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) Solicitors: Levitt Robinson Solicitors (First and Second Plaintiff) Tzovaras Legal (Defendant) File Number(s): 2022/00372208 Judgment Nature of the application 1. By Further Amended Originating Process filed on 22 June 2023, the Plaintiffs, Ms Diakovasili and Mr Antonakos, seek a declaration that they are entitled to commence or continue proceedings in the name of the Defendant, Order of AHEPA NSW Incorporated ("AHEPA NSW", also referred to in the evidence as "the Association"), against ten persons named in a draft Statement of Claim ("proposed SOC") (Ex J1, 2031) or alternative relief. The proposed Defendants in those proceedings comprise nine members of the management committee of AHEPA NSW ("Nine Defendants") who are not aligned with a faction associated with the Plaintiffs (to which I will refer, without any disrespect, as the "Plaintiffs' faction") and a company, Rock Princes (Sydney) Pty Ltd ("RPS") as trustee of the Rock Princes (Sydney) Property Unit Trust. The relief claimed in this application raises two questions: first, whether derivative proceedings may be brought at general law in respect of an association incorporated under the Associations Incorporation Act 2009 (NSW) ("2009 Act"); and, second, whether, if that is possible, the Plaintiffs should be permitted to bring the proposed claim on the particular facts. 2. This application is brought under the general law, rather than under ss 236-237 of the Corporations Act 2001 (Cth) ("Corporations Act") and the Plaintiffs recognise that there is no requirement at general law for leave to commence derivative proceedings, so long as an exception to the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189 ("Foss v Harbottle") is established: Oates v Consolidated Capital Services Pty Ltd (2009) 72 ACSR 506; [2009] NSWCA 183 ("Oates") at [105]. They point out that the declarations that they seek are of a similar kind to that given in Vigtel Ltd v Zabusky [2006] 2 Qd R 81 at [106], as noted in Oates at [101]-[102]. The Plaintiffs submit, and I accept, that there is a genuine dispute as to whether they have standing to bring the proposed derivative claims, and it is desirable to determine that matter at this stage, rather than leaving the parties to incur the costs of proceedings which may later be dismissed for lack of standing. Chronology 1. I now set out a chronology of events, drawing partly on the Plaintiffs' chronology and partly on the documents tendered, largely in a joint court book (Ex J1). I only make findings of fact in these proceedings to the extent necessary to determine the question whether the declaratory relief sought by the Plaintiffs in this application should be granted, and I do not determine any other fact or question that might arise in the proposed proceedings if they were properly brought. The chronology below reflects my findings, to the extent that issues are contested and it is necessary to make them for that purpose. 2. AHEPA NSW was incorporated in 1993, although the Australian Hellenic Educational Progressive Association has a longer history in Australia and an unincorporated association has a longer history in New South Wales. Rule 13 of the rules of AHEPA NSW, as revised in 2018 (Ex J1, 456) ("Rules") relevantly provides for the powers of the management committee of AHEPA NSW and, importantly, provides that the management committee: "shall not sell, purchase, mortgage, charge, lien, borrow, lend, encumber or create any liabilities without approval first having been received by a special resolution made at a general meeting." 1. Rule 20 in turn provides (Ex J1, 460) for notice of committee meetings, requiring 7 days' notice of regular meetings of the committee or at least 48 hours oral or written notice of "additional meetings" of the committee which must state "the general nature of the business to be transacted at the additional meeting except business which the committee members present at the additional meeting unanimously agree to treat as urgent business". Rule 25 provides (Ex J1, 463) for the committee to convene a special general meeting whenever it thinks fit, and also requires the committee to do so on the requisition in writing of not less than 25 members and allows the members who made the requisition to convene such a special general meeting if the committee fails to do so within one month after the date of the requisition of members. That rule is relevant to special general meetings (purportedly) held by the Plaintiffs' faction and AHEPA NSW on different dates in June 2023, which respectively authorised and did not authorise the commencement of the proposed proceedings. It will not be necessary for me to determine the validity or effect of those meetings in order to determine this application. 2. At least from early 2016, a dispute arose as to the relationship between AHEPA NSW and the then unincorporated national association and as to the identity of chapters of AHEPA NSW and its membership. Mr Friedgut, with whom Mr Di Lizia and later Ms Meares appeared for the Plaintiffs, accepted, in his opening submissions, that there have been two "factions" in AHEPA NSW, each of which comprised different chapters of AHEPA NSW. He also accepted that the Nine Defendants are members of a "faction" which is comprised of a greater number of chapters than the Plaintiffs' faction has aligned to it, and that a larger number of members on the management committee of AHEPA NSW were aligned with the Nine Defendants' faction and a smaller number with the Plaintiffs' faction. He accepted that the Nine Defendants were all members of the majority faction and that the five other members of the management committee, not joined as Defendants, were members of the Plaintiffs' faction. 3. In December 2016, AHEPA NSW brought proceedings for declaratory relief to ratify certain resolutions passed (or purportedly passed) in 2005, 2007, 2010 and 2015. Ms Melas and Ms Alexandrou (who are aligned with the Plaintiffs' faction) opposed that relief. The parties ultimately agreed consent orders that should be made in those proceedings and, by my judgment delivered on 21 March 2018 (Re Order of AHEPA NSW Inc [2018] NSWSC 458), I addressed the question whether orders should be made under s 1322 of the Corporations Act 2001 (Cth) (as applied by the 2009 Act and the Associations Incorporation Regulation 2016 (NSW)) in respect of those matters and, on 21 March 2018, I made the agreed orders and also noted an agreement between AHEPA NSW on the one hand and Ms Melas and Ms Alexandrou on the other as to certain matters. 4. On 30 April 2018, AHEPA NSW held a special general meeting. AHEPA NSW then held a further special general meeting in November 2018 which became the focus of further disputes. In proceedings commenced in 2018, two members of the Plaintiffs' faction, again including Ms Alexandrou, also sought declarations that they were members of AHEPA NSW; representative orders were again made; and those proceedings were resolved by consent in late 2018. 5. In January 2019, Messrs Lianos, Gouros and Kypreos, also members of the Plaintiffs' faction, brought proceedings ("Lianos 2019") which challenged the validity of an amendment to AHEPA NSW's constitution at a meeting in November 2018 and also challenged resolutions passed at subsequent meetings, in the context of a proposal for AHEPA NSW to participate in a redevelopment of the Bexley Bowling Club. On 8 March 2019, Messrs Gouros, Kypreos and Lianos filed an Amended Originating process in Lianos 2019 and that case was heard by Rees J on 13-15 March 2019. 6. By a valuation report dated 11 March 2019, Lando Valuations ("Lando") valued two properties owned by AHEPA NSW at Rockdale ("Rockdale Properties") at $6 million (Ex J1, 2941). That valuation report reflects an inspection of the properties and refers to comparable rental data and sales data largely referable to late 2017 and 2018. That value was then recorded in the financial statements of AHEPA NSW for the year ended 30 June 2019 (Ex J1, 516). 7. Rees J delivered judgment in Lianos 2019 on 3 October 2019: Re Order of AHEPA NSW Inc. [2019] NSWSC 1329. The Plaintiffs in Lianos 2019 then brought an appeal from the orders made by Rees J in Lianos 2019, which was initially determined by the Court of Appeal in Lianos v Order of AHEPA NSW Inc [2020] NSWCA 193 ("Lianos CA 1"), although the Court of Appeal later varied significant aspects of that judgment in its subsequent judgment in Lianos v Order of AHEPA NSW Inc (No 4) [2021] NSWCA 159 ("Lianos CA 4"). A special leave application brought to the High Court was unsuccessful: Order of AHEPA NSW Inc v Lianos [2021] HCASL 113. 8. On 10 October 2019, Ms Alexandrou served a creditor's statutory demand for $107,753.23 on AHEPA NSW in respect of costs of the 2016 proceedings (Ex J1, 632). 9. By a letter dated 2 December 2019 (Ex J1, 744) to solicitors acting for Ms Alexandrou, the solicitors acting for AHEPA NSW, responded that: "[y]our clients have no reason to infer that [AHEPA NSW] is unable to pay its debts. They are well aware of the significant assets held by [AHEPA NSW]. The audited 2019 financial reports are readily available on [AHEPA NSW's] website. … Members had equity of $12,426,460 on the balance date. The Association's ordinary operating expenses are wholly funded from rent receipts. It pays trade creditors in conformity with their trading terms. It meets all employee entitlements and tax obligations. The Association continues to enjoy the support of its bankers. It is not insolvent." 1. By letter dated 3 December 2019 (Ex J1, 746), the solicitors who were then acting for Ms Alexandrou and are now acting for the Plaintiffs in this application, in turn rightly recognised that reliance on AHEPA NSW's balance sheet did not establish its solvency and observed that: "[i]t is trite law that the test for solvency is whether or not AHEPA is able to pay all its debts as and when they become due and payable. What is evident from AHEPA's financials is that, as at 30 June 2019, it had just $13,634 in the bank. It is uncontroversial that AHEPA has a debt payable to [Ms Alexandrou] in the sum of $107,753.23 ("the Debt"). Despite repeated requests, AHEPA has failed to identify how it intends to pay the Debt, when it will pay the Debt or whether it will pay the Debt at all. There is a distinction between solvency and a surplus of assets. A company may be at the same time insolvent and wealthy. The nature of a company's assets, and its ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all its debts as and when they fall due, must be considered in determining solvency. … It is evident that whilst it has assets, [AHEPA NSW] is nevertheless not in a position to pay the debt. In such circumstances, by definition, it is insolvent." 1. On 13 December 2019, Ms Alexandrou, again represented by the solicitors who now act for the Plaintiffs in these proceedings, brought proceedings seeking an order under s 63 of the 2009 Act that AHEPA NSW be wound up on the basis of insolvency. On 9 January 2020, under threat of winding up, AHEPA NSW paid the amount sought by Ms Alexandrou and then paid interest on that amount on 17 January 2020 (Ex J1, 637). After that occurred, the winding up proceedings were dismissed by consent. Emmett AJA delivered a judgment in respect of the costs of those proceedings in Re AHEPA NSW Incorporated [2020] NSWSC 138 ("AHEPA 2020") and observed (at [18]) that: "[i]t is fair enough to say that, on one view, the Association was technically insolvent. There is no evidence it had in place any facility against which it intended to draw once it had obtained the approval of the meeting for the Committee of Management to borrow money. The financial evidence that is presently before the Court indicates that, while the Association has substantial assets in excess of its total liabilities in the amount that I have already indicated, its current assets were clearly inadequate to meet the judgment debts. On that basis there was material from which it could be concluded that the Association was insolvent." 1. By letter dated 23 January 2020 (Ex J1, 2976), Judo Bank Limited ("Judo Bank") increased the amount of its loan to AHEPA NSW from $1.3 million to $1.5 million, and that increased loan apparently funded payment of Ms Alexandrou's claim for costs, although I recognise that payment had previously been made. It is common ground that additional borrowing required approval by, and was approved by, AHEPA NSW's members by special resolution in general meeting under rule 13 of the Rules. 2. The Plaintiffs rely on AHEPA NSW's balance sheet as at 30 June 2019 and 30 June 2020. The 30 June 2019 balance sheet (Ex J1, 515-516) records a value for the Rockdale Properties at $6 million in March 2019 and a value for the Surry Hills Property at $7.6 million in July 2019. The 30 June 2020 balance sheet (Ex J1, 787, 795), records that AHEPA NSW owns the Rockdale Properties valued at $4.4 million in October 2020 and the Surry Hills Property valued at $14 million in March 2019, with total liabilities of $3,063,834 as at 30 June 2020 (Ex J1, 787). Those financial reports indicate substantial total equity, which would be increased if its co-ownership of another property at Kemp's Creek was valued at market value rather than book value, but cash and cash equivalents of only $1,999 as at June 2020 (Ex J1, 794), compared with $13,634 as at 30 June 2019 (Ex J1, 515). There is evidence that the amounts held by AHEPA NSW in bank accounts as at the balance date exceed that figure, although the additional bank balance falls well short of the amount needed to meet AHEPA NSW's debts and contingent debts as they existed on 8 September 2020, when voluntary administrators were appointed to AHEPA NSW ("VA Appointment"). While AHEPA NSW then held substantial assets, that is not sufficient to establish its solvency if those assets could not be realised in sufficient time to meet debts that have fallen due. Under rule 13 of AHEPA NSW's Rules, to which I referred above, AHEPA NSW could not borrow or sell those assets without approval of a special resolution of members, and it is doubtful that such a resolution could have been passed (or, at least, passed in a manner that would be recognised by dissenting members and not challenged in further litigation) where the identity of members of AHEPA NSW has been a primary issue in dispute in recent litigation between it and its members. I return to that matter below. 3. On 26 August 2020, the Court of Appeal delivered judgment in Lianos CA 1. I bear in mind that, as Mr Friedgut points out in closing submissions, the Court of Appeal did not immediately make orders to give effect to its reasons and did not do so prior to the date of the VA Appointment. I also have regard to correspondence concerning the legal proceedings in the period between delivery of the Court of Appeal's judgment in Lianos CA 1 and the date of the VA Appointment, and following that date, to which Mr Friedgut refers in closing submissions, although it is not necessary to set out that correspondence here. 4. On 29 August 2020, Mr Gouros, one of the plaintiffs in Lianos 2019 and one of the appellants in Lianos CA 1, called a meeting of AHEPA NSW's management committee to be held on 1 September 2020 (Ex J1, 882). Mr Gouros and the Plaintiffs' faction then contended that they were the only persons entitled to sit on the management committee. That contention was based on the Court of Appeal's decision in Lianos CA 1, and its correctness was an open question until that decision was varied by the Court of Appeal's decision in Lianos CA 4. On 31 August 2020, AHEPA NSW's solicitors wrote to Mr Gouros' solicitors asking him, inter alia, to refrain from conducting that meeting (Ex J1, 885). 5. On 5 September 2020, Mr Michael Hird of Cor Cordis, later appointed as one of the voluntary administrators of AHEPA NSW, met with some members of its committee of management. One of the Nine Defendants, Mr Skandalakis then sent him an email, with copies to Mr Premetis and Mr Diasporas with various documents including a meeting agenda for "Tuesday night" (Ex J1, 925, 2980). 6. On 6 September 2020, AHEPA NSW sent an email concerning a meeting of the management committee which contained an error as to its date (Ex J1, 890) and, on 7 September 2020, the Secretariat of the Association sent a further email confirming that the meeting of that committee was scheduled for 8 September 2020 (Ex J1, 896). That notice referred to AHEPA NSW's adherence to the conflict of interest policy of the Australian Charities and Not for Profit Commission, but the parties did not address that policy and it is not necessary for me to do so (Ex J1, 890). It identified (Ex J1, 891) the business at the meeting as, relevantly: "2. NSW Court of Appeal decision (strictly privileged) 3. General business relating to Item 2 of the agenda." 1. Obviously enough, that agenda did not give any clear notice that a resolution for the VA Appointment would be proposed or passed at that meeting. By email dated 7 September 2020 (Ex J, 892), Mr Antonakos advised AHEPA NSW that he would not attend that meeting, unless it confirmed that he would be entitled to stay throughout the meeting, including for discussion of the privileged issues in respect of the Court of Appeal decision, in which he was in a contrary interest to AHEPA NSW. As Mr Corsaro, with whom Mr Rizk appears for AHEPA NSW, pointed out in closing submissions by reference to the affidavit evidence and cross-examination, other committee members from the Plaintiffs' faction generally made a conscious choice not to attend the meeting on 8 September 2020, with notice that it was to occur, although without specific notice of any proposed VA Appointment. 2. Also on 7 September 2020, Mr Hird and Mr Skandalakis had a telephone conference (Ex J1, 3200ff). Subsequent steps took place in the Court of Appeal from 8 September 2020, including in relation to orders (Ex J1, 909ff). 3. There are two separate minutes of what appears to have been a single meeting of the management committee on 8 September 2020, at which the VA Appointment was made. That meeting was attended only by the Nine Defendants and not by committee members associated with the Plaintiffs' faction. The first of those minutes (Ex J1, 898), which recorded that the meeting commenced at 8pm and concluded at 8.32pm, noted the decision of the Court of Appeal in Lianos CA 1 and referred to a proposed application to reopen the appeal hearing and seek special leave to appeal, and a proposal to form a sub-committee to deal with those matters. Those resolutions assumed that the position in respect of voluntary administration was then an open question, since the management committee and any sub-committee would necessarily be deprived of any control of those proceedings once a voluntary administrator was appointed, even if (as ultimately occurred) leave was granted to continue the proceedings while AHEPA NSW was in voluntary administration. The committee members there present, being the Nine Defendants, also resolved, as recorded in a second set of minutes (Ex J1, 904) of that meeting: "1 That in the opinion of the directors/committee of management members, the Association is insolvent, or is likely to become insolvent at some future time. 2. That administrators of the Association should be appointed." I note that that resolution is in standard form, so far as the VA Appointment is concerned. An instrument of appointment of administrator was signed on the same day executed by the Nine Defendants who had attended that meeting (Ex J1, 906). 1. On 15 September 2020, the former solicitors for AHEPA NSW submitted an informal proof of debt (Ex J1, 933) in the voluntary administration for the total amount of $538,907.95. The first meeting of creditors of AHEPA NSW then took place on 18 September 2020 (Alexandrou 24.4.23 [24]). 2. On 24 September 2020, Messrs Premetis, Diamadis, Kallimanis, Fandakis and Skandalakis (who are among the Nine Defendants) submitted a Report on Company Activities and Property ("ROCAP") to the voluntary administrators (Ex J1, 1024) which recorded amounts, inter alia, owed to Judo Bank of $1.550 million and to AHEPA NSW's former solicitors of $538,907.95, amounts owing to the other parties in respect of Lianos 2019 and Lianos CA 1 of $961,678.67 and to its current solicitors of $64,314.21, an amount owing to Revenue NSW of $48,517.74 and numerous other debts in smaller amounts. They there stated that the Rockdale Properties were valued at $3,000,000 each for a total of $6,000,000, reflecting the value attributed to them in AHEPA NSW's earlier financial statements for financial year 2020, and stated the value of the Surry Hills Property at $7.6 million and referred to the current market value of another asset as $3 million, reflecting the then strong asset position of AHEPA NSW. 3. On 30 September 2020, Mr Fandakis requested Lando again to provide a valuation of the Rockdale Properties "for assets purposes" (Ex J1, 3338). By a further valuation report dated 7 October 2020 (Ex J1, 3341), Lando valued the Rockdale Properties at $4,440,000 exclusive of GST. The report noted that the real estate market was being impacted by the uncertainty arising from the COVID-19 outbreak and that there was significant market uncertainty as at the date of the valuation. The rental data and sales data on which that valuation relied extended from late 2017 to late 2019. 4. By letter dated 6 October 2020 (Ex J1, 1044), the solicitors then acting for Messrs Lianos, Gouros and Kypreos in Lianos CA 1 noted that they were creditors of AHEPA NSW in the amount of $961,678.67; noted that the total amount owed by AHEPA NSW to its creditors was about $3.38 million and observed that it was: "[a]pparent from above that the value of the assets of the Association exceeds its liabilities; however there is likely to be a shortfall in the amount of $1,500,000 if the Association were to discharge its liabilities (including legal fees for amounts as agreed or assessed) without liquidating any of its assets." Mr Lianos and others there indicated their wish to propose a DOCA ("CS DOCA") put by Capital Services (NSW) Pty Ltd ("Capital Services") for consideration by creditors at the second meeting of creditors and outlined the terms of the CS DOCA. 1. On 7 October 2020, RPS was incorporated (Ex J1, 2721ff) and Mr Bouteris sent Mr Fandakis the valuation obtained from Lando which had valued the Rockdale Properties at $4.4 million (Ex J1,3337ff). 2. By the administrators' report to creditors dated 7 October 2020 (Ex J1, 1055) they observed, under the heading "Explanation for the Association's difficulties" that: "[a]t the date of our appointment it became evident that the Association was adversely impacted by material internal disputes within its membership. This led to lengthy legal disputes and extraordinary liabilities, (legal fees) being incurred by the Association. These internal disputes and legal fees were the main catalyst for the appointment of voluntary administrators." They also observed, under the heading "Estimated date of insolvency" that: "[o]ur preliminary view is that the Association may have become insolvent following the decision of the Appeals case and handed down in late August 2020. This case led to liabilities being crystallised for which the Association was unable to pay when due." Under the heading "View on insolvent trading" they observed that: "[a]lbeit the Association has a surplus of assets over liabilities, the Association is insolvent as prior to our appointment it was unable to pay its liabilities as and when they fell due. Our preliminary investigations indicate that [the] Association had no internal means of passing a special resolution to approve payment of its liabilities which were predominantly incurred from the Appeals Case." (Ex J1, 1055) 1. That report indicated a substantial estimated surplus of AHEPA NSW's assets over liabilities, on the figures provided in the ROCAP, although the cash at bank held by AHEPA NSW at October 2020 was only $44,240 (Ex J1, 1067), well short of its then liabilities payable to the other parties in legal actions against AHEPA NSW. That report also indicated that, by that time (I note, only approximately a month after the VA Appointment), AHEPA NSW's former solicitors had obtained two cost assessment certificates for the costs owed to them, and also provided the voluntary administrators with legal invoices in support of their claim totalling $538,908 (Ex J1, 1070). 2. On 19 October 2020, Mr Fandakis provided Opteon Property Group Pty Ltd ("Opteon") with a copy of the Lando valuation dated 7 October 2020 valuing the Rockdale Properties at $4.4 million (Ex J1, 3382); Opteon inspected the properties on 23 October 2020 (Ex J1, 1408) and, on 29 October 2020, its report (Ex J1, 1408) also valued the Rockdale Properties at $4.4 million as at 23 October 2020, on a market value basis. That report also noted the major disruption to the economy and property markets caused by COVID-19 and that the economy was then in a recession, with changes in the property market expected to result in weaker tenant demand and a potential adverse effect on value, and noted the highest and best use for the property was considered to be its existing use "with longer term redevelopment potential". It recognised the then zoning of the property, reflected a detailed inspection of the property, and referred to extensive market evidence as to comparative rentals and sales. 3. On 30 October 2020, I made orders validating the VA Appointment in Re Order of AHEPA NSW Incorporated [2020] NSWSC 1626. The parties confirmed, at the commencement of the hearing, that they did not object to my hearing this matter by reason of that decision. I there observed (at [2], [6]-[8], [15]) that: "… despite its laudable aims, the Association has been occupied in the recent past in internal disputes, which have generated other litigation in this Court, including, most recently, litigation before Rees J and subsequently in the Court of Appeal, which are the immediate precursor of this application and indeed of the appointment of administrators to the Association ... Mr Hird [one of the voluntary administrators] also outlines the circumstances of previous disputes involving the Association, to which I have referred above. He notes that an issue may have arisen in the Court of Appeal, and is raised in orders which it is suggested will be sought from the Court of Appeal, if the stay of the appeal which arises from the administration is lifted, as to the membership of the management committee and, in particular, as to whether the Association had validly appointed any person to be the Secretary or Treasurer on the committee of management. Mr Hird notes that, not surprisingly given the complex history of the disputes within the Association, he has not yet formed a view as to that matter, but is concerned about it. Mr Hird also refers to the administrators' investigations to date, which have disclosed that the Association has a significant number of creditors who have lodged proofs of debt, such that its known unsecured creditors as at the date of his affidavit are in excess of $1.8 million, and a third party, Judo Bank, is a secured creditor with a claim of $1.5 million plus interest and costs in addition to that amount. Mr Hird notes that the Association owns real property which is of very substantial value, but its assets that are realisable within a short period are substantially less than the amount of the present debts owed by it. It is implicit in Mr Hird's analysis, and I find, that the Association is presently likely to be insolvent on a cash flow basis, so far as its assets realisable within a short period would not be sufficient to meet the debts that would be payable within that period and, if it is not presently likely insolvent on that basis, then it is likely to become insolvent with the passage of time, particularly when any costs order made by the Court of Appeal in respect of the proceedings before it become due and payable. The administrators also rely on the affidavit dated 23 October 2020 of their solicitor, Mr Steven Mattiussi, which refers to correspondence with solicitors representing persons interested in the Association, including the two groups which take two different views as to the Association's affairs. The administrators also rely on a second affidavit of Mr Mattiussi dated 27 October 2020 which refers to a deed of company arrangement proposal which has already been put by one of those groups in respect of the Association, and to the anticipation that a further deed of company arrangement proposal will be put by the other group. The second meeting of creditors has been adjourned to allow both proposals to be considered. Mr Katekar SC, who appears for the administrators, points to their concern, which seems to me to be well-founded given the Association's history, that there is a potential of or a likelihood of further dispute, including as to the validity of their appointment, if one or other deed of company arrangement was accepted, in a manner that caused disappointment to the group which supported a competing deed ... It seems to me that there is a compelling basis for an order to be made under s 447A of the [Corporations Act] to validate the administrators' appointment by reference to several factors. First, there are uncertainties as to the validity of the administrators' appointment, at least by reason of the questions of the adequacy of notice of the meeting and the membership of the management committee to which I have referred above. Second, it is plain that the Association has substantial assets which are not realisable within a short time, but significantly exceed its debt. That allows a real prospect that a restructuring of the Association will preserve it, or at least its functions, for the benefit of the relevant community. Third, it seems to me that it is desirable, in the relevant circumstances, that an independent person, such as the administrators, have the conduct of that restructuring where the existing divisions within the management committee and the membership of the Association are otherwise likely to cause significant difficulties for such a reconstruction. Fourth, the validation of the administrators' appointment is desirable, from the point of view of members of the management committee who might otherwise be exposed to potential liabilities in respect of the continued conduct of the Association's affairs at a time that it either is, or is likely to become, unable to pay its debts as and when they fall due. Such an order will also particularly avoid the diversion of the Association's or its members' resources to a fruitless dispute at some point in the future as to the validity of the administrators' appointment and allow a more productive focus upon the steps that may be taken to preserve the Association or its functions." 