Vesic v Serbian Cultural Club St Sava Inc & Ors; Bogvnovic & Dragosavljevic v Serbian Orthodox Church St Knez Lazar & Ors [2002] ACTSC 119 (22 November 2002)

Last Updated: 25 November 2002

LILLIAN VESIC v SERBIAN CULTURAL CLUB ST SAVA INC AND ORS; BISHOP NIKANOR BOGVNOVIC AND ARCH PRIEST ILIJA DRAGOSAVLJEVIC v SERBIAN ORTHODOX CHURCH ST KNEZ LAZAR INC AND OTHERS [2002] ACTSC 119 (22 November 2002)

CATCHWORDS

ASSOCIATION AND CLUBS - application by interim receiver for winding up orders - alternative proposal to revive Club by new membership, new constitution and a fresh injection of funds - whether injunction restraining such a course should be lifted - competing considerations.

Associations Incorporation Act 1991, s 90

Corporations Act 2001 (Cth), s 420

Nos SC 491 and 502 of 2001

Judge: Crispin ACJ

Supreme Court of the ACT

Date: 22 November 2002IN THE SUPREME COURT OF THE )

) No. SC 491 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: LILLIAN VESIC

Plaintiff

AND: SERBIAN CULTURAL CLUB OF ST SAVA INCORPORATED

First Defendant

AND: STEVAN RADOVANOV

Second Defendant

AND: HARCOURT HOMES PTY LIMITED

ACN: 003 235 587

Third Defendant

ORDER

Judge: Crispin ACJ

Date: 22 November 2002

Place: Canberra

THE COURT ORDERS THAT:

1. The injunction granted on 4 October 2002 be discharged.

2. It be declared that the first defendant is at liberty to pass resolutions for the repeal of any existing constitution, the adoption of a new constitution and the election of a new committee.

3. The parties have liberty to apply for further orders, including orders for the winding up of the first defendant on two (2) days notice in the event that such resolutions are not passed by 20 December 2002 or that funds are not made available to the first defendant which are sufficient, in the opinion of the receiver, to enable it to pay its undisputed debts and recommence trading as a licensed Club.

4. Subject to any further order, the order appointing Mr Ezio Marco Senatore as receiver of the first defendant be discharged with effect from 5.00 pm on the date occurring fourteen (14) days after the passage of such resolutions.

5. Any existing injunction restraining the second defendant from having access to funds standing to his credit in bank accounts be discharged.

IN THE SUPREME COURT OF THE )

) No. SC 502 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: NIKANOR BOGUNOVIC

First Plaintiff

AND: ARCH PRIEST ILIJA DRAGOSAVLJEVIC

Second Plaintiff

AND: SERBIAN ORTHODOX CHURCH ST KNEZ LAZAR INCORPORATED

First Defendant

AND: STEVAN RADOVANOV

Second Defendant

AND: HARCOURT HOMES PTY LTD

ACN: 003 235 587

Third Defendant

ORDER

Judge: Crispin ACJ

Date: 22 November 2002

Place: Canberra

THE COURT ORDERS THAT:

1. The injunction granted on 4 October 2002 be discharged.

2. It be declared that the first defendant is at liberty to pass resolutions for the repeal of any existing constitution, the adoption of a new constitution and the election of a new committee.

3. It be declared that the first defendant is at liberty to pass resolutions that it be wound up by the Supreme Court and that any surplus property of the first defendant vest in Serbian Cultural Club St Sava Incorporated.

4. The first defendant have liberty to apply for any further orders on two (2) days notice including an order that it be wound up.

5. Subject to any further order, the order appointing Mr Ezio Marco Senatore as receiver of the first defendant be discharged with effect from 5.00 pm on the date occurring fourteen (14) days after the passage of such resolutions.

6. Any existing injunction restraining the second defendant from having access to funds standing to his credit in bank accounts be discharged.

