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. Kefalinian Brotherhood 'O Kefalos' of NSW 14 After World War II a group of people from the Greek Island of Kefalonia, also referred to as Kefalinia, banded together to support persons of Greek origin from Kefalonia who lived in Australia. That group was known as "Kefaliniakos Syllogos 'O Kefalos'". It is apparent that the group met and maintained conduct with Kefalinians on their arrival in Australia and such group became an apparently close-knit, but legally loose, organisation. 15 In 1964 the defendant was incorporated. It is apparent that the foundation members were all male but quite clearly at the time of this litigation many of the members are female, one being the current President, Virginia Apostolatos. Notwithstanding this composition it is still referred to as 'The Brotherhood'. 16 The Constitution of the defendant remained unchanged between 1964 and 2000. The objects for which the defendant was established included an object to take over all the assets and liabilities of the unincorporated body. Other objects included the establishment and maintenance of clubs for social, sporting and cultural activities and the establishment of libraries (3(c)); the purchase or lease of any land, buildings or real property to be used in connection with the objects of the defendant (3(d)); and: 3(b) To unite all Kefalinians in New South Wales in the work of promoting their highest interest and those of the Brotherhood; to promote and encourage social intercourse and good fellowship amongst members; to develop and elevate their mental and moral character; to emulate the purest principles of philanthropy, honour and patriotism; to alleviate the wants of the poor and needy amongst the members of the Brotherhood their dependents and Kefalinian people in general; to encourage and support science, art, sport and athletics; and 3(l) to subscribe to any local or other charities and to grant donations for any public purpose and to provide a superannuation fund for the servants of the Brotherhood or otherwise to assist any such servants, their widows and children. (Ex. A) 17 Income and property of the defendant has to be "applied solely towards the promotion of the objects" of the defendant and "no portion thereof should be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit to members of" the defendant (cl.5). However payment "in good faith" of "reasonable and proper remuneration" is able to be made to any officer or servant of the defendant in return for any services rendered (cl. 5). Committee of Management 18 The business and affairs of the defendant are managed by a committee consisting of a President, a Vice President, an Honorary Secretary, an Honorary Treasurer and five other members of the defendant (the Committee) (Art. 30). Each member of the committee is elected for a period of one year (Art. 31). Meetings of the committee are held monthly and four members of the committee is a quorum (Art. 32). 19 The President presides as Chairman at all meetings of the committee and in the absence of the President, the Vice President takes the Chair (Art. 48). The Chairman of the meeting has a second or casting vote if there is an equality of votes on an issue (Art. 49). 20 The committee is required to keep true and correct minutes of all its meetings and the President or Chairman of the committee at which the minutes are read and confirmed is to sign the minutes (Art. 50). The committee is subject to any direction which may be given by any resolution passed by the members of the defendant at a General Meeting called for the purpose of giving such direction. (Art.53) 21 If the defendant in General Meeting passes a resolution authorising the committee to sell or dispose of any of its property or effects, the committee is required to make all such dispositions and enter into and complete all such agreements as may be necessary to give effect to such resolution (Art. 55). 22 Article 54 provided that: No donation or expenditure exceeding fifty pounds shall be made by the Committee in any one financial year for any individual purpose unless authorised by a resolution of the members in General Meeting. (Ex. A) Election of Committee 23 An election committee consisting of a returning officer and four other members of the defendant are appointed at the Annual General Meeting. No member of the Committee or any candidate for a position on the Committee is eligible to act as an election committee member (Art. 37). The Committee is required to hand to the election committee an alphabetical list of the members of the defendant entitled to vote at the elections. This list is to be "sealed and signed" by the President, Secretary and Treasurer of the defendant (Art. 38). 24 The election committee is to conduct the election of members of the Committee from members nominated in writing by at least two other members of the defendant (Art. 39). As soon as practicable, but not later than eight days from the day of its appointment, the election committee is required to fix and announce the date, time and place of the election and the name and address of the officer to whom nominations are to be forwarded. Such announcements are to be placed in one or more Greek newspapers and should also include the date and time of closing of nominations, not earlier than twelve days from the date of the announcement (Art. 40). 25 Only members who have paid all moneys then owing to the defendant are eligible to vote at such elections (Art. 41). Voting is in person or by proxy (Art. 42). At the election, the election committee is required to provide to each member of the defendant who is entitled to vote, a ballot initialled by not less three members of the election committee, containing in alphabetical order the names and occupations of each candidate (Art. 43). 26 The method of voting is by placing a cross opposite the name of the candidate. If a ballot paper contains a number of crosses either more or less than the number of candidates to be elected, such ballot paper is to be rejected as informal (Art. 44 and 45). 