1. On 17 November 2020, Mr Premetis submitted an outline of a proposed deed of company arrangement on behalf of RPS ("RPS DOCA") (Ex J1, 1533) , which proposed to create a deed fund in the amount of $4.4 million to enable a return to creditors of 100 cents in the dollar, by the sale of the Rockdale Properties to RPS for "market value of $4.4 million", on terms that provided rent free occupancy to AHEPA NSW in the first year and rental payments of substantially less than the amount of the market rent as assessed by Opteon in the second and third years. The then proposal also contemplated conditions which would have changed the status of AHEPA NSW to a public company limited by guarantee and contemplated the election of new directors and a new constitution, although those conditions were ultimately not pressed. On 7 December 2020, RPS submitted a revised RPS DOCA (Ex J1, 1573). 2. The voluntary administrators' supplementary report to creditors of 9 December 2020 (Ex J1, 1589) outlined the terms of the CS DOCA and the competing RPS DOCA but did not indicate the value of the Rockdale Property by reason of "commercial sensitivity" (Ex J1, 1614). The voluntary administrators also obtained a valuation report (in draft) of the Rockdale Properties from Property Logic on or about 12 December 2020 (Ex J1, 3423). That draft report refers to the medium to longer term redevelopment prospects and capital growth of those properties as "generally sound" but pointed to a recently refused development application of the property and the neighbouring site, by reason of a failure to comply with the height limit, building envelope and design guidelines, and noted that development site values could fluctuate rapidly under changing market conditions. That draft report provided a detailed analysis of the potential for development of the property and also considered sales evidence for earlier years until late 2020. In that draft report, Property Logic valued the Rockdale Properties at $4.9 million, exclusive of GST, about $500,000 higher than the valuation obtained by RPS, but well short of the $6 million valuation for which the Plaintiffs contend. 3. At the resumed meeting of creditors held on 16 December 2020, the administrator noted (Ex J1, 1742) that the RPS DOCA provided for the sale of the Rockdale Property to RPS "at a price determined by a valuation they arranged" and outlined other terms of the proposed RPS DOCA; there was an extensive discussion of the competing CS DOCA and RPS DOCA in which creditors associated with proponents of the respective DOCAs supported the respective DOCAs; a resolution that AHEPA NSW execute the CS DOCA was lost, and a resolution that it execute the RPS DOCA proposed by RPS was passed by a majority of creditors. In the course of that meeting, the voluntary administrator drew the attention of creditors to the ability to challenge a DOCA, but no such challenge was subsequently brought by Capital Services or any member of the Plaintiffs' faction. 4. On 17 December 2020, the Court of Appeal delivered judgment in Lianos v Order of AHEPA NSW Inc (No 3) [2020] NSWCA 340 which, inter alia, stayed its orders made in Lianos 1 until the determination of a reopening application made by several incorporated chapters of AHEPA NSW. 5. On 18 December 2020, the administrators and RPS executed the RPS DOCA (Premetis 11.4.23 [25]). 6. On 6 August 2021, the Court of Appeal made orders in Lianos CA 4 varying its orders made in Lianos CA 1. 7. Also in 2021, AHEPA NSW brought proceedings against members of the Plaintiffs' faction concerning the redevelopment of the Bexley Bowling Club, which were dismissed by consent, and Mr Gouros and other members of the Plaintiffs' faction brought proceedings against AHEPA NSW concerning several matters. Some of those matters were resolved in the course of the hearing and in my judgment in Gouros v Order of AHEPA NSW Inc [2023] NSWSC 1281, delivered at the same time as the judgment in this application. The parties also indicated that there was no objection to my also hearing this application, after I had heard those proceedings and prior to my delivery of judgment in them. 8. On 22 July 2022, the solicitors acting for Ms Diakovasili gave notice (Ex J1, 1978) under s 237 of the Corporations Act of her intent to seek leave to bring derivative proceedings. As I noted above, the application now relies on the general law derivative action. 9. By email dated 11 August 2022 (Ex D3), the solicitors acting for the Plaintiffs in this application advised Mr Alexandrou, Mr Lianos, Mr Kypreos and Ms Diakovasili that, inter alia, there had been no response from AHEPA NSW to the notice of the proposed derivative proceedings; Ms Diakovasili would be the deponent of the affidavit in support of the application for leave to bring the derivative proceedings; and the solicitors "wished to have the proceedings filed before the mediation, scheduled for 27 August 2022". The Defendants relied on this matter to seek to establish that the Plaintiffs, or at least their solicitors, had an improper purpose in the commencement of the application or the proposed proceedings, namely to place pressure upon the Nine Defendants personally at the mediation. I do not need to reach such a finding in order to determine this application, and that inference is weakened where this application has been pressed, and the Plaintiffs continue to seek to bring the proposed proceedings, after the mediation has passed. 10. These proceedings were then commenced, in their original form seeking leave under ss 236-237 of the Corporations Act, in the Federal Court on 1 September 2022, and subsequently transferred to this Court: Diakovasili v The Order of AHEPA NSW Incorporated [2022] FCA 1465 at [9]. 11. Persons associated with the Plaintiffs' faction later requisitioned a general meeting of AHEPA NSW to authorise the commencement of the proposed proceedings by AHEPA NSW, which would have avoided the need for the declarations they now seek. On 3 April 2023, the management committee resolved that the requisitioned meeting would be held on 21 June 2023 (Ex J1, 2139). The members of the Plaintiffs' faction then convened a meeting themselves, by a notice of meeting that indicated the members of the opposing faction associated with several incorporated chapters of AHEPA NSW would be excluded from voting (Ex J1, 2349, 2693). Unsurprisingly, the resolution authorising the proceedings then passed at that meeting which only members of the Plaintiffs' faction attended. Also unsurprisingly, the corresponding resolution then failed at the meeting previously convened by AHEPA NSW in response to the requisition, which was not attended by members associated with the Plaintiffs' faction (Ex J1, 2029ff, 2086ff, 2152ff, 2348ff, 2693, 2699-70). It is not necessary to address the position in respect of those meetings, given the findings which I reach on other grounds. 12. The solicitors acting for the Plaintiffs and others in respect of this application provided a costs disclosure letter dated 6 April 2023 (Ex D2) in respect of this application to several members of the Plaintiffs' faction, namely Mr and Ms Alexandrou, and a company associated with them, Marine Parade Pty Ltd ("Marine Parade"), Mr Lianos, Mr Kypreos, Ms Diakovasili and Mr Antonakos. That letter recorded that all of those parties, not only the two named Plaintiffs, Ms Diakovasili and Mr Antonakos, had instructed that firm, inter alia, to: "[f]ile proceedings seeking leave to commence derivative action against nine (9) incumbent committee members of [AHEPA NSW] and [RPS] (Proposed Defendants) in respect of the appointment of the voluntary administrators, and the acquisition of the Rockdale Properties by RPS (Claims)." [emphasis added] That letter estimated the cost of the application for leave to bring the derivative proceedings, as distinct from the conduct of the proposed substantive proceedings, as $440,000 inclusive of GST, although it is not clear whether that estimate included Counsels' fees. The copy of that letter in evidence is only signed by the solicitors and Mr Antonakos. 1. That costs disclosure letter also contained an additional provision that: "[Mr Alexandrou], [Ms Alexandrou], [Marine Parade], [Mr Lianos] and [Mr Kypreos] jointly and severally indemnify [Ms Diakovasili] and [Mr Antonakos] in respect of the legal costs and disbursements of [the solicitors] of acting for [Ms Diakovasili] and [Mr Antonakos] ("the Indemnified") in this matter, to be charged at the rates disclosed in any Costs Disclosure and Costs Agreement relating thereto, including as amended, varied or updated from time-to-time, or any further disclosure; any order made for security for costs; and any adverse orders for costs (Indemnity). The Indemnifiers irrevocably agree and undertake to pay any amount that is subject to the Indemnity to [the solicitors] in the first instance. The Indemnifiers jointly and severally indemnify [the solicitors] in respect of any loss and damage suffered or incurred by [the solicitors] arising out of or in connection with the breach by any of the Indemnifiers of the Indemnity." [emphasis added] 1. That indemnity plainly does not extend to the costs of the proposed proceedings, since the costs agreement is directed only to the costs of the leave application and not the cost of the proposed proceedings, unless amended to extend its scope; nor does it extend to liabilities incurred by AHEPA NSW in the proposed proceedings; nor does it extend to any liability of Ms Diakovasili or Mr Antonakos for any costs order made against them in the proposed proceedings. It does no more than provide an indemnity to the two Plaintiffs for the solicitors' costs of the leave application (as distinct from the proposed proceedings) and ensure that the solicitors can claim their costs of the leave application against Mr Alexandrou, Ms Alexandrou, Marine Parade, Mr Lianos and Mr Kypreos. There was reference, in the course of this application, to an indemnity given to Ms Diakovasili and Mr Antonakos that they understood to have a wider application, but that wider indemnity is not found in that costs agreement and the Plaintiffs did not tender any other document containing it. I return to that matter below. Affidavit evidence 1. The Plaintiffs read three affidavits dated 20 March 2023, 6 April 2023 and 17 August 2023 of Ms Diakovasili in support of the application. She is the First Plaintiff in this application and the first plaintiff in the proposed proceedings, and is a longstanding member of the Order of AHEPA and an elderly pensioner who is Greek-speaking. She gave her gave affidavit evidence through interpreters and the Plaintiffs also read the affidavits of the interpreters, Dimitra Gallos dated 20 March 2023 and 6 April 2023 and Voula Tamaras dated 17 August 2023, in respect of Ms Diakovasili's affidavits. She was also cross-examined through an interpreter. 2. In her first affidavit, Ms Diakovasili gave evidence that, on 22 July 2022, she caused her solicitors to provide notice to AHEPA NSW of her intention to seek leave to commence derivative proceedings, then in the form of statutory derivative proceedings under ss 236-237 of the Corporations Act. She gave evidence to establish that AHEPA NSW would probably not commence the proposed proceedings, by reference to a detailed analysis of the membership of its management committee, and I accept that proposition. Ms Diakovasili also referred to steps which had been taken to reformulate this application to bring it under the general law rather than under ss 236-237 of the Corporations Act and exhibited documents to support aspects of the allegations in the proposed SOC. It was clear from the detail of that part of Ms Diakovasili's first affidavit and her cross-examination that her evidence reflected her legal representatives' analysis and that Ms Diakovasili had little input into it or present understanding of that analysis. 3. In opening submissions, Mr Friedgut particularly emphasises the evidence of Ms Diakovasili in paragraphs 56-59 and 64 of her first affidavit dated 20 March 2023 that: "As a member of the Association, I have an interest in the management and welfare of the Association. I am concerned that the claims pleaded…concern fundamental breaches of duty and mismanagement resulting in loss and damage to the Association. I want the assets of the Association restored, namely by way of the prospective defendants paying damages, compensation or an account of profits in respect to the claims alleged against them. This will bring a financial and practical benefit to the Association's members as a group. … I am not aware of any decision of the Committee not to commence the Proposed Proceedings and whether such decision was made: a. In good faith and for a proper purpose; b. After the members informed themselves to the extent they reasonably believed appropriate; c. On the basis of rational belief that the decision was in the best interests of the Association." 1. Regrettably, having paid close attention to Ms Diakovasili's evidence in cross-examination, I have concluded that this evidence does not reflect any understanding of the claims or their likely result by Ms Diakovasili, but is an unfortunate example of Ms Diakovasili adopting her legal representatives' formulation of evidence without any real understanding of it or its basis. I make no criticism of Ms Diakovasili in that respect, where she likely had no way of knowing that course was inappropriate, or that her evidence should properly have reflected the reality, that she wishes to bring the claims because she and her faction have an adverse view of the Nine Defendants and their conduct, but she has left it to others to understand the content of the proceedings, the nature of the relief sought and whether they have any factual or legal basis. 2. Ms Diakovasili also there explained, by reference to documents, why the proceedings were in the best interests of AHEPA NSW. It was also clear from her cross-examination that she had little understanding of that aspect of her evidence. I accept that she genuinely believes that the affairs of AHEPA NSW have been conducted inappropriately by the Nine Defendants, but it is plain that she has no real understanding of the issues raised by the proposed proceedings and no basis to assess how the relief sought in them (if it were identified) would address her concerns. 3. Ms Diakovasili also addresses her financial position, referring to the equity in her home and to an indemnity that (she understood) Marine Parade (which is, as I noted above, a company controlled by Mr and Ms Alexandrou) had provided to her in respect of any liability arising from the proposed proceedings and her understanding that Marine Parade had a surplus of assets over liabilities. That indemnity is not in evidence, where the costs agreement to which I referred above does not contain it. It was not apparent, from Ms Diakovasili's affidavit evidence or cross-examination, that she had any understanding of the fact that the proposed proceedings against ten defendants would, if unsuccessful, give rise to a substantial costs order against her and Mr Antonakos, jointly and severally; or to the risk that enforcement action might be taken against her home in respect of such costs at a time in her life where she would be vulnerable to a loss of that home; or that there was an unavoidable risk that Marine Parade either could not or would not honour that wider indemnity (if it exists) if she called on it after unsuccessful proceedings at first instance or on appeal, whether because it had been wound up in a member's voluntary winding up or deregistered before liability under the indemnity fell due; or that breach of the undertaking that Mr and Ms Alexandrou proposed to offer to the Court on Marine Parade's behalf may render them or it liable in contempt, but a remedy in contempt would not necessarily assist her position. I am troubled by these matters and will return to this issue below. 4. By her second affidavit dated 6 April 2023, Ms Diakovasili emphasised her concern over the suggested actions of the incumbent management committee of AHEPA NSW and again indicated her wish to continue as a plaintiff in the proceedings together with Mr Antonakos, who was by then proposed as a Second Plaintiff in the proceedings. She again emphasised her concern with the overall management of AHEPA NSW, although the claims sought to be made in the proposed SOC have a narrower character, focussing on the voluntary administration and sale of the Rockdale Properties under the RPS DOCA. 5. By her third affidavit dated 17 August 2023, Ms Diakovasili again referred to her long relationship with AHEPA NSW and observed that: "[d]espite my age and personal circumstances, I have decided to commence these proceedings. I believe that I have no choice but to commence these proceedings in order to advance the best interests of AHEPA [NSW]". Ms Diakovasili then provided a detailed outline of the history of the VA Appointment and referred to other proceedings in the Court commenced by other persons associated with AHEPA Australia (as distinct from AHEPA NSW) in which she had given evidence, and emphasised that she did not expect any personal or financial gain from the proceedings. 1. Ms Diakovasili was cross-examined and I have no doubt as to the genuineness of her commitment to AHEPA and her genuine wish to pursue the proceedings. However, I am comfortably satisfied that she has little understanding of the basis of the allegations proposed to be brought by her on AHEPA NSW's behalf in the proposed proceedings, or of the factual matters to which they refer, or the legal issues which they raise, or the relief that may be sought in them, or the risk of the loss of her home which is her only substantial asset to which she would be exposed by the pursuit of the proposed proceedings. Even assuming that the risk of Marine Parade failing to meet its indemnity (if it exists) if she failed in the proceedings is limited, the consequence of that occurring would be catastrophic for her. That is a significant matter, to which I return below. 2. The Plaintiffs also read the affidavits dated 24 April 2023 and 17 August 2023 of Mr Demetrios Antonakos, who was recently joined as the Second Plaintiff in this application and would be the Second Plaintiff in the proposed proceedings. In his first affidavit dated 24 April 2023, Mr Antonakos indicated that he wished to be joined as Second Plaintiff to the proceedings to provide his "support" to Ms Diakovasili because he wished to "ensure that the orders sought" are made. He indicated that he supported the proposed SOC and that he wished to have the assets of AHEPA NSW restored, implicitly by recovering costs of the voluntary administration and compensation for the sale of the Rockdale Properties at an alleged undervalue. He referred to his belief that he could more readily provide information and documents to the solicitors acting in the proceedings and better assist in communications with them than Ms Diakovasili. That proposition is plausible given Ms Diakovasili's age and the fact that she is Greek speaking and requires an interpreter to communicate with the solicitors. Mr Antonakos indicates that he is willing to be a plaintiff in the proceedings because (he understands) he has received an unlimited indemnity from Mr and Ms Alexandrou's company, Marine Parade, and he refers to Mr Alexandrou's offer of an undertaking to the Court on behalf of that company. As I noted above, that indemnity is not in evidence and the costs agreement to which I referred above does not contain it. Mr Antonakos also addresses the difficulties that the Plaintiffs' faction had in calling a meeting to approve the proposed proceeding in March 2023, which it is not necessary for me to address given the conclusions that I reach below. He also refers to the circumstances of the VA Appointment and to his surprise that the relevant resolution had been passed. 3. By his second affidavit dated 17 August 2023, Mr Antonakos elaborated on the evidence given in his first affidavit as to the matters relating to the meetings convened by members of the Plaintiffs' faction and AHEPA NSW in June 2023 in respect of the proposed proceedings. 4. Mr Antonakos was also cross-examined and his evidence was that he had given limited attention to this proceeding and the proposed proceedings until about March 2023, because of his involvement in other proceedings that he and others had brought against AHEPA NSW. He was cross-examined at some length as to steps which would be taken to establish the membership of AHEPA NSW in order to conduct a special general meeting. That cross-examination was complex, both in the questions asked and also in Mr Antonakos' responses to them, which likely reflect the underlying dispute as to the status of AHEPA NSW and its constituent parts. Mr Antonakos' evidence in cross-examination at least made clear that he and members of the Plaintiffs' faction have taken the view that the only members who would be entitled to vote at a special general meeting were the financial members of chapters of AHEPA NSW associated with an unincorporated association, AHEPA Australia, and not members of the incorporated chapters linked with the other faction, so that any general meeting to approve a loan or any sale of property would likely have given rise to a dispute as to which members of AHEPA NSW were entitled to vote at it. 5. Mr Antonakos was also cross-examined as to the circumstances in which he did not attend the meeting at which the voluntary administrators were appointed to AHEPA NSW, although he had received notice of that meeting, which turned on a wider dispute as to whether he should be entitled to be present when legal issues in respect of the other proceedings brought by and against AHEPA NSW were discussed. 6. Mr Antonakos' evidence is that he sought to be joined as a Second Plaintiff in the proceedings, when he had occasion to read the proposed SOC in about March 2023, and then formed the view that he wished to support the proceeding, although he was not then aware of what evidence was available to support the claim. I think it likely that Mr Antonakos' claim that he was joined as a Second Plaintiff in the proceedings to assist with his knowledge and to promote the prospect that the relief sought would be obtained did not provide a full account of the matters which went to that decision, which may have included a recognition of Ms Diakovasili's lack of understanding of the proceedings. Mr Antonakos' evidence on cross-examination at least indicated that he has a better understanding of the matters raised in the proceedings than Ms Diakovasili who, as I noted above, has little or no understanding of those matters. 7. Mr Antonakos was cross-examined as to whether he supported the Plaintiffs' proposed claims as put in Mr Friedgut's opening of this application, formulated by Mr Corsaro in a somewhat heightened way (T166) as follows: "But, at the heart of this, is that the claim you're making is a claim of fraudulent concealment from you and others of a plan to go into administration for the improper purpose of making money out of the sale of the property. That's really what you're claiming, is it? Is that what you're claiming?" Mr Antonakos responded (T167) that: "Well, I don't what going's to be proposed. I'm looking, as I said, and I'll repeat, that I've looked at the statement of claim, and I totally support it, and I can see there was no reason why we should've gone into administration, and that's my that's my view." 1. Mr Corsaro also relied on Mr Antonakos' evidence in cross-examination that members of the Plaintiffs' faction believe that they are the only members of AHEPA NSW, to the exclusion of other members associated with the incorporated chapters so that they would be the only persons entitled to vote at any general meeting of AHEPA NSW (T154). I return below to the lack of utility in any attempt by the management committee to convene a special general meeting to seek approval of a sale of property of AHEPA NSW, or a borrowing by AHEPA NSW, where there was a continuing dispute as to who would be entitled to vote at any general meeting. 2. The Plaintiffs also read two affidavits dated 24 April 2023 and 17 August 2023 of Mr Alexandrou, who is not a plaintiff in these proceedings or in the proposed proceedings but is partly funding these proceedings and proposes to cause Marine Parade, a company that he and his wife controls (as I noted above) to indemnify the Plaintiffs in the proposed proceedings. 3. In his first affidavit dated 24 April 2023, Mr Alexandrou referred to his involvement as a member of the management committee of AHEPA NSW between November 2019 and October 2020. He referred to meetings which had taken place between the potential voluntary administrators and some members of AHEPA NSW's management committee prior to the VA Appointment. He also referred to his surprise at the VA Appointment and indicates that he would have voted against the resolution for the VA Appointment had he received notice of the meeting of the management committee on 8 September 2020 at which they were appointed. The evidence is not sufficient to indicate whether he was sent or received such notice. Mr Alexandrou's evidence is that there was no mention before the meeting of 8 September 2020 of any issue regarding AHEPA NSW's solvency, although that proposition is unsurprising, if that insolvency or likely insolvency resulted from the Court of Appeal's decision in Lianos CA 1 delivered on 26 August 2020. 4. Mr Alexandrou there addresses information that was provided to him by the voluntary administrators to the extent of AHEPA NSW's liabilities and indicates that he had not previously had access to that information. He refers to the fact that AHEPA NSW had a surplus of assets over liabilities, which is plainly the case, but is of limited assistance in assessing its solvency which is to be determined on a cashflow basis. He refers to the subsequent conduct of the voluntary administration and to the fact that the solicitor who was then acting for him had attended the hearing in which the voluntary administrators sought validation of their appointment. I should add that that solicitor did not then seek to be heard in opposition to that application. Mr Alexandrou also refers to the proposals for a DOCA made by RPS and to the steps which he took to cause a company controlled by him, Capital Services, to put forward the CS DOCA in the voluntary administration. Mr Alexandrou also refers to the list of creditors at the second creditor's meeting, the debts of which totalled nearly $1.7 million, and makes comments as to the status of those creditors (which were admitted, by agreement of the parties, with a limiting order under s 136 of the Evidence Act 1995 (Cth) ("Evidence Act") as evidence of his understanding only). Those comments are of limited relevance where no step was previously taken to challenge either the resolutions passed at the second meeting of creditors or the RPS DOCA that was approved by creditors at that second meeting of creditors. 