1. These matters came before me on Monday last when an application was made by the receiver of Serbian Cultural Club St Sava Incorporated ("the Club") and Serbian Orthodox Church St Knez Lazar Incorporated ("the Church") for orders that these incorporated Associations be wound up. During the course of submissions counsel for other parties sought alternative relief. A substantial amount of evidence was referred to in argument and, despite the need for expedition, I found it necessary to reserve judgment in order to read and consider it.

2. Having regard to the level of feeling exhibited by some of the parties and their supporters I have concluded that it would be inappropriate for me to resolve the competing applications by simply making the necessary orders and reserving any statement of my reasons until some later time. The parties should, I think, have an opportunity to understand the considerations that have led me to conclude that these orders should be made even if, given the need for urgency, the explanation of those considerations and of the context in which the issues emerged is necessarily more limited than I might otherwise have considered appropriate.

3. On 18 January 2001 Harcourt Homes Pty Ltd ("Harcourt Homes") entered into an agreement with the Club to purchase its premises at block 5, section 57 Mawson for the sum of $205,000 and on the same day entered into a further agreement with the Church to purchase its premises at block 9, section 57 Mawson for a similar amount. In each case Harcourt Homes dealt with Mr Steven Radovanov whom it understood to be an office bearer of both bodies. It was subsequently persuaded by Mr Radovanov that the value of both premises had been somewhat higher than the agreed purchase price. Consequently, on 15 June 2001 both contracts for sale were amended to increase the purchase price from $205,000 to $245,000 and, in addition, a sum of $150,000 was released to the Church to enable its debts to be paid. Harcourt Homes took a mortgage over the Church's premises to secure this advance.

4. Proceedings were subsequently instituted to challenge the validity of these transactions and the control which Mr Radovanov and others exercised over the Associations. Lillian Vesic, who claims to have been a foundation member of the Club commenced proceedings numbered SC 491/2001 against the Club as first defendant and Mr Radovanov as the second defendant and now claims the following relief:

1. A declaration under s.53(1)(b) of the Act that the purported sale of the First Defendant's property to the Third Defendant by contract dated 19 January 2001 as amended on 15 June 2001 is beyond the power of the First Defendant under its Constitution.

8. [sic] A declaration under s.53(1)(b) of the Act that the mortgage granted over the First Defendant's property to the Third Defendant on 15 June 2001 is beyond the power of the First Defendant under its Constitution.

9. A declaration under s.53(1)(b) of the Act that the power of attorney granted by the First Defendant to the Third Defendant on 15 June 200 [sic] is beyond the power of the First Defendant under its Constitution.

10. An order under s.53(1)(a) of the Act that the Second Defendant as Secretary of the First Defendant provide to the Plaintiff a list of current members of the First Defendant.

11. An order under s.53(1)(a) of the Act that the members of the Administrative Committee of the First Defendant be removed from office.

12. In the alternative, a declaration under s.53(1)(b) of the Act that the members of the Administrative Committee of the First Defendant no longer hold office.

13. An accounting by the Second Defendant of profits.

5. Arch Priest Ilija Dragosavljevic commenced proceedings numbered SC 502 of 2001 against the Church as first defendant and Mr Radovanov as second defendant and Harcourt Homes as third defendant and he and Bishop Nikanor Bogunovic, who was subsequently joined as an additional plaintiff, now claim the following relief:

Relief claimed:

1. A declaration under s.53(1)(b) of the Act that the purported sale of the First Defendant's property to the Third Defendant by contract dated 19 January 2001 as amended on 15 June 2001 is beyond the power of the First Defendant under its Constitution.

2. A declaration under s.53(1)(b) of the Act that the mortgage granted over the First Defendant's property to the Third Defendant on 15 June 200 [sic] is beyond the power of the First Defendant under its Constitution.

3. A declaration under s.53(1)(b) of the Act that the power of attorney granted by the First Defendant to the Third Defendant on 15 June 200 [sic] is beyond the power of the First Defendant under its Constitution.

4. An order under s.53(1)(a) of the Act that the Second Defendant as Secretary of the First Defendant provide to the Plaintiff a list of current members of the First Defendant.

