Australia, June 12 -- New South Wales Land and Environment Court issued text of the following judgement on May 13:

1. By Summons filed on 28 June 2024, the Plaintiff, Mr Jaworski, sought relief described as:

"Grant of leave for derivative action per Request in attached Affidavit: Jaworski v Chartered Accountants, Australia and New Zealand."

2. The Defendant, Chartered Accountants Australia and New Zealand ("CA ANZ") is a body politic and corporate with perpetual succession, which was founded by Royal Charter in King George V's name, which has been amended or supplemented by Supplemental Royal Charters, most recently by Queen Elizabeth II by letters patent in 2019.

3. The relief that Mr Jaworski seeks was initially framed as the grant of leave to bring a derivative action in accordance with the general law, where CA ANZ is not a company registered under the Corporations Act 2001 (Cth) ("Act"). However, Mr Jaworski rightly then recognised that leave was not required to commence the proceedings but, on the case law, was relevant to the question whether, as he sought, he should be entitled to retain legal representation to pursue the proposed proceedings at the cost of CA ANZ.

4. By my judgment delivered on 19 August 2024 (Jaworski v Chartered Accountants Australia and New Zealand [2024] NSWSC 1052) ("First Judgment"), I held that Mr Jaworski's application should not be heard ex parte and that CA ANZ should be allowed an opportunity to be heard as to whether the relief sought by Mr Jaworski should be granted. I noted that the proceedings had not then been served on CA ANZ and stayed the proceedings until they were served, while leaving it to Mr Jaworski whether he wished to do so and assume any consequential costs risk. In a second judgment delivered on 4 September 2024 (Jaworski v Chartered Accountants Australia and New Zealand (No 2) [2024] NSWSC 1134), I did not allow Mr Jaworski's application to reopen my First Judgment requiring that his application be served on CA ANZ before it was heard and determined. By a third judgment delivered on 26 September 2024 (Jaworski v Chartered Accountants Australia and New Zealand (No 3) [2024] NSWSC 1214), I ordered that a further application filed by Mr Jaworski seeking to reagitate whether the application could proceed in CA ANZ's absence be struck from the file.

5. Mr Jaworski ultimately served his application on CA ANZ and he now relies on his Amended Summons filed on 24 February 2025, by which he seeks an order that:

"On the Court being satisfied that Mr Jaworski has a prima facie claim to be brought in the name [CA ANZ] against its officers, CA ANZ pay the future legal costs of Mr Jaworski's conduct of that claim."

6. In his opening written submissions, which refer to his first affidavit and his previous submissions in respect of previous hearings, Mr Jaworski made clear that he sought to allege that CA ANZ's "controlling officers" had breached their duties in respect of the four specific matters that I address below and, more generally, advances an allegation that they had engaged in:

"numerous actions/inactions since 2005 which have the effect of entrenching the power of the controlling officers, disenfranchising and diminishing the rights of members, and generally eschewing accountability".

7. I pause here to note a significant aspect of Mr Jaworski's proposed claim, namely that he seeks to bring claims against all or substantially all of CA ANZ's current and former directors or officers over the last 10 or more years, and makes no attempt to identify any individual directors or officers who had any particular involvement in the decisions or conduct that he seeks to challenge, but treats the alleged "wrongdoers" as being a collective body of all those current and former directors and officers over the whole of that period. I return to the significance of that matter below. While I will generally adopt Mr Jaworski's usage of the term "officers" in this judgment, the number of people who fall in that category and the lack of attention to their individual conduct and roles in that description should not be forgotten.

8. In his opening written submissions, Mr Jaworski submitted that the alleged conduct fell within exceptions to the general rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189, in several ways, including that it infringed the personal rights of members. I pause there to note that, as Mr Giles (with whom Mr Puttick appeared for CA ANZ) emphasised, that proposition had the consequence that several of the claims which Mr Jaworski seeks to bring as derivative claims in CA ANZ's name could have been brought as personal claims of members of CA ANZ, including Mr Jaworski, at least as against CA ANZ. Mr Jaworski also submits that, having regard to the case law to which I refer below, "it would be reasonable (if not compelling) for an independent board to bring claims in CA ANZ's name against the controlling officers" in respect of the matters to which I refer below. Mr Jaworski in turn seeks to bring those claims where CA ANZ's current board has not done so.

*Rest of the document can be viewed at: https://www.caselaw.nsw.gov.au/decision/196c7db8a45ab1ed7849c918)

Disclaimer: Curated by HT Syndication.