5. Mr Alexandrou also refers to the fact that his children took an assignment of a debt of $548,907.95 claimed by the solicitors previously acting for AHEPA NSW in the several legal proceedings, notwithstanding that he raises questions as to the status of that debt, which was ultimately paid to his children in full under the RPS DOCA. He also refers to his disappointed expectation that the proposal for the CS DOCA put by Capital Services would be accepted at the second creditor's meeting. Mr Alexandrou also addresses the position in respect of the Rockdale Properties owned by AHEPA NSW and refers to an option granted to the owner of a neighbouring property to sell those properties in 2014, which did not proceed to completion when orders were made against that owner under the Criminal Assets Recovery Act 1990 (NSW). I refer below to the limited weight that can be given to that uncompleted option in determining the value of the Rockdale Properties. 6. Mr Alexandrou's evidence is that Marine Parade has indemnified or will indemnify the Plaintiffs, Ms Diakovasili and Mr Antonakos, in this proceeding and in the proposed proceedings, in respect of the legal costs which they incur in the proceedings and any adverse costs order against them, and he refers to three properties owned by Marine Parade and to its present liabilities. I noted above that no such indemnity is in evidence and the indemnity provision in the costs agreement does not have that effect. Mr Alexandrou offers an undertaking to the Court to be liable for, jointly and severally with the plaintiffs in the proposed proceedings, any amount which the plaintiffs may be liable to pay to the prospective defendants in the proposed proceedings and in respect of dealings with properties owned by Marine Parade. He also indicates that he will cause the Plaintiffs' lawyers to be funded until the determination of the proposed proceedings including any appeal. 7. By his second affidavit dated 17 August 2023, Mr Alexandrou referred to attempts to access information in order to convene a meeting of members of AHEPA NSW in May 2023, and to competing special general meetings convened by interests associated with the Plaintiffs on 11 June 2023 and by AHEPA NSW on 21 June 2023. It is not necessary to address those matters given the conclusions that I have reached on other grounds. 8. Mr Alexandrou was cross-examined and his evidence was that he, Mr Lianos and to some extent Mr Kypreos, had personally paid the costs of this proceeding. He accepted that he was associated with the Plaintiffs' faction and that the persons on AHEPA NSW's management committee who were associated with that faction included Ms Bouros, Ms Alexandrou, Mr Lianos and Mr Antonakos. Mr Alexandrou accepted those persons had been acting together in connection with this proceeding although, oddly, his evidence in cross-examination was that those persons had not initiated this proceeding, and had retained the solicitors acting in this proceeding to defend other proceedings brought by AHEPA NSW but then "something completely different [implicitly, these proceedings] appeared" (T63). Mr Alexandrou's evidence in cross-examination was that Ms Diakovasili volunteered to be the first plaintiff in this application and the proposed proceeding and he was not party to a decision that Mr Antonakos should become a second plaintiff in the application and proposed proceedings. He was cross-examined as to an email addressing the commencement of these proceedings, shortly before an unsuccessful mediation between the parties, but it is not necessary to address that issue in order to determine this application given the findings I reach below on other grounds. 9. Mr Alexandrou was also cross-examined as to his affidavit evidence which initially suggested that AHEPA NSW owed only $28,308 to creditors at the time the voluntary administrators were appointed. That position was plainly not correct and he fairly acknowledged in cross-examination that he had made a "mistake" as to that matter. Mr Alexandrou also accepted in cross-examination that, so far as Mr Friedgut had opened on the basis that the VA Appointment was a "device" to acquire the Rockdale Properties at undervalue, Mr Alexandrou did not think that the process started for that purpose but considered that that scheme had "evolved" (T72). 10. Mr Alexandrou was also cross-examined as to the meetings convened by the Plaintiffs' faction and AHEPA NSW respectively to approve or disapprove the commencement of the proposed proceedings but it is not necessary to address those matters given the findings that I reach below. He did not accept that he had held the view that AHEPA NSW was insolvent on a cashflow basis at the time that he and RPS were proposing competing DOCAs in the voluntary administration, on the basis that he had not had access to sufficient books and records to determine that question (T78-79). He went further, later in his cross-examination, to express his view that AHEPA NSW was "not insolvent" (T79). That is likely the case now, since the RPS DOCA was completed, but it seems to me that AHEPA NSW was at least likely to become insolvent, if not insolvent in fact, at the time it was placed in voluntary administration. I return to that matter below. 11. Mr Alexandrou was also cross-examined as to a fundamental difficulty with calling a general meeting to approve any borrowing by AHEPA NSW to address the debts which were due by it when the voluntary administrators were appointed, or to approve any sale of property to realise funds to pay those debts, namely that there was an ongoing dispute between the two factions of AHEPA NSW as to who were the members of AHEPA NSW who were entitled to vote at such a meeting. He responded, obscurely, that there was not a dispute as to membership but as to the "validity of the membership" and whether members were financial in the relevant chapter and whether they had been "initiated" (T82). That was a distinction without a difference, where the dispute as to those matters would, I find, have given rise to a dispute as to which members were entitled to vote at any special general meeting, which would likely have resulted in further litigation between the two factions, delaying the implementation of any such borrowing or sale of property. 12. I note, for completeness, that I also do not accept that the fact that a resolution was successfully passed on one occasion, to pay Ms Alexandrou's costs of earlier proceedings (T85-86), makes it likely (as distinct from possible) that that would have occurred on a second occasion in respect of the larger claim for costs of Lianos 2019 and Lianos CA 1. Whether that would occur would likely depend, in part, on whether the Plaintiffs' faction's then preferred result was to achieve the payment of those costs or alternatively to promote a winding up of AHEPA NSW or encourage the resignation of the Nine Defendants as committee members so as to avoid their potential liability for insolvent trading. In closing submissions, Mr Corsaro advances several other criticisms of the logic of Mr Alexandrou's evidence, but it is not necessary to address those criticisms in detail in order to determine this application. 13. The Plaintiffs also read affidavits dated 24 April 2023 and 24 July 2023 of Ms Maria Alexandrou, who is Mr Alexandrou's wife and was not cross-examined. Ms Alexandrou's first affidavit refers to her application brought, in December 2019, to wind up AHEPA NSW under s 63 of the 2009 Act on the ground of insolvency in respect of unpaid costs arising from earlier proceedings and to the fact that, in mid-January 2020, AHEPA NSW paid the amounts owing and post-judgment interest; the winding up proceedings were dismissed by consent, subject to an argument as to costs; and, on 24 February 2020 the Court made no order as to costs. I have referred to Emmett AJA's finding in that judgment that AHEPA NSW was then likely insolvent in the chronology that I set out above. 14. Ms Alexandrou also there refers to the meeting of the management committee held on 8 September 2020, and implicitly acknowledges that she was given notice of that meeting and indicates she did not attend that meeting because she expected to be excluded from substantive deliberations at the meeting, so far as they addressed the proceedings in the Court of Appeal and "there was no notice in the agenda that the Committee intended to resolve to appoint administrators". Ms Alexandrou also refers to Mr Alexandrou's proposal for the CS DOCA in the voluntary administration, and notes that he advised her in September 2020 that he did not want to see AHEPA NSW wound up. Presumably, Mr Alexandrou and Ms Alexandrou have different views as to that matter, possibly at different times, since she had previously sought to wind up AHEPA NSW only nine months before. Ms Alexandrou also refers to her assessment that it would have been "risky" to contest the VA Appointment, when she considered that she lacked real information about what AHEPA NSW's management committee had been doing over the previous two or three years. Ms Alexandrou also responds to aspects of Mr Fandakis' affidavit evidence and addresses the indemnity that (she understands) was provided by Marine Parade in respect of Ms Diakovasili's and Mr Antonakos' costs of the proceedings and an undertaking, in corresponding terms to that offered by Mr Alexandrou, on behalf of Marine Parade in respect of the costs of the proceedings. As I noted above, that indemnity is not in evidence and the costs agreement to which I referred above does not contain it. 15. By her second affidavit dated 24 July 2023 Ms Alexandrou refers to difficulties in obtaining information concerning AHEPA NSW's membership and to a subsequent meeting convened by the Plaintiffs' faction and AHEPA NSW respectively to approve and disapprove the commencement of the proposed proceedings held in June 2023. I have noted above that it is not necessary for me to reach findings as to those meetings in order to decide these proceedings. 16. The Plaintiffs read two affidavits of Mr George Lianos dated 24 April 2023 and 17 August 2023, and he was not required for cross-examination. In his first affidavit, Mr Lianos addressed the Lianos 2019 proceedings, which he commenced, and the appeal in those proceedings in Lianos CA 1. He also refers to a notice of meeting issued by Mr Gouros following the decision in Lianos CA 1 and to the position as to the identity of the President of AHEPA NSW for which he contended in reliance on that decision. Mr Lianos also referred to the notice that he had received from AHEPA NSW as to the meeting of the management committee on 8 September 2020, at which the voluntary administrators were appointed. He explained why he did not attend that meeting, since he expected to be excluded from it so far as issues in the legal proceedings were addressed. Mr Lianos also addresses subsequent developments in the Court of Appeal, and refers to his view that AHEPA NSW was not insolvent when the voluntary administrators were appointed and that it had only "minimal current liabilities" which could easily have been paid if members had been called to approve that expenditure. Although Mr Lianos was not cross-examined, it seems to me that the Plaintiffs have little or no prospect of establishing either of those propositions having regard to the objective probabilities, given the then substantial claim for costs made against AHEPA NSW by its solicitors and the contingent claim of Mr Lianos and others against it in respect of costs in Lianos 2019 and Lianos CA 1. Mr Lianos also refers to Ms Diakovasili's reasons for commencing the proceedings, a matter which could be given greater weight if she had any real knowledge of the matters in issue in them or the relief that was likely to result from them. 17. By his second affidavit dated 17 August 2023, Mr Lianos also addressed the position in respect of the competing meetings called by the Plaintiffs' faction and AHEPA NSW to approve or disapprove the proposed proceedings in 2023. It is again not necessary to address those matters, given the conclusions which I have reached on other grounds 18. The Plaintiffs also read the affidavit dated 17 August 2023 of Ms Lianos, who was not required for cross-examination. She also addresses matters surrounding the meetings in June 2023. 19. By his affidavit dated 24 April 2023, Mr Stewart Levitt, the solicitor acting for the Plaintiffs, addresses the costs which he considers will be incurred by the Plaintiffs in respect of the proceedings. He proceeds on the basis that at least half of the work related to the prospective proceedings has probably been done, because the proposed SOC has been drafted and comprehensive affidavits have been filed and served setting out the key evidence on which the Plaintiffs rely. The Court can therefore give greater weight to the proposed SOC and the extent of the available evidence in assessing whether the Plaintiffs' claims give rise to a serious question to be tried and whether the proceedings should be permitted in the interests of justice. 20. Mr Levitt also takes issue with Mr Tzovaras' estimate (to which I refer below) of the costs likely to be incurred by the defendants in the conduct of the proposed proceedings and estimates that those costs would be about half of Mr Tzovaras' estimate of those costs. However, Mr Levitt's estimate assumes that none of the defendants would be separately represented. That assumption may be unreasonable, where there appears to be a significant difference between, on the on hand, the position of three of the Nine Defendants who had an economic interest in RPS which acquired the Rockdale Properties and possibly also Mr Fandakis, against whom allegations in respect of the Post Appointment Breaches are made on a different basis; and, on the other hand, five of the Nine Defendants who had no economic interest and no involvement in that acquisition and whose only relevant involvement in the matters in issue was in the passage of the resolution to place AHEPA NSW in voluntary administration. Plainly, if individual defendants, or groups of them, retained separate counsel and separate solicitors, then the defendants' costs of the proposed proceedings would significantly increase. Even on Mr Levitt's lesser estimate, the defendants' costs of defending the proceedings will be substantial, particularly when assessed in the context that both Plaintiffs rely on an unsecured indemnity which they understand was (or possibly will be) provided by Marine Parade to meet any order for costs made against them and risk the loss of their only assets of substance, their homes. As I noted above, that indemnity is not in evidence and the costs agreement which I noted above does not contain it. 21. The Plaintiffs also tendered an expert report and a supplementary expert report of Mr Goran dealing with the valuation of the Rockdale Properties, which were oddly both dated 24 April 2023 (Ex P1 and Ex P2). Mr Goran was rightly not required for cross-examination given the nature of this application, and I accept that his evidence is capable of supporting the Plaintiffs' claim that the Rockdale Properties had a higher value than that identified in the several other valuations that were obtained prior to the approval of the RPS DOCA at the second meeting of creditors. 22. I turn now to the evidence on which AHEPA NSW relied. AHEPA NSW reads affidavits dated 11 April 2023 and 3 July 2023 of Mr Harry Fandakis, who was cross-examined. By agreement of the parties, significant parts of his affidavits, as to matters as fundamental as whether and when AHEPA NSW was incorporated, whether and when its rules were amended, what are the chapters of AHEPA NSW and who were the members of the management committee, were admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding only, because all of these matters are apparently disputed, notwithstanding two previous decisions of this Court at first instance and two substantive decisions of the Court of Appeal. The extent of these disputes highlights the implausibility of the suggestion put by the Plaintiffs that the management committee of AHEPA NSW could readily have called a special general meeting to seek approval for, for example, a loan or sale of assets in order to quickly address issues as to its solvency, a matter to which I return below. 23. Mr Fandakis refers to his involvement in the management of AHEPA NSW's affairs since 2010 and he notes that he has had primary responsibility for overseeing its involvement in several proceedings and is the primary contact point for its legal representatives. He refers to aspects of the background and membership of AHEPA NSW, all of which are disputed, and to the history of disputes within AHEPA since 2016, although the history of its disputes is also disputed. He addresses the circumstances of the VA Appointment by reference to AHEPA NSW's financial position as reflected in its accounts as at 30 June 2020, and its liabilities, including a loan owed to Judo Bank which was secured over the Surry Hills Property; a claim by its former solicitors in the Court of Appeal proceedings for legal costs; and an estimated liability of approximately $950,000 as a result of the adverse costs orders made by the Court of Appeal in respect of Lianos 1, which extended to costs at first instance in Lianos 2019. 24. Mr Fandakis there noted that the legal costs due to AHEPA NSW's former solicitors was subject to a costs assessment and that that firm could have obtained a judgment against AHEPA NSW once that assessment was complete. I have noted in the chronology above that two assessments were completed, in respect of at least part of those costs, within about a month of the VA Appointment. It was put to Mr Fandakis in cross-examination that those amounts were not then due and payable. It seems to me that that matter is of limited relevance, where they were a contingent liability, depending only on completion of the costs assessment; two costs assessments were in fact completed within a short time of the VA Appointment; and a voluntary administrator may be appointed not only when a company or association is presently insolvent, but when it is likely to become insolvent, reflecting the statutory purpose that a company or association should be able to address impending liabilities by voluntary administration before it has reached actual insolvency. 25. Mr Fandakis also observed, in evidence that was partly admitted by agreement of the parties with a limiting order under s 136 of the Evidence Act as evidence of his understanding, that: "… [t]he Association did not have the income or liquidity to pay the costs orders made by the Court of Appeal. The Association would therefore have needed to sell one of its assets or mortgage one of the properties it owned in order to generate the funds to pay the costs order. However, in accordance with r 13 of [AHEPA NSW's] Rules, the Committee of Management could only carry out a sale or mortgage if approval was received by a special resolution of members of the Association made at a general meeting. I, and other members of the Committee of Management, were concerned that given the history of in-fighting between the membership of the Association, it was highly unlikely that a special resolution to the above effect could be passed. I note that in the past 8 years, there have been 4 special resolutions passed by the Association, all of which have resulted in litigation contesting the result of that special resolution. The Court of Appeal's decision had itself emanated from what was at that time the most recent special resolution sought to be passed by members of the Association. The difficulties in trying to pass a special resolution were further compounded by the uncertainties that were created by the Court of Appeal's judgment about the membership composition of the Association. That was an issue that was the subject of further litigation and was rectified when the Court of Appeal subsequently revised its original orders in its judgment of 6 August 2021 [in Lianos CA 4]". 1. I am conscious that this application is directed to the question whether the Plaintiffs should be permitted to bring proceedings, at general law, on behalf of AHEPA NSW and is not the occasion to make findings as to contested facts on any final basis, and I proceed on that basis. It seems to me, however, that Mr Fandakis' explanation of how these matters restricted AHEPA NSW's ability to address its liquidity difficulties outside a voluntary administration, is cogent. I also bear in mind that it would not have been a defence to a claim for insolvent trading against the Nine Defendants that they had a hope that the membership might have approved borrowings or a sale of assets by a special resolution. It also does not seem to me that the fact, highlighted in Mr Fandakis' cross-examination, that the Plaintiffs' faction were once, in January 2020, prepared to approve a special resolution for a modest borrowing, to pay the costs claimed by Ms Alexandrou in respect of earlier proceedings to avoid a winding up of AHEPA NSW, provided any reason for the Nine Defendants to assume that they would again do so in respect of a much larger amount in the circumstances prevailing after the Court of Appeal's decision in Lianos CA 1. I have addressed that matter in dealing with Mr Alexandrou's evidence above. 2. Mr Fandakis also addressed the conduct of the meeting of the management committee in which the resolution to appoint the voluntary administrators were passed and the subsequent validation of the VA Appointment, to which I have referred in the chronology above. Mr Fandakis also identified, in evidence admitted by agreement of the parties with a limiting order under s 136 of the Evidence Act as his understanding only, his concerns as to whether the then proposed plaintiff in the proceedings, Ms Diakovasili, was acting in good faith and whether the proceedings would be in AHEPA NSW's best interests. 3. By his second affidavit dated 3 July 2023, Mr Fandakis elaborated on the history of disputes in respect of AHEPA NSW and took issue with aspects of Mr Alexandrou's and Mr Lianos' evidence, and parts of that affidavit were also admitted by the parties' agreement with a limiting order under s 136 of the Evidence Act as his understanding. Mr Fandakis there addressed, in evidence also admitted by agreement of the parties as evidence of his understanding, his concerns as to whether the Second Plaintiff, Mr Antonakos, was acting in good faith, pointing to his long history of involvement in litigation concerning AHEPA NSW, as a witness or party, and to several other matters including his delay in involving himself in the proceedings. 4. I have regard to the fact that, as Mr Friedgut points out in closing submissions, Mr Fandakis does not give evidence regarding the value of the Rockdale Properties and I proceed on the basis that his evidence would not have assisted AHEPA NSW in that regard. It is not necessary for me to reach a determination as to the valuation of these properties in order to determine this application, for the reasons noted below. 5. Mr Fandakis was cross-examined, including as to whether the monies held in AHEPA NSW's bank account as at 30 June 2019 were greater than the amounts recorded under the description "cash at bank" or cash and cash equivalents in its financial accounts as at that date. Nothing turns on this matter, where the somewhat larger cash amount held in AHEPA NSW's bank accounts on that date was still far short of what would be required to meet the liability to its own solicitors, still less the contingent liability to the appellants arising from the Court of Appeal's decision in Lianos CA 1. 6. Mr Fandakis rightly accepted that placing AHEPA NSW in voluntary administration was a "serious and significant event" and the decision was one that had to be carefully considered and that other options should be considered to the extent of the management committee's "knowledge and ability" (T183). He was cross-examined as to the notice given of the 8 September 2020 meeting and the time taken for that meeting. It appears that the questions whether to seek to reopen the Court of Appeal's decision in Lianos CA 1 and bring an application for special leave to appeal to the High Court of Australia, and whether to place AHEPA NSW in voluntary administration, were discussed at the same meeting although Mr Fandakis could not recall the amount of time which was spent on the separate issues. The discussion of both matters was plainly not a lengthy discussion, of about half an hour, but it also seems to me that the fact that AHEPA NSW was insolvent or likely to become insolvent was self-evident; the implausibility of the several alternatives of further borrowings or sale of assets, depending on approval at a general meeting where there were ongoing disputes as to who could vote at that meeting, was also self-evident; and it is not apparent to me that a lengthy discussion of those matters would have much advanced them. I do not accept Mr Friedgut's submission that the short length of the meeting is in itself indicative of a failure to "consider and comply with [director] duties" (T185). 7. Mr Fandakis also observed in cross-examination (T189) that: "[c]ashflow, we could not – we did not have enough funds to pay our liabilities at the time. There was an adverse decision by the Court of Appeal which impounded the liabilities, because we were forced to pay the costs, and it's in the judgment. Number 3, there was a finding by the Court of Appeal that none of our members of the Eight Chapters, are members of the Association. Only members that were members of the Association, were the members of the AHEPA Australian chapters, which meant – which meant, in fact that 80% of the members were not members. … We felt that we should place it into administration because [the Association] was insolvent. I'm an engineer. I am not an accountant. Insolvent, in my books, means when I have liabilities and cannot pay my liabilities. That was the case at that time. …" 1. I recognise that the Plaintiffs rely on Mr Fandakis' recognition of the exclusion of members associated with the incorporated chapters by the Court of Appeal's decision in Lianos CA 1 (later varied by the Court of Appeal in Lianos CA 4) to suggest that he had an improper purpose in making the VA Appointment and I address that issue below. That does not seem to me to displace the issues that then existed as to the insolvency or likely insolvency of AHEPA NSW, exacerbated by the difficulties in calling a special general meeting while the membership of AHEPA now was in dispute. 2. Mr Fandakis' evidence in cross-examination, in answer to a question asking him to confirm why he believed AHEPA NSW was insolvent on 8 September 2020, was also that (T195): "[m]y evidence is that at 8 September, there were outstanding liabilities which, if I recall, amounted to $800,000. That's without accounting for the compounding costs of the aggrieved party, which we knew was in the vicinity of $900,000, because we were ordered by the Court to pay the Court of Appeal [costs], plus the Court by Rees J [implicitly, the first instance costs]. Those two Court cases would have amounted to approximately $900,000, we were advised then. I can't remember who, but we knew it was about $900,000. So $750,000 were the current liabilities, plus $900,000 coming. That's pushing it to 1.75 million [although, I interpolate, the figures add up to $1.65 million]. There were also outstanding invoices by the consultants for Bexley, land tax and a few other unpaid bills, which pushed way beyond our capacity to pay our liabilities, with the available funds at the time. We then decided that we are volunteers. We are not willing to continue acting in insolvency, because then we might be personally liable. So after obtaining some advice, it was decided to place the Association into voluntary – into administration. That's my recollection." 1. Again, I note that this is not an occasion to reach findings as to Mr Fandakis' credit or findings on a final basis as to the matters which would be determined in the proceedings, if they were properly brought. However, I recognise that the statutory purpose of Part 5.3A of the Corporations Act has always been to permit company directors (or, here, members of the management committee of AHEPA NSW) to avoid the risk of personal liability for insolvent trading by placing a company into voluntary administration. 