5. An order under s.53(1)(a) of the Act that the members of the Administrative Committee of the First Defendant be removed from office.

6. In the alternative, a declaration under s.53(1)(b) of the Act that the members of the Administrative Committee of the First Defendant no longer hold office.

7. A declaration that the First Defendant holds its property on trust for the Australian church, or in the alternative for the purposes of the Australian church, or in the alternative for the Bishop of the Australian church to be used as he sees fit for the purposes of the Australian church.

8. A declaration that the purported sale of the First Defendant's property to the Third Defendant by contract dated 19 January 2001 as amended on 15 June 2001 is in breach of the trust under which the First Defendant holds the property.

9. A declaration that the retention of monies from the sale of 6 Power St Mawson ACT by the Serbian Cultural Club St Sava Incorporated is in breach of the trust under which the First Defendant was the beneficial owner of those monies.

10. A declaration that the purported grant of a mortgage on 15 June 2001 over the First Defendant's property in favour of the Third Defendant is in breach of the trust under which the First Defendant holds the property.

11. A declaration that the purported grant of a power of attorney on 15 June 2001 by the First Defendant to the Third Defendant is in breach of the trust under which the First Defendant holds its property the subject of the power of attorney.

12. A declaration that the purported sale of the First Defendant's property to the Third Defendant by contract dated 19 January 2001 as amended on 15 June 2001 is void.

13. Damages

14. An accounting by the First and Second Defendant of profits.

6. Defences were filed and Harcourt Homes also filed a counter claim seeking declaratory relief and orders for specific performance of the contracts for sale of the land.

7. During the course of these proceedings it quickly became apparent that there were substantial issues as to the control and management of both Associations. Extensive affidavits were filed relating to the formation of the two Associations. Mr Radovanov deposed to the fact that the Serbian associations and organisations in Canberra are split into three hostile groups and are all independent of each other. He said that in 1963 the Serbian community had been split and a Free Serbian Orthodox Church had been formed in opposition to what he described as the "communist controlled" Serbian Orthodox Church. In the mid 1970's, he and a small group had in turn split from the Free Serbian Orthodox Church because they believed that it had departed from their traditional beliefs and formed the Club and the Church with an independent priest. Both Associations apparently flourished for some time but the priest died in 1995 and was not replaced. It appears that the congregation dwindled and services were not maintained. The Church premises were leased to another Christian church. The Club also experienced difficulties. Trading became unprofitable and debts mounted. Mr Radovanov apparently advanced some money to both organisations but their fortunes were not revived. The sales of the premises to Harcourt Homes were apparently intended to enable the Club and the Church to pay the debts which each had accumulated.

8. On 4 September 2001, Miles CJ granted injunctions effectively restraining Mr Radovanov from having access to funds standing to his credit in bank accounts on the application of the plaintiffs. These injunctions had been sought on the ground that Mr Radovanov had apparently appropriated the sum of $150,000 made available to the Church by Harcourt Homes and it had been suggested he had been remitting money from Australia to Belgrade.

9. On 23 October 2001 Mr Ezio Maco Senatore ("the receiver") was appointed as receiver of both the Club and the Church for the following purposes:

(a) to assess the respective financial positions of the Club and the Church;

(b) to settle a list of respective Association members by category; and

(c) to report to the Court and parties in both proceedings.

10. In February 2002, Harcourt Homes and Mr Radovanov both applied for orders striking out the proceedings on the ground that the plaintiffs had had no standing to bring them. Appeals against the dismissal of those applications are due to be heard in February 2003.

11. The receiver was unable to conclusively determine the membership of the Club but undertook a limited review of the financial position of both Associations which suggested to him that both might well be insolvent.

12. On 7 June 2002 Miles CJ ordered that he continue to act as receiver for the Associations but extended his powers to those described by s 420 of the Corporations Act 2001 (Cth). I understand that in making these orders his Honour referred to the "urgent need for the affairs of these Clubs to be put in order".