27 The election committee collects the ballot papers, scrutinises the count of votes for each candidate and then announces as elected members of the Committee those of the candidates who have received the majority of votes. The successful candidates are then notified by the election committee (Art. 46). 28 The returning officer is required to call a meeting of the elected members of the Committee within ten days of the election. At such meeting the Committee, under the presidency of the oldest of those present, elects the President, Vice President, Honorary Treasurer and Honorary Secretary (Art. 47). Membership 29 The defendant consists of ordinary, associate and honorary members of eighteen years of age (Art. 4 and 5). Ordinary members are persons of Greek origin who are natives of the Island of Kefalinia or are descendants of such natives and reside within New South Wales (Art. 8). Associate members are all persons of Greek origin who, not being natives of the Island of Kefalinia or descendants of such natives, are married or related by marriage to natives or descendants of natives of the Island (Art. 9). 30 Associate members are entitled to all rights and privileges accorded to ordinary members save the right of election to the committee (Art. 10). 31 Honorary members, as defined in the Constitution between 1964 and 2000 are such persons who have rendered exceptional or distinguished service to the defendant or have donated in any one financial year money in excess of £30 or goods of such value and are recommended by the committee to have been declared at the Annual General Meeting of the defendant honorary members (Art. 11). Honorary members are not able to hold office nor vote at any meeting of the defendant (Art. 11 and 12). The number of associate and honorary members must not exceed four-fifths of the number of the ordinary members at any one time (Art. 13). Admission of Members 32 Every candidate for admission to membership of the defendant must be proposed and seconded by two members of the defendant to both of whom the candidate must be personally known (Art 15). Application for membership is in writing signed by the candidate and the proposer and seconder. Particulars required are full name, address, profession, rank or occupation, age, place of birth, place of birth of parents, nationality, marital status, and if married, place of birth of spouse (Art. 16). 33 The Committee has the power to accept or reject any application. A majority of the votes of the members of the committee is required for acceptance (Art. 17). Immediately upon the acceptance of the application, notice is given to the applicant together with a copy of the Constitution with a request for payment of the subscription to the Secretary within one month of the date of such request. Upon the payment of the subscription, and from that date, the candidate becomes an ordinary member or an associate member of the defendant as the case may be (Art. 18). If the application is unsuccessful the applicant is notified by letter (Art. 19). 34 Annual subscriptions are determined by the Committee from time to time and are due and payable in advance on 30 June each year. Members accepted after 31 December in any year are only required to pay half the subscription for that year (Art. 20). The Committee has power to grant an exemption from the payment of the annual subscription to certain categories of members (Art. 22). General Meetings 35 Annual General Meetings are required to be held once every year during the last week of the month of August (Art. 58). The Committee may convene an Extraordinary General Meeting whenever it thinks fit. The Committee must, if required in writing by not less than fifty ordinary members of the defendant, convene an Extraordinary General Meeting (Art. 60). 36 Any requisition for an Extraordinary General Meeting must express the object of the meeting proposed to be called and must be left with the Secretary of the defendant. The Committee must then convene an Extraordinary General Meeting within twenty one days from the date of the receipt of the requisition. If the Committee neglects to convene such a meeting the requistionists may convene such a meeting (Art. 60). 37 The quorum of any General Meeting is one third of the members of the defendant, which includes members attending by proxy. If within an hour from the appointed time of the meeting a quorum is not present at a requisitioned Extraordinary General Meeting then the meeting is to be dissolved. In any other case the meeting is to stand adjourned for a week and if the quorum is not present within fifteen minutes then the members present shall be a quorum (Art. 62). 38 At least fourteen days notice of the meeting is to be given to each ordinary and associate member and non receipt of such notice does not invalidate the proceedings of any General Meeting (Art. 63). Any five ordinary or associate members may give notice of any resolution to a General Meeting (Art. 64). Voting rights at General Meetings are limited to members who have paid all moneys then presently payable to the defendant (Art. 66). 39 A member is able to vote in person or by proxy (Art. 67). The instrument appointing the proxy is to be in writing under the hand of the appointor or of his attorney (Art. 68). When it is desired to give members an opportunity to vote for or against a resolution, the particular form of Proxy is set out in the Articles (Art. 69). Books and Records 40 The defendant is required to keep books of the affairs of the defendant which include accurate minutes of all resolutions and the proceedings of all meetings of members as well as meetings of the Committee. It is also required to keep or cause to be kept at the registered office a Register of members in alphabetical order, with occupations and addresses and the date of admission to membership (Art. 76). 