2. AHEPA NSW also relied on the affidavit dated 11 April 2023 of Mr Theophilus Premetis, who is also a member of the management committee of AHEPA NSW and is associated with RPS, which acquired the Rockdale Properties under the RPS DOCA. Mr Premetis' evidence is that he is the treasurer and a member of the committee of management of AHEPA, and has been a member of AHEPA NSW for more than 40 years. He also refers to disputes between the two factions within AHEPA NSW since about 2016, and to the circumstances in which Mr Kallimanis and he established a syndicate with 16 relatives and friends with the view to purchasing the Rockdale Properties from AHEPA NSW for market value in order to enable it to apply the resulting sale proceeds towards the discharge of its liabilities and use the balance as working capital and reserves. He refers to the conduct of the second meeting of creditors of AHEPA NSW, and to the voluntary administrators' determination as to the creditors who were entitled to vote at that meeting and the amount of the claims for which they were entitled to vote. He also refers to valuations of the Rockdale Properties, including a valuation obtained by the voluntary administrators, the amount of which had not been disclosed to him at that time. Mr Premetis outlines the terms of the RPS DOCA and also refers to the competing CS DOCA proposed by the Plaintiffs' faction. He refers to the entry into the RPS DOCA and RPS's subsequent purchase of the Rockdale Properties from AHEPA NSW for the price of $4.4 million. I recognise that, as Mr Friedgut emphasised in closing submissions, Mr Premetis did not give affidavit evidence of what occurred at the meeting at which the VA Appointment was made on 8 September 2023, and I proceed on the basis that Mr Premetis' evidence of that matter would not have assisted AHEPA NSW. 3. Mr Premetis was cross-examined at some length. He acknowledged the substantial value of assets held by AHEPA NSW at all relevant times, which is common ground in the proceedings, and he accepted the proposition that the price of property has "generally" increased in Sydney over the last decade and agreed that AHEPA NSW had been able to obtain approval in general meeting to borrow the amount necessary to pay the costs previously claimed by Ms Alexandrou in order to avoid a winding up order which she had sought against it (T110). He accepted that AHEPA NSW had the support of its bankers in 2019 (T111) but observed that it became impossible to raise further funds by way of a bank loan in 2020, as a result of continuing disputes within AHEPA NSW. Again recognising that this is not the occasion to reach findings as to credit or determine that question on any final basis, the position seems to me to be entirely plausible. I also recognise that, in cross-examination, Mr Premetis accepted that the views expressed in a letter dated 2 December 2019 from AHEPA NSW's solicitors to Ms Alexandrou's solicitors correctly expressed the view of AHEPA NSW's management committee at that time, notably that there was "no reason to infer that the Association [was] unable to pay its debts" (T110-111). I have addressed that letter above and pointed to the cogency of the views put by Ms Alexandrou's solicitors in their response. I note that, in any event, the question here is not the solvency of AHEPA NSW in December 2019, but its position after the Court of Appeal delivered judgment in Lianos CA 1, as assessed at the date of the VA Appointment. 4. Mr Premetis responded to the proposition that no orders as to costs had been made by the Court of Appeal in Lianos CA 1, at the time AHEPA NSW was placed in voluntary administration, by pointing to the fact that the management committee had a "fair idea" how much the costs that would be payable by AHEPA NSW in respect of the proceedings would be and that proposition is again a plausible one. He also pointed in cross-examination to the demand made by AHEPA NSW's former solicitors for the costs payable to them in respect of the proceedings, in the amount of approximately $600,000, and to AHEPA NSW's inability to pay that amount (T119-120). 5. Mr Premetis' evidence in cross-examination was also that the values of the properties held by AHEPA NSW had declined by September 2020 because of COVID-19 and its effect on the rental market (T126). Although any such decline would still have left AHEPA NSW with a substantial surplus of assets over liabilities, on a balance sheet test, it is relevant to the valuation of the Rockdale Properties, which Mr Premetis claimed had declined from the amount of $6 million contemplated by an option to acquire the property granted in 2014 (which I address below) and repeated in later financial statements of AHEPA NSW, to $4.4 million in September 2020 (T126). Mr Premetis acknowledged that he, and other committee members, had not reflected that decline in the value they attributed to the Rockdale Properties in their report of affairs to the voluntary administrators but attributed that to the hope that the value of the property would be maintained (T126). It seems to me that little would ultimately turn on those matters at a hearing of the proposed proceedings, if they are properly brought, given the contemporaneous valuation evidence and the expert valuation evidence on which the Plaintiffs would rely. It is not necessary for me to determine any question of valuation in order to determine these proceedings. 6. I also recognise that Mr Friedgut submits that Mr Premetis' evidence "lacks credibility" and that his evidence should be treated with caution. As I noted above, it is not necessary to reach any wider finding as to Mr Premetis' credit in order to determine this application. 7. AHEPA NSW also read the affidavit dated 3 July 2023 of Dr Panayiotis Diamadis. Dr Diamadis has been a member of AHEPA NSW since it was incorporated in 1993, was a member of the prior unincorporated association, and is currently a member of the management committee and secretary of AHEPA NSW. He responds to aspects of Mr Antonakos' affidavit, directed to the giving of notice in respect of the June 2021 meeting that discussed whether AHEPA NSW should commence these proceedings. I noted above that it is not necessary for me to determine matters arising from that meeting to determine this application. Mr Diamadis was cross-examined, particularly in respect of the events surrounding the VA Appointment at the meeting on 8 September 2023. His evidence, which it seems to me plausible although I again do not reach any finding as to credit, is that the two separate minutes of that meeting, one of which relates to the VA Appointment and the other of which relates to conduct of proceedings in the Court of Appeal, relate to the same meeting; and the meeting took about half an hour, as recorded on one of those minutes, although the minute relating to the VA Appointment wrongly recorded it as having commenced and concluded at the same time, at 8pm on that date. 8. AHEPA NSW also relies on the affidavits of its solicitor, Mr Tzovaras, dated 14 April 2023 and 17 August 2023, which relate to his estimate of the likely costs of the proposed proceedings and his response to Mr Levitt's evidence of those matters. Mr Tzovaras was not cross-examined and I have addressed that issue in dealing with Mr Levitt's evidence above. 9. For completeness, I have also had regard to the submissions made by Mr Friedgut in closing submissions as to the absence of production of various documents by AHEPA NSW on subpoena and notice to produce, and I proceed on the basis that documents which were not produced either did not exist or were not retained or would not have assisted AHEPA NSW in its response to this application. Whether derivative proceedings at general law are available in respect of an incorporated association 1. The Plaintiffs proceed on the basis that, where AHEPA NSW is registered under the 2009 Act and is not a company for the purposes of the Corporations Act, the Court has no statutory jurisdiction to grant leave to bring a derivative action under ss 236-237 of the Corporations Act. A similar question as to whether ss 232-233 of the Corporations Act could apply to an incorporated association, by reason of s 95 of the 2009 Act, was noted but not decided by Robb J in Bandiera v Bilambil Community Preschool & Oosh Incorporated [2018] NSWSC 1903 and in my decision in Knox v Nile & Ors [2022] NSWSC 195 at [98]-[99]. 2. Relevantly, s 95 of the 2009 Act declares an association to be an "excluded matter" for the purposes of s 5F of the Corporations Act in relation to the whole of the corporations legislation, but s 95(3) of the 2009 Act declares that section does not operate to exclude the operation of, inter alia, Chapter 2F of the Corporations Act which includes ss 236-237 of the Corporations Act: as to the operation of that section, see Australian Federation of Islamic Councils Inc v United Moslems of New South Wales Inc [2021] NSWCA 311 at [73]. Sections 236-237 of the Corporations Act refer to proceedings brought on behalf of a company and that term, as is defined in s 9 of the Corporations Act, does not include an association incorporated under the 2009 Act. If s 236 of the Corporations Act were to apply to AHEPA NSW as a company defined under s 9 of the Corporations Act, then any right of the Plaintiffs at general law to bring or intervene in proceedings on behalf of AHEPA NSW is abolished by s 236(3) of the Corporations Act, and any application for derivative leave would need to be brought under ss 236-237 of the Corporations Act. 3. It seems to me, while s 95(3) of the 2009 Act applies Ch 2F of the Corporations Act to an association incorporated under the 2009 Act, that would only be sufficient to allow a statutory derivative action under ss 236-237 of the Corporations Act and exclude a general law derivative action if those sections extended beyond a company (as defined under s 9 of the Corporations Act) to an incorporated association or, more generally, a corporation (as defined in s 57A of the Corporations Act) which includes not only a company but also a body corporate incorporated in the jurisdiction. Those sections presently extend only to a company, and not to a corporation, and a statutory derivative action under ss 236-237 is not available in respect of AHEPA NSW and any available general law action is not excluded by s 236(3) of the Corporations Act. 4. It remains to determine whether a general law derivative action is available in respect of an association incorporated under the 2009 Act. The Plaintiffs point to several circumstances in which the Courts have recognised exceptions to the rule in Foss v Harbottle, to permit a member or members of an unincorporated association or other body to bring a derivative proceeding. Mr Friedgut submits that: "under the general law, courts have applied the 'rule' in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189, and 'exceptions' to the rule, to unincorporated associations, such that courts have held that a member or members of an unincorporated association may be entitled to commence 'derivative proceedings' for or on behalf of an unincorporated association (as well as other bodies corporate which are not a 'corporation' or 'company' as defined in the Corporations Act); see in particular: (i) For trade unions, see e.g. Taff Valley Railway Co v Amalgamated Society of Railway Servants [1901] AC 426; Osborne v Amalgamated Society of Railway Servants [1909] 1 Ch 163; Cotter v National Union of Seamen [1929] 2 Ch 58; and Hodgson v National and Local Government Officers Association [1972] 1 WLR 130 at 139-140; (ii) For friendly societies, see RL Adbrook v Peter Bennett Investment Services Pty Ltd (1997) 77 FCR 59 at 73-77; (iii) For owners corporations established under strata legislation, see e.g. Carre v Owners Corporation – Strata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302 ["Carre"]; and Eastmark Holdings Pty Ltd v Kabraji [2013] NSWSC 1763; (2013) 97 ACSR 161; and (iv) For associations registered under the [2009 Act], see e.g. Ahmed v Chowdhury [2012] NSWSC 1452." 1. In opening submissions, Mr Corsaro assumed for the purposes of his submissions, but did not concede, that a derivative action could be brought on behalf of an incorporated association, although he contested that proposition in closing submissions to which I refer below. Mr Corsaro there addressed the factors relevant to this application by reference to statutory criteria under ss 236-237 of the Corporations Act, although I consider it preferable to address the particular exceptions to the rule in Foss v Harbottle on which the Plaintiffs rely. I return to those matters below. 2. In closing submissions, Mr Corsaro submits that the rule in Foss v Harbottle has the consequence that proceedings by a corporation would generally be brought in its own name and in its corporate character, because it is a separate entity from its members, and that no individual member can maintain an action in respect of a transaction which could be ratified by the majority of the corporation's members. He seeks to distinguish the decisions in respect of strata bodies on the basis that members of an incorporated association do not have any legal or equitable interest in that association's property. While I accept that distinction exists, it does not seem to me to be sufficient to displace the extension of the rule in Foss v Harbottle and the exceptions to that rule to allow a claim by a member of an incorporated association for the benefit of that incorporated association, where the rights of that incorporated association otherwise could not be vindicated by action brought by it. There is no public policy reason not to allow that extension, where such a claim can only be brought where the requirements of the exceptions to that rule are satisfied. 3. I am satisfied that, by analogy with the other circumstances noted above where a derivative action has been permitted at general law, such an action should be permitted in respect of an incorporated association. First, it seems to me that there is here no reason to distinguish between the position of a trade union or a friendly society on the one hand and that of an incorporated association on the other, although I recognise that strata title schemes involve somewhat different issue since their owners typically own units in the relevant property. Second, there is no reason to think that allowing such an action will create a flood of actions that would cause detriment to such associations or their members, where a member would need to fall within an exception in Foss v Harbottle to bring such an action. Third, s 95 of the 2009 Act discloses no legislative intention to exclude such an action, where Ch 2F of the Corporations Act is explicitly not excluded in respect of an incorporated association under s 95(3)(a) of the 2009 Act, although the terms of ss 236-237 of the Corporations Act are not sufficiently wide to allow a statutory derivative action. In enacting the 2009 Act, the legislature could readily have excluded Pt 5.3 of the Corporations Act, together with the other parts of the Corporations Act that are excluded under s 95, had it been the legislature's intent to exclude the right of an incorporated association to bring a derivative action. The scope of the general law derivative action 1. I now turn to the scope of the derivative action at general law, which is an exception to the rule in Foss v Harbottle that the company is the proper plaintiff in an action to complain of a wrong done to it, if that wrong can be approved or ratified by ordinary resolution of the shareholders in general meeting. In Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at 210; 1 All ER 354; 2 WLR 31 ("Prudential") at 37, the English Court of Appeal characterised the rule in Foss v Harbottle as embracing, first, the principle that a shareholder cannot bring an action against a third party to recover damages or to secure other relief on behalf of a company for an injury done by the third party to the company, since the company is the party injured and is therefore the proper plaintiff and the person in whom the cause of action is vested; and, second, the related principle that a shareholder cannot bring an action in to complain of an irregularity (as distinct from an illegality) in the conduct of the company's internal affairs if the irregularity is one which can be cured by a vote of the company in general meeting. For example, the rule in Foss v Harbottle would prevent a shareholder bringing an action against the directors based on an allegation of lack of care and diligence in the management of the company's affairs, or of breach of fiduciary duty to the company, if the conduct of the director could be ratified by shareholders in general meeting. 2. There were a number of established exceptions to the rule in Foss v Harbottle. If such an exception applied, a minority shareholder could bring the proceedings in a representative capacity, on his or her own behalf and on behalf of all shareholders in the company other than the alleged wrongdoers, and the company would be joined as a defendant in such proceedings: G R Sullivan, "Restating the Scope of the Derivative Action" (1985) 44 CLJ 236, cited in Butterworths, Australian Corporation Law: Principles and Practice (August 2023) at [3.2A.0160]. Any damages which were awarded in the proceedings would go to the benefit of the company rather than to the plaintiff who brought the proceedings. 3. Relevantly, a minority shareholder could bring proceedings against a director on behalf of the company if a breach of duty by the director was of a fraudulent character and the director controlled the company, or if the directors had failed to bring proceedings and the majority of shareholders had acted improperly in condoning that failure: Menier v Hooper's Telegraph Works (1874) 9 Ch App 350 per James LJ at 353 (resolution of general meeting to abandon legal proceedings and place the company in liquidation); Cook v Deeks [1916] 1 AC 554 at 564 (resolution of general meeting resolving to abandon the company's interest in a contract); Eromanga Hydrocarbons NL v Australis Mining NL (1988) 14 ACLR 486 (placement of shares alleged to have been made for improper purpose). In Burland v Earle [1902] AC 83; [1900-3] All ER Rep 1452 at 1456, Lord Davey observed that this fourth exception to the rule in Foss v Harbottle would be available if "the acts complained of are of a fraudulent character or beyond the powers of the company", and noted that cases falling within this class would include circumstances where: "the majority are endeavouring directly or indirectly to appropriate to themselves money, property or advantages which belong to the company, or in which the other shareholders are entitled to participate…" 1. There is authority that the exception to the rule in Foss v Harbottle for a transaction which involves a fraud on the minority would not apply if a breach of duty was merely negligent, and the directors had not profited from the breach. In Pavlides v Jensen [1956] Ch 565; 2 All ER 518, where the directors of a company had authorised the sale of a mine at a substantial undervalue, Danckwerts J held that the rule in Foss v Harbottle had the effect that a minority shareholder did not have standing to bring proceedings alleging that the directors had breached their duty to the company, in the absence of an allegation that the transaction was ultra vires, illegal or a fraud on the minority; and that it was open to the majority of shareholders in general meeting to resolve that proceedings should not be brought. By contrast, it appears that a derivative action could be brought if directors personally profit from a breach of a duty of care owed to the company and declined to authorise the company to take action to recover that profit: Daniels v Daniels [1978] Ch 406; 2 All ER 89; 2 WLR 73. 2. In Hurley v BGH Nominees Pty Ltd (1982) 31 SASR 250; 6 ACLR 791; 1 ACLC 387, a shareholder brought proceedings alleging that a director had breached his fiduciary duty to a company which was the trustee of a trust by procuring a company controlled by the director to purchase the freehold of the premises on which the trustee company carried on its business. The court held that the shareholder had standing to bring the proceedings as a derivative action relying on the fourth exception to the rule in Foss v Harbottle where a breach of fiduciary duty was fraudulent in character and could not be ratified by shareholders. 3. Mr Friedgut also refers to Biala Pty Ltd v Mallina Holdings Ltd (No 2) (1993) 13 WAR 11; 11 ACLC 1082; 11 ACSR 785; ("Biala") at 835-836 where Ipp J summarised the fourth exception to the rule in Foss v Harbottle as follows: "[i]n determining whether the plaintiffs are entitled to claim for the breach of fiduciary duties that has been established, regard must be had to the cardinal principle that the proper plaintiff in an action relating to a wrong alleged to be done to a corporation is, prima facie, the corporation. This principle is generally recognised as the rule in Foss v Harbottle, to which there are recognised exceptions. In Prudential Assurance Company Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204 the Court of Appeal (constituted by Cumming-Bruce, Templeman and Brightman LJJ) described what is commonly referred to as the fourth exception to the rule in Foss v Harbottle in the following terms: 'There is an exception to the rule where what has been done amounts to fraud and the wrongdoers are themselves in control of the company. In this case the rule is relaxed in favour of the aggrieved minority, who are allowed to bring a minority shareholders' action on behalf of themselves and all others. The reason for this is that, if they were denied that right, their grievance could never reach the court because the wrongdoers themselves, being in control, would not allow the company to sue.' The reference to 'those in control of the company' is prima facie 'a reference to those who command a majority of the votes at an ordinary general meeting of the company': Eromanga Hydrocarbons NL v Australls Mining NL (1988) 13 ACLR 804; 14 ACLR 486; 6 ACLC 906 at 909 (per Malcolm CJ). Examples of 'control' being determined in this manner are several. It is sufficient to refer to Mason v Harris (1879) 11 Ch D 97, Russell v Wakefield Water Works Company [1875] LR 20 Eq 474 at 482, and Daniels v Daniels [1978] 1 Ch 406." 1. In the first instance decision in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1981] Ch 257; 2 All ER 841; [1980] 3 WLR 543 at 581, Vinelott J identified a further exception to the rule in Foss v Harbottle that would permit a derivative action to be brought if the interests of justice would otherwise be frustrated. The "interests of justice" exception to the rule appears to have some support in Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782; (1969) 92 WN (NSW) 199 per Street J at 789-90. In Scarel Pty Ltd v City Loan & Credit Corp Pty Ltd (1988) 17 FCR 344, Gummow J acknowledged (at 349) that there was some support for the existence of an exception to the rule in Foss v Harbottle if "the company cannot or will not bring or continue the action and it is in the interests of justice that the action be brought or continued". Mr Friedgut also refers to Biala (at 844-848) where Ipp J observed, inter alia, that: "[t]o the extent that policy may be relevant in determining whether a fifth and general exception to the rule should be recognised, I consider it desirable to allow a minority shareholder to bring a derivative claim where the justice of the case clearly demands that such a claim be brought, irrespective of whether the claim falls within the confines of the established exceptions. … Accordingly I uphold the argument of the plaintiffs that the court may allow a derivative action by shareholders in circumstances whenever the justice of the case so requires." 1. In Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128; 130 FLR 180; 19 ACSR 483 at 486-495, Young J noted that the "interests of justice" exception had effect that, where there has been a harm to a company, "the court may permit proceedings brought otherwise than by the company where justice so requires", and allowed the plaintiff standing under the exception, despite his finding that the plaintiff himself did not have "completely clean hands" in the matter. 2. The scope of the fifth exception to the rule in Foss v Harbottle was also addressed, in the context of a claim by lot owner in a strata scheme, in Eastmark Holdings Pty Ltd v Kabraji (2013) 97 ACSR 161; [2013] NSWSC 1763 ("Eastmark") at [78]-[81] and [89], where Darke J observed that: " … [a]ll parties also appeared to accept the existence of the interests of justice exception to the rule in Foss v Harbottle. I would in any event reach that conclusion, based on the reasons advanced by Barrett J in Carre at [34]-[40]. However, each of the defendants submitted that the present case was not one of those "rare" or "unusual" cases in which it was in the interests of justice to permit a plaintiff, who is unable to bring itself within one of the four well-recognised exceptions to the rule in [Foss v Harbottle], to none the less pursue a derivative action. It was further submitted by the defendants that in order for Eastmark to bring itself within the interests of justice exception to the rule, it was necessary for Eastmark to demonstrate: (a) that it brings the action bona fide in the interests of the Owners Corporation and not for an ulterior purpose; (b) that normal corporate procedures have failed to achieve the justice sought; (c) that there is no other remedy to address the alleged wrong; and (d) that serious injustice would arise if it was precluded from pursuing the derivative action. … Eastmark, for its part, submitted that, unlike the statutory regime which now exists under the [Corporations Act] (see ss 236 and 237), there was no list of matters which needed to be "ticked" in order for the interests of justice exception to apply. Eastmark further submitted that Cope v Butcher [1996] 20 ACSR 37, a decision of Johnston AM of the Supreme Court of Western Australia, should not be regarded as an authority for the proposition that it is necessary to show that normal corporate procedures have failed to achieve the justice sought. Otherwise, Eastmark appeared to accept that the matters identified by the defendants were at least relevant to whether the interests of justice exception applied in this case. … I agree with Eastmark's contention that the four matters identified by the defendants should not be seen as factors, each of which must invariably be established before a plaintiff can invoke the interests of justice exception to the rule in Foss v Harbottle. I do not think that the exception ought to be so confined. However, the four matters are each plainly relevant to the question whether the exception applies in any particular case, and the failure of a plaintiff to establish any one of them will generally indicate that the exception is not applicable." 1. Here, the Plaintiffs rely on both the fourth and fifth exceptions to the rule in Foss v Harbottle, namely that the relevant conduct amounts to fraud and the wrongdoers are in control of AHEPA NSW or, alternatively, that the justice of the case requires that a derivative action be permitted. In order to determine whether those exceptions are satisfied, it will be necessary to have regard to several wider matters addressed by the parties and the nature of the claim pleaded by the Plaintiffs in the proposed SOC and the factual matters on which they rely in support of that claim. I bear in mind that, where this is an application of a preliminary character, it is not necessary that the Plaintiffs prove all of the facts necessary to be established at an ultimate hearing. However, the Court should not grant the leave sought if it is apparent that the claim as put could not satisfy the requirements for either exception to the rule. The parties' submissions as to several wider matters 1. I now turn to submissions made by the parties as to several wider issues, before addressing the substance of the Plaintiffs' proposed claims below. 2. In his opening submissions, Mr Friedgut submits that: "[t]he Plaintiffs are longstanding members in good standing of [AHEPA NSW] and they have a genuine, good faith, interest in the wellbeing of [AHEPA NSW] such that they are appropriate persons to conduct the litigation on behalf of [AHEPA NSW]. They seek, in good faith, to commence these proceeding on [AHEPA NSW's] behalf; they have a genuine, honest, good faith, reasonable, belief that [AHEPA NSW] has a good cause of action and has reasonable prospects of success, as evidenced, inter alia, by the willingness to indemnify [AHEPA NSW] against any adverse costs orders in the proceedings." 1. I do not doubt the Plaintiffs have a subjective belief in the merit of the claims that they seek to bring in the proposed proceedings, although I have found above that Ms Diakovasili has little or no understanding of the content of those claims, and their subjective beliefs as to their merit are plainly affected by the long-running history of dispute and litigation between opposing factions within AHEPA NSW. I address the question whether the proposed claims give rise to a seriously arguable case against the Defendants below, recognising that question arises in the context of the exceptions to the rule in Foss v Harbottle, rather than by reference to the specific factors identified in ss 236-237 of the Corporations Act. Mr Friedgut's submission concerning the Plaintiffs' willingness to indemnify AHEPA NSW also requires significant qualification, where the Plaintiffs rely on their understanding that an unsecured indemnity was provided to them by Marine Parade, a company associated with Mr and Ms Alexandrou, in respect of the proposed proceedings; that indemnity is not in evidence and the costs agreement to which I referred above does not extend to the proposed proceedings; understandably, neither of the Plaintiffs wish to place their only substantial assets, their homes, at risk; and neither of them appears to have recognised the significant risk to which they were exposed by themselves giving any such indemnity in reliance on an unsecured arrangement with Marine Parade in respect of the proposed proceedings, if that arrangement in fact exists. 