Lukaszewicz v Polish Club Limited

By their Second Further Amended Statement of Claim (“SFASC”), the Plaintiffs sought a range of relief in respect of the affairs of the First Defendant, Polish Club Limited (“Club”). I heard the proceedings on 29 – 31 January; 1 February; 6 February; 22 February; 26 – 28 February; 1 March and 5–8 March 2019 and delivered judgment on 23 April 2019 ([2019] NSWSC 446) (“Judgment”). The Plaintiffs largely failed to establish their claims and their entitlement to relief.

I addressed (at Judgment [193]ff) an allegation that two individual Defendants and other Defendants “to the extent to which they were involved in the decisions taken” to suspend or expel members or refuse full membership of the Club, had acted in a manner oppressive of the members of the Club, and, in particular, in a manner oppressive of the members of the Club as a whole in specified respects. I observed that:

I also observed (Judgment [292]) that:

On delivering my judgment on 23 April 2019, I made orders directing the parties to bring in agreed short minutes of order to give effect to the Judgment, including as to costs, or if they were unable to reach agreement, their respective short minutes of order and short submissions as to the differences between them, indicating whether an oral hearing was requested, by 14 May 2019. I also listed the matter for further directions in the Corporations Directions List on 27 May 2019. The parties subsequently submitted draft orders, as to which there was some agreement. The parties are in disagreement as to the form of a declaration that should be made to give effect to the finding of oppression to which I have referred above, and as to whether an order discharging the interlocutory injunction previously obtained by the Plaintiffs should be stayed.

The Plaintiffs propose that declarations should be made in two paragraphs as follows:

The Plaintiffs’ submissions in respect of the form of declaration amounted to no more than an assertion that it more accurately reflected the findings set out in paragraphs 193 and 194 of the Judgment than the Defendants’ proposed declaration, having regard to a reference to an email set out elsewhere in the Judgment. I do not accept that submission.

The Defendants submit that the declaration sought by the Plaintiffs that the management committee, as a whole, engaged in oppressive conduct, without any temporal limitation, is not supportable where I had not found (Judgment [193]) that the relevant conduct was engaged in by the management committee as a whole, or all of the Defendants, and had expressly found that the individual Defendants engaged in that conduct largely as a minority of the management committee and over differing periods. The Defendants also submit that the proposition that members of the management committee engaged in oppressive conduct by actively seeking out and admitting new full members who shared its views does not fairly reflect the findings in Judgment [194], which involved the combination of several matters. The Defendants also submit that a declaration that the management committee pursued a policy of manipulating the majority of the Club’s membership is not supported by the Judgment, where I had observed (Judgment [175]) that I was not persuaded there was impropriety in the decisions made by the management committee to offer full or associate membership to the relevant persons. The Defendants also submit that the Plaintiffs’ proposed paragraph 2 is unnecessary if a declaration is made in paragraph 1 that the relevant conduct was oppressive conduct, and it is unnecessary to state the legal principles as to why that conduct was oppressive conduct.

The declarations proposed by the Plaintiffs should not be made. It seems to me that the criticisms of the form of the first of those proposed declarations advanced by the Defendants, to which I referred above, are well-founded. It seems to me that the reference to “the management committee of the Polish Club” having engaged in such conduct is inappropriate, where I had held (Judgment [193]) that the relevant conduct of the individual Defendants was undertaken largely as a minority of the management committee over differing periods, and that the improper purpose alleged against the individual Defendants had not been established. I made no findings in respect of the several members of the management committee at relevant times who were not party to these proceedings and have not had an opportunity to be heard in them. Second, the words “with respect to applications for membership as an ordinary member of the Club, particularly with regard to the persons listed in Schedule 1 of the [Second] Further Amended Statement of Claim” do not properly reflect the findings that I had reached, where I did not find that the persons listed in Schedule 1 were not properly admitted to membership and where I had found that oppression was not established in respect of other applicants for membership referred to in Schedules 2 and 4 of the Second Further Amended Statement of Claim.

The Defendants submit that the second of the Plaintiffs’ proposed declarations is unnecessary given that the Court is declaring, in either paragraph 1 of the Plaintiffs’ proposed orders or paragraph 1 of the Defendants’ proposed orders, that the relevant conduct was oppressive conduct, and it is unnecessary to state the legal principles as to why that conduct was oppressive conduct. That proposed declaration seems to me, in paragraph (a), to impose an unnecessary gloss upon the findings that I had reached, and, in paragraph (b) to misstate those findings by referring to a general meeting “under the direction of the said management committee”.