41 The defendant has a seal in the shape of a circle with a map of the Island of Kefalinia in the centre with the words "The Kefalinian Association "O Kefalos' of New South Wales" and the Greek equivalent of those words around it (Art. 77). The President and the Secretary or such others of the Committee as authorised must sign any document to which the seal is affixed (Art. 78). 42 All cheques drawn on the defendant's bank account require two signatures of named officers of the Committee (Art. 81 and 82). The Committee is required to cause proper accounting or other records to be kept and to distribute to members copies of the profit and loss statement and the balance sheet, accompanied by a copy of the auditor's report not more than three months before the Annual General Meeting (Art. 85). The defendant is required to employ a properly qualified auditor (Art. 87) to whom the committee is required to deliver the appropriate accounts and vouchers (Art. 88). The auditors are entitled to have access to all the books of account of the defendant (Art. 89). The Plaintiff 43 The plaintiff became a member of the defendant in 1998. Her father, Nick Liosatos, was a member of the Committee from September 1998 to October 1999. Mr Liosatos stood unsuccessfully for re-election in 1999. Georgia Koustoubardis (GK) has been a member of the defendant for 21 years and was also a member of the Committee from September 1998 to October 1999. 44 Virginia Apostolatos (the President) was elected to the Committee in 1998 and re-elected in 1999 and 2000. On each occasion she has been elected as President. 1998 Election 45 On 29 September 1998 there were eighty seven registered members of the defendant, seventy four of whom voted. Seventy three of those votes were counted and one was declared informal. After the nine successful candidates were elected, the committee then elected Ms Apostolatos as President, Dennis Likoudis as Vice President, Harry Petratos as Treasurer, Stamo Fanos as Secretary and the remaining five as councillors, one of whom was GK and another of whom was the plaintiff's father Mr Liosatos. 46 At the Committee meeting on 9 October 1998 GK complained about the election of the office bearers. The minute of that meeting is as follows: Georgia Koustoumbardis complains that she deserves the Presidency, sighting (sic) article 47 of the constitution as her reason. She believes that her nomination for President by Nick Liosatos should be upheld. She only agreed to allow Harry Petratos to take this position but, she did not agree with him giving the Presidency away to anyone else. In her opinion she states that "the election were fixed". (Ex. F) 47 By 21 October 1998 the matter had caused further concern and the minute of that meeting notes: Nick Liosatos moves that we have a general meeting because he does not accept the present committee as it is, and no resolution can be reached within the committee, citing article 64 of the constitution as his right to do so. (Ex. F) Although the motion was seconded the minute does not record the result of this motion. It is apparent however that a further General Meeting was not called. On 30 October 1999 there was a change in the office bearers of the Committee. Chris Perivolaris was appointed as Assistant Secretary, Mr Petratos became Assistant Treasurer and GK became Treasurer. At this meeting GK received the cheque book, deposit book, invoices for the 1998/1999 financial year and the details of a term deposit. 48 On 11 November 1998 GK requested to see the minutes of the Annual General Meeting to see if members had voted and authorised the Committee to be able to purchase any property. It is apparent that after this meeting GK attended upon the Australian Securities and Investment Commission (ASIC). 49 On 25 November 1998 GK reported to the Committee that she had attended ASIC and her findings were noted as follows: - Forms have not been lodged properly since 1995, and the accountant believes that the committee are at fault for not informing him of the changes to the committee. - Because of these wrong details being lodged the committee have incurred late lodgement fees of up to $920. - Another fee will be paid because the ASIC were not informed of the sale of the property at Rockdale. - An annual return must be lodged by the 31st January, to indicate any changes to the committee, and a $35 fee as registration of the company. - No Director of the company should have any criminal convictions. - Any Director leaving the committee must inform the ASIC. - The ACN should be on the cheque book. - Mr Kekatos made errors on the form that he lodged, thus this is the reason for the fees that need to be paid. (Ex. F) 50 As a result of this report the Committee decided that Mr Kekatos' services should be terminated. It was decided by the Committee that GK's address would be utilised and she would become the Committee's Secretary for the purposes of ASIC documents. It was also decided that the main directors of the company would be the President, GK and Stamo Fanos. 51 At the Committee meeting of 16 December 1998 GK insisted that the defendant should take out public liability insurance and claimed that she would not take any responsibility if anything went wrong at any of the events that the defendant held. As a result of GK raising this matter the Committee agreed that the solicitor should be contacted to advise it on that matter. 52 It is apparent that by January 1999 tensions were running high on the Committee. GK commenced writing letters to members of the Committee. She wrote to Mr Perivolaris demanding the documents of the defendant to be sent to her because she was Company Secretary and "she was entitled to it". GK also wrote to another Committee member asking for his resignation. It is also apparent that on a number of occasions GK reminded Committee members that they might be sent to gaol if they did not comply with her requests. 