In the matter of New South Wales Leagues Club Limited [2015] NSWSC 967

Supreme Court New South Wales

Medium Neutral Citation: In the matter of New South Wales Leagues Club Limited [2015] NSWSC 967 Hearing dates: 21 May 2015 Date of orders: 21 May 2015 Decision date: 21 May 2015 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Originating process dismissed. No order as to costs. Catchwords: PROCEDURE – costs – where proceedings settled – where plaintiff obtains substantial success by settlement – where not unreasonable for proceedings to be commenced for resolution of dispute – where requirement to come to Court not caused by defendant – held, parties to bear own costs. Category: Procedural and other rulings Parties: George Peponis (plaintiff) New South Wales Leagues' Club Limited ABN 66 000 005 229 (defendant) Representation: Counsel: J A C Potts w C E Bannon (plaintiff) W G McNally (solicitor) (defendant)

Solicitors: Thomson Geer (plaintiff) W G McNally Jones Staff (defendant) File Number(s): 2015/147868

Judgment (ex tempore) 1. HIS HONOUR: Before the Court for final hearing today is an originating process filed by leave of the Court three days ago on Friday 18 May 2015 seeking declaratory relief as to the proper construction of an article of the defendant's Articles of Association in respect of the election of the Board, and an order restraining the defendant from declaring the results of the election to be completed on 26 May 2015 other than in conformity with that declaration. 2. The substantive proceedings have effectively been settled by way of undertakings proffered by the defendant which substantially reflect the position that the plaintiff contended should obtain. In other words, although the orders sought by the plaintiff will not be made and instead the undertakings for the defendant noted, it is fair to say that the plaintiff has achieved substantial success, in that its contentions have been vindicated by the outcome. In that context, it seeks and the defendant opposes an order that the defendant pay the plaintiff's costs of the proceedings. 3. The background to the proceedings is that on 28 April 2015, the New South Wales Rugby League Limited ("the League") nominated seven persons, being directors of the League and certified by the Secretary to be also members of the Management Committee, for election to the Board of the Club, which election is to take place on 22 May or thereabouts and the results declared at the Annual General Meeting on 26 May. 4. Under the article in question, provision was made that of the seven vacancies for directors of the Club to be filled, five were to be filled by the election of five directors elected from members who are members of the Management or Administrative Committees of the League. Thus, prima facie – and as has now been accepted by the undertakings proffered – the League was effectively entitled to have its nominees fill five of the seven positions on the Club's Board. 5. However, it seems that, in recent years at least, the League has not exercised this right, and the nomination of 28 April appears to have been the first occasion on which it has sought to do so, at least for some years. 6. There have been and are other disputes between the League and the Club, and there was reason to suppose that, shortly after the election of the Board, directors of the Club might be considering expressions of interest for amalgamation of the Club with other clubs. Apparently troubled by that possibility, the League on 11 May 2015 – that is to say, last Monday week – sought in writing confirmation from the Club that it would apply the article as to the election of directors in the manner that it is now accepted should apply. 7. On 14 May – that is to say, seven days ago – the League's solicitors demanded that unless a response to the letter of 11 May was provided by 5pm on 14 May, proceedings would be commenced. On 15 May, following a conversation in which the Club's solicitor had indicated that senior counsel's advice was being sought, the League indicated that proceedings would be commenced if a response was not provided by 1pm on Monday 18 May. 8. On 17 May, the Club's solicitor sent without prejudice communications expressing thanks for deferring the issue of proceedings until Monday, indicating that service would be accepted and acknowledged, outlining that it would be necessary for there to be some agreement on the issue before the election could be declared and that a hearing might not be available before that time in the normal course, and suggests that agreement in that regard and any interim orders should be discussed in the meantime. The Club's solicitor offered to meet early on Monday for that purpose if appropriate. 9. On 18 May, the League commenced proceedings and, in view of the Club's solicitor's agreement to accept service and the apparent desire to co-operate in an early hearing, the Court was able to fix the proceedings for hearing today and make orders to enable that to happen. 10. The Club's solicitor informed the League's solicitors on 19 May that senior counsel's advice had been received and would be recommended to the Board and, on 20 May, shortly after midday, that no nominee would be eligible for election for the five vacancies in question other than those nominated by the League. 11. As the League pressed for costs, this did not result in an immediate resolution of the matter, and there was some doubt as to whether the proceedings were or were not resolved until the matter came before the Court this morning. 12. A number of relevant factors are relevant on the question of costs. The circumstance that the plaintiff has achieved substantial success is one of them. However, that has to be seen in context. Often it can be said not only that a plaintiff achieved substantial success, but that it had to come to Court to achieve it. Here, there does not appear to have been any indication on the part of the Club, at any stage, that it did not propose to apply the article in the manner for which the League contended. True it is that it did not immediately proffer the confirmation sought first by the League and then by its solicitors, but that reasonably has to be seen in the context that the League was asserting a right which had not been asserted for at least some years and that, while from the League's perspective the timeframe was set by the impending election and Annual General Meeting, from the Club's perspective these issues arose on very short notice, in correspondence that was first issued on 11 May, seven days before proceedings were commenced and then in a solicitor's letter on 14 May, leaving only effectively a little more than one business day before proceedings were commenced. 13. A response that senior counsel's advice was to be sought was not at all an unreasonable response in the context of this issue being raised for the first time for some years. That that advice was not received by 1pm on Monday but not until some time on Tuesday, and could not be taken to the Board until Wednesday, does not appear to me to involve any delay; in fact, in most contexts that would be regarded as dealing with the matter very expeditiously. I equally appreciate that, on the other side, it was imperative for the League to have resolution by the declaration of the poll. In other words, I do not think that the League acted in the slightest unreasonably in commencing the proceedings: but on the other hand, I do not think that there has been any unreasonable conduct on the part of the Club contributing to the necessity for proceedings. 14. If it was clear that the League had to come to Court, and could not have obtained the relief claimed – or at least sufficient protection – by some other means, that would be an important consideration. But it seems to me that, on Monday 17 May, there was still some prospect that some interim arrangement could be sorted out which would avoid that necessity. The League acted entirely reasonably in commencing proceedings, but the need to do so was not occasioned by any unreasonable conduct on the part of the Club. 15. As I have said, it does not appear that the Club has ever said that it would not apply the article, although it might not have been unreasonable from the League's perspective to entertain some reservations as to whether it would. But in that respect, by choosing, after not doing so for some years, to assert its rights under its article, the League has itself contributed in some measure to the necessity for the proceedings. 16. For those reasons, it seems to me that the proper outcome is that there be no order as to costs, with the intent that each party bear its own costs of the proceedings. 17. The Court therefore notes that the defendant by its solicitor gives to the Court the undertakings and confirmations contained in the document marked A, signed by the solicitor for the defendant, initialled by me, dated this day and placed with the papers. By consent the Court orders that the originating process be otherwise dismissed. The Court makes no order as to costs, with the intent that each party bear its own costs of the proceedings.