2. Mr Friedgut also submits, and frequently repeats, that it is in AHEPA NSW's best interests that the Plaintiffs be permitted to pursue the proceedings, because any damages would go to AHEPA NSW's benefit and, he contends, there is no "downside" to AHEPA NSW in the conduct of the proceedings. I proceed on the basis that at least the availability of the fifth exception in Foss v Harbottle, referable to the interests of justice, partly depends on whether the proceedings give rise to a serious question to be tried, and it seems to me that there would be a real detriment to AHEPA NSW and the community generally in permitting the Plaintiffs to advance claims that are not seriously arguable against the Defendants. First, that would perpetuate the cycle of repeated litigation that has consumed AHEPA NSW over several years; second, it would continue to distract AHEPA NSW and its members from undertaking any of the objectives for which it was created; and, third, it would deter members of the Greek community from joining AHEPA NSW or serving on its management committee, by identifying the risk that they too could be targeted as individuals in litigation brought by the other faction, justified by no more than the proposition that that has no "downside" to AHEPA NSW. It seems to me that Mr Freidgut's submission gives too little weight to the real stress and cost suffered by individuals who are joined in complex litigation, particularly where the determination of any one proceeding is shortly followed by the commencement of the next. 3. In opening submissions, Mr Corsaro conversely emphasises AHEPA NSW's character as a voluntary organisation and submits that: "AHEPA [NSW's] management committee are volunteers, who are effectively nominated by the chapters they represent rather than because of their professional qualifications. Those volunteers are motivated by a desire to help the association of which they are a member, rather than financial gain. Permitting this litigation to proceed would create a significant risk that members of the association are more reluctant to volunteer their time and effort, as they may consider themselves to be susceptible to litigation. That may significantly undermine the functioning of AHEPA [NSW]. Given its recent history, further time consuming, protracted and divisive litigation is inevitably going to be detrimental to the Association, its functions and its ongoing ability to meet its stated goals and objectives." 1. In closing submissions, Mr Corsaro also submits that: "[t]he members of the Committee of Management of the Association, whether aligned with the Incumbent or the dissenting Faction, are volunteers. The give up their time to run meetings of the Committee of Management and of their Chapters, they maintain the assets of the Association, they ensure compliance by the Association with relevant regulatory requirements and, from time to time, they develop ideas about how the operations and facilities of the Association might be improved. Each Committee member brings a different skill set to the task and, ideally, makes a contribution commensurate with their qualifications and expertise." 1. I have regard to these matters, although I do not proceed on the basis that volunteers necessarily owe lesser duties, as members of a management committee, than persons who are paid for their services, particularly in respect of the proper purposes and best interests duties and the no conflict and no profit rules as distinct from the duty of care and diligence. 2. In opening submissions, Mr Corsaro also contended that, where the Court had previously validated the VA Appointment, that created an issue estoppel and the proposed proceedings would constitute an abuse of process. It is not clear whether that submission was put in closing submissions, and I do not accept it. As Mr Friedgut made clear in submissions, the Plaintiffs do not challenge the validity of the VA Appointment, or contest the validation of their appointment, but instead allege that the VA Appointment was made in breach of duty by the Nine Defendants. No issue estoppel or abuse of process arises in respect of such a claim, although I recognise that there is an overlap between the issues as to AHEPA NSW's solvency or likely insolvency that were addressed in the validation application and the issues which arise in this application and would arise in the proposed proceedings in that regard. 3. In closing submissions, Mr Corsaro submits that it is not in the best interests of AHEPA NSW to permit Ms Diakovasili or Mr Antonakos to bring proceedings on its behalf, and points to Ms Diakovasili's lack of understanding of the proceedings or the issues involved in them, as it emerged from her cross-examination; to Mr Antonakos' late involvement in the proceedings and the obscurity of his explanation as to how that involvement came about; and he submits that Mr Antonakos had little interest in the strength or merit of the Plaintiffs' proposed claim, where he is relying on an indemnity given (or, I interpolate, which he rightly or wrongly understands to have been given) by Marine Parade in respect of the costs of the proposed proceedings. Mr Corsaro submitted that Ms Diakovasili and Mr Antonakos were, in reality, "de facto plaintiffs" and that the proceedings were being "promoted" by Mr and Ms Alexandrou and other members of the Plaintiffs' faction, who have been involved in repeated proceedings against AHEPA NSW. 4. Mr Corsaro also submits that: "[t]he rationale underlying the proposed proceedings, the desire of the Alexandrous to fund the proceedings but not put their names forward as plaintiffs, the involvement of Mr Lianos, Mr Gouros, Mr Kypreos, Mr Antonakos, Ms Alexandrou, Ms Bouros and Ms Cretan infers concerted action by the Dissenting Faction to punish and to oust the Incumbent Committee of Management and to cause them concern as to their own personal liability. All this in the context of a volunteer association where the office holders are not paid a fee for their services and are committed to working to achieve community oriented objectives and aims." It is not necessary to reach a finding of that gravity in order to determine this application. 1. Both Mr Friedgut and Mr Corsaro also addressed the authorisation purportedly provided by the members of the Plaintiffs' faction for the commencement of the proceedings, at the special general meeting that only they attended held in June 2023, and the decision not to bring those proceedings undertaken at the meeting also convened by AHEPA NSW in June 2023. I have noted above that I do not consider it necessary to determine the validity of either meeting or the effect of the resolutions passed at them, given the findings which I have reached on other grounds. A wider claim raised in opening 1. Mr Friedgut opened this application (T15) by reference to a claim that was not contained in the Plaintiffs' proposed SOC as follows: "… what our submission is, is that this was all a device: that the Association was not insolvent. It was not insolvent, but they were very unhappy - the incumbent members - with the decision of the Court of Appeal. They wished to thwart that, and they developed a device whereby they would appoint administrators, establish a company, which they did, put in a DOCA, which they did, and purchase property which had always been valued by the Association at, at least, $6 million. They would purchase that property for a gross undervalue, which they did, so that this whole plan, this whole scheme, was devised while they were in control, while they were members, and they used the device of the administration in order to pursue that plan." Mr Friedgut returned to the claim in the course of the hearing (T132-133) as follows: "[o]ur submission is going to be, when seeking to persuade your Honour that there's a serious question to be tried, that the incumbent members of the committee had this plan, or what I referred to as this device, to place it into administration. They hid that fact from the aggrieved members. That they sent out an agenda which made no reference to that which this witness and the previous witness had said was a very important, extremely significant step in the life of an association. The made no reference to it, they didn't refer to any special resolution, they didn't refer to administration, and that that was done in furtherance of this plan to keep a secret for the improper purpose. That in our submission will be - is relevant in the sense that that can rationally affect the assessment of the probabilities of a matter in issue in the proceedings, namely the issue being whether your Honour will be satisfied that there's a serious question to be tried as to whether the proposed defendants were in breach of their fiduciary obligations." 1. I am satisfied that I could not and should not determine this application on the basis of that wider claim, for the reason set out in my ex tempore judgment delivered on 12 October 2023 as to whether Mr Friedgut should be permitted to advance that claim in cross-examination. I do not proceed on the basis that the Plaintiffs' proposed SOC should be understood as a final document, incapable of change or clarification in the course of the proposed proceedings. However, as I noted in that ex tempore judgment, the proposed SOC identifies, in a detailed way, the case that the Plaintiffs seek a declaration that they should be permitted to bring as a derivative action at general law. AHEPA NSW must be afforded a proper opportunity to lead evidence and be heard as to whether, in the language of the fifth exception to the rule in Foss v Harbottle, the case that the Plaintiffs seek to bring should be permitted in the interests of justice. AHEPA NSW would be deprived of that opportunity if, rather than determining whether the case that the Plaintiffs indicated they wish to bring (as identified in the proposed SOC) could or could not be brought, I instead determined whether a different case, which advanced serious allegations that are not supported by any pleading of material facts in the proposed SOC and which was first raised in opening, could be brought. As I observed in my ex tempore judgment: "[i]t is one thing, as Mr Friedgut says, to clarify or improve that proposed pleading. It is another thing entirely to introduce an allegation of fraud or intentional wrongdoing in it which is not presently there. The difficulty with that course is, obviously enough, AHEPA NSW are entitled to an opportunity to be heard as to the question whether the exceptions to the rule against Foss v Harbottle are established. No such opportunity is given, if the case to be brought is not identified, and a declaration is instead made in respect of a case which AHEPA NSW has had no real opportunity to address." 1. For these reasons, and consistent with the ruling in the course of the hearing, I should not and do not determine this application on the basis of the unpleaded fraud or conspiracy case, where a determination of the application on that basis would deprive AHEPA NSW of procedural fairness in respect of the substantive issues in the application. The Plaintiffs' proposed claim for breach of duty in respect of the VA Appointment The structure of this claim 1. I now turn to the case which the Plaintiffs seek to bring on behalf of AHEPA NSW as set out in the proposed SOC. As I noted above, the proposed SOC identifies ten proposed defendants to the proceedings, the Nine Defendants and RPS. I first set out the structure of the Plaintiffs' proposed claim for breach of duty in respect of the VA Appointment before turning to an assessment of its components. 2. The Plaintiffs first plead (proposed SOC [15]-[16]) fiduciary duties owed by the Nine Defendants (and, presumably, other committee members associated with the Plaintiffs' faction) as follows: "At all material times, each of the [Nine Defendants], upon assuming their roles on the Committee, owed fiduciary duties to the Plaintiff. The fiduciary duties owed by the [Nine Defendants], extended to each of the [Nine Defendants], respectively: a. Acting in good faith; b. Acting in the best interests of the Plaintiff; c. Exercising their powers for a proper purpose; d. Avoiding conflicts of interest; e. Not promoting their personal interests by making or pursuing a gain in circumstances in which there is a conflict or a real or substantial possibility of conflict between his or her personal interests and those of the persons that he or she is bound to protect." 1. The Plaintiffs then plead (proposed SOC [17]) that: "[i]n discharging their duties pleaded in paragraph 16 above and in circumstances where: a. The Plaintiff would likely suffer loss as a result of the appointment of administrators (as defined at paragraph 35); b. The [Nine Defendants] either put the proposal for the appointment of administrators to the Committee (in the case of Skandalakis) or propounded the appointment of administrators (in the case of Premetis, Kallimanis, Papanagiotou, Diamadis, Fandakis, Bellos, Mandatis and Nikolareas); i. The Plaintiff refers to paragraph 42 below. c. The [Nine Defendants] each had a higher degree of knowledge and/or experience in relation to the proposed appointment of administrators or in relation to the relevant area than the other persons on the Committee; i. The Plaintiff refers to paragraphs 28 – 31 and 34 below. d. The [Nine Defendants] conducted the day-to-day operations of the Plaintiff; e. The [Nine Defendants] were negligent in relation to the appointment of administrators and had a conflict; i. The Plaintiff refers to paragraph 27.d and 37-38 below. f. The [Nine Defendants] stood to gain personally; i. The Plaintiff refers to paragraph 27.d below. g. The [Nine Defendants] were each required to: ii. Disclose any conflict of interest; iii. Disclose information relevant to any proposed transaction or decision; iv. Take positive steps to inform fellow [c]ommittee [m]embers of their intention to appoint administrators; v. Abstain from any vote in relation to the appointment of administrators; vi. Further, and or alternatively, take positive steps to prevent the appointment of administrators." 1. It is unclear to me how the matters identified by the Plaintiffs (in proposed SOC [28]-[31] and [34]) as supporting the allegation that the Nine Defendants had a higher degree of knowledge in relation to the proposed VA Appointment do so; it is unclear how the matters alleged (in proposed SOC [27(d)] and [37]-[38]) support an allegation of negligence or conflict do so, for the reasons noted below; it is unclear how the proposition that the Nine Defendants stood to "gain personally" is supported by the matters relied on in proposed SOC [27(d)]; and, as I note below, the positive duties which are said to follow (at proposed SOC [17(g)]) are not aspects of a fiduciary duty under Australian law, which does not support a positive duty of disclosure, although they would be relevant to any defence of disclosure which may avoid a conflict of interest. 2. The Plaintiffs then plead (proposed SOC [18]-[35]) matters which occurred between the delivery of reasons by Rees J on 3 October 2019 in Lianos 2019; the decision of the Court of Appeal delivered on 26 August 2020 in Lianos CA 1 in the first stage of the appeal from orders made by Rees J; and the resolution passed by the Nine Defendants on 8 September 2020 to appoint voluntary administrators to AHEPA NSW. The Plaintiffs then plead (proposed SOC [36]) that, at the date of the VA Appointment, AHEPA NSW had substantial assets, did not demonstrate other indicators of insolvency and, implicitly, was not insolvent. 3. The Plaintiffs plead (proposed SOC [38]) that, prior to the VA Appointment, the Nine Defendants did not take any steps, or proper or adequate steps, to investigate AHEPA NSW's financial position, or identify whether there were "Alternatives" or implement any such Alternatives. Those "Alternatives" are in turn identified (proposed (SOC [40]) as: "i. Negotiating with bona fide creditors and those creditors with a view to allowing [AHEPA NSW] time to pay; ii. Calling a meeting of members with a view to passing a special resolution authorising the sale, mortgage, charge or borrowing including by encumbering [AHEPA NSW]'s Surry Hills Property to enable sufficient funds to be made available to [AHEPA NSW] to pay bona fide creditors including future/contingent creditors, with interest being amortised and consolidated with the principal; iii. Selling the Rockdale Properties, at arm's length, for the best price reasonably obtainable on the open market, the net proceeds of which could pay [AHEPA NSW's] bona fide creditors; iv. Obtaining a loan from a financial or non-financial institution lender, allowing for [AHEPA NSW] to pay bona fide creditors including future/contingent creditors." 1. The Plaintiffs then plead (proposed SOC [42]) that the Nine Defendants were proponents of or supported the VA Appointment and particularise contact between the Nine Defendants or some of them and the voluntary administrators prior to their appointment. They then plead (proposed SOC [43]-[44]) the operative allegations that the Nine Defendants acted in conflict of interest and duty when effecting the VA Appointment and acted negligently when effecting that appointment. 2. The Plaintiffs also plead (proposed SOC [45]) that Nine Defendants knew or should have known certain things before the VA Appointment. These include an allegation of knowledge or constructive knowledge of improper conduct, although the fact of that improper conduct is not separately pleaded, namely that the Nine Defendants knew or ought to have known, when effecting the Appointment, that: "[b]y proceedings with the [VA] Appointment, it would be (i) In bad faith and for an improper purpose, that being not for a purpose of, or to achieve an object contemplated by, or within scope of Part 5.3A of the [Corporations Act], but rather: (i) to frustrate or delay the entry of orders which were likely to affect the [Nine Defendants' faction's] tenure and control of the Plaintiff and in the interim, provide them with time to consider their position;… (ii) Further or in the alternative, given the unnecessary expenses involved with any administration, they would be acting in reckless disregard of the interests of [AHEPA NSW]." I will assume, without deciding, that the allegation that the Nine Defendants knew those matters implies that the Plaintiffs also allege that those matters existed in fact, although that is plainly not a desirable form of pleading, and that conclusory allegation does not identify which of the factual matters previously pleaded are relied on to support that allegation. 1. The Plaintiffs then plead (proposed SOC [46]) that, in those circumstances, each of the Nine Defendants was "required not to invoke, or alternatively, not to follow through with the [VA] Appointment" and (proposed SOC [47]) that the VA Appointment was made in breach of fiduciary duty. 2. The Plaintiffs plead (proposed SOC [48]) that, but for the alleged Fiduciary Breaches (defined as the duties outlined above at proposed SOC [16] and [17(g)]), the VA Appointment would not have been made. That proposition depends, of course, on establishing the existence of the alleged Fiduciary Breaches. They also contend that, but for the Fiduciary Breaches, AHEPA NSW would have negotiated an outcome with the appellants in the Lianos CA 1 proceedings; a special general meeting would have been called to consider a special resolution to sell the Rockdale Properties at arm's-length on the open market or to mortgage the Surry Hills Property; members would have passed a special resolution authorising that sale or grant of mortgage at a general meeting, the Rockdale Properties would have been sold on the open market and at arm's-length; and the net equity from a sale or borrowing would have provided sufficient cash to pay bona fide creditors. Paragraph 49 of the proposed SOC then claims damage resulting from the VA Appointment, including fees, remuneration, charges and disbursements relating to the voluntary administration of AHEPA NSW and a subsequent deed administration. 3. The proposed SOC does not identify the relief which is to be sought in respect of these claims, although the likely scope of the relief sought is implicit in the pleaded facts and allegations and was identified by Mr Friedgut in opening submissions as follows: "[a]s against the [Nine Defendants], equitable compensation in the sum of $1,035,346 in respect of claims for the wrongful appointment of the administrators (which includes the costs and expenses of the administration)." Good faith, best interest and proper purposes duty claims 1. The Plaintiffs' primary claim in respect of the VA Appointment, and its only claim in respect of the alleged Post Appointment Breaches which I address below, is the claim for breach of fiduciary duty. Mr Friedgut summarised the allegation made in respect of the VA Appointment as follows: "[the committee members] breached the fiduciary duties they owed to [AHEPA NSW] in purportedly exercising their powers as committee members to appoint administrators to [AHEPA NSW] on 8 September 2020: see paragraphs 15-49 of the Draft SOC …" 1. In opening submissions, Mr Friedgut also describes this claim as follows: "[the Nine Defendants] breached the fiduciary duties they owed to the Association as committee members by wrongfully exercising their powers of management to appoint an administrator to the Association, in circumstances where (a) there was no valid basis to appoint an administrator under Part 5.3A of the Corporations Act (that is, the Association was not insolvent or likely to become insolvent at some future time: see s 436A of the Corporations Act), and (b) instead, the committee members acted to in favour [sic] of their own interests rather than in the best interests of the Association (given their concern for their positions as members of the Association and of the Committee following the Court of Appeal's decision in [Lianos CA 1]". 1. Mr Friedgut also submitted in opening that: "[t]he gravamen of the allegations in the Draft SOC is that the [Nine Defendants], as members of the Committee, owed fiduciary duties to the Association which included acting in good faith and in the best interests of the Association, exercising the powers for a proper purpose, and avoiding conflicts of interest, and that the [Nine Defendants] breached these general law duties and obligations by resolving to appoint the administrators to the Association in the relevant circumstance." 1. The first aspect of this claim (proposed SOC [16(a)-(c)]) invokes a duty of good faith and the best interests and proper purposes duties. Mr Friedgut referred to a helpful summary of the equitable duties of committee members of an incorporated association by Professor A S Sievers in Associations and Clubs Law in Australia and New Zealand (The Federation Press, 3rd ed, 2010) at 146-147 as follows: "It has always been assumed that committee members of incorporated associations and other bodies corporate are in a similar position to company directors and owe similar fiduciary duties to the association although there is very little authority on this point. Haselhurst v Wright (1991) 4 ACSR 527 is one of the few relevant Australian decisions. In this case in the Western Australian Supreme Court, Owen J held that although a building society was not regulated by the companies legislation then in force, its directors were in a similar position to directors of a company and had a fiduciary duty to act in the interests of the corporate body as a whole (at 531). Johnson J reached a similar conclusion in a more recent Western Australian case in respect to the duties of committee members of an incorporated association, noting that, 'although the principle is not established by authority, it is probable that committee members owe in the same measure, the common law and equitable duties which law and equity have imposed on company directors (see Lai v Tiao (No 2) [2009] WASC 22 at [84]). In England, Vinelott J applied similar reasoning in Taylor v National Union of Mineworkers (Derbyshire Area) [1985] BCLC 237 at 241 in finding that officers of a trade union owed it a fiduciary duty. The same approach has also been adopted by New Zealand courts. In Porima v Te Kauhanganui o Waikato Inc [2001] 1 NZLR 472 at [112], Hammond J noted that the members of the committee of an incorporated society were in a 'trustee-like' fiduciary position in respect of their duties to the society. Stafford Racing Inc v Adlam [2008] NZCA 92 at [58] is a very recent decision in which the New Zealand Court of Appeal held that the members of the committee of a racing club were required to exercise their powers in the best interests of the club and for proper purposes and that their duties were analogous to those owed by directors to a company, also referring to the earlier decision of the Court of Appeal in Cabaret Holdings Ltd v Meeanee Sports and Rodeo Club Inc [1982] 1 NZLR 673 as authority for this approach." 1. Mr Corsaro also accepts that there are judicial statements which support the proposition that officers of incorporated associations are fiduciaries in their relation to the association, and therefore owe fiduciary duties in the same way as a company director, referring to Pine Rivers, Caboolture and Redcliffe Group Training Scheme Inc v Group Training Association Queensland & Northern Territory Inc [2015] 1 Qd R 542 at 555-556. He also draws attention to the observation in G E Dal Pont, Law of Associations (LexisNexis, 1st ed, 2018), at [8.39] that: "…it may be incorrect to say that every officer of an incorporated association, in every instance, owes fiduciary obligations to the association. In one of the leading fiduciary law cases, which incidentally involved an incorporated association, the Privy Council famously remarked that "[a] person in his position may be in a fiduciary position quoad a part of his activities and not quoad other parts" [citing New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126]. While rejecting the fiduciary claim on the ground that the alleged fiduciary obligations did not extend to what had ensued, their Lordships did not deny that, in an appropriate case, within the scope of the relevant relationship, officers of an incorporated association could owe fiduciary obligations to the association. The appropriate case will likely be one where it can be shown that the officer held a position of such trust and confidence vis-a-vis the association as to make the association vulnerable to an abuse of power sourced from that trust and confidence." [citations omitted] 1. I now turn to the nature and content of these three duties. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; 89 ACSR 1; [2012] WASCA 157 ("Bell Group (No 3)"), the Court of Appeal of the Supreme Court of Western Australia unanimously held that the general law duty to act in good faith in a company's best interests was subjective and would be complied with if directors honestly believed they acted in the company's best interests (at [923] per Lee AJA, at [1988] per Drummond AJA, at [2027], [2772], [2795] per Carr AJA); and that whether a director acts for an improper purpose, for the purposes of the corresponding general law duty, is determined objectively involving an assessment by the Court of what was reasonable in the circumstances (at [933] per Lee AJA, at [1988], [2027], [2073] per Drummond AJA). By contrast, Carr AJA held that the test whether directors had acted for an improper purpose was primarily subjective, although a decision would be voidable if directors acted in good faith for a purpose that was beyond their powers or for a collateral purpose (at [2923]). 2. In determining whether directors have exercised their powers for a proper purpose, a court will examine the power which the directors have exercised to determine the purpose for which the power was granted and the court will then determine the substantial purpose for which the power was in fact exercised, and then reach a conclusion whether that purpose was proper or not: Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; (1974) 3 ALR 448; [1974] AC 821 per Lord Wilberforce at 835. Where directors act partly for a proper purpose and partly for an improper purpose, the court will ask whether the directors would have exercised the power "but for" the impermissible purpose: Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 294; [1987] HCA 11. 