53 By 9 February 1999 the tolerance levels of the other Committee members had been reached and at a meeting on that day Mr Perivolaris moved that GK be replaced as Company Secretary. That vote was seconded by Mr Lakoudis and the Committee voted seven in favour and two against GK's replacement. There was a further motion that GK be replaced as Treasurer at which time GK and Mr Liosatos left the meeting. That resolution was passed unanimously in their absence. This removal has caused GK a great deal of consternation. It is apparent that GK has requested a letter stating the reasons for her removal but the Committee did not write to her. Notwithstanding her replacement and removal, GK attended every meeting of the Committee between 9 February 1999 and 18 October 1999. 1999 Election 54 The plaintiff and four other members were appointed to the election committee. The election committee notified the members that the election was to be held on 24 October 1999 at Alexander the Great Club in Marrickville. Notifications of nominations of candidates for the election were to be sent to the plaintiff as the Returning Officer for the election. 55 The election committee prepared what has been referred to in the proceedings as an election kit which included the notification to which I have just referred, the nomination form for candidates for the election, in English and Greek, and a Proxy form in English and Greek. The Proxy form sent out with the election kit was a Proxy form in identical terms to the form found in Article 69 of the Constitution. Article 69 provides: Where it is desired to afford members an opportunity of voting for or against the resolution the instrument appointing a proxy shall be in the following form or a form as near thereto as circumstances admit: "The Kefonian Brotherhood 'O Kefalos' of New South Wales I, …. of…..being a member of the above named Brotherhood, hereby appoint…of…or failing him….of….as my proxy to vote for me on my behalf at the (annual or extraordinary, as the case may be) General Meeting of the Brotherhood, to be held on the ……day of ….19… and at any adjournment thereof. Signed this…….day of …….19…. This form is to be used in favour of the resolution *against * Strike out whichever is not desired. Unless otherwise instructed, the proxy may vote as he thinks fit)." (Ex. A) 56 A number of Proxy forms were received by the plaintiff which were not in this form. Those Proxy forms were apparently in a similar form but for the deletion of the reference to the voting for or against the resolution. 57 The plaintiff complained that the President had not provided the election committee with a list of members in breach of the Articles. It is true that the President took some little time to provide the list but ultimately produced it by 29 September 1999. Prior to that date the President had informed the plaintiff during the course of a meeting that there were 191 members of the defendant. The list produced to the plaintiff contained 196 members. This caused the plaintiff some concern but I am satisfied that the President merely made an erroneous statement when she said there were 191 members. I accept her evidence was that she was simply mistaken and that when the list was counted there were 196 members. 58 A further matter of concern to the plaintiff was the position of Mr George Galiatsatos. A former member of the Committee informed the plaintiff that the President had deleted Mr Galiatsatos' name from the list. The plaintiff wrote to the President seeking clarification as to whether Mr Galiatsatos had the right to vote in the election. 59 By the time the plaintiff wrote to the President on 6 October 1999, the election kit had already been forwarded to Mr Galiatsatos. On 20 October 1999 the President wrote to the plaintiff confirming that for any person to be eligible to vote they must have paid their membership fees fourteen days prior to the Annual General Meeting. Mr Galiatsatos had apparently not done so and the President advised he was not eligible to vote. However the President also advised that, as the election package had already been forwarded to him, a decision had been made to allow Mr Galiatsatos to vote at the election if "indeed he does turn up to do so". 60 This response was apparently not sufficient for the plaintiff who requested further clarification from the President who wrote a further letter on 23 October 1999 to the plaintiff advising that Mr Galiatsatos could vote at the election. 61 The election was held on the appointed day and the plaintiff, as Returning Officer, contacted each of the successful candidates to advise them of their successful election. The plaintiff did not call the required meeting pursuant to Article 47. Instead the plaintiff advised the President that she was going to instruct a firm of solicitors to investigate "fraud" in the election results. The plaintiff also advised the President that the defendant would have to pay for the legal expenses for the solicitors she intended to instruct. As a result of this communication, the defendant's solicitors, Messrs Voros & Associates, wrote to the plaintiff advising amongst other things: We are instructed that in your capacity of electoral and returning officer, prior to the aforesaid election, you exercised a discretion to strike out a number of proxy votes, and telephoned the relevant persons, advising of your decision to strike out the votes, and inviting a personal attendance at the election. You did not raise any irregularity, or choose in any way to do anything but to proceed with the elections of 24 October 1999. In those circumstances we are instructed that there was no basis of any allegations of "fraud", or any prejudice associated with any proxy which you deemed as defective, given your apparent action to rectify the same by personally telephoning the members. The incoming Committee is of course most concerned that you have engaged solicitors, without the knowledge of all election Committee members, to investigate "fraud" in the aforesaid election. 62 The letter advised that the defendant would not be meeting or authorising any expenditure of the solicitors the plaintiff intended to instruct and that she would be responsible for them if she proceeded with that plan. The letter also requested the plaintiff to provide all the defendant's documents that she held. Proceedings commenced 63 On 9 December 1999 the plaintiff filed a Summons seeking an order that the defendant be wound up under s 461(1) of the Corporations Law. As a result of an exchange of correspondence the defendant gave an undertaking to the plaintiff "that no assets of the Brotherhood will be dispersed except in the ordinary course of business". Use of Subpoena 64 During December 1999 and January 2000 the plaintiff attended the Commonwealth Bank and gained access to the defendant's bank accounts. This conduct became controversial during the course of the trial as the plaintiff claimed that she had been granted access to such accounts by using a copy of a subpoena issued by this Court. The plaintiff claimed that Mr Madden, her former solicitor, had advised her that she could go to the bank with the subpoena and request access to the defendant's bank accounts. 65 On 4 January 2000 the plaintiff swore an affidavit in which she said that since giving the undertaking to the plaintiff "a member or members of the defendant have withdrawn $6,000 from the defendant's bank account on 24 December 1999 in breach of the defendant's undertaking and in breach of Article 54". 66 Paragraph 8 of that affidavit reads as follows: I request this honourable court to immediately appoint a provisional liquidator to the defendant immediately to preserve the assets and funds of the defendant for the benefit of all members. The affidavit annexed a photocopy of a bank statement of the defendant's account for the period 2 December 1999 to 29 December 1999. 67 On 10 January 2000 the matter was before the Vacation Duty Judge at which time further affidavits were filed and the Court noted the undertaking by the defendant that it would not make any donation or expenditure contrary to its Articles of Association. 68 On 10 January 2000 the plaintiff swore a further affidavit to which she annexed a copy of the defendant's cheque of $6,000 payable to the defendant's solicitors. That cheque was dated 16 December 1999. 69 On 6 February 2000, the plaintiff was asked about her access to the bank account of the defendant by Mr Mitzinis, the Treasurer of the defendant. Mr Mitzinis said: "You thought you were so smart with the $6,000", to which the plaintiff responded: "I know where it went to". Mr Mitzinis said: "Where"? to which the plaintiff responded: "Voros Trust account". Mr Mitzinis asked: "How do you know that?" to which the plaintiff responded: "I just do". Mr Mitzinis said: "How did you get the bank statements?" and the plaintiff responded: "I just do". 70 It was not until cross examined that the plaintiff claimed that she had been using a subpoena with a Court seal on it to gain access to the bank statements. I am satisfied that the subpoena directed to the Commonwealth Bank was not issued until February 2000. It is therefore not possible for the plaintiff to have had a subpoena with a Court seal on it prior to that date. Indeed the copy of the subpoena produced by the plaintiff (Ex. 2) is obviously a copy of a subpoena issued by this Court on 14 February 2000 (Ex. 1). 71 The plaintiff said the original document that she had was "tatty" and she photocopied it and destroyed the original copy that was given to her by the solicitor. The copy produced by the plaintiff to the Court is deficient in some ways in that it does not have the issuing date of 14 February on the second page but I am satisfied that it is a photocopy of the subpoena issued by the Court on 14 February 2000. There are a number of documents attached to the subpoena which are in identical form to the documents produced in late February by the bank. 72 Mr Chippindall drew attention to the fact that the documents attached to the plaintiff's copy subpoena do not include two of the documents that were produced to the Court by the bank. Notwithstanding that difference I am comfortably satisfied that the plaintiff could not have had the copy subpoena that she claims she had, (Ex. 2), at the time she went to the bank in December and accessed the defendant's accounts. Not only did she access the defendant's accounts but she was able to obtain a photocopy of the cheque which had been written by the defendant to pay its lawyers in these proceedings. 73 Mr Chippindall also referred to Mr Madden's bill of costs in which there is reference to a subpoena earlier than February. The plaintiff did not claim she used a draft subpoena but one with a Court seal upon it. I do not accept the plaintiff's version of events in respect of her attendances at the bank with the subpoena prior to February 2000. I am not able to say on the evidence how it is that the plaintiff accessed the defendant's accounts but I am satisfied she did not do so with the subpoena that she produced to the Court (Ex. 2) prior to February 2000. 6 February Meeting 74 The new Committee called a General Meeting of members on 6 February 2000. That meeting was held at the Greek Community of NSW Home for the Aged at 2 Willcott Street, Earlwood. The purpose of the meeting was to "update" the Constitution. The notice of the meeting was dated 12 January 2000 and the plaintiff's then solicitor, Mr Madden, wrote to the defendant on 3 February advising that the meeting was invalid under the Corporations Law because "the full text of the proposed resolutions was not sent to the members at least 21 days in advance of the proposed Extraordinary General Meeting". 75 The plaintiff attended and claimed the meeting should not proceed as it was invalid. The meeting did not proceed and physical altercations occurred and a plate glass window was smashed. The police were called and the attendees dispersed. 