13. The receiver then resumed his efforts to ascertain the true financial position of the Associations and took steps such as meeting with the ACT Racing and Gambling Commission in an attempt to ensure that the Club might be able to retain its licence should it be able to establish an appropriate membership base. There was apparently a paucity of accounting records and there were substantial disputes as to some of the debts claimed including those claimed by Mr Radovanov. However, he understood from Ms Vesic and other people associated with her that substantial sums could be made available to the Club if it were in a position to reopen its doors for the trade.

14. The receiver took the view that the constitution did not restrict eligibility for membership on the basis of cultural or ethnic characteristics and decided that an adequate membership would have to be re-established if the Club were to survive. Accordingly, he proceeded to call a special general meeting of people whom he described as coming from "the Serbian community". He notified some 380 people whom he understood may have been among the ranks of "existing members" of the Club and advertised the meeting extensively. The receiver ultimately proposed that there would be a special general meeting to consider repeating the existing constitution, adopting a new constitution and electing a new management committee. A special meeting of the Church was also called with a view to passing similar resolutions but, in addition, to resolving to wind up the Church and transfer its assets and liabilities to the Club. Mr Radovanov protested that this would effectively enable people whom he regarded as his "political enemies" to take over both the Club and the Church by using their superior numbers to swamp any opposition and, in effect, achieve much of what the plaintiffs sought without a hearing.

15. On 4 October 2002, I granted interlocutory injunctions restraining the Club and the Church from passing any resolution to repeal the existing constitutions, adopt new constitutions, elect new committees or wind up either body.

16. It is now clear that the Club is insolvent. The receiver has not yet been able to fully verify the debts claimed by the second defendant and other members but its overall liabilities may exceed $1,000,000 and certainly exceed the value of its assets. Furthermore, it ceased trading some months ago and has no income.

17. The financial position of the Church is less clear. Apart from its debt to Harcourt Homes for the sum of $150,000 advanced to it in connection with the sale of the land, other debts amounting, in all, to $227,120 have been claimed though this amount includes the sum of $189,791 claimed by Mr Radovanov and the receiver has again been unable to verify the validity of all of the claims. Furthermore, there apparently has been a failure to maintain a clear distinction between sums of the Club and sums of the Church with the former being used to pay the debts of the latter and vice versa. Consequently, it would appear to be impossible to determine whether the Church is solvent without a full audit of the accounts of both Associations and, perhaps, litigation to determine the validity of some of the debts claimed.

18. Mr Erskine, who appeared for the plaintiffs in both proceedings, argued that, whatever the Church's financial position, the purpose for which the Association had been formed had substantially lapsed. There had been no priest since 1995, there were no continuing services and the Church building was leased to another church. He also submitted that the ecclesiological position had been changed since the formation of the Association due to a reunification of portions of the Serbian Orthodox Church following the division in 1963. On the other hand, it was submitted on behalf of Mr Radovanov that some members of the former congregation still met in his home and that the Church had been intended to remain within a small group that had split from the Free Serbian Orthodox Church and had not been reintegrated as suggested. For present purposes I think it is unnecessary for me to attempt to resolve these issues. Whilst s 90 of the Associations Incorporation Act 1991 permits the Supreme Court to wind up an association on the broad ground that the court is of the opinion that it is "just" to do so, the receiver who was the applicant for the winding up orders, did not rely upon this ground, there had been no prior notice that these contentions would be raised and the evidence concerning them was not wholly satisfactory.

19. In the circumstances, I am unable to be satisfied that adequate grounds for winding up the Church have been established.

20. Ms P Orton, who was permitted to make submissions on Mr Radovanov's behalf because he was too ill to attend court, sought an adjournment and argued that it would be inappropriate for me to make any order substantially affecting the rights of the parties until Mr Radovanov's appeal was heard in February 2003 because the outcome of that appeal might demonstrate that the plaintiffs had not had standing to commence either of the proceedings and hence impugn the validity of any subsequent orders including the appointment of the receiver. Whatever the merits of these contentions, it is inescapable that any substantial delay would result in the liquidation of the Club and might well result in the liquidation of the Church. Furthermore, the resolution of the appeal would not effect the indebtedness of either the Club or the Church and the same problems would still have to be faced.