3. As Australian law presently stands, these duties are likely not fiduciary duties, but equitable and non-fiduciary duties. The High Court has emphasised that Australian courts only recognise fiduciary duties of proscriptive or prohibitive character, imposing the obligation on the fiduciary not to obtain an unauthorised profit or to be in a position of conflict, and the existence of a fiduciary relationship does not impose a positive legal duty on the fiduciary to act in the beneficiary's interests: Breen v Williams (1996) 186 CLR 71 at 113; [1996] HCA 57; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 at 197–198; [2001] HCA 31. I recognise that there may be an open question as to aspects of that position in the corporations law, and in Bell Group (No 3), the majority in the Court of Appeal of the Supreme Court of Western Australia (at [918]-[933] per Lee AJA, at [1956] and [1978] per Drummond AJA) held that the director's duties to act in good faith and in the company's interests and for proper purposes, although imposing positive obligations, can nonetheless be characterised as fiduciary, and Carr AJA took substantially the same view, and observed (at [2733]) that he was not prepared to hold, on the present state of authority, that duties to act in the company's interests were not fiduciary duties. In Netglory Pty Ltd v Caratti [2013] WASC 364 at [345]ff, Edelman J observed that it may be incorrect, on the current state of Australian authorities, to characterise a breach of positive duties by a director, such as duties to act in good faith and in a company's interests and for proper purposes, as a breach of fiduciary duty. 4. It is necessary to assess these claims in the context of the statutory and general law regime applicable to incorporated associations and voluntary administration. The parties did not address the statutory duties of committee members of an associated incorporation, or any effect of ss 30A-30B of the 2009 Act which relevantly provide that: 30A Duty of committee members It is the duty of each committee member to carry out his or her functions for the benefit, so far as practicable, of the association and with due care and diligence… 30B Personal liability of committee members A matter or thing done or omitted to be done by a committee member, or by a person acting under the direction of a committee member, does not, if the matter or thing was done or omitted to be done in good faith for the purpose of exercising the committee member's functions under this Act, subject the committee member or person so acting personally to any action, liability, claim or demand. 1. I will assume, without deciding, that s 30B of the 2009 Act is in the nature of a defence and not a matter that the Plaintiffs need address in order to establish a seriously arguable case, where the Nine Defendants did not contend to the contrary. The parties also did not place any weight on s 31 of the 2009 Act dealing with disclosure of interests, s 32 dealing with dishonest use of information or s 33 dealing with dishonest use of position. That is perhaps understandable where the Plaintiffs' proposed claim is primarily put as a claim for breach of fiduciary and not statutory duty. 2. Section 435A of the Corporations Act in turn states the object of Pt 5.3A (as here applied to AHEPA NSW as an incorporated association by s 54 of the 2009 Act) as follows: "[t]he object of this Part is to provide for the business, property and affairs of an insolvent company to be administered in a way that: (a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or (b) if it is not possible for the company or its business to continue in existence — results in a better return for the company's creditors and members than would result from an immediate winding up of the company." 1. In Brash Holdings Ltd (admin apptd) v Katile Pty Ltd [1996] 1 VR 24; (1994) 13 ACSR 504 at 510 ("Brash Holdings"), the Court described Pt 5.3A as providing: "… a means whereby a company which is or may be insolvent may be subjected to control by an administrator to the exclusion of its normal officers for a strictly limited period during which the administrator is charged to investigate the affairs of the company in order to ascertain which of three courses should thereafter be adopted: a deed of company arrangement to be executed by the company, winding up, or simply the cessation of the administration without either of the foregoing. The scheme of Part 5.3A is that at the end of the strictly limited period of administration, the creditors themselves will decide which of these three possible steps should be taken and in the meantime there is a moratorium on actions or proceedings against the company."[emphasis added] 1. The purpose of Pt 5.3A has also been expressed, by Cohen J in Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139 at 145, as to "provide a more expeditious and less expensive way of assisting those creditors and members than under the greater formality of a winding up or of the entry into a scheme of arrangement" and the procedure under that Pt 5.3A is intended to be capable of swift implementation and to be as uncomplicated and inexpensive as possible. In Blacktown City Council v Macarthur Telecommunications Pty Ltd (2003) 47 ACSR 391; [2003] NSWSC 883 at [19], Barrett J also observed that: "[e]xamination of Pt 5.3A as a whole shows that there are several purposes which together contribute to the widely stated object. The provisions imposing the various moratoriums show that there is a purpose of allowing time for unpressured but reasonably prompt consideration of possible reconstruction possibilities. The provisions as to creditors' meetings and creditor decision-making, including those concerning deeds of company arrangement, show that there is a purpose of allowing reconstruction possibilities to be pursued in such a way that, if creditors so desire, a legacy of debt may be left behind and winding up, which would normally be the product of an intolerable debt burden, may be avoided. Implicit in that, of course, is the proposition that the company will thereby be permitted to return to the mainstream of commercial life. Another purpose is that, if the company is not capable of returning to the mainstream of commercial life, there will be some better outcome for creditors than that available in an immediate winding up." 1. Section 436A of the Corporations Act in turn provides for the company (or, as applied by s 54 of the 2009 Act, AHEPA NSW) to appoint an administrator, and it is a prerequisite to that appointment that the board has resolved to the effect that it holds the opinion that the company is insolvent and that administrators of the company should be appointed. Members of the board will inevitably have a personal interest in making such an appointment, not least because such an appointment is typically made, and Pt 5.3A of the Act contemplates that it will be made, in order to avoid personal liability of a director for insolvent trading. 2. In closing submissions, Mr Friedgut refers to Cadwallader v Bajco [2001] NSWSC 1193 at [233], where Austin J held that a resolution to appoint an administrator was a misuse of power and a breach of duty where directors sought to retain office and ensure that a company continued with proceedings against the majority shareholders, and that breach fell within the fifth exception to the rule in Foss v Harbottle. I pause here to note, however, that any proposition that the Nine Defendants appointed voluntary administrators to AHEPA NSW in order to preserve their control of AHEPA NSW has the obvious difficulty that the VA Appointment would not preserve that control, but divest it to the voluntary administrator. I refer below to the real possibility, which Mr Friedgut recognised in closing submissions and I also recognise, that the Nine Defendants preferred to have control of AHEPA NSW pass from themselves to the voluntary administrators, rather than potentially pass to members of the Plaintiffs' faction. 3. Mr Friedgut also refers, and I have had regard to, other case law relevant to the validity of a resolution to appoint a voluntary administrator. He submits that: "… to pass any such resolution, it is necessary for the directors/committee members to in fact genuinely have believed, on reasonable grounds, that the company was insolvent or likely to become so in the future; the reasonableness of any such belief in turn depends, at least in part, upon the adequacy of the steps that they took to satisfy themselves that the preconditions for the appointment of an administrator had been met: Downey v Crawford (2004) 51 ACSR 182 at [189]. The power to pass such a resolution envisaged by s 436A (1) is a fiduciary power: Cadwallader v Bajco [2001] NSWSC 1193 at [222]. Thus, in order to validly exercise that fiduciary power, the directors who vote in favour of the resolution must form their opinion about the solvency of the company, and the desirability of appointment of an administrator, genuinely and in good faith: Cadwallader at [223] citing Kazar v Duus (1998) 29 ACSR 321, 333. The directors may only pass such resolution for the genuine purpose provided for in s 435A of the [Corporations Act]. Where several purposes are identified, some of which are proper while others are improper, the Court must determine whether, but for the improper purpose, the directors would have passed the impugned resolution: see Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285, 293-4 per Mason, Deane and Dawson JJ; Cadwallader v Bajco at [224]. It is not a proper purpose for directors to vote to appoint an administrator to preserve themselves in office and thereby ensure the continuation [of] certain proceedings: Cadwallader at [224]. A decision made for that purpose is a misuse of the fiduciary power of directors under s 436A." 1. Mr Corsaro also refers, to the case law relating to the validity of an appointment of a voluntary administrator as follows: "[t]he exercise of the power to appoint an administrator will be invalid, and the purported appointment will be invalid, if that power is exercised for an ulterior or extraneous purpose and that purpose is substantial in the sense that the decision would not have been made but for the ulterior purpose: Kazar v Duus [(1998) 88 FCR 218] at 233; Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391, St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd [2004] NSWSC 851; (2004) 210 ALR 265. … [A]n appointment of an administrator is for an improper purpose if it is for a purpose other than one "in furtherance of the object of Pt 5.3A as set out in s 435A": McMaster v Eznut Pty Ltd above at [135]. … [T]he purpose of the resolution must be ascertained, then characterised as proper or improper, after identifying the actual purpose of the directors who voted in favour of the resolution, and the relevant question is what was the substantial purpose; and whether the resolution would have been passed were it not for the improper purpose: Cadwallader v Bajco [2001] NSWSC 1193 at [224]; Re Lime Gourmet [[2015] NSWSC 244] at [23]." 1. In St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd (2004) 50 ACSR 443; [2004] NSWSC 851, Barrett J recognised that a director may breach his or her general law and statutory duties by appointing an administrator for a collateral purpose, but also there observed (at [16]) that: "I hasten to say that it is not, of itself, reflective of improper purpose for directors faced with a winding-up application to cause the company go to into Pt 5.3A administration. Indeed, in many cases that will be the proper and responsible thing for directors to do. In some cases, the demands of a creditor and the indication that the creditor will pursue a winding-up application will so focus the minds of directors that they become able to take stock of the company's position more critically and, realising that the company is insolvent or likely to become insolvent, to see resort to the Pt 5.3A procedure as the appropriate course. In those cases, such action is entirely responsible and proper." 1. In Downey v Crawford (2004) 51 ACSR 182; [2004] FCA 1264 ("Downey v Crawford") at [189] and [196], Weinberg J observed that: "[t]he real issue is whether the defendants, or either of them, acted in breach of duty when they proceeded to put the company into administration. The answer to that question depends largely upon whether they genuinely believed, on reasonable grounds, that the company was insolvent or likely to become so in the future, and not upon whether that was the company's actual position. The reasonableness of any such belief in turn depends, at least in part, upon the adequacy of the steps that they took to satisfy themselves that the preconditions for the appointment of an administrator had been met. This takes me to my findings in relation to the primary claim. That claim depends upon my being satisfied that the Crawfords, or either of them, acted in breach of their duties to the company when they resolved, on 4 August 1999, to place it into administration. As previously indicated, the question is not whether, as at that date, the company was actually insolvent, or likely to become so at some future time. It is rather whether the directors genuinely believed that this was so, and whether that belief was reasonable in the circumstances. That in turn will depend largely upon whether they took adequate steps to satisfy themselves that the statutory requirements were met before resolving to appoint Mr Downey as administrator." 1. In Mt Nathan Landowners Pty Ltd (in liq) v Morris [2006] QSC 225 at [38], the Court in turn identified the issues in a claim for breach of duty arising from the appointment of a voluntary administrator as "whether the directors genuinely believed on reasonable grounds on [the date of the VA Appointment] that the plaintiff was insolvent or likely to be so in the future (Downey v Crawford at [189]) and whether a substantive purpose in the appointment of the fifth defendant was an improper purpose (Kazar v Duus (1998) 88 FCR 218 ("Kazar") at 233)". That approach has also been cited in cases dealing with the validity of the appointment of an administrator, including Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 ("Lime Gourmet") and Re ACN 607 358 887 (formerly known as Carzapp) Pty Ltd [2019] NSWSC 1561. In Re Windows on World Steel Windows Pty Ltd (In Admins) [2020] VSC 880 at [24]ff, the Court referred to Downey v Crawford and Kazar as authority that the director(s)' opinion must be "bona fide and genuinely formed"; that evidence of the actual state of the financial affairs of a company at the time of the appointment of a voluntary administrator may ground inferences as to the validity of the opinion of a director expressed in such a resolution; and approved paragraph [196] of Downey v Crawford, as extracted above. 2. Mr Corsaro in turn submits that, if one of the Nine Defendants formed a genuine belief that AHEPA NSW was insolvent or was likely to become insolvent, his or her obligations to act in the best interests of AHEPA NSW would have required that he or she comply with the provisions of Pt 5.3A. He also cites my decisions in Sliteris v Ljubic [2014] NSWSC 1632 and Lime Gourmet as cases where a breach of duty was not established by the appointment of a voluntary administrator where the circumstances gave rise to a genuine issue as to the company's insolvency or likely insolvency. Mr Corsaro also submits that the appointment of an administrator on the basis of a genuine belief that AHEPA NSW was insolvent or likely to become insolvent could not be in breach of fiduciary duty even if the appointment resulted in some collateral personal interest, and he refers to CellOs Software Ltd v Huber [2018] FCA 2069, where Beach J observed at [784] that: "[n]ow company directors are frequently shareholders. And French CJ and Keane J said in Howard v Federal Commissioner of Taxation (2014) 253 CLR 83 at [34]: The decisions they take as directors may therefore affect their personal interests. They do not breach their fiduciary obligations merely because in promoting the interests of the company they are also promoting their own. On the other hand, a decision taken by directors to advantage themselves other than as members of the general body of shareholders would constitute an abuse of fiduciary powers." 1. Mr Friedgut in turn refers to my observations in Re Bean and Sprout Pty Ltd (admin apptd) [2018] NSWSC 351 at [47], where I cited my earlier decision in Re Warwick Keneally as administrator of Australian Blue Mountain International Cultural and Tourist Group Pty Ltd (admin apptd) [2015] NSWSC 937 at [96], as follows: "[t]he exercise of the power to appoint an administrator will be invalid, and the purported appointment will be invalid, if that power is exercised for an ulterior or extraneous purpose and that purpose is substantial in the sense that the decision would not have been made but for the ulterior purpose: Kazar v Duus above at 233; Blacktown City Council v Macarthur Telecommunications Pty Ltd [2003] NSWSC 883; (2003) 47 ACSR 391, St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd [2004] NSWSC 851; (2004) 210 ALR 265. … [A]n appointment of an administrator is for an improper purpose if it is for a purpose other than one "in furtherance of the object of Pt 5.3A as set out in s 435A": McMaster v Eznut Pty Ltd above at [135]. … [T]he purpose of the resolution must be ascertained, then characterised as proper or improper, after identifying the actual purpose of the directors who voted in favour of the resolution, and the relevant question is what was the substantial purpose; and whether the resolution would have been passed were it not for the improper purpose: Cadwallader v Bajco [2001] NSWSC 1193 at [224]; [Lime Gourmet] at [23]." 1. Mr Friedgut submits that: "… the exercise of the power to appoint an administrator will be invalid, and the purported appointment will be invalid, if that power is exercised for an ulterior or extraneous purpose and that purpose is substantial in the sense that the decision would not have been made but for the ulterior purpose: VRM Global Holdings Pty Ltd v Savannah AG Research Pty Ltd (Administrators Appointed), in the matter of Savannah AG Research Pty Ltd [2023] FCA 131 at [11] citing In the matter of Bean & Sprout Pty Ltd (admin apptd) [[2018] NSWSC 351]." 1. I recognise that the case law as to which Counsel made submissions, and to which I have referred, is directed to the appointment of a voluntary administrator to a company, and explicitly or implicitly has regard to a director's general law and statutory duties to act in the company's best interests and for a proper purpose. I assume, without deciding, that s 30A of the 2009 Act and the general law duties of committee members, to which I referred above, would support a similar result in respect of committee members of an incorporated association, although I again note that the best interests and proper purposes duties are likely not fiduciary under Australian law. I do not take these matters further where the parties did not address them. 2. It seems to me that the allegations in proposed SOC [16] that the Nine Defendants owed duties to act in good faith, in the best interests of AHEPA NSW and to exercise their powers for a proper purpose in respect of the VA Appointment are seriously arguable, so far as those duties overlap with the matters noted in the case law I have addressed above, although those duties are not properly characterised as fiduciary duties. 3. The factual basis of these claims comprises the claim, identified in proposed SOC [36], that AHEPA NSW was not insolvent at the date of the VA Appointment. Mr Friedgut submits that it "defies credulity" that the Nine Defendants had any genuine belief on 8 September 2020, the date of the VA Appointment, that AHEPA NSW was insolvent or would likely become insolvent, and he refers to the absence of previous business records as to that matter. I do not accept that submission where, as the voluntary administrators recognised in their report to creditors to which I referred above, the insolvency or likely insolvency of AHEPA NSW only arose from the Court of Appeal's decision in Lianos CA 1, which indicated that AHEPA NSW would lose its previous right to recover the costs of the proceedings at first instance from the plaintiffs in those proceedings, and also exposed AHEPA NSW to liability for the plaintiffs' costs at first instance and on appeal. It is not surprising that no risk of insolvency is documented prior to that event, because it would not exist prior to that event. The question whether AHEPA NSW was insolvent, or likely to be insolvent, from that point is properly assessed by reference to its cashflow position and objective reality, although the understanding of the Nine Defendants and the members of the Plaintiffs' faction and the extent of references to solvency in contemporary documents are also relevant matters. 4. Mr Friedgut also points to the fact that the Defendants only rely on Mr Fandakis' evidence in respect of the VA Appointment and points to the absence of evidence from several of the Nine Defendants. I proceed on the basis that the evidence of the rest of the Nine Defendants would not assist AHEPA NSW, although that proposition must be applied pragmatically, where it would have been highly undesirable to extend the length of this hearing further by calling numerous additional witnesses to address the same matters as Mr Fandakis. I proceed on the basis that the absence of evidence from those other Nine Defendants would also allow the Court to more readily draw inferences that are available from the evidence led by the Plaintiffs, but it would not substitute for an absence of evidence in the Plaintiffs' case. Little turns on these matters here, where a significant part of this application turns on questions of law rather than questions of fact, and, as I noted above, the position as to the insolvency or likely insolvency of AHEPA NSW is properly assessed (to the extent necessary to determine this application) by reference to objective reality, although the understanding of the Nine Defendants and the members of the Plaintiffs' faction is also relevant. I have regard to Mr Friedgut's emphasis, in closing submissions, on Mr Fandakis' evidence that he could not recall whether alternatives to the VA Appointment (which I address below) had been discussed at the 8 September meeting and that he did not recall other aspects of the discussion (T192-197), but I do not treat a lack of recollection to that matter as evidence that such a discussion did not occur. 5. I am not persuaded that the Plaintiffs have shown a seriously arguable case for the proposition that AHEPA NSW was not insolvent or likely to become insolvent, where AHEPA NSW's substantial excess of assets over liabilities would not avoid insolvency on a cash flow basis where it could not then meet the existing debt owed to its former solicitor on any reasonable estimate of its amount, or the other outstanding debts to which I have referred above; it could not avoid insolvency, by reason of any mere hope or expectation that it could implement either a timely sale of its properties or any long term borrowing, where both would require approval by special resolution in a general meeting and there was a continuing and substantial dispute as to who would be entitled to vote at such a meeting; and it could also not avoid insolvency by reason of any mere hope that they might be able in future to reach an agreement with the Plaintiffs' faction that would allow payment of the solicitor's costs or deferral of their contingent claim to costs in respect of Lianos 2019 and Lianos CA 1. 6. The factual basis of this claim also involves the alleged failure to investigate AHEPA NSW's financial position and the alternatives identified in proposed SOC [38] and [40]. Mr Friedgut submits that: "[t]he [Nine Defendants] failed to take any steps to investigate the financial position of the Association and take steps to identify whether there were alternative and implement them [sic] (such as negotiating with creditors, selling or encumbering property or obtaining a loan from a lender)." 1. I am also not persuaded that there is a serious question to be tried as to a failure to investigate AHEPA NSW's financial position, where it was plain enough that it had substantial assets which could not be readily realised to pay the immediate claims against it. I am also not persuaded that there was a seriously arguable case that there were any available alternatives that would have addressed, in the short term, AHEPA NSW's insolvency or the fact that it was likely to become insolvent shortly after the date of the VA Appointment. The prospect of negotiations with AHEPA NSW's former solicitors or the Plaintiffs' faction would have been speculative, at best; I have pointed above to the difficulties in obtaining a special resolution to approve AHEPA NSW taking out a loan or sale oof of the properties, where the identity of members entitled to vote was a key issue in dispute between the two factions of AHEPA NSW, and there is no suggestion that any of the properties could be sold for market value in a time frame that would avoid insolvency; and a loan would also require approval by a special resolution of members. 2. The factual basis of this claim also includes the allegation of knowledge of improper conduct, and any implied allegation of the fact of that improper conduct, in proposed SOC [45]. I accept that the chronology of events and Mr Fandakis' cross-examination could support a finding that the Nine Defendants recognised the risk that the Plaintiffs' faction would gain control of the management committee or of the membership of AHEPA NSW at the time of making the VA Appointment and preferred that AHEPA NSW be controlled by an independent insolvency practitioner rather than by the Plaintiffs' faction. 3. However, in order to establish a seriously arguable case for breach of the good faith, best interests and proper purposes duties, the Plaintiffs must show it is seriously arguable that the improper purpose for which they contend was the substantial purpose for which the power to make the VA Appointment was exercised. I have referred to the relevant case law above. Where the Plaintiffs have not established a seriously arguable case that AHEPA NSW was neither insolvent nor likely to become insolvent, it seems to me doubtful that they can establish either a seriously arguable case that the improper purpose to which they point, rather than the fact of AHEPA NSW's insolvency or likely insolvency and the consequential risk of liability for insolvent trading, was the substantial reason for the VA Appointment, or that the VA Appointment would not have occurred in order to avoid the risk of liability for insolvent trading, irrespective of any collateral purpose of avoiding the Plaintiffs' faction taking control of AHEPA NSW's management committee or its membership. I do not need to reach a stronger finding than that to reach a conclusion as to whether the fraud on the minority or interests of justice exception is satisfied in respect of this claim. The conflict of interest and no profit rules claims 1. The second aspect of this claim (proposed SOC [16(d)-(e)]) invokes the no conflict and no profit rules. It is again necessary to assess this claim with regard to the statutory and general law context of an incorporated association and voluntary administration, which I have addressed above. As I noted above, the Plaintiffs then plead (proposed SOC [43]) the allegation that the Nine Defendants acted in conflict of interest and duty when effecting the VA Appointment and acted negligently when effecting that appointment. 2. The no conflict and no profit rules are of course well-recognised incidents of a fiduciary position. In Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37, Payne JA (with whom Gleeson and Leeming JJA agreed) summarised (at [105]) the no conflict and no profit rule as follows: "[a] fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is a conflict, or a real or substantial possibility of a conflict, between the personal interest of the fiduciary and those to whom the duty is owed … A conflict arises if there is a real and sensible possibility that the personal interests of the fiduciary divide the loyalty of the fiduciary with the result that he or she could not properly discharge their duties to the beneficiary…" [citations omitted] 1. As Mr Corsaro points out, the Court must determine whether there is a real or sensible possibility of conflict in the particular case: Boardman v Phipps [1967] 2 AC 46 ("Boardman v Phipps") at 124; Bell Group Ltd (in liquidation) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1; [2008] WASC 239 at [4512]. Mr Corsaro also submits, by reference to Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 ("Howard"), that the scope of the fiduciary duty owed by the Nine Defendants to AHEPA NSW had to accommodate itself to the particulars of the underlying relationship which give rise to the duty so that it was consistent with and conformed to the scope and limits of that relationship, and that any fiduciary relationship between the Nine Defendants and AHEPA NSW was one which had to be moulded according to the nature of the relationship and the facts of the case. 2. A duty to avoid a conflict of interest only arises in that part of a relationship between a fiduciary and his or her beneficiary that is fiduciary in character: Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384 ("Birtchnell") at 408 (Dixon J); New Zealand Netherlands Society 'Oranje' Inc v Kuys [1973] 1 WLR 1126 at 1130 (Lord Wilberforce). In Birtchnell, Dixon J noted (at 408) that the subject matter over which the fiduciary obligations extend is determined "by the character of the venture or undertaking for which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm." In Boardman v Phipps at 127, Lord Upjohn also observed that, if a fiduciary relationship was found to have been established, "that relationship must be examined to see what duties are thereby imposed upon the agent, to see what is the scope and ambit of the duties charged upon him." 1. In Omnilab Media Pty Ltd v Digital Cinema Network Pty Ltd (2011) 285 ALR 63; [2011] FCAFC 166 at [206], Jacobson J similarly observed (Rares and Besanko JJ agreeing) that: "[i]t is fundamental that the scope of the fiduciary duty must be moulded according to the nature of the particular relationship and the facts of the case: Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 69, 102" 1. In Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6, Finn, Stone and Perram JJ , in a passage cited by Gageler J in Howard at [110], observed (at [179]) that: "[t]he concept of 'duty' in the 'conflict of duty and interest' formula of the first of these is convenient shorthand. It refers simply to the function, the responsibility, the fiduciary has assumed or undertaken to perform for, or on behalf of, his or her beneficiary. What that function or responsibility is, is a question of fact. It may be narrow and circumscribed, as is often the case with specific agencies; it may be broad and general, as is characteristically the case with the functions of company directors; its scope may have been antecedently defined or determined; it may have been ordained by past practice; it may be left to the fiduciary's discretion to determine; and it may evolve over time as is commonly the case with partnerships." 