19 March Meeting 76 A further meeting was called on 19 March 2000 at the Mytilenian Hall in Canterbury. At that meeting the defendant amended a number of the Articles in its Constitution, which in the main, were to change the amounts of money from pounds to dollars and increase the limits beyond which the defendant was required to obtain the approval of its members. Honorary members were also given greater rights as members. 77 This meeting also has a controversial aspect to it in that the plaintiff with a group of about twenty members, to whom she referred as "supporters", arrived at the meeting to find that the meeting was being videoed. It is true that such a step was not notified to the members but many of the members had already entered the meeting hall at the time that the plaintiff arrived with her supporters. 78 When the plaintiff and her supporters arrived and noticed the video camera in operation she and her supporters decided not to enter the hall. They took up a position opposite the hall across the other side of the road. The plaintiff decided to call the police as she took the view that the use of the video camera was illegal. The plaintiff claimed that when the police arrived she was informed that there was bomb threat in relation to the hall. 79 It is apparent that the bomb threat was not received until some time after the plaintiff and her supporters had decided not to enter the hall. I am satisfied that the plaintiff and her supporters were not denied access but decided that the conditions of entry were not to their satisfaction. 80 The police report of their attendance of the meeting at the hall on 19 March 2000 reads as follows: Liosatos informed me at the time that her and a group of supporters had been denied access to the meeting and that they were being videoed. I then went to the foyer of the hall where I had conversation with Jerry Mitzinis of 510 Homer Street, Earlwood Dob 17.7.1967. He is apparently president of the group, he informed me that a group of members from the club and voted to hold the meeting this date and to video proceedings. I asked him why the other persons outside had been refused admittance he informed me that they had not been refused entry, if they attended the meeting they had to sign a book at the front entrance. Two security guards had been engaged by Mitzinis to maintain peace whilst the meeting was in progress. I informed Liosatos that her and her supporters, of whom there were about 20, could attend the meeting if they signed the book. I also signed the situation to her re the videoing of the meeting. I explained that police were only here to keep the peace. She informed that the issues surrounding the faction dispute in the club will be heard before Judge Rubin (sic) in the Supreme Court on 31.3.00. I suggested that it would be better if they did not attend the meeting and wait until the outcome of the Court Proceedings which was not far off. Whilst police were at the location anonymous information was reveived (sic) regarding a bomb threat to detonate at 3 pm. A search of the perimeter of the hall by police failed to locate any suspicious objects. Ms Liosatos and her group decided to leave the area, after which there was no further attention required by police. (Ex. D) 81 I am satisfied that it was appropriate for the defendant to utilise methods to induce members who attended the meeting to keep the peace. This is particularly so having regard to the fracas which occurred at the meeting on 6 February 2000 with the consequential damage to property. I am also satisfied that it was not an invalid meeting by reason of the steps taken by the defendant in this regard. The amendments to the Constitution at this meeting were in my view validly effected. Committee 2000 82 At the Annual General Meeting in October 2000 there were only nine candidates for nine positions on the Committee. Those nine candidates were elected unopposed. Applications for Membership 83 The plaintiff has been actively obtaining applications of eligible candidates for membership of the defendant. The number of members has soared from about 190 twelve months ago to approximately 363 (Tr. 267). The defendant has been very busy processing these applications. The plaintiff has lodged bank drafts or bank cheques or money orders with the application forms. 84 Mr Stathis Toumasatos has been a member of the defendant on and off for about five years. He is currently the Secretary of the defendant. He received 72 applications in three bundles in about May of this year. Each application has been reviewed and if it was in accordance with Article 16 of the Constitution it was accepted. If it was not in accordance with Article 16, the applications were mailed back to the applicant advising of any further information which was required. 85 Under cross examination Mr Toumasatos was shown a document (Ex. N) which contains on its right hand side a number of applicant's names. Those persons have been approved for membership but have not as yet paid their fee for the year (Tr. 269). Mr Toumasatos returned the money orders to Ms Liosatos in the form of a bank cheque. This was done because Mr Toumasatos was of the view that the payment method was not in accordance with Article 17 and 18. Fees are payable after membership is approved and I am satisfied the return of the moneys was within the Secretary's discretion. 86 Ms Liosatos then paid money directly into the defendant's bank account. That is not in accordance with the Articles of the Constitution and I am quite satisfied Mr Toumasatos' conduct has been proper and aimed at ensuring that the defendant complies with its obligations under the Constitution. I was impressed by Mr Toumasatos. He seems to me to be a person who is attempting to get the records in order in an atmosphere that has been difficult, acrimonious and at times violent. 