The Defendants in turn propose that a declaration should be made that:

It seems to me that that declaration narrows or oversimplifies my findings and does not address the combination of matters to which I had referred, including the seeking out of supportive members and the use of disciplinary proceedings against dissenting members. That form of declaration arguably also inappropriately seeks to attribute oppressive conduct to particular persons, rather than recording a state of affairs, although it fairly recognises that my findings were not directed to all members of the management committee at all times.

For these reasons, I will not make the declarations in the form sought in paragraphs 1 and 2 of the Plaintiffs’ draft orders, or the alternative form of declaration proposed by the Defendants. I have not neglected that there is also authority, which the parties did not address in submissions, that the Court should not generally make a declaration, even if it has jurisdiction to do so, unless it is satisfied that the declaration sought is appropriate and that it has sufficient practical utility; or where that declaration would merely be prefatory to other relief: Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18; (1974) 131 CLR 286; Attorney-General (NSW) (Ex rel Corporate Affairs Commission) v Australian Softwood Forests Pty Ltd [1979] 2 NSWLR 73 at 76 per Hutley JA (with whom Reynolds and Samuels JJA agreed); E & J Gallo Winery v Lion Nathan Australia Pty Ltd (No 2) [2009] FCAFC 47; OXS Pty Ltd v Sydney Harbour Foreshore Authority and Minister for Planning and Environment [2014] NSWSC 1284 at [6], aff’d OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120; PW Young, C Croft and ML Smith, On Equity (Lawbook Co, 2009) at 1084; Coyte v Norman; Centre Capital (Newcastle) Pty Ltd v B Scorer [2016] NSWSC 1428. On the other hand, such a declaration may here have utility in reducing the scope for disputes within the Club as to admission of members in the future and there are cases where such a declaration has been made in oppression cases, including Backoffice Investments Pty Ltd v Campbell [2007] NSWSC 161; (2007) 61 ACSR 144 (at first instance) and recently in Nellbar Pty Ltd v Jones Partners Pty Ltd [2018] WASC 292. I also recognise that Mr McCulloch (who appeared for the Defendants) had accepted at the hearing that it would be appropriate to make such a declaration if I reached the findings made in the Judgment.

I will, with hesitation, formulate a declaration that will give effect to the Judgment, when read in the context of that Judgment, and allow the parties a brief opportunity to make submissions in respect of it. That declaration is as follows:

The parties will need to make submissions as to an appropriate starting date for that declaration, which cannot be before the date when the individual Defendants together constituted a majority of the management committee, and an end date, which cannot be after the determination of the last of applications within Schedule 1 to the Second Further Amended Statement of Claim. I will direct the parties to make any further submissions, limited to any question as to the form of that declaration, by 5pm on 28 May 2019. I will then make substantive orders at the same time as making that declaration with any appropriate amendments.

The parties have agreed a form of order to give effect to my finding (Judgment [292]) that the injunction restraining the Defendants from taking any steps to sell or dispose of the Club’s real property must be discharged. The Plaintiffs seek an additional order staying the order discharging the injunction until the expiry of 28 days from the date of the making of final orders in the proceedings. That order is not agreed between the parties, and the Plaintiffs do not trouble to make submissions to support it. The Defendants submit that any application for a stay or for a further injunction should be made by the appropriate application being filed and served with supporting evidence and the Defendants should be given an opportunity to file and serve evidence in reply. They indicate that the Defendants would also seek an oral hearing of any such application. I need not address that question since no such application has been made.

No basis for a stay of the order discharging the injunction has been identified, and I am not persuaded that I should order such a stay. I am reinforced in that view where final orders will not be made in the proceedings for some time, given the approach which the parties have adopted in respect of costs, and the possibility of an inquiry as to damages in respect of the interlocutory injunction obtained by the Plaintiffs.

The directions that I made on 23 April 2019 required the parties to submit agreed short minutes of order as to costs, or otherwise their respective short minutes of order as to costs and submissions as to the differences between them by 14 May 2019, and contemplated that the parties would make substantive submissions as to costs. They have instead agreed a different approach, which provides for further evidence and submissions as to costs over an extended period and a future hearing as to costs. I will make directions as to that process in the form the parties have agreed between them. The parties have also agreed that any directions as to an inquiry as to damages suffered by the Club, other Defendants or any third parties, be stood over to a specified date.

I make the following directions: