Supreme Court New South Wales Medium Neutral Citation: Nanitsos v Pantzouris [2012] NSWSC 1396 Hearing dates: Tuesday, 6 November 2012 Decision date: 06 November 2012 Before: White J Decision: Various undertakings to the court noted; application for interim relief otherwise dismissed. Catchwords: CORPORATIONS - application by member of company limited by guarantee for interim relief - where undertakings given to court largely satisfy claim for relief Legislation Cited: Corporations Act 2001 (Cth) Taxation Administration Act 1953 (Cth) Category: Interlocutory applications Parties: Dimitrios Nanitsos (Plaintiff) Andoni Pantzouris (aka Tony Pantzouris) (Defendant) Representation: Counsel: In person (Plaintiff) D Knoll (1st, 3rd-11th Defendants) Solicitors: File Number(s): 2012/342791 Judgment 1HIS HONOUR: By his summons the plaintiff seeks certain interim relief in relation to the rights of members of a company called the Pan Macedonian Greek Brotherhood "Alexander the Great" NSW Ltd. The company is a small company limited by guarantee. 2The plaintiff's claim for interim relief is largely satisfied by undertakings that the defendants, other than the second defendant, proffer. The undertakings are proffered as undertakings to the Court and are, I understand, as follows: "That the defendants (other than the second defendant) undertake to the Court that they will notify all members of the company by letter by close of business today that: a. inform all current members that they will be allowed to renew their membership by correspondence and will not be required to personally attend for the purposes of such renewal; b. make available all accounting, financial and membership records to members wishing to inspect such documents." 3The defendants, other than the second defendant, also proffer an undertaking to the Court that for so long as they are directors of the company they will use their best endeavours to ensure that members are able to exercise any such rights so long as the company's constitution or the Corporations Act 2001 (Cth) provides members such rights. 4They also proffer an undertaking to the Court that they will take steps to procure that the company will not proceed with the Annual General Meeting scheduled to be held on 11 November 2012, and within 21 days will issue an amended notice of Annual General Meeting. 5These undertakings substantially meet the concerns raised by the plaintiff in his affidavit. Those undertakings will be accepted. 6The undertakings are proffered on the basis that if the proceedings are stood over, there will be liberty to restore and costs of the application to date will be reserved. That is acceptable to the plaintiff. 7The plaintiff seeks further relief in respect of two other matters, and in the course of my giving judgment he referred to a third. 8The first is that cl 8 of the company's Memorandum of Association provides that: "Accounts shall be kept of the sums of money received and expended by the Brotherhood and the matters in respect of which such receipts and expenditure takes place of the Assets and liabilities of the Brotherhood and subject to any reasonable restrictions as to the time and manner of inspection of the accounts that may be imposed in accordance with the regulations of the Brotherhood for the time being shall be open to the inspection of the members. Once at least in every year the accounts of the Brotherhood shall be examined and by one or more qualified members of a recognised Institute, Association or Body of Accountants appointed by the Brotherhood." 9The plaintiff submits that the members' rights to inspect the company's accounts extends to inspection of the documentation that would support the accounts. 10The company is obliged to keep written financial records that correctly record and explain its transactions and financial position and performance, and which would enable true and fair financial statements to be prepared and, in this case, audited. Financial records include things such as invoices (Corporations Act, s 9). But I was not referred to any provision of the Corporations Act or of the constitution which confers on members a right to inspect the underlying financial records from which the accounts are prepared. The ordinary conception of "accounts" includes things such as profit and loss accounts and balance sheets and can also include ledgers and journals but does not, in my view, extend to supporting primary financial records (see, for example, the definition of "accounts" in s 8J of the Taxation Administration Act 1953 (Cth)). 11The plaintiff has not demonstrated that members are entitled to inspect such primary financial records. It is not the case, as was submitted by the plaintiff, that without such a right of inspection the right to inspect the accounts would be rendered nugatory. It is relevant that the company's constitution requires the accounts to be audited, and one would expect the auditor to call for material primary records, to be satisfied that the accounts present a true and fair view of the company's financial position and performance. 12I decline to make a further order in relation to members' entitlement to inspect such primary financial records. 13The second matter raised by the plaintiff concerns what he called his security or threats of violence. 14By his summons the plaintiff seeks an order that the directors provide a secure and safe environment for members, free from verbal abuse and threats of violence at the company's premises or other premises chosen by the directors for use by members. 15The affidavit filed in relation to this application does not include evidence which would support such an order, assuming, which I do not decide, that the directors are under such an obligation. 16There would be other difficulties with the form of order sought. I am not sure how a director could ensure a safe environment for members free from verbal abuse. I am not sure how a director could prevent one member from arguing with, or even abusing, another. No doubt it is the function of directors of a club to seek to ensure an harmonious environment for all members. But the order which is sought is not supported by any evidence, and I decline to make the further interim order as sought. 17After the close of submissions, the plaintiff made a further application. He referred to the provisions of the Articles that provide for the board of directors having the power to fine, caution or suspend any members who wilfully infringe provisions of the constitution or by-laws or who, in the opinion of the directors, are guilty of conduct unbecoming of a member, or prejudicial to the interest of the Brotherhood. 18It is not clear to me what order is sought in that respect. But whatever the precise order might be, there is no evidence on this application which would warrant making an order in relation to the directors' power to deal with members, either by restraining them from exercising the power, or by compelling them to exercise the power. 19For these reasons, I note the undertaking given without admissions by the defendants, other than the second defendant, through their counsel, to the Court to notify all members on the members' register of the company named Pan Macedonian Greek Brotherhood "Alexander the Great" NSW Ltd (ACN 060 985 953 (the "company") by letter by close of business on 7 November 2012 that: (a) members of the company may renew their membership by payment of their annual subscription without being required to attend at the company's premises in person to do so; and (b) each member of the company has the right to inspect the membership register and accounts upon reasonable notice being given to the company's secretary and during the company's business hours in accordance with the company's Memorandum and Articles of Association. 20I note the further undertaking of the defendants, other than the second defendant, to the Court that for so long as they are directors of the company they will use their best endeavours to ensure that members are able to exercise such rights referred to in the previous undertaking for so long as the company's constitution or the Corporations Act provides for such rights. 21I note the further undertaking of those defendants through their counsel to the Court that they will take steps to procure that the company will not proceed with the Annual General Meeting scheduled to be held on 11 November 2012, and within 21 days will issue an amended notice of Annual General Meeting. 22I refuse the plaintiff's application for further interlocutory relief. 23I stand over the summons to the Registrar's list at 9 am on 12 February 2013. 24I give liberty to any party to restore the matter to the Registrar's list in the first instance on not less than three business days' notice. 25I order that the costs of the proceedings to date be reserved. 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: 20 November 2012