21. In the circumstances there appear to be only two options.

22. The first option is to accede to the receiver's application for an order winding up the Club and to leave the Church subject to continuing receivership. There are a number of obvious advantages to this course, the most obvious being that it would enable the affairs of the Club to be resolved in an orderly and efficient manner, ensure that the creditors were paid some portion of the amounts they are owed and prevent any risk of further insolvent trading. Furthermore, Harcourt Homes have been negotiating with the receiver in relation to the land and has now made an offer which would effectively give the Club and the Church a total amount of $626,500 and enable them to retain possession of the chattels in the buildings which would confer a further benefit of some $30,000-$40,000. The amount thus offered for the land exceeds the apparent value of the land as revealed in the valuations obtained by the receiver. Acceptance of that offer would also have the benefit of settling that part of the present litigation that relates to the validity of the contracts for sale.

23. Mr Erskine submitted that it would, in any event, be incumbent upon either a liquidator or a receiver to seek orders declaring that the contracts for sale were void because they were uncommercial contracts for the purposes of the Corporation Act and then to submit the land for sale by public auction. He indicated that in that event the plaintiffs and/or people associated with them would wish to make competing bids at the auction. Mr Walker, who appeared for Harcourt Homes, not only challenged this contention but, on the contrary, submitted that I should make an order expressly sanctioning acceptance of the offer which his client had made.

24. As I indicated at the time, I think that a receiver or liquidator faced with a situation of this kind should be free to make the decision which he or she regards being in the best interest of the association or its creditors and shareholders based upon commercial considerations and any legal advice which he or she may need to obtain in the light of the information available at the time when the decision needs to be made. It would be appropriate for a court to intervene to sanction such a decision only in comparatively unusual circumstances and there would need to be compelling reasons for a court to direct a receiver or liquidator to make a decision which he or she believed was not in the best interests of the company and/or its shareholders and creditors. In the present case, if the Club were to be liquidated and the Church to remain in receivership, it would be open to the liquidator to conclude that the offer by Harcourt Homes should be accepted and that it would be inappropriate to pursue the suggested litigation when the outcome was uncertain, an adverse finding would enable Harcourt Homes to purchase the land for substantially less than the amount presently offered and even a successful resolution would result only in the land being submitted for auction in the perhaps vain hope of receiving a bid substantially higher than the amount presently offered. On the other hand, it would be equally open to him to decide that such a course was worth pursuing if, for example, he were to receive a firm offer of an amount very substantially higher than that offered by Harcourt Homes. To my knowledge no such offer has been made and Mr Love, who appeared on his behalf, informed me that if the Club were to be liquidated the receiver would probably accept Harcourt Homes offer. On the evidence before me, I accept that such a decision might well provide a significant benefit to the creditors.

25. On the other hand, liquidation of the Club would not solve every problem. Apparently complex issues as to the validity of some of the claimed debts would remain and it seems probable that further litigation would be required to resolve these issues. The disentanglement of the financial affairs of the Club and the Church would be likely to prove to both tortuous and time consuming and disputes concerning claims against both Associations might have to be litigated. The costs of the receivership already amount to approximately $150,000 and the apparent magnitude of the task facing the receiver if obliged to complete the liquidation of the Club and at the same time maintain the receivership of the Church suggest that further substantial fees could be incurred and these would, of course, substantially reduce the amount that might ultimately be available for distribution to creditors. Furthermore, whilst there are many similarities, the duties of liquidators and interim receivers are by no means co-extensive and acceptance of the offer would require the receiver to deal with the property of the Club and the Church in the same manner and at the same time. Whilst counsel raised this issue somewhat hesitantly, there is also an obvious potential for conflicts of interest to emerge between a liquidator of the Club and a receiver of the Church because there are plainly grounds for competing claims to be made by each organisation against the other. Hence, it could give rise to the need for a further application to the Court and, perhaps, the appointment of another person to fulfil one or other of those roles. Given these difficulties it is impossible to form any clear impression as to what sums would ultimately be available for distribution to the creditors but it seems quite possible that they might receive as little as 10 or 20 cents in the dollar. Quite apart from purely financial considerations, a winding up order would obviously defeat the Club's objects of association and if, as seems likely, the Church were also to be dragged into liquidation, then its objects of association would also be defeated.

