” within the meaning of Rule 3.5.1 of the MSC Rules, possess “the required qualification” to be appointed as directors, sufficient to satisfy Rule 3.13.3.1 of the MSC Rules (i.e.. the “casual vacancy rule”)?
(ii) could Said and Mazzeo, not being aware that a motion was being proposed and had been passed at such meeting to appoint them as directors, be appointed as directors?
In relation to the first two questions of law, MSC submits that:
(a) Section 34 of the AIR Act provides that the Club must not, otherwise than as provided by the Act, “exercise any power contrary to any restriction on the exercise of that power contained in its rules”;
(b) the MSC Rules identify three repositories of power within the Club’s corporate structure: the board of the Club, the Club Executive, and the members of the Club in a general meeting;
(c) Rule 3.11.1 of provides that the affairs of the Club shall be managed by a board of directors, which may exercise “all such powers and functions as may be exercised by the Club”, other than those powers and functions which the Rules required to be exercised by the members of the Club in a general meeting;
(d) where, as here, an association’s constitution vests management powers in the board of directors, the directors must exercise those powers collectively as a board: no individual director has implied authority to act unilaterally on behalf of the association22 and even the chairperson does not have any greater authority to contract on the association’s behalf than other individual directors; and
(e) Rule 3.15.2.2 precludes the board of directors from conducting any Business without a quorum being present.
In relation to the question of Said and Mazzeo not being validly appointed by reason of not being ordinary members, MSC says:
(a) pursuant to Rule 3.51 of the MSC Rules, it was necessary for Said and Mazzeo to have paid the entrance fee and annual subscription in order to become ordinary members of the Club;
(b) as the Rules constitute a contract between the members and the Club, it is necessary for a prospective member to meet his or her contractual obligations by paying any relevant subscription fee, so as to be admitted to membership;
(c) there is no evidence that Said and Mazzeo paid the membership fee and thus satisfied the requirements of the MSC Rules for becoming ordinary members prior to the 6 December 2016 meeting;
(d) it follows that Said and Mazzeo lacked the required qualifications for appointment as a director and were, therefore, ineligible to be appointed to the Club’s board.
MSC says that these are legal findings required to be made by the Court, that they are admissions not contradicted by other parties in their pleadings or by any affidavit material, and that any evidence would need to show there was no proper basis for MSC’s admissions for the party to be able to rely on that evidence. It says that there are no factual issues in dispute.
In substance, MSC supports the Stuart’s application for the Judgment Sought, save for paragraph A(d), based on its admissions in respect of the Want of Authority Claim.
JBI’s submissions
JBI effectively supports Stuart’s application as well. It contends that the Club’s admissions are clear and disputes 528 Main’s characterisation of some of them as conditional. JBI says that the Club’s critical admission that its Board was not properly constituted at the critical time under its rules is not conditional upon any further factual inquiry or finding and that it is plainly made in the Club’s defence.
JBI says that if 528 Main wishes to dispute the Club’s admissions then it must do so by putting forward a properly pleaded case as to the relevant memberships, which it says 528 Main has not done. It also says that 528 Main does not in its defence file any pleading putting forward any alternative factual allegations, which it is obliged to do under r 13.12(2) of the Rules if it wishes to assert facts to the contrary. JBI says that nothing in 528 Main’s pleadings or affidavit material undermines the Club’s clear admissions.
528 Main’s Submissions
528 Main rejects the position put by the Club at the directions hearing on 11 November 2022 that 528 Main should not be permitted to adduce any substantive evidence in opposition to Stuart’s application, by reason of it being an application for judgment on admissions made in pleadings. 528 Main says that there is no such general principle or rule in respect of an application under r 35.04 of the Rules and that in ACT International, no such principle was referred to and substantive affidavit evidence was taken into account by Connock J in that judgment.
528 Main also submits that even if there is such a rule or principle, then it would be manifestly unjust to apply it to this application because the Judgment Sought would directly affect 528 Main’s interests as it is a party to the transactions sought to be impugned and was required to be joined by Stuart to the proceeding by reason of s 36 of the AIR Act; and the Ashley affidavit is voluminous and it would be strange for Stuart to be able rely on that and for 528 Main not to be able to adduce evidence. In this regard, the other parties say that apart from setting out some of the procedural matters, the Ashley affidavit is voluminous only because it exhibits the documents referred to in the pleadings.
