Wykrota v Polish Club Ltd

1. [1]

   The plaintiff, Mr Mick Wykrota, is a member of the defendant, the Polish Club Ltd (“the Club”).

2. [2]

   The Club is a company limited by guarantee and a registered club under the Registered Clubs Act 1976 (NSW) (“the Act”).

3. [3]

   The Club is a licensed social club which caters primarily for the Polish community.

4. [4]

   It is the registered proprietor of two adjoining properties at 73 and 75 Norton Street, Ashfield. The land at 73 Norton Street contains the Club’s main facilities. The adjoining lot, 75 Norton Street, is the site of a car park and a burnt out building.

5. [5]

   Section 41E(1) of the Act provides that a registered club must not dispose of any “core property” of the club unless, relevantly:

6. [6]

   “Core property” is defined in s 41E(6) of the Act as:

7. [7]

   The Club has previously resolved that its land at 75 Norton Street (the car park) not be “core property”.

8. [8]

   The present controversy concerns a purported resolution made on 1 March 2020 that the land at 73 Norton Street (on which the club building itself is erected) not be “core property”.

9. [9]

   On 1 February 2020, the Club sent to its members notice of an extraordinary general meeting (“the Notice”) to be held on 1 March 2020 at 3:00pm (“the EGM”).

10. [10]

    The Notice identified that two resolutions would be considered at the EGM:

11. [11]

    The “proposed agreement with Diecorp” is one pursuant to which that entity proposes to redevelop the Norton Street properties in a manner that will include provision to the Club of new premises.

12. [12]

    At the 1 March 2020 meeting the result of the voting on the First Resolution and the Second Resolution was as follows:

13. [13]

    Included in those who voted on both resolutions were 13 “Associate Members”, as opposed to “Ordinary Members” of the Club. All other members who voted were Ordinary Members.

14. [14]

    The plaintiff, Mr Mick Wykrota, is a member of the Club and seeks a declaration that the purported First and Second Resolutions were invalid and an injunction restraining the Club from taking any step to implement those resolutions.

Decision

1. [15]

   At the conclusion of argument on 13 March 2020, I informed the parties that I did not propose to make the declaration or grant the injunction sought and that the proceedings would be dismissed.

2. [16]

   I said I would give my reasons later. These are those reasons.

Was the First Resolution one “dealing with” an alienation of the Club’s interest in land?

1. [17]

   The first question is whether the First Resolution, that the 73 Norton Street property be declared not to be core property, was one which required a Special Resolution, rather than an Ordinary Resolution.

2. [18]

   The question arises because Article 49 of the Club’s Constitution provides that:

3. [19]

   The question is whether a resolution that the 73 Norton Street property not be “core property” is a resolution “dealing with” the “alienation” of the Club’s interest in that property.

4. [20]

   Mr Ireland QC, who appeared for Mr Wykrota, accepted that a resolution that the 73 Norton Street property not be “core property” was not itself an “alienation” of an interest in that property.

5. [21]

   However, Mr Ireland submitted that as the resolution that 73 Norton Street not be core property “frees this asset to be alienated”, the resolution should be seen as “dealing with” such alienation.

6. [22]

   I do not accept that submission.

7. [23]

   An “alienation” of land is the actual disposal of the land: for example Di Carlo v Kashani-Malaki and Anor [2012] QCA 320; [2013] 2 Qd R 17 (Muir JA (with whom Fraser and Gotterson JJA agreed)) at [30].

8. [24]

   An “alienation” of land “refers to a parting with property and includes the parting with some interest in the property”: GPT RE Ltd v Lend Lease Real Estate Investments Ltd [2005] NSWSC 964 (White J) at [46].

9. [25]

   In order for a resolution to be one which “deals with” such “alienation” the resolution would have in some way to concern the “alienation” itself.

10. [26]

    The First Resolution was not in my opinion itself concerned with the “alienation” of the 73 Norton Street property.

11. [27]

    The First Resolution was a necessary condition precedent to an alienation of the 73 Norton Street property; but it was not itself a resolution “dealing with” such “alienation”.

The entitlement of “Associate Members” to vote at the meeting

1. [28]

   The second question concerns the entitlement of “Associate Members” to vote at the 1 March 2020 meeting.