26. An alternative proposal put forward on behalf of the plaintiff involves lifting the injunction made on 4 October 2002 to enable the Club to adopt a new constitution, appoint a new committee of management and resolving that the Church to be wound up and its assets transferred to the Club. It appears that the Club now has more than 600 members and the special general meeting conducted on 7 October 2002 was attended by 234 people. Resolutions were passed with overwhelming support expressing support for the adoption of a new constitution for each association and for the merger of their assets after the property rights of third parties had been resolved subject, in each case, to the court's sanction. An informal working committee was elected and Ms Vesic was elected as president. It is also proposed that a substantial sum of money be provided to pay the undisputed debts of both the Club and the Church and to provide working capital so that the Club may recommence trading. Mr Milicevic who is president of both the Serbian Australian Settlers social and cultural centre and the Serbian Council of the Australian Capital Territory gave evidence that the Settlers Club members and Board of the Serbian Council had agreed that funds obtained from the sale of the Settlers Club premises were to be used for these purposes. An amount of $561,944.27 was standing to the credit of the Serbian Australian Settlers Social and Cultural Centre as at 14 November 2002. Whilst it may be necessary for formal motions to be passed and other procedural steps to be complied with before the release of those funds, I see no reason to doubt Mr Milicevic's evidence that they can be provided for the purposes suggested.

27. This course would not resolve any disputes concerning debts claimed by Mr Radovanov and others. Indeed, it is possible that the resolution of those disputes may be further hampered by the evident level of feeling between Mr Radovanov on the one hand and Ms Vesic and others associated with her on the other. However, these issues will need to be confronted whichever course is adopted. More significantly, it will leave the litigation concerning the validity of the contract for the sale of the land unresolved and should Harcourt Homes ultimately succeed in obtaining orders for the specific performance of those contracts, the financial viability of the new unified Association could be placed in further jeopardy. The prospects of the new Association being able to recommence trading successfully are also somewhat speculative and it may find that there are further financial shoals ahead.

28. It would also involve the winding up of the Church and the objects of that association might as a consequence be substantially defeated though the Club may seek to pursue similar objectives.

29. On the other hand, this option has significant attractions. In the first place it would enable many members of the Serbian community to have the opportunity of re-establishing a cultural club with licensed premises and this would be substantially in accordance with the objects of that association. Secondly, it would ensure that at least the undisputed debts of both Associations were paid in full rather than leaving most of the creditors to hope for a relatively small dividend at some time in the future when the financial position of the Associations has been clarified and litigation concerning the disputed debts resolved. Thirdly, it would avoid the need to unravel the financial affairs of the Church vis a vis those of the Club and this alone might result in a considerable saving in time and money. Furthermore, by vesting the financial control in an elected committee of management the Club the Associations would avoid the further expense of liquidation and continued receivership.

30. Whilst neither alternative is wholly satisfactory, I have concluded that the proposal put to the Board by the plaintiff should be permitted.

31. I accept that this decision may leave Mr Radovanov and others associated with him with some sense of grievance because there has been no final determination of some of the issues raised between him and the plaintiff and this decision may effectively give control of the Club to people whom, it was suggested, he regards as his "political enemies". However, it is now clear that the only alternative is liquidation and, whatever the validity of his contentions, neither he nor those associated with him could regain effective control of the Club. Furthermore, the present course may well place the Club on a more secure financial footing and hence improve his prospects of ultimately recovering any amount presently owed to him either by the Club or the Church.