The evidence relied upon by 528 Main is set out in the Holt Affidavit, and goes to a number of matters including events in related proceedings. It exhibits affidavits of Said (12 December 2021), Knipe (16 December 2021), Warren (17 November 2021), Christopher Rae (22 November 2021) and Mazzeo (3 December 2021), all filed by 528 Main in the related appeal brought by JBI against MSC.
528 Main opposes Stuart’s application for judgment on admissions and its submissions are summarised below.
First, in respect of the Want of Authority Claim, the so-called admissions by the Club are actually conditional admissions. These are said to be in paragraphs 50(b), 51(a), 56(e), 58(b), 84(c) of the Club’s defence. By way of example, paragraph 50(b) of the Club’s defence states:
in the event that the appointment of Mr Said and Mr Mazzeo to the MSC board on 6 December 2016 was invalid by reason of the matters pleaded in 49() to (h) above, then it admits that, from 2 December 2016, the MSC board could no longer exercise the powers given to it collectively as a board under the Club Rules
The ‘conditionality’, being the phrase “in the event that the appointment of Mr Said and Mr Mazzeo to the MSC board on 6 December 2016 was invalid by reason of the matters pleaded in 49(c) to (h) above, then it admits that …”, is much the same in each of the other paragraphs relied upon.
Paragraph 58(b) of the Club’s defence states:
in the event that the MSC did not have a validly constituted board, it admits that the actions taken by the Executive could not be ratified by the board as required by Rule 3.12.2; and …
In respect of this conditionality, 528 Main submits that were there any doubt about these admissions being conditional, which it says there is not, then it points to the directions hearing on 13 September 2022, where counsel for the Club said:
And D is the position of the club. In the event that – that’s the nature of the admission … So, the findings of fact that need to be made. It’s not some open admission. … No, there are matters that are pleaded in the alternative because they’ll need to be findings and fact by the court. … But if path A is found and we admit this – and if path B is found then we admit this.
528 Main submits that it denies the key allegations, particularly for the reasons set out in paragraph 50 of its defence, and it denies Stuart is entitled to the relief he seeks. At paragraph 50 of its defence, 528 Main pleads:
(a)the quorum for ‘… the transaction of the business of a meeting of the Board of Directors …’ was 4 directors, not 6 (rule 3.15.2.1);
(b)casual vacancies were able to be filled ‘… on the vote of the remaining Directors from among persons with the required qualifications’ (rule 3.13.3.1);
(c)casual vacancies only had to be filled at the next Annual General Meeting (rules 3.13.3.3 and 3.13.3.4);
(d)no motion at the Annual General Meeting by a simple majority of members was needed for any such appointment where the number of nominations did not exceed the number of vacancies (rule 3.11.4.5);
(e)the quorum of 4 directors required for ‘… the transaction of the business of a meeting of the Board of Directors …’ was satisfied at all relevant times (Draper, Warren, Knipe and Wise);
(f)at the Board meeting on 6 December 2016, the resignations of Stuart and Harvey were accepted and Said and Mazzeo were appointed ‘… on the vote of the remaining Directors …’;
(g)at the next Annual General Meeting on 1 May 2017:
(i) the casual vacancies were filled without any need for a motion by a simple majority of members because the number of nominations did not exceed the number of vacancies; and
(ii) the appointment of Said and Mazzeo as directors of the Club on 6 December 2016 was ratified;
(h)accordingly, there were at least 6 directors on the Board at all relevant times;
(i)otherwise denies the allegations.
528 Main submits that for this reason alone, r 35.04 of the Rules is not engaged.
If it is, then 528 Main says that the exercise of the Court’s discretion ought lead to the dismissal of the application. It says that if Stuart’s application was to succeed, there would be little or nothing left for the Court to determine at any trial that Stuart may or may not pursue, which would be manifestly unjust to 528 Main. 528 Main says it has all the rights to contest Stuart’s claim against the club, just as the club has the ability to contest the claims against 528 Main if it chooses to. Further, 528 Main says it would undermine the fundamental basis for s 36 of the AIR Act, which makes it a necessary party to Stuart’s proceeding, it opposes Stuart’s application and has filed a defence that plainly raises matters than can only be determined at trial. It says that the proposition that Stuart could obtain judgment on all the main issues in the proceeding based on the Club’s conditional admissions on one issue and then decide whether to proceed with essentially the same case against 528 Main at trial is absurd.