87 I should now turn to the specific allegations which remain in the plaintiff's case. The first is the election irregularities. This is puzzling because the plaintiff was the Returning Officer of the election and had the power to delay the election should she have been of the view that there was, as she claimed originally, "fraud". The plaintiff turned away five people who wanted to vote because they were not on the list. This was appropriate because only those who were on the list were eligible to vote. The plaintiff did not recall in her evidence how many votes were lodged, however a report was prepared on the election which was placed with the other election papers. 88 The plaintiff states her concerns regarding the irregularities as being: (a) another style of proxy form was issued in respect of some members which she alleged is not authorised by Article 69; (b) five members were turned away on the basis that their names were not on the list; and (c) proxy forms were received from people who were not originally on the list. 89 It is clear beyond doubt that any proxy form about which the plaintiff had some concerns was not used. In cross examination the following evidence was given: Q So, therefore they had no outcome, affect on the outcome of the vote as counted? A I don't think that's correct. Q Well, you are not saying that you allowed in people to vote, people who had wrong proxy forms, are you? A That's correct. Q And so therefore if these wrong proxies, any attempt to use them did not result in any votes being cast? A Right. Q So, therefore the actual vote as cast was not affected by those proxies? A That's correct. Q So that there are two areas that you have identified being the two elderly people and the non conforming proxy, what else? A The list that I have given had dates next to each member of when their subscriptions were paid and I looked at a book that my father, a receipt book which is of the defendants and two of the people in that receipt book had different dates and according to the Articles depending on when you pay your subscription it entitles you to be a member or not and therefore you have a right to vote or not. (Tr. 8-9) 90 The plaintiff's concerns about the financial status of two of the persons named had no relevance whatsoever to the election because those membership dates were some nine months prior to the election. In any event there has been another Annual General meeting since the 1999 election and a further election. The relief sought by the plaintiff, even if properly based, which I am of the view it is not, would not be efficacious in the circumstances of the 2000 election of nine members unopposed. 91 There was further evidence given about GK's requisition for Extraordinary General Meetings. Although the President accepted that the requisitioning of such a meeting had been received she admitted that she did not call a meeting. The Constitution provides that if the Committee neglects to call a meeting the requisitionists are able to do so themselves (Art. 60). 92 In these circumstances the failure to call a meeting would not ground a finding of oppression because the requisitionists are not dependent upon the Committee to have the meeting called. The power is with them to call the meeting if the Committee does not call it. 93 The next basis upon which the plaintiff attacks the defendant is financial irregularities. I regard the whole of the plaintiff's case against the defendant in respect of its allegations against directors as baseless and properly abandoned by the plaintiff's counsel. The remaining claim in relation to unaccompanied baggage has not been made out. It is not clear that such did not relate to the proper affairs of the defendant. 94 The defendant has made donations to various charities pursuant to its objects. Some of those donations include payments to the Westmead Children's Hospital, the Heart Foundation and the Cancer Foundation. Such amounts have been in the vicinity of $5,000 in the case of Westmead and $2,000 in the case of the Heart Foundation and the Cancer Foundation. It is conceded that approval was not obtained from the membership prior to those donations being made and that Article 54 of the Constitution, as it was up until March 2000, required the defendant to obtain authorisation by resolution of the members in general meeting for any donation exceeding "fifty pounds". 95 The plaintiff relied heavily upon the failure of the defendant to obtain the approval of the membership prior to the payment of these donations in her oppression claim. The members have been informed of the donations at the Annual General Meeting (Ex. G) and they have also been provided with the financial statements and accounts of the defendant at general meeting. There is no doubt that these payments have been made in pursuance of the purpose for which the defendant was constituted. 96 I am satisfied that such payments have been ratified at general meeting when the annual accounts have been produced. In any event I am satisfied that such conduct would not amount to the oppression claimed by the plaintiff. 97 A further attack was made upon the defendant's accounts because the auditor qualified the audit certificate by reserving his position in respect of work that had been previously done by others. The accountant and auditor, Mr N Pitsikas, explained that whenever he is appointed as an auditor of a new business he always qualifies the accounts to that extent because he is unable to guarantee the accuracy of the prior year balances and balance sheet. He impressed me as a careful accountant and auditor. Any suggestion that the qualification of the accounts in the circumstances would ground a finding of oppression in this case is rejected. 98 A further allegation was made in respect of a property at Rockdale previously owned by the defendant. A great deal of time was spent on whether the sale of the property included certain of the items in the property, including ovens, fridges, television sets, videos and a billiard table. 