2. [29]

   The 1 February 2020 Notice of Meeting stated:

3. [30]

   Article 8 of the Club’s Constitution provides, relevantly, that:

4. [31]

   In my opinion, for the reasons that follow, the latter part of Article 8 was not effective to disentitle Associate Members from voting at the meeting.

5. [32]

   Section 30(1)(f) of the Act provides, relevantly, that:

6. [33]

   The Act makes no provision for an “Associate Member” nor for the admission of a person to a club as an “Associate Member”.

7. [34]

   In s 4 of the Act:

8. [35]

   Section 30(1)(g) provides, relevantly:

9. [36]

   That is how “Associate Members” are in fact admitted to the Club.

10. [37]

    Thus, “Associate Members”, as referred to in the Club’s Constitution, are in fact “Ordinary Members” for the purposes of the Act.

11. [38]

    Section 41E(6) of the Act contemplates the entitlement of “ordinary members” of a club to participate in a resolution at a general meeting of a club that club property not be “core property”.

12. [39]

    Insofar as Article 8 of the Club’s Constitution purports to restrict the entitlement of “Associate Members” to vote at the General Meeting, it is inconsistent with that provision.

13. [40]

    Section 30(8) of the Act provides, relevantly:

14. [41]

    It follows that insofar as Article 8 of the Club’s Constitution purports to preclude an “Associate Member” from voting on a resolution of a kind referred to in s 41E(6) (the First Resolution) it is of no force or effect.

In any event, relief should be denied

1. [42]

   The 1 March 2020 meeting was attended by 471 Club members of whom only 13 were “Associate Members”.

2. [43]

   Assuming, contrary to my earlier conclusion, that the 13 “Associate Members” were not entitled to vote on the First Resolution, it would nonetheless have been easily passed.

3. [44]

   I have set out the result of the voting on the First Resolution at [12] above.

4. [45]

   If it be assumed that all 13 Associate Members voted for the First Resolution, and that those votes should be discounted entirely, the result would have been as follows:

5. [46]

   On the other hand, if it be assumed that all 13 Associate Members voted against the First Resolution, and that those votes should be discounted entirely, the resolution would have passed with a higher percentage:

6. [47]

   Thus, the votes of the 13 Associate Members, no matter how cast, could have made no difference to the outcome.

7. [48]

   In any event, and assuming that the 13 Associate Members should not have voted at the meeting, it does not follow that the resolutions are not valid.

8. [49]

   Thus, in Steuart v Oliver (No 2) (1971) 18 FLR 83, Joske J (with whom Spicer CJ and Smithers J agreed) said, at 84:

9. [50]

   I should add that there is no suggestion that the 1 March 2020 meeting was inquorate.

10. [51]

    More recently, in Moala v Free Wesleyan Church of Tonga in Australia (Victoria) Inc [2019] VSC 205, Ginnane J said at [400]:

11. [52]

    Assuming that the 13 Associate Members were “unauthorised participants” at the March 2020 meeting, their involvement made “no material difference” to the outcome.

12. [53]

    That is a further reason for me not to make the declaration sought.

Section 1322 of the Corporations Act 2001 (Cth)

1. [54]

   Mr McCulloch SC, who appeared with Mr Notley for the Club, accepted that if, contrary to his submissions and my findings, the participation of the 13 Associate Members did have the effect of rendering the First Resolution invalid, that would constitute a substantive irregularity rather than a procedural irregularity of the kind referred to in s 1322(1) and (2) of the Corporations Act 2001 (Cth).

2. [55]

   However, Mr McCulloch submitted that by reason of subsections 1322(4)(a) and (6) of that Act, the Court can make a validating order under s 1322(4)(a) if the Court is satisfied that the relevant persons acted honestly or that it is just and equitable that a validating order be made; provided that no substantial injustice is likely to be caused to any person.

3. [56]

   There is no suggestion here that any representative of the Club behaved other than honestly. Nor is there any suggestion that any substantial injustice has been caused by reason of the “Associate Members” involvement in the 1 March 2020 meeting.

4. [57]

   And, as I have said, the participation of the 13 “Associate Members” has made no difference to the outcome.

5. [58]

   In my opinion, were it relevant for me to do so, it would be just and equitable to make a validating order under s 1322(4)(a) of the Corporations Act.

Conclusion

1. [59]

   The proceedings must be dismissed.

2. [60]

   I will hear the parties as to costs.