Diakovasili & Anor v Order of AHEPA NSW Incorporated [2023] NSWSC 1282

Supreme Court New South Wales

Medium Neutral Citation: Diakovasili & Anor v Order of AHEPA NSW Incorporated [2023] NSWSC 1282 Hearing dates: 11 - 13, 17 October 2023 Date of orders: 31 October 2023 Decision date: 31 October 2023 Jurisdiction: Equity - Corporations List Before: Black J Decision: Parties to bring in orders that give effect to this judgment, including as to costs, within 14 days and, in the event of any disagreement between them, their respective short minutes of order and short submissions as to the differences between them. Catchwords: ASSOCIATIONS AND CLUBS — General law derivative action — Where two members of incorporated association seek declaration as to entitlement to commence derivative proceedings at general law — Whether derivative proceedings at general law are available in respect of an incorporated association — Whether acts complained of are fraudulent or ultra vires — Whether it is in the interests of justice that derivative proceedings be brought. ASSOCIATIONS AND CLUBS — Voluntary administration — Duty to act in good faith in the best interests of an incorporated association and for a proper purpose — Whether administrators appointed for an improper purpose. EQUITY — Fiduciary duties — Conflict of interest and duty — Where incorporated association appoints voluntary administrators and some committee members subsequently make a deed of company arrangement proposal that is accepted by creditors — Whether committee members acted in a conflict of interest. Legislation Cited: - Associations Incorporation Act 2009 (NSW), ss 30A-30B, 31-33, 54, 63, 95 - Associations Incorporation Regulation 2016 (NSW) - Corporations Act 2001 (Cth), Ch 2F, Pt 5.3A, ss 5F, 9, 57A, 198G, 232, 233, 236, 237, 435A, 436A, 437A, 437D, 439A, 764A, 911A - Corporations Regulations 2001 (Cth), r 7.1.04N - Criminal Assets Recovery Act 1990 (NSW) - Evidence Act 1995 (Cth), s 136 Cases Cited: - Addstead Pty Ltd (in liq) v Liddan Pty Ltd (1997) 70 SASR 21; 25 ACSR 175 - Advanced Fuels Technology Pty Ltd v Blythe [2018] VSC 286 - Australian Federation of Islamic Councils Inc v United Moslems of New South Wales Inc [2021] NSWCA 311 - Bandiera v Bilambil Community Preschool & Oosh Incorporated [2018] NSWSC 1903 - Bell Group Ltd (in liquidation) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1; [2008] WASC 239 - Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11; 11 ACSR 785; 11 ACLC 1082 - Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384 - Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391; [2003] NSWSC 883 - Boardman v Phipps [1967] 2 AC 46 - Brash Holdings Ltd (admin apptd) v Katile Pty Ltd [1996] 1 VR 24; (1994) 13 ACSR 504 - Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 - Burland v Earle [1902] AC 83; [1900-3] All ER Rep 1452 - Cadwallader v Bajco [2001] NSWSC 1193 - CellOs Software Ltd v Huber [2018] FCA 2069 - Collard v Western Australia (No 4) [2013] WASC 455 - Cook v Deeks [1916] 1 AC 554 - Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 - Daniels v Daniels [1978] Ch 406; 2 All ER 89; 2 WLR 73 - Diakovasili v The Order of AHEPA NSW Incorporated [2022] FCA 1465 - Downey v Crawford (2004) 51 ACSR 182; [2004] FCA 1264 - Dresna Pty Ltd v Linknarf Management Services Pty Ltd (in liq) (2006) 156 FCR 474; [2006] FCAFC 193 - Eastmark Holdings Pty Ltd v Kabraji (2013) 97 ACSR 161; [2013] NSWSC 1763 - Eromanga Hydrocarbons NL v Australis Mining NL (1988) 14 ACLR 486 - Fitzwood Pty Ltd v Unique Gold Pty Ltd (in liq) (2001) 188 ALR 566; [2001] FCA 1628 - Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 - GHLM Trading Ltd v Maroo [2012] EWHC 61 (Ch) - Gladstone Ports Corporation Ltd v Murphy Operator Pty Ltd (2020) 6 QR 497; [2020] QCA 250 - Gouros v Order of AHEPA NSW Inc [2023] NSWSC 1281 - Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 - Gunasegaram v Blue Visions Management Pty Ltd (2018) 129 ACSR 265; [2018] NSWCA 179 - Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139 - Hanco ATM Systems Ltd v Cashbox ATM Systems Ltd [2007] EWHC 1599 (Ch) - Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782; (1969) 92 WN (NSW) 199 - Howard v Federal Commissioner of Taxation (2014) 253 CLR 11; [2014] HCA 83 - Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; (1974) 3 ALR 448; [1974] AC 821 - Hunt v System Building Services Group Ltd (in liq) [2020] EWHC 54 (Ch) - Hurley v BGH Nominees Pty Ltd (1982) 31 SASR 250; 6 ACLR 791; 1 ACLC 387 - Item Software (UK) Ltd v Fassihi [2004] EWCA (Civ) 1244 - Kazar v Duus (1998) 88 FCR 218 - Knox v Nile & Ors [2022] NSWSC 195 - Lianos v Order of AHEPA NSW Inc [2020] NSWCA 193 - Lianos v Order of AHEPA NSW Inc (No 3) [2020] NSWCA 340 - Lianos v Order of AHEPA NSW Inc (No 4) [2021] NSWCA 159 - McTear v Engelhard [2014] EWHC 1056 (Ch) - Menier v Hooper's Telegraph Works (1874) 9 Ch App 350 - Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128; 130 FLR 180; 19 ACSR 483 - Mount Gilead Pty Ltd v Macarthur-Stanham (as executor of Estate of late Lee Macarthur-Onslow) [2023] NSWCA 37 - Mt Nathan Landowners Pty Ltd (in liq) v Morris [2006] QSC 225 - Murdoch v Mudgee Dolomite & Lime Pty Ltd (In Liq) (2022) 398 ALR 658; [2022] NSWCA 12 - Netglory Pty Ltd v Caratti [2013] WASC 364 - New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126 - Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 - Oates v Consolidated Capital Services Pty Ltd (2009) 72 ACSR 506; [2009] NSWCA 183 - Omnilab Media Pty Ltd v Digital Cinema Network Pty Ltd (2011) 285 ALR 63; [2011] FCAFC 166 - P & V Industries Pty Ltd v Ponto [2007] VSC 64 - Pavlides v Jensen [1956] Ch 565; 2 All ER 518 - Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 - Pine Rivers, Caboolture and Redcliffe Group Training Scheme Inc v Group Training Association Queensland & Northern Territory Inc [2015] 1 Qd R 542 - Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204; 1 All ER 354; 2 WLR 31 - Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1981] Ch 257; 2 All ER 841; [1980] 3 WLR 543 - Re ACN 607 358 887 (formerly known as Carzapp) Pty Ltd [2019] NSWSC 1561 - Re AHEPA NSW Inc [2020] NSWSC 138 - Re Bean and Sprout Pty Ltd (admin apptd) [2018] NSWSC 351 - Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 - Re Order of AHEPA NSW Incorporated [2018] NSWSC 458 - Re Order of AHEPA NSW Incorporated [2019] NSWSC 1329 - Re Order of AHEPA NSW Incorporated [2020] NSWSC 1626 - Re SCW Pty Ltd [2013] NSWSC 302 - Re Warwick Keneally as administrator of Australian Blue Mountain International Cultural and Tourist Group Pty Ltd (admin apptd) [2015] NSWSC 937 - Re Windows on World Steel Windows Pty Ltd (In Admins) [2020] VSC 880 - Scarel Pty Ltd v City Loan & Credit Corp Pty Ltd (1988) 17 FCR 344 - Sliteris v Ljubic [2014] NSWSC 1632 - St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd (2004) 50 ACSR 443; [2004] NSWSC 851 - Vigtel Ltd v Zabusky [2006] 2 Qd R 81 - Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; 89 ACSR 1 [2012] WASCA 157 - Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 Texts Cited: - Butterworths, Australian Corporation Law: Principles and Practice (August 2023) - G E Dal Pont, Law of Associations (LexisNexis, 1st ed, 2018) - A S Sievers, Associations and Clubs Law in Australia and New Zealand (The Federation Press, 3rd ed, 2010) - G R Sullivan, "Restating the Scope of the Derivative Action" (1985) 44 CLJ 236 Category: Principal judgment Parties: Litsa Diakovasili (First Plaintiff) Demetrios James Antonakos (Second Plaintiff) Order of AHEPA NSW Incorporated (Defendant) Representation: Counsel: M Friedgut/F Di Lizia/M Meares (First and Second Plaintiff) F Corsaro SC/A Rizk (Defendant)