99 The plaintiff claimed that the process of sale, and at one stage alleged the process of purchase, was irregular. The Minutes of the 1995 Annual General Meeting recorded the following: The President went on to explain to the members that two real estates were given the task of trying to sell the building being Karl Realty from Newtown and Tome from Rockdale. More than one agency was approached as the committee did not want one agency to have exclusivity. Only one offer of $290,000 was made by Karl Realty. This was discussed amongst committee members and was decided that the President speak to the agency to try to rise the figure so that the building may sell for slightly over $300,000 to cover costs being legal/agency fees etc. After 1½ weeks the agency notified the President and said the party concerned was no longer interested in the property and did not want to buy. Mr Koutavis asked what will happen if the house does not sell and the President answered that another option to try is to rent the building as a whole to pay for our expenses and to put money in the bank and then after 3-4 months place the building on the market again. (Ex. G) 100 The 1996 Annual General Meeting Minutes note: The bottom half of the building is currently being rented out for $300 per week. The lessee now wants to rent the above premises for an extra $100. If he can't have the upper premises as well he will leave the building. Members agree to rent the above. Three year lease with an optional three year. The assets of the building will be stored at someone's house and the TV/video are to be sold. (Ex. G) 101 At the 1997 Annual General Meeting a vote was taken as to whether the property should be sold. Twenty two voted yes and ten voted no. It was resolved that if the building was sold a better venue would be "sourced". The Minutes of the 1998 Annual General Meeting note that the property was sold by auction in March 1998 for $342,000. It was also noted that the money from the sale was placed in a term deposit along with existing moneys totalling $360,000. 102 At the 1998 General Meeting questions were asked about the sale of some of the assets from the Rockdale property. The Minutes of the 1998 General Meeting note that certain of the assets were sold and certain were held at the premises of Mr Perivolaris and one other member. This matter was raised again by the plaintiff at the 1999 Annual General Meeting. It is apparent that the billiard table was sold to a Lebanese man next door to the Rockdale building. The plaintiff gave evidence that the television and video recorder had been sold to Ms Apostolatos' father, who is also a member of the defendant. 103 Article 55 requires the Committee to make all dispositions of property agreed to be sold at any general meeting. I am satisfied that the Committee was authorised firstly to sell the Rockdale property and secondly to sell some of the assets from that property which were not included in the contract. The plaintiff has not established that there is any conduct inconsistent with the obligations imposed upon the Committee or any departure from the standard of fair dealing. 104 A further claim has been made that records have been demanded and not supplied to the plaintiff and/or GK. There was an attendance upon Mr Perivolaris at which time he indicated that he did not have the key to the filing cabinets which were at his home. It is clear that the defendant, which prior to this litigation was a much smaller organisation, operated in a way that is less disciplined than it now is. Records were kept at member's homes and there was a fairly relaxed approach to the business dealings of the company. 105 The claims in respect of non-production of documents in circumstances that I have just outlined does not in my view form a proper basis for any finding of oppression or justification of the appointment of a Receiver. 106 The evidence of the present Secretary, Mr Toumasatos establishes that the records were previously in disarray. I accept Mr Toumasatos as a witness who was careful and honest. He has indicated quite candidly that it has taken him some time to get the records in order. 107 The members have now unanimously reposed power in the 2000 Committee elected unopposed. It now has the capacity to work cohesively for the benefit of the members and in pursuit of the purposes for which the defendant was constituted. 108 The plaintiff submitted that the compounding of each of the matters raised by her would amount to oppression of herself and GK. The problem for the plaintiff is that the allegations that she has made individually have not been made out. 109 Notwithstanding that GK was motivated to put the records in order, the manner in which she went about it created such tension in the Committee that it became untenable for her remain in the Committee. I am also satisfied that more probably than not to some extent the disputation that has arisen in this company has occurred by reason of a failure by the plaintiff's father to be re-elected in the 1999 year and GK's failure to be elected President. I am satisfied that this is a case more of resentment than any unfair abuse or impairment of confidence in the defendant: Elder v Elder & Watson Ltd [1952] SC 49 per Lord Cooper at 55. 110 I am satisfied that the defendant is an organisation which has made and is making a valuable contribution to the community by supporting charities and supporting members of the community from Kefalonia. I am satisfied that the current Committee is acting in the best interests of the members of the defendant, including the plaintiff and GK, and are committed to ensure that the defendant operates pursuant to its Constitution and within the confines of the Corporations Law. 111 I am not satisfied that there has been oppression in this case or any circumstances that warrant the appointment of a Receiver. The claims made by the plaintiff must fail. I will hear counsel as to an appropriate order for costs. ************* Last Modified: 12/15/2000 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.