1. In Howard, French CJ and Keane J also observed (at [34]) that: "[t]he scope of the fiduciary duty generally in relation to conflicts of interest must accommodate itself to the particulars of the underlying relationship which give rise to the duty so that it is consistent with and conforms to the scope and limits of that relationship. It is to be 'moulded according to the nature of the relationship and the facts of the case'." [citations omitted] 1. In Gunasegaram v Blue Visions Management Pty Ltd (2018) 129 ACSR 265; [2018] NSWCA 179 at [152], Gleeson JA noted that: "[i]t is necessary to focus on the actual functions or responsibilities assumed by the fiduciary to determine the subject matter over which his or her obligations extend, at least for the purposes of deciding whether there is a conflict of interest and duty or a conflict between duties." These observations were approved by the Court of Appeal in Murdoch v Mudgee Dolomite & Lime Pty Ltd (In Liq) (2022) 398 ALR 658; [2022] NSWCA 12 at [81]ff. on which I have partly drawn for these observations. 1. It seems to me that the Plaintiffs' claim for breach of the rule against conflict of interest pleaded in proposed SOC [43] does not rise to the level of a seriously arguable case. I have referred above to the case law which has recognised that the decision of a director, or by extension a committee member of an association, whether to form the opinion specified in s 436A of the Corporations Act and resolve to appoint an administrator is to be assessed by reference to the basis for the appointment. I have also referred above to the case law concerning the need to assess the scope of a fiduciary duty, and it seems to me that any fiduciary duty which a director of the company or committee member of a voluntary association owes to the company or association, in considering the appointment of a voluntary administrator, will necessarily be attenuated by the purposes of the voluntary administration regime and the fact that directors of a company or committee members of an incorporated association will likely have personal interests in forming the opinion which s 436A of the Corporations Act contemplates they will form as a prerequisite to the company or association appointing a voluntary administrator. 2. In many or all cases, directors of a company will be shareholders in or creditors of the company with an unavoidable economic interest in that decision, or members of a committee of an association will be members of or creditors of the association with at least a personal and possibly also an economic interest in its affairs. In virtually all cases, a director or committee member will have a personal interest in that decision arising from the risk of his or her liability for insolvent trading or breach of directors' duties if a voluntary administrator is not appointed, when a company or association is insolvent or likely to be insolvent, and the appointment of a voluntary administrator is a well-recognised means of avoiding that liability. If the Plaintiffs' contention that the existence of a personal interest of a director or committee member requires that he or she not form the opinion set out in s 436A of the Corporations Act and appoint an administrator were correct, it would be impossible for a company or association to appoint voluntary administrators in many or most cases and that result would significantly undermine the effectiveness of Pt 5.3A of the Corporations Act. That unfortunate result is avoided by recognising that any such fiduciary duty must be narrowed to reflect the statutory regime. The alleged positive disclosure duties 1. It seems to me that the duty alleged in proposed SOC [17(g)(ii)-(iv) and (vi)] could not be established, since Australian law does not recognise positive fiduciary duties, as I noted above, and also does not recognise an affirmative duty of disclosure applying to directors or company officers as a separate fiduciary duty or an incident of the no conflict rule and a director's non-disclosure of information relevant to the company is not a separate breach of duty, although the fact of disclosure may, of course, still be relevant to informed consent to or ratification of conduct that would otherwise be a breach of fiduciary duty: Fitzwood Pty Ltd v Unique Gold Pty Ltd (in liq) (2001) 188 ALR 566; [2001] FCA 1628 at [32]–[33]; Dresna Pty Ltd v Linknarf Management Services Pty Ltd (in liq) (2006) 156 FCR 474; [2006] FCAFC 193 at [130]–[132]; P & V Industries Pty Ltd v Ponto [2007] VSC 64 at [24]–[30]; Collard v Western Australia (No 4) [2013] WASC 455 at [1096], [1211]–[1214]. I recognise that English law has taken a somewhat different approach: Item Software (UK) Ltd v Fassihi [2004] EWCA (Civ) 1244 at [40]-[44]; Hanco ATM Systems Ltd v Cashbox ATM Systems Ltd [2007] EWHC 1599 (Ch) at [65]; GHLM Trading Ltd v Maroo [2012] EWHC 61 (Ch) at [192]–[195]; McTear v Engelhard [2014] EWHC 1056 (Ch) at [10]–[91]. The duty alleged in proposed SOC [17(g)(v)] also seems to me to be not seriously arguable, so far as it seeks to prevent AHEPA NSW exercising the statutory power to appoint a voluntary administrator that is conferred on it by s 54 of the 2009 Act and s 436A of the Corporations Act, where directors form the requisite opinions. A negligence claim 1. As I noted above, the Plaintiffs also plead (proposed SOC [44]) a claim that the Ninth Defendants acted negligently when effecting the VA Appointment, although the basis of any duty of care is not identified. It seems to me that the Plaintiffs also have not shown a seriously arguable proposition that the Nine Defendants acted without due care, or negligently, as pleaded in proposed SOC [44] when effecting the VA Appointment. In order to determine whether AHEPA NSW was insolvent or likely to become insolvent, there is no seriously arguable case that more was required than to answer the question whether AHEPA NSW could pay its debts as and when they fell due, adopting the same straightforward analysis that was adopted by the solicitors who were then acting for Ms Alexandrou and are now acting for the Plaintiffs in their letter dated 3 December 2019, to which I referred in the chronology, and then by Emmett AJA in AHEPA 2020. Even if a duty of care existed, it also does not seem to me that there is a seriously arguable case that reasonable care required further inquiries or the exploration of questionable alternatives that could not have promptly displaced the matters that gave rise to the then insolvency or likely insolvency of AHEPA NSW. Causation and loss 1. I should note, for completeness, that there are also real difficulties with the manner in which the Plaintiffs propose to establish causation of loss on the part of AHEPA NSW. I have referred to the pleadings in proposed SOC [48] above. It seems to me that it is doubtful that the Plaintiffs could establish a seriously arguable case as to these propositions, where the evidence to which I have referred above and the history of AHEPA NSW gives little reason to think that there was room for a negotiated outcome with the Plaintiffs' faction, or that a special resolution would have been approved in general meeting for sale of the Rockdale Properties or for the Surry Hills Property to be mortgaged, where there have been continuous disputes as to who would be entitled to vote at a special meeting. It is notable that, at the relevant time, the Plaintiffs and other members of the Plaintiffs' faction made no offer of a negotiated outcome and the earlier claim for costs in respect of earlier proceedings had resulted in a winding up application brought by Ms Alexandrou rather than a negotiated outcome. The Plaintiffs claim for loss in proposed SOC [49] depends on the existence of a seriously arguable case in respect of the pleaded breaches which I have noted above. Determination as to whether this claim falls within the exceptions to the rule in Foss v Harbottle 1. I have referred to the scope of the relevant exceptions to Foss v Harbottle at general law above. In oral submissions, Mr Corsaro submits that the matters on which the Plaintiffs rely do not establish a fraud on the power, for the purposes of the fourth exception in the rule in Foss v Harbottle. I will assume, without deciding, that a use of the power to appoint a voluntary administration, for an improper purpose and other than for the purpose for which that power was conferred, may constitute a fraud on the power in the relevant sense, and fall within the fourth exception of that rule so far as it was not capable of ratification by the majority of AHEPA NSW's members. However, I am not persuaded that the Plaintiffs' claim in respect of the VA Appointment falls within the scope of the fourth exception to the rule. I have held above that it is doubtful that the matters to which they refer rise to a seriously arguable claim that the Nine Defendants had a predominant purpose other than to address the insolvency or likely insolvency of AHEPA NSW and I am not persuaded that they raise a seriously arguable claim that the Nine Defendants personally profited from the VA Appointment or any matter that would have prevented ratification in general meeting by a majority of AHEPA NSW's members. I would also not exercise a judicial discretion to make the declaration sought on that basis, given the issues as to Ms Diakovasili's lack of understanding of the proceedings which I have noted above and the funding arrangements which I address below. 2. I am also not satisfied that this claim falls within the fifth exception to Foss v Harbottle, namely that it is in the interests of justice that the claim be permitted. First, as I have noted above, it is doubtful that the Plaintiffs have shown a seriously arguable case of breach of the best interest or proper purposes duties, and they have not shown a seriously arguable claim for breach of the rule against conflict of interest or negligence for the reasons noted above. As I noted above, the wider conspiracy or fraud case on which the Plaintiffs opened is not pleaded in the proposed SOC and AHEPA NSW has not had a fair opportunity to respond to it in this application. 3. Second, and importantly, the First Plaintiff, Ms Diakovasili, demonstrated little or no understanding of her own affidavit evidence in support of this application or of the case that she seeks to bring or of the relief that might be available in that case and would therefore have no real ability to control the conduct of that case. She plainly also does not understand the financial risk to which she is exposed by the proposed conduct of the proceedings. Those who are funding this application and the proposed proceedings and exercising a degree of control or influence over their conduct provide no real explanation of why they have caused them to be brought in the name of an elderly non-English speaking pensioner who, like AHEPA NSW and the proposed Defendants, would be exposed to the risks associated with the conduct of the proposed proceedings. I will address a further uncertainty as to the existence of, and terms of, any funding and indemnity arrangements in respect of the proposed proceedings below. 4. Third, I recognise that the Second Plaintiff, Mr Antonakos, has a better understanding of the case that is to be brought although not of the risk to him of the funding arrangement. That does not assist the Plaintiffs where the relief sought is a declaration directed to proposed proceedings to be brought by Ms Diakovasili and Mr Antonakos, not only by Mr Antonakos. It seems to me that the Court should, in an application of this kind, consider the claim which the Plaintiffs seek to bring, and not deal with that claim in a way that would turn into a substantively different claim brought by Mr Antonakos alone, with the result that he would bear the sole risk of the proceedings, subject to any unsecured indemnity given by Marine Parade in respect of the proposed proceedings, if such an indemnity exists. 5. Fourth, so far as Mr Alexandrou is funding and likely exercising a degree of control over the claim where he is a party to the solicitors' retainer, it seems to me that his delay and previous conduct tends against the relief sought, where he had a legal representative present at the application to validate the VA Appointment and did not then oppose the validation of the DOCA; he and his associates then put a proposal for the competing CS DOCA, allowing the voluntary administration to go forward in the expectation that they could obtain control of AHEPA NSW under the CS DOCA; did not challenge the resolutions passed at the second creditors' meeting or the execution into the RPS DOCA; but then promoted and supported these proceedings, only after the RPS DOCA had been implemented and AHEPA NSW's solvency likely restored by it. 6. I should add that, even if I had reached the view that the relief sought could have been granted limited to a claim for breach of duty in respect of the VA Appointment, as distinct from the claims against the Four Defendants and RPS relating to the alleged Post Appointment Breaches, I would not have granted that relief in respect of the proposed SOC where it is not so limited. As I have noted above, it seems to me that the Court should, in an application of this kind, consider the claim which Plaintiffs seek to bring and not seek to reformulate that claim in a way that would turn into a substantively different claim. The claim in respect of the alleged Post Appointment Breaches 1. The second aspect of the Plaintiffs' proposed case, pleaded in paragraphs 50-67 of the proposed SOC, is directed to a claim that continuing fiduciary duties owed by the Nine Defendants were breached when four of them, Messrs Kallimanis, Premetis, Fandakis and Papanagiotou ("Four Defendants") were involved with RPS in the RPS DOCA which allegedly had the result that RPS acquired the Rockdale Properties at undervalue. I proceed on the basis that this claim is only proposed to be made against the Four Defendants and RPS, where that is broadly consistent with the proposed SOC and Mr Friedgut opened the Plaintiffs' case on that basis. 2. In opening written submissions, Mr Friedgut summarises this claim as follows: "[t]he [Four Defendants], with the knowing assistance of [RPS], breached the fiduciary duties they owed to [AHEPA NSW] by misusing their position as committee members/former committee members by causing the administrators to agree to sell [the Rockdale Properties] owned by [AHEPA NSW] to [RPS] at a gross undervalue, despite knowing the true value of the properties at the time of the transaction. See paragraphs 50-72 of the Draft SOC." Mr Friedgut also submits that: "[the Four Defendants] misused their position as committee members/former committee members by causing the administrators to agree to sell the Rockdale Properties to the tenth defendant, [RPS], at an undervalue, for a price of $4.4 million when the true value of the Properties at the relevant time was at least $6 million." 1. Both these formulations leave unclear how the Four Defendants are alleged to have "caused" the voluntary administrators to sell the Rockdale Properties at an undervalue, where both RPS and CS put competing DOCAs to the voluntary administrators, the voluntary administrators put both DOCAs before the second meeting of creditors, and the majority of creditors at the second meeting of creditors then approved AHEPA NSW's entry into the RPS DOCA in preference to the CS DOCA. 2. In opening submissions, Mr Friedgut identifies the relief claimed in respect of this claim, which is not pleaded in the proposed SOC, as follows: "[a]s against the [Four Defendants], equitable compensation in the order of $1,700,000 in relation to the sale of the Rockdale Properties to [RPS] (being the difference between the amount of $4.4 million paid by [RPS] to purchase the properties and the true value of the Rockdale Properties as at the date of sale). (In a rising property market, the damage may well be in excess of that sum.)" 1. Turning to the proposed pleading of this claim, the Plaintiffs repeat (proposed SOC [50]) their claims that the committee members owed fiduciary duties to AHEPA NSW and as to the content of those fiduciary duties and plead (proposed SOC [51]) that those fiduciary duties survived AHEPA NSW's entry into voluntary administration, although the position of committee members other than the Four Defendants would not be relevant to this claim. I have noted above that several of the duties on which the Plaintiffs rely are not properly characterised as fiduciary duties. I accept that it is seriously arguable that the alleged fiduciary duties owed by committee members (relevantly, the Four Defendants) survived AHEPA NSW's entry into voluntary administration, where they remained in office as committee members. 2. It is not necessary to address the decision in Hunt v Michie [2020] EWHC 54 (Ch), on which Mr Friedgut relied, to reach that conclusion, and that decision is of limited assistance where the statutory regime for directors' duties and the insolvency regime in the United Kingdom are (contrary to Mr Freidgut's submission) different from the Australian statutory regime in significant respects. As Mr Friedgut noted in closing submissions, in Advanced Fuels Technology Pty Ltd v Blythe [2018] VSC 286 at [326], in a different factual setting, Macaulay J also recognised the possibility that a director's duty to avoid conflicts of interests could continue after his or her resignation (I interpolate, particularly if that resignation was prompted by a wish to exploit an opportunity in breach of his or her duty), but observed that: "[t]he scope for establishing a breach of the 'conflict rule' is narrowed because, in principle, that rule is attracted by actual or potential conflict between personal interest and the duty of fiduciary office, yet the office ceases when the fiduciary resigns." 1. The proposition that committee members' fiduciary duties survived the VA Appointment is, however, only the start of the inquiry as to the scope of those duties after the VA Appointment, where committee members (again, relevantly, the Four Defendants) were no longer able to exercise their powers and duties by reason of the VA Appointment. I note that s 30A of the 2009 Act, to which I referred above, is consistent with a focus on the scope of a committee member's duties, where the duty it imposes is directed to carrying out the committee member's functions for the benefit, so far as practicable, of the association. 2. Section 437A of the Corporations Act (as applied by s 54 of the 2009 Act to AHEPA NSW) relevantly provides that: (1) While a company is under administration, the administrator: (a) has control of the company's business, property and affairs; and (b) may carry on that business and manage that property and those affairs; and (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration. (2) Nothing in subsection (1) limits the generality of anything else in it. 1. That section assumes that the voluntary administrator can exercise those powers to the exclusion of company directors (or, here, committee members of AHEPA NSW). I referred above to Brash Holdings, where the Court described (at 28) Pt 5.3A of the Corporations Act as providing: "… a means whereby a company which is or may be insolvent may be subjected to control by an administrator to the exclusion of its normal officers for a strictly limited period …" 1. That position is made express, in the case of a company, by s 198G of the Corporations Act which provides that, when a voluntary administrator is appointed to a company, an officer of the company must not perform or exercise a function or power of that office without, inter alia, the written approval of the voluntary administrator or the Court, or where the officer is permitted to do so by the Corporations Act. Although that section does not refer to an incorporated association that is placed in voluntary administration, there seems to me to be no arguable case that the powers of the officers of a voluntary association are not impliedly suspended by that appointment, since it is inconceivable that both a voluntary administrator and officers of the association are entitled to exercise control of it at the same time and in circumstances that they may well have opposed views as to how the voluntary administration or the affairs of the association should be conducted. 2. Section 437D of the Corporations Act in turn provides that: (1) This section applies where: (a) a company under administration purports to enter into; or (b) a person purports to enter into, on behalf of a company under administration; a transaction or dealing affecting property of the company. (2) The transaction or dealing is void unless: (a) the administrator entered into it on the company's behalf; or (b) the administrator consented to it in writing before it was entered into; or (c) it was entered into under an order of the Court. … (4) Subsection (2) has effect subject to an order that the Court makes after the purported transaction or dealing. (5) If, because of subsection (2), the transaction or dealing is void, or would be void apart from subsection (4), an officer or employee of the company who: (a) purported to enter into the transaction or dealing on the company's behalf; or (b) was in any other way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the transaction or dealing; contravenes this subsection. 1. Section 439A of the Corporations Act in turn provides for the matters to be decided by creditors at a second meeting of creditors in a voluntary administration, which may include that the company execute a deed of company arrangement, and Pt 5.3A Div 10 deals with the execution and effect of a deed of company arrangement. Importantly, creditors and not a company's directors (or, here, committee members of AHEPA NSW) decide whether the company (or AHEPA NSW) should enter into a deed of company arrangement. 2. As I have noted above, a duty to avoid conflicts of interest only arises in that part of a relationship between a fiduciary and his or her beneficiary that is fiduciary in character. It is commonplace in a voluntary administration that a director of a company will propose a deed of company arrangement, which may propose the acquisition of the company's business or its assets at a price that may be less than fair value but reasonable in the circumstances, for example because no alternative purchasers have an interest in those assets. The proposed deed of company arrangement will be put by a voluntary administrator to creditors of the company for approval at the second meeting of creditors. It is inconceivable that the rule against conflict of interest and duty applies in that situation to prevent such a proposal, on the basis that the director's personal interest in acquiring the company's business or assets on more or less favourable terms will inevitably conflict with any duty owed to the company or association to maximise the purchase price for the business or assets, just as a vendor's and a purchaser's interests will inevitably be in conflict. The utility of the voluntary administration regime would be significantly undermined if directors or officers of a company or association, who would ordinarily be well-placed to put a deed of company arrangement, are prevented from doing so. I note, for completeness, that a director or officer would likely not be able to avoid that result, if it would otherwise arise, by resignation prior to putting a DOCA proposal: Addstead Pty Ltd (in liq) v Liddan Pty Ltd (1997) 70 SASR 21; 25 ACSR 175. 3. It seems to me that, in consequence of these matters, the premise of the Plaintiffs' claim for Post Appointment Breaches, that the Nine Defendants (or, relevantly, the Four Defendants) owed a fiduciary duty which could be breached by putting forward a proposed DOCA for creditors' approval, is not seriously arguable, either generally in respect of companies or here in respect of AHEPA NSW. That result follows because, first, as Mr Corsaro submits, a director of a company (or committee member of AHEPA NSW) is not in a position of real and sensible conflict of interest in putting a proposal for a deed of company arrangement on more or less favourable terms, where the assessment of that proposal and the decision whether the company (or AHEPA NSW) executes that deed of company arrangement will not be made by the director (or committee member) but respectively by the voluntary administrator and creditors at the second meeting of creditors. 4. The same result follows, second and alternatively, because the scope of a continuing fiduciary duty owed by a director of the company (or here a committee member in respect of AHEPA NSW) is narrowed when a voluntary administrator is appointed and takes control of the company (or, here, AHEPA NSW) to the exclusion of that officer or committee member, and does not extend to steps which he or she may take to put such a proposal, in a similar way that the fiduciary duty owed by a joint venturer in Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 did not extend to steps taken in assigning its interest in the joint venture. There is no seriously arguable claim that such a director (or, relevantly, the Four Defendants) can breach a fiduciary duty or the rule against conflict of interest by a putting a proposed DOCA on more or less favourable terms for consideration by the voluntary administrator and then by creditors at the second meeting of creditors. These matters also explain a matter that Mr Friedgut did not address, namely why no corresponding breach of duty arose so far as other committee members associated with the Plaintiffs' faction were associated with putting the competing CS DOCA. 5. The Plaintiffs also bring a case against RPS in respect of the alleged Post Appointment Breaches. They plead (proposed SOC [52]) that RPS is the "alter ego" of one or more of the Nine Defendants. The particulars of that proposition are directed to only four of the Nine Defendants, namely that Mr Kallimanis and his family own 63 shares in RPS, comprising 52.5% of the share capital; Mr Papanagiotou and his family owned at least 10 shares comprising 8.3% of the share capital; Mr Premetis and a "business associate" owned at least 15 shares comprising 12.5% of the share capital of RPS; the Plaintiffs do not identify the persons who own the other 26.7% of the share capital of RPS; and they also particularise that Mr Fandakis acted as RPS's real estate agent in respect of the transaction, although it is not apparent how that would advance an allegation that RPS is the alter ego of the Nine Defendants generally or the Four Defendants in particular. The Plaintiffs then plead (proposed SOC [53]) that, as a result of being an alter ego of the Four Defendants, RPS had full knowledge of the facts pleaded in respect of the alleged breach of fiduciary duty by them (or possibly the Nine Defendants) in appointing the voluntary administrator and had "transmitted fiduciary obligations" of the same character alleged against the Four Defendants (or possibly the Nine Defendants generally). 