528 Main says that difficult points of law are raised, including issues relating to:
(a) the constitution of the Board and interpretation of the Board’s authority and powers under its rules;
(b) enforceability of the Impugned Agreements;
(c) exercise of the Option to Purchase and alleged breaches of the Lease; and
(d) the final orders sought by Stuart.
528 Main points to the language of s36(2) of the AIR Act which provides that the Court may grant relief if it considers it just and equitable to do so, which plainly means that relief is discretionary and must satisfy this test. By his application, Stuart is effectively seeking to bypass this requirement and rely solely on r 35.04 of the Rules.
Consideration
As I noted at the hearing, plainly in light of MSC’s submissions, judgment on admissions based on the Oppression Claim was not appropriate given that the Club does not admit the Oppression Claim. Any judgment on admissions arising from the Club’s defence could only be in respect of the Want of Authority Claim and could only be for relief based on that cause of action. Stuart’s concessions at the hearing in this respect were, in the end, properly made.
The circumstances of this case are such that I do not consider it an appropriate exercise of the Court’s discretion to grant Stuart’s application for judgment on MSC’s admissions in respect of the Want of Authority Claim.
Stuart’s application is premised on MSC being the only relevant defendant in respect of allegations as to the Want of Authority Claim. It is as if Stuart says that only the Club can plead to whether or not its Board was properly constituted at the relevant times and the consequences of that.
But that is not this case. The relevant parts of the SFASOC are not pleaded against the Club alone: they are pleaded generally. All defendants are entitled to plead in response to all of the SFASOC if they choose to do so. Generally speaking, they have. Fundamentally, then, one must look to each of the defendants’ defences to discern whether the relevant allegations relied upon for the purposes of this application have been admitted by the defendants. MSC has made those admissions. 528 Main has not. It is not relevant for present purposes for me to explore JBI’s defence, as it supports P’s application.
Why, then, should the Court grant judgment on MSC’s admissions when 528 Main does not make those admissions?
Stuart, MSC and JBI contend that the Court should do so because the allegations concern matters to do with MSC and so it is the relevant defendant for those purposes, and 528 Main is not. The matters relied upon are said to be solely within the knowledge of the Club and not 528 Main. More particularly, they say that if 528 Main does deny or not admit those allegations then it is required to positively plead facts to contradict the allegations and MSC’s admissions (the latter of these propositions is a little odd) and it is said that 528 Main has not done so. If that is so, then that is a pleading issue and cannot be a proper basis for judgment on admissions.
Moreover, I accept 528 Main’s submission that as a party to the proceeding, it has the same rights that the Club has to file evidence and submissions in opposition to Stuart’s substantive case. 528 Main relied on Chikabo Pty Ltd v Zphere Pty Ltd (No 2).[3] In that case, in the context of a non-party, Sifris J (as his Honour then was) stated:
Where that non-party is a necessary party because they are directly affected, they are not restricted to disputing the particular claims against them. The non-party is entitled to claim, if it wished, that the plaintiff’s substantive case is insufficiently strong to succeed at all. The non-party is entitled to call evidence against that substantive case, and even if it did not wish to do that, it is entitled to be heard on the weaknesses in the substantive case.[4]
[3][2019] VSC 580.
[4]Ibid, [49].
This must be especially so when it is a party to the proceeding that we are talking about.
Insofar as Knipe is concerned, Stuart pleads in the SFASOC that he was a director of the Club at the relevant time and 528 Main admits that. MSC disputes that he was validly appointed a director and that is said to be the admission relied upon by Stuart for the proposition that Knipe was not a valid director. Clearly, then, this remains in issue, at least as between 528 Main and MSC.
Insofar as Said and Mazzeo are concerned, Stuart pleads that they were not validly appointed as directors and MSC admits this. 528 Main denies it, as set out in para 50 of its defence as referred to above. Also clearly, this remains in issue between Stuart and 528 Main.
