Liosatos v Kefalinian Brotherhood 'O Kefalos' of NSW [2000] NSWSC 1138

New South Wales Supreme Court

CITATION : Liosatos v Kefalinian Brotherhood 'O Kefalos' of NSW [2000] NSWSC 1138 revised - 14/12/2000 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4966 of 1999 HEARING DATE(S) : 9, 10,13, 14, 15, 16 and 17 November 2000 JUDGMENT DATE : 8 December 2000

PARTIES : Theodora Liosatos (Plaintiff) Kefalinian Brotherhood 'O Kefalos' of NSW (Defendant) JUDGMENT OF : Bergin J

COUNSEL : J Chippindall (Plaintiff) G Rundle (Defendant) SOLICITORS : Clinch Neville Long (Plaintiff) Voros & Associates (Defendant) CATCHWORDS : CORPORATIONS - Receivers, Managers and Controllers - Application for the appointment of a Receiver and Manager to the defendant on the basis of alleged oppressive and/or unfairly prejudicial and/or unfairly discriminatory conduct against the plaintiff - Allegations of electoral, financial and administrative irregularities. LEGISLATION CITED : Corporations Law ss. 461(1), 246AA. Elder v Elder & Watson Ltd [1952] SC 49 CASES CITED : Fexuto Pty Ltd v Bosnjak Holdings (1998) 28 ACSR 688 Re Ingleburn Horse and Pony Club Ltd & the Companies Act [1973] 1 NSWLR 641 Wayde & Anor v New South Wales Rugby League Limited (1985) 180 CLR 459. DECISION : All claims dismissed.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BERGIN J DATE: 8 DECEMBER 2000

4966/99 - LIOSATOS v KEFALINIAN BROTHERHOOD 'O KEFALOS' OF NSW

JUDGMENT

1 This litigation commenced by the filing of a Summons on 9 December 1999 in which the plaintiff sought an order that the defendant be wound up under s 461(1) of the Corporations Law. An Amended Summons was filed on 31 March 2000 in which an alternative order was sought pursuant to s 246AA that the defendant be wound up or that the conduct of the affairs of the defendant be regulated by the appointment of a receiver and manager. 2 The matter was expedited and set down for hearing for five days on 24 July 2000. The plaintiff appeared in person on 21 July 2000 and informed the Court that she had terminated the services of her legal advisers. The trial date was vacated and a subsequent order was made that the defendant's costs thrown away by the vacation of the trial date were to be paid by the plaintiff. 3 In a Statement of Claim filed on 25 August 2000 the plaintiff has abandoned her claim that the defendant be wound up either under s 461(1) or s 246AA but maintains a claim for an order for the appointment of a receiver. The plaintiff seeks an order setting aside the election of directors of the defendant in 1999, an order that a further Annual General Meeting be held and an order that the purported amendments to the Articles of Association be set aside. 4 The plaintiff claims that the affairs of the defendant have been and are being conducted in the manner which is oppressive and/or unfairly prejudicial and/or unfairly discriminatory against her and one other person named in the Schedule to the Statement of Claim, Georgia Koustoubardis. The claim is now focused upon four matters (1) alleged election irregularities (2) alleged financial irregularities (3) alleged irregularities in the amendments to the Articles of the defendant and (4) alleged administrative irregularities. 5 The parties are ad idem that the totality of the conduct and all the circumstances of the case must be assessed to determine whether there is oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 739. A finding of oppression may be made in circumstances in which the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play: Re Ingleburn Horse and Pony Club Ltd & the Companies Act [1973] 1 NSWLR 641 at 646. The Court may intervene if a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing is unfair: Wayde & Anor v New South Wales Rugby League Limited (1985) 180 CLR 459 per Brennan J at 472. 6 The election irregularities alleged by the plaintiff focus upon two matters. The first is an allegation that the defendant produced a list of members eligible to vote at the election which was inaccurate. The second matter was the issuing of Proxy forms alleged to be non-compliant with the Articles of Association. 7 The plaintiff also made a number of allegations in her Statement of Claim relating to financial irregularities. A number of these allegations involved the conduct of individual directors of the defendant in 1993, 1994 and 1998. 8 A claim was made that in the financial year 1993/1994 Mr J Mitzinis had received $7,000 from the defendant "in circumstances which were not connected with the objects of the defendant". The evidence disclosed in the affidavits suggested that such a claim was not maintainable. However Mr Mitzinis was cross examined and it became clear beyond any doubt that such a claim should not be maintained. Mr Chippindall abandoned such claim in final address. 9 A claim was made that Mr Zafiratos had received $2,100 from the defendant "in circumstances which were not connected with the objects of the defendant". The evidence in the affidavit suggested that such a claim was not maintainable but Mr Zafiratos was also cross examined. Mr Chippindall abandoned this claim in final address. 10 A further claim was made that Mr H. Petratos submitted a receipt to the defendant for the sum of $69.99 which was not "adequately explained". This claim was also without foundation and Mr Chippindall abandoned it in final address. 11 The remaining claims of alleged financial irregularities relate to a claim in respect of payments by the defendant for the collection of unaccompanied baggage, the disposal of assets without first obtaining authorisation by resolution of the members of the defendant, and the payment of donations to charities which exceeded the limit specified in the Articles of Association. 12 The plaintiff also claims that there were irregularities in the amendment to the Articles of Association which occurred at a meeting on 19 March 2000. 13 Finally the plaintiff made claims of administrative irregularities alleging that records have not been available for inspection and refusals to provide "reasonable" responses to questions at meetings. There is also a claim that the defendant has refused to admit applicants to membership in breach of the Articles of Association.