6. In his opening submissions, Mr Friedgut describes this claim as follows: "[t]he Draft SOC also alleges that [RPS] is the alter ego of one or more of the [Nine Defendants]. As a result, [RPS] also had fiduciary duties to the Association. It alleges that [RPS] obtained a valuation of the Rockdale Properties that was not at market rate that took into account known development potential and used that as the basis for its proposal for a Deed of Company Arrangement, which was ultimately entered into. Thus, ultimately, [RPS] purchased the Rockdale Properties at what it knew to be a substantial undervalue and knew that it would not be in the best interests of the Association to purchase at such undervalue. Additionally, there were lease obligations that the Association had to enter into." 1. I note, for completeness, that Mr Friedgut submits in closing submissions that there is no evidence from witnesses called by AHEPA NSW as to whether other members of the management committee have any direct or indirect interest in RPS, and he submits that an "adverse inference" should be drawn from the absence of that evidence. I do not take that approach, first, because the Plaintiffs do not allege that other members of the management committee have any direct or indirect interest in RPS, and there was no reason for AHEPA NSW or those committee members to deny an allegation that is not made and, second, because the absence of evidence does not generally support an adverse inference, particularly as to a matter which is not alleged. The claim against RPS is not seriously arguable where the alleged breach of fiduciary duties by the Four Defendants, on which it relies, is not seriously arguable for the reasons noted above. 2. The Plaintiffs also plead (proposed SOC [54]) several matters relevant to the alleged discharge of fiduciary duties owed by the Four Defendants after the VA Appointment, including repeating the allegation of conflict of interest and that the Four Defendants or RPS "stood to gain personally" and they seek to establish that a valuation obtained by RPS or Mr Fandakis in respect of the Rockdale Properties was at undervalue. I return to that matter below. The Plaintiffs also plead (SOC [56]) that the "purported creditors" voted in favour of the resolution at the second meeting of creditors and, implicitly, seek to raise a collateral attack on the validity or propriety of that resolution, although no application was brought to set it aside after it was passed and no application to set aside the DOCA was brought. 3. I bear in mind that Mr Friedgut, in closing submissions, also criticises the fact that RPS or interests associated with it acquired third party debt which was voted in favour of the RPS DOCA at the second creditors' meeting. As I noted above, Mr Alexandrou's children similarly acquired third party debt which was voted in favour of the CS DOCA at the second creditors' meeting. Nothing turns on these matters, where it is open to a creditor or interested party to acquire another creditor's debt and to vote it at the second creditors' meeting, although the Court would have been able to take these matters into account, if Mr Alexandrou or any other interested person had brought an application to set aside the result of the second creditors' meeting or the entry into the RPS DOCA at the time it occurred. 4. The Plaintiffs then plead (proposed SOC [59]-[60]) that RPS purchased the Rockdale properties at what it knew to be a substantial undervalue and that the Four Defendants and RPS knew that it was not in AHEPA NSW's interests to purchase the Rockdale properties "off market at significantly below market value". 5. Mr Friedgut draws attention to the matters on which the Plaintiffs will rely to contend that the Rockdale Properties were valued at $6 million at the time they were acquired by RPS, including references to that value in AHEPA NSW's business records prior to the date of the VA Appointment, by a 2019 valuation and references to that figure in AHEPA NSW's balance sheet as at 30 June 2020. The Plaintiffs also place substantial weight on a call option dated 12 November 2014 which provided for the potential sale of the Rockdale Properties for a total consideration of $6.001 million (Ex J1, 377). Although an option fee was paid, that option was not exercised at that price or at all and the transaction did not complete. It seems to me that that option provides little support for that proposition. In Mount Gilead Pty Ltd v Macarthur-Stanham (as executor of Estate of late Lee Macarthur-Onslow) [2023] NSWCA 37 at [108]ff, Bell CJ referred to authority rejecting the use of offers as evidence of the value of land and noted that the use of uncompleted transactions will generally give rise to speculation (although he also recognised, and White JA there noted, that the significance of an offer, an option, or an uncompleted contract for the sale of land may depend upon the circumstances). Both Bell CJ and White JA there upheld my conclusion at first instance in that case that the evidence, there including an uncompleted option agreement, did not establish a real prospect that an expression of interest campaign or similar public market process would have led to a better result than the entry into the relevant transaction. I recognise that the Plaintiffs also propose to rely on expert valuation evidence in that regard. 6. Mr Corsaro responds that the Plaintiffs do not articulate a claim for relief against RPS; that Mr Fandakis' only interest in the acquisition of the Rockdale Properties was to act as RPS's agent in respect of the transaction; and that there is nothing to suggest that he stood to gain any benefit from RPS purchasing the Rockdale Properties or had a conflict of interest. He also submits, importantly, that AHEPA NSW was then being managed by the voluntary administrators and not the Nine Defendants or other committee members of AHEPA NSW; that the voluntary administrators recommended that creditors vote for the RPS DOCA; and that AHEPA NSW's creditors, rather than the Nine Defendants as committee members, made the decision to execute the RPS DOCA and thereby to sell the Rockdale Properties to RPS. He submits that, on that basis, there is no arguable claim for a conflict of interest or unauthorised profit made by the Nine Defendants in respect of RPS's acquisition of the Rockdale Properties and he also relies on the valuation obtained by RPS from Opteon to contend that transaction took place at market value. 7. Mr Friedgut also advances criticisms of the methodology of Lando's second valuation and also advances various criticisms of the Opteon valuation, to which I have referred above, although Mr Corsaro responds that his suggestion that the valuers did not have regard to the zoning of the property or any development potential are wrong, on the face of the valuation. He also points out that the valuation obtained by the voluntary administrators from Property Logic was in draft at the date of the second meeting of creditors and advances criticisms of the methodology adopted in that valuation. It is not necessary to determine the correctness of these valuations in order to determine the application. Mr Friedgut also referred to the retrospective valuation of the Rockdale Properties showing a value at $6.1 million as at 16 December 2020 (Ex J1, 1872ff) on which the Plaintiffs would rely at a hearing. 8. In closing submissions, Mr Corsaro points out that three valuations obtained at the time of the sale of the Rockdale Properties valued them in the range of $4.4-$4.9 million, including one obtained by the voluntary administrators, and points to the fact that those valuations all referred to the impact of the then COVID pandemic on property prices. Mr Corsaro also points out that each of those valuations considered comparable sales and recognised the "development potential" of the Rockdale Properties. Mr Corsaro also advances several criticisms of the retrospective valuation on which the Plaintiffs would rely at the proposed hearing, which he points out reflects a "kerbside" view of the property in April 2022, was issued a year later in April 2023, and seeks to value the property as at December 2020. Mr Corsaro also points to a potential difficulty with the sales evidence relied on in that report, so far as it relied largely on sales prior to the COVID pandemic, only two sales occurred in the period between September and December 2020 and the valuer also relied on two later sales. 9. It is not necessary to decide whether the Plaintiffs could establish the higher valuation of the Rockdale Properties for which they contend, which I accept is a matter that would properly be left to final hearing if the proceedings were properly to proceed. That question does not arise where the breach of duty on which the Plaintiffs would rely to establish this claim is not seriously arguable for the reasons noted above. 10. The gravamen of the Plaintiffs' claim in respect of the Post Appointment Breaches is that the Four Defendants and RPS proceeded with and completed the purchase of the Rockdale Properties by RPS in breach of fiduciary duty, and they plead loss suffered by AHEPA NSW as a result of that matter, calculated by reference to the market value of the Rockdale Properties, alleged to be at least $6 million, in comparison with the $4.4 million received under the RPS DOCA. I am not persuaded that this claim is seriously arguable, where it is not seriously arguable that the Four Defendants had a real and sensible possibility of conflict of interest, where their powers as committee members of AHEPA NSW had been displaced during the voluntary administration and the assessment of the RPS DOCA and competing CS DOCA proposals would be and were undertaken not by them but by the voluntary administrators and the decision whether AHEPA NSW should execute either of those proposals would be and was made not by them but by creditors. It also does not seem to me to be seriously arguable that the scope of the Four Defendants' continuing fiduciary duty extended to steps taken in respect of the RPS DOCA or competing CS DOCA proposals for the same reason. Determination as to whether this claim falls within the exceptions to the rule in Foss v Harbottle 1. I have referred to the scope of the relevant exceptions to Foss v Harbottle at general law above. I am not persuaded that the Plaintiffs' claim in respect of the Post Appointment Breaches falls within the scope of the fourth exception to the rule in Foss v Harbottle, since the legal basis of the claim is not seriously arguable and the matters raised do not constitute a fraud on the minority in the relevant sense. Even if the fourth exception did apply, I would not exercise a judicial discretion to make the declaration sought, given the issues as to Ms Diakovasili's lack of understanding of the proceedings and the funding arrangements to which I return below. 2. I am also not persuaded that the claim falls within the fifth exception, and it is not in the interest of justice to permit the claim for the same reasons, and also for the reasons noted above, including Ms Diakovasili's lack of understanding of the relief that might be available in the proceedings and her lack of any real ability to control the conduct of that case; the lack of explanation of why those who stand behind the case have caused it to be brought in the name of an elderly non-English speaking pensioner who, like AHEPA NSW and the proposed Defendants, would be exposed to the risks associated with conduct of the proceedings; and the fact that Mr Antonakos' better understanding of the issues in the proceedings does not assist the Plaintiffs where they seek to have the proceedings brought by both Plaintiffs and not only Mr Antonakos. Funding and indemnity arrangements 1. The Plaintiffs and AHEPA NSW also rightly recognised the significance of funding and indemnity arrangements for the proposed proceedings, whether they were to be brought in AHEPA NSW's name or by the Plaintiffs personally for AHEPA NSW's benefit. 2. Mr Friedgut emphasised, in his opening written submissions, the Plaintiffs': "genuine, honest, good faith, reasonable, belief that the Association has a good cause of action and has reasonable prospects of success, as evidenced, inter alia, by the willingness to indemnify the Association against any adverse costs order in the proceedings." 1. Mr Friedgut then submitted, in closing submissions, that: "[t]here is no downside for the defendant [in the proposed proceedings]. In the light of the proffered indemnity, the defendant will not suffer any detriment as a result of the proposed proceedings." 1. Mr Friedgut also placed substantial emphasis on the funding and indemnity arrangements in oral submissions. For example: "…the [P]laintiffs before your Honour this morning who fund the proceedings, will give an indemnity to the Association, and that is clearly in the interests of the Association that the proceedings be pursued..." (T19) "AHEPA [NSW] has sustained substantial loss and damage, and I emphasise again that the plaintiffs before your Honour this morning, they do not seek a cent for themselves, but they seek the money for the Association. They undertake to fund the litigation. They undertake to provide an indemnity against any adverse costs award that may be made against the Association, and in those circumstances, the respectful submission to your Honour will be that it is in the interests of the corporation, that the declarations be made, so as to enable them to bring these proceedings on behalf of the Association..." (T24) "Of course, the interests of justice is, no doubt, an elastic term, and one cannot be prescriptive as to what's the interests of justice consist of, and, in this case, our submission would be that where an association like this stands to gain very substantial sums of money with no downside in the sense that the proceedings are being funded by somebody else and indemnity is given to the Association..." (T32) "I submit that the best evidence of the genuineness of [Ms Diakovasili's] belief in the cause of action, is the very fact that she's willing to fund the action and provides an indemnity. She makes it clear that any compensation will be used for the benefit only of AHEPA [NSW]. She doesn't want to personally receive any compensation..." (T33) "My submission is that the easiest route of course would be the fifth exception because the fifth exception is the interests of justice exception, and the submission in relation to the interests of justice is that there's only upside for the Association and no downside, given that the proceedings are financed and given the indemnity to the Association..." (T209) "At the end of the day, these are people - as your Honour now knows, the evidence is before your Honour - who have put their money on the line. Each one of these people has given an indemnity to the solicitors, they have provided security, they will finance the proceedings, and if they lose, it will be their money, their own money that they will be losing…" (T243) 1. Mr Corsaro also referred to case law, in the context of statutory derivative proceedings, emphasising the significance of funding and indemnity for the relevant company and submitted that: "[i]t is of significance whether there is sufficient and adequate indemnification of the Association to ensure it would not be exposed to the costs and expenses of litigation and the risk of an adverse costs order. Were leave to be granted, the Court should only do so on the basis that an indemnity is provided by each of the Plaintiffs and [Marine Parade] which indemnifies the Association against the costs of the proceedings, including in respect of the Association's own legal costs, and any adverse costs order, and provides sufficient security to ensure that the indemnity is adequately valuable." 1. As I noted above, the evidence given by each of the Plaintiffs was that, understandably, they do not in fact wish to put their only substantial assets, their homes, at risk and they relied on funding and an indemnity provided by Marine Parade or Mr and Ms Alexandrou in respect of the proposed proceedings. I have also observed above that those funding and indemnity agreements or arrangements are not in evidence, where the costs agreement to which I referred above does not contain them. 2. I requested further submissions from the parties as to possible findings as to these matters, after the hearing concluded and prior to judgment, as follows: "1 It appears that, by a costs disclosure letter dated 6 April 2023 (Ex D2), signed by the solicitors and Mr Antonakos, Mr and Mrs Alexandrou, Marine Parade, Mr Lianos, Mr Kypreos, Ms Diakovasili and Mr Antonakos entered into a costs disclosure and costs agreement with the solicitors acting in these proceedings, which indicated that they and Ms Diakovasili and Mr Antonakos, had instructed that firm, inter alia, to: "File proceedings seeking leave to commence derivative action against nine (9) incumbent committee members of [AHEPA NSW] and [RPS] (Proposed Defendants) in respect of the appointment of the voluntary administrators, and the acquisition of the Rockdale Properties by RPS (Claims)." [emphasis added] 2 That letter contained a provision which provided that: "[Mr Alexandrou], [Mrs Alexandrou], [Marine Parade], [Mr Lianos] and [Mr Kypreos] jointly and severally indemnify [Ms Diakovasili] and [Mr Antonakos] in respect of the legal costs and disbursements of [the solicitors] acting for [Ms Diakovasili] and [Mr Antonakos] ("the Indemnified") in this matter, to be charged at the rates disclosed in any Costs Disclosure and Costs Agreement relating thereto, including as amended, varied or updated from time to time, or any further disclosure; any order made for security for costs; and any adverse orders for costs (Indemnity)." The Indemnifiers irrevocably agree and undertake to pay any amount that is subject to the Indemnity to [the solicitors] in the first instance. The Indemnifiers jointly and severally indemnify [the solicitors] in respect of any loss and damage suffered or incurred by [the solicitors] arising out of or in connection with the breach by any of the Indemnifiers of the Indemnity." [emphasis added] 3. It appears that indemnity does not extend to the proposed proceedings, since the costs agreement is directed only to the costs of the leave application and not the cost of the proposed proceedings; nor does it extend to liabilities incurred by AHEPA NSW in the proposed proceedings; nor does it extend to any liability of Ms Diakovasili or Mr Antonakos for any costs order made against them in the proposed proceedings. It appears that provision does no more than allow an indemnity for the solicitors' costs of the leave application (as distinct from the proposed proceedings) to the two Plaintiffs and ensure that the solicitors can claim their costs of the leave application against Mr Alexandrou, Ms Alexandrou, Marine Parade and Mr Lianos. 4. While there was reference, in the course of the application, to an indemnity given to Ms Diakovasili and Mr Antonakos that they understood to have a wider application, it appears that a wider indemnity is not found in this costs agreement and the Plaintiffs did not tender any wider document containing it. 1. In supplementary submissions, Mr Friedgut and Ms Meares accept that the four propositions noted above are correct. They submit, and I recognise, that the indemnity in the costs agreement extends to any wider scope of work requested by the Plaintiffs under the costs agreement, and could be extended to the proposed proceedings or a new costs agreement could be executed in the proposed proceedings. However, the first difficulty with that proposition is that an indemnity in those terms has not, so far as the evidence goes, been extended to the proposed proceedings. The second difficulty is that an indemnity in that form would protect the Plaintiffs' solicitors, rather than the Plaintiffs or AHEPA NSW in respect of the costs of the proposed proceedings, which I have noted above are likely to be substantial. The third, and possibly most important, is that an indemnity in that form would be entirely inconsistent with Ms Diakovasili's and Mr Antonakos' evidence as to the basis on which they wish to bring the proceedings, without putting their homes at risk, where it does nothing to protect them against that risk. 2. I also drew attention to and sought submissions as to a possible inference that any other document containing an indemnity would not have assisted the Plaintiffs in establishing that a wider indemnity had been given in favour of them or AHEPA NSW. Mr Friedgut and Ms Meares submit such an inference is not available, where AHEPA NSW rather than the Plaintiffs tendered the costs letter and the issues raised above were not contested at trial. I do not accept that proposition in its wider form, where the Plaintiffs deployed their willingness to assume the liability for costs of the proposed proceedings in submissions in support of the application, albeit Ms Diakovasili's and Mr Antonakos' evidence was that they did not wish to bear that liability themselves, and were relying on the suggested indemnity from others. I accept that I first raised the question whether the indemnity in the costs letter, if it was the indemnity on which Ms Diakovasili and Mr Antonakos were relying, was adequate. That question is plainly relevant to the way in which the Plaintiffs have put their case. In the event, it is not necessary to draw an inference of the kind noted above, where there is simply no evidence that an indemnity now exists of the kind referred to in the Plaintiffs' submissions. 3. Mr Friedgut and Ms Meares also refer to the Defendants' submission that the Plaintiffs should only be permitted to bring the proposed proceedings on terms that indemnity is provided by each of the Plaintiffs and Marine Parade in respect of AHEPA NSW's legal costs, although that issue may present differently where, in a general law derivative action, the proceedings would be brought in the Plaintiffs' names, by contrast with a statutory derivative action where it would be brought in AHEPA NSW's name. They also submit that: "… it is the [P]laintiffs' position that the [A]ssociation will be indemnified against any adverse costs order that may be made against it in the foreshadowed proceedings, and that the [A]ssociation will not be liable to fund the proceedings in any way; the [P]laintiffs have duly given evidence in relation to the question of indemnifying the association and, in addition, the [P]laintiffs' express position – supported by case law - is that it is open to the Court to make any orders of the kind sought by the [P]laintiffs conditional upon the plaintiffs first providing an indemnity, in a form satisfactory to the Court, in respect of any adverse costs order that may be made against the association, and in respect of the conduct of the proposed proceedings." 1. They also refer to Mr Friedgut's oral closing submissions (T244,T245) that: "If your Honour were to say, under the guise of further alternative relief, that "A person that seems to be standing behind this from of financial perspective is Mr Alexandrou, so I'm going to make a condition of the orders that Mr Alexandrou be added as a plaintiff," I'm sure that there won't be any objection to that. At the end of the day, these are people who know what the situation is. These are mature adults who have been involved in this association for a very considerable time, and they are coming to the court and are swearing to the fact that they want to proceed with this litigation, and they will fund it and they will indemnify the [A]ssociation. If the question that your Honour raised related to the fact that your Honour's suggesting that your Honour is concerned about the security, it can also be addressed and there are many cases where that has happened, where the court has said "I'm giving leave, but that's subject to better security being granted. That will not be, on my instructions, any difficulty at all." That I do make clear. … if your Honour considers that it is appropriate to make other orders in relation to the security - there's case law. I think it's in the opening submissions - where the court made, in effect, a derivative order that said that it's subject to better security being provided, and that can, on my instructions, be done if your Honour considers it necessary." 1. The Plaintiffs also refer to case law, in the context of the statutory derivative action, where the Court has been prepared to grant leave to bring a derivative action conditional on the applicant indemnifying the relevant company for any liability which it may incur in pursuing the action. 2. I do not consider that the Court can or should seek to fashion an indemnity condition on which the declarations sought by the Plaintiffs could be granted, where the issues which arise here is quite different from that which ordinarily arises in a statutory derivative action. The differences include the fact that, first, in a derivative action brought at general law, Ms Diakovasili and Mr Antonakos would likely be the named Plaintiffs and would be exposed to an order for costs against them and in favour of the Defendants if the proposed proceedings failed. Second, and understandably, the evidence of both Ms Diakovasili and Mr Antonakos is clear that they do not wish to bear the exposure for costs in the proceedings and seek to rely on an indemnity provided by Marine Parade and Mr and Ms Antonakos, which does not arise from the costs agreement that I noted above and is not in evidence, if it exists. 3. In assessing the interests of justice, I cannot ignore the fact that the commencement of the proposed proceedings would expose Ms Diakovasili and Mr Antonakos to a liability for costs that they make clear they do not wish to bear, and could not meet without loss of their homes, and there is no evidence before the Court of the indemnity that they believe exists to protect them from that risk. I have not neglected the fact that Ms Diakovasili and Mr Antonakos may already be exposed to corresponding risks in respect of the conduct of this application, but that is a matter that is outside the Court's control and not reason to extend those risks to the future conduct of the proposed proceedings. Second, and importantly, once I have found (as I do) that there is no evidence of adequate arrangements to protect their interests in respect of the costs of the proposed proceedings, I should not go further to seek to impose such arrangements as between the members of the Plaintiffs' faction inter se, the majority of whom are not party to the proceedings. That would be an entirely different exercise from that which the Court undertakes, in a statutory derivative action, in imposing a condition as to the basis on which an applicant who is party to proceedings can bring proceedings in a company's name. 4. Third, to the extent that an indemnity should be ordered in favour of AHEPA NSW, so far as it may be exposed to a third party costs order or at least the costs of production of documents on compulsory process in the proceedings or, I do not consider that I should require Ms Diakovasili and Mr Antonakos to give it, where that would expose them to a risk of costs they do not wish to take. Fourth, I do not consider that I should seek to extract such an indemnity from third parties such as Marine Parade or Mr and Ms Alexandrou, whether by order (if I could make such an order against non-parties to the proceedings) or by the imposition of a condition. That is also a different exercise from that which the Court undertakes in a statutory derivative action, in respect of the parties to the proceedings and not third parties. It would also not be appropriate to take that course where I would have to determine the terms of such an indemnity and how to address the risk of non-performance for myself, without assistance from the parties, and where Marine Parade or Mr and Ms Alexandrou have had the opportunity to formulate such an indemnity but have not put it before the Court. These matters undermine the Plaintiffs' contention that the proposed proceedings are in the interests of justice. 5. Where the existence and terms of any funding and indemnity arrangements relating to the proposed proceedings are not established, it is not necessary to address any further question whether Marine Parade's provision of litigation funding to Ms Diakovasili and Mr Antonakos in respect of the proposed proceedings, if it has agreed to do so, would amount to carrying on an unlicensed financial services business for the purposes of s 911A of the Corporations Act, by reason of s 764A(1)(m) of the Corporations Act and the definition of "litigation funding scheme" in reg 7.1.04N of the Corporations Regulations; or whether the proposed funding arrangement, in the particular circumstances, may have the characteristics of champerty that are now assumed within the concept of abuse of process: see Gladstone Ports Corporation Ltd v Murphy Operator Pty Ltd (2020) 6 QR 497; [2020] QCA 250. Orders 1. For these reasons, I will not make the orders sought by the Plaintiffs. My preliminary view is that this is a case, like that considered by Brereton J in Re SCW Pty Ltd [2013] NSWSC 302, dealing with a direction to a liquidator, where the Court should not only decline to make the declarations sought by the Plaintiffs, but should make a declaration to the opposite effect. I direct the 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. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 October 2023