The affidavits exhibited to the Holt Affidavit all effectively contain statements that each of Said, Mazzeo and Knipe were directors of the Club at the relevant time. This evidence was criticised by Stuart, MSC and JBI as being insufficient or inadmissible, but at the very least it is apparent that 528 Main will be able to lead evidence at trial going to these matters.
Stuart made submissions about 528 Main’s proposition that MSC’s admissions were conditional which were somewhat confusing and possibly even contradictory to the application.
Repeatedly, Stuart submitted that the admissions which were said to be conditional were not. He submitted that what MSC said in its pleading was that if the Court finds Said and Mazzeo were not validly appointed as directions then the Board could not do the things it purports to have done. He submits that MSC’s pleading is only said to be conditional on the Court making that finding. Eventually, Stuart clarified his position and said that while MSC’s defence states that the admissions are conditional on the Court making that finding, in reality it is not because MSC has in other paragraphs of its defence admitted that Knipe was not validly appointed, Said and Mazzeo were not validly appointed, and the Board did not have a quorum for its meetings.
As already noted, MSC says that these are legal findings required by the Court. MSC did not appear to make submissions addressing this conditionality point.
Even if Stuart is correct about MSC’s admissions not being conditional, that does not mean that his application should be granted, for the reasons already expressed.
Stuart says that granting judgment on admissions does not affect 528 Main because it is still free to pursue compensation for the loss and damage sustained by it that may result from the setting aside and restraining of the Impugned Transactions: s 36(3)(b) of the AIR Act. He says that 528 Main could have, but has not, made claims against him or the Club in this regard. 528 Main points to the new proceeding it has issued, S ECI 2022 05139, where it makes claims against the Club and JBI which do not rely on the AIR Act, including claims for specific performance of the Impugned Transactions. Further, 528 Main says that it does not have a claim against Stuart and that it could not pursue its claims against the Club and JBI in a counterclaim in this proceeding as a consequence. 528 Main says that it would be detrimentally affected by the application being granted as it goes to issues at the heart of the dispute between the parties.
Without commenting on the issue of whether 528 Main could pursue its claims against MSC and JBI as a counterclaim in this proceeding, I otherwise accept 528 Main’s submissions as set out in the previous paragraph. In circumstances where 528 Main must be a party to this proceeding, by virtue of the AIR Act, it is entitled to defend it and it is entitled to have the Court consider the claims made in the proceeding and decide them in accordance with the requirements of the AIR Act which is that it must be just and equitable for the Court to take the action it can under that Act, which includes setting aside or restraining the transaction. It is not appropriate, on this application, for such a determination to be made.
Even if I was minded to grant judgment on admissions, I would not do so in respect of paragraph A(a) of the Judgment Sought as I was not taken to any material justifying the time period set out in that proposed declaration. Further, the form of the declaration in paragraph A(b) of the Judgment Sought is inadequate, as it refers to MSC having no power to enter into the Impugned Agreements and I accept MSC’s submission that properly construed, the allegation is that the Board had no authority to enter into them. Paragraph B of the Judgment Sought requires a finding that it would be just and equitable to grant that relief, and that is not how this application has been run by Stuart. Even if I am wrong and Stuart did put its application in that way, I do not consider it just and equitable to grant the relief on a summary basis.
Conclusion
For all of these reasons, Stuart’s application for judgment on admissions is refused.
The parties are to confer as to a form of orders as a consequence of this ruling, including as to costs.
By 21 March 2023, the parties are to send, in a joint email to my Chambers, the following:
(a) if there is consent, then proposed orders; or
(b) if there is not consent, each party’s preferred order.
If sub-paragraph (b) of the preceding paragraph applies, upon receipt of the joint email the parties will be advised as to how I intend to deal with it.
SCHEDULE OF PARTIES
| S ECI 2018 01124 | |
| BETWEEN: | |
| RAYMOND JOHN STUART | Plaintiff |
| - v - | |
| MORDIALLOC SPORTING CLUB INCORPORATED (ARN A0027737R) | First Defendant |
| 528 MAIN STREET MORDIALLOC PTY LTD AS TRUSTEE FOR THE 528 MAIN STREET MORDIALLOC UNIT TRUST (ACN 614 378 040) | Eighth Defendant |
| JOHN BARR INVESTMENTS PTY LTD (ACN 005 229 274) | Ninth Defendant |
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