32. At the time I granted the injunction to prevent such an organisational reformulation, there was no evidence to suggest that the Club was financially moribund and it seemed appropriate to ensure that the status quo was maintained until Mr Radovanov's contentions could be determined at a final hearing. It is now clear that if the injunction is maintained the Club will not be preserved in its current form but doomed to liquidation. There has been no attempt to raise any substantial dispute as to the accuracy of the receiver's evidence concerning the financial position of the two Associations and the balance of convenience clearly favours the discharge of the injunction.

33. I also accept that disputes concerning debts allegedly owed by the Church to Mr Radovanov and others may need to be resolved in any event and need to be litigated but these disputes need not delay the winding up of the association should a resolution to that effect be passed.

34. It will, of course, be necessary for further special general meetings to be held in order to pass resolutions formally implementing these proposals and it is appropriate for the receiver to continue administering the affairs of both Associations until the management of the Club has been taken over by a new committee and the Church has been wound up or a similar committee appointed. These steps will have to be taken quickly if liquidation of the Club is to be avoided. Whilst I do not think it is appropriate to give directions as to the dates by which such meetings must occur, I do intent to grant leave for any of the parties to make a further application on short notice for liquidation of the Club in the event of undue delay.

35. The receiver's evidence was also relevant to the question of whether existing injunctions restraining Mr Radovanov from having access to funds standing to his credit in bank accounts should be discharged. Whilst no formal application was made by Mr Radovanov, he had previously applied for the injunction to be varied to enable him to obtain funds for legal expenses and during the course of submissions the issue was raised with Mr Erskine whose clients had made the applications upon which the injunctions had been granted. It had been alleged that Mr Radovanov had appropriated for his own use the sum of $150,000 paid to the Church by Harcourt Homes pursuant to the contract for the sale of the Church's land and, since there had been some evidence to suggest that he had been transferring funds out of Australia, Miles CJ concluded that it was appropriate to issue the injunctions. I dismissed a subsequent application to vary them. However, the receiver has now confirmed that Mr Radovanov spent much of the monies he obtained from the Church on debts of the Club and that the Club owes him at least $130,000. Furthermore, as I have mentioned, Mr Radovanov claims to be owed more than $500,000 by the Club and almost $190,000 by the Church. Whilst the receiver has not yet been able to verify the validity of the balance of these claims, he was not able to discount the possibility that at least some portion of them might ultimately be substantiated.

36. Counsel for the plaintiff foreshadowed the possibility of counter claims against Mr Radovanov for breach of fiduciary duty and negligence in the management of the Club. However, those claims have not yet been formulated, let alone pleaded and I am unable to make any real assessment either as to potential liability the likelihood that liability will be established or as to the likely range of damages should they succeed. There is nothing in the evidence before me to establish, even on a prima facie basis, that there is likely to be a net liability owed by Mr Radovanov to the Club rather than vice versa.

37. In these circumstances, I cannot be satisfied that there are any grounds for maintaining the present injunction and, even if there were, I would be inclined to think that the balance of convenience favoured discharging it so that Mr Radovanov would be able to have access to his funds for the purposes of obtaining legal representation.

38. These reasons for judgment apply in relation to the orders made in both matters.

39. Unless some application is made within seven (7) days I propose to make no order as to the costs of the applications for winding up orders and associated relief.

I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Acting Chief Justice Crispin.

Associate:

Date: 22 November 2002

Counsel for the plaintiff: Mr C Erskine

Solicitor for the plaintiff: Meyer Clapham

Counsel for the first defendants: -

Solicitor for the first defendants: No appearance

Counsel for the second defendant -

Solicitor for the second defendant: Litigant in person assisted by Ms P Orton

Counsel for the third defendant: Mr P Walker

Solicitor for the third defendant O'Connor Harris

Counsel for the receiver: Mr M Love

Solicitor for the receiver: Williams Love

Date of hearing: 14, 18, 19 November 2002

Date of judgment: 22 November 2002