Background

Readers should bear in mind that I'm not a lawyer and the following general comments do not constitute legal advice.

As noted on the Home page of this site, readers can form their own view on whether CA ANZ is justified in "considering that due process has been followed in connection with all of CA ANZ's conduct and operations; that all the allegations made are baseless; and CA ANZ denies the conduct alleged."

Just prior to resigning my membership in 2024, I initiated a derivative action under the general law in the Supreme Court of NSW (NSWSC). Such an action under the Corporations Act is not available to members since CA ANZ was incorporated under a royal charter.

Unlike a statutory derivative action which requires leave from the court (and this in turn requires the court to be satisfied that the action is in the best interests of the company and raises serious questions to be tried), a general law derivative action does not require leave to initiate.

However, in practice, an initiator like me does require leave to allow access to the victim corporation's resources to fund the legal action, so that the corporation can uphold its rights against alleged wrongdoers.

UK precedent not followed

My understanding was that the NSWSC would uphold the procedure laid down by Lord Denning and two fellow Law Lords in the UK Court of Appeal case of Wallersteiner v Moir (No 2) [1975] 1 QB 373. 

In a situation where the alleged wrongdoers control a corporation, all three Law Lords suggested that a court adopt an ex parte approach to determine whether a reasonable case exists for the initiator to pursue against the wrongdoers, on behalf of the victim corporation, and if so, to let the case proceed on the basis that legal costs would be indemnified by the corporation.

In my case, Justice Black of the NSWSC decided not to adopt an ex parte approach. The practical effect would be to potentially expose me to adverse cost orders if I was to proceed, which, in my view, was against public policy and the intent of the so-called exceptions to the general rule under the famous Foss v Harbottle case.

I was nevertheless encouraged to proceed by a comment made by Justice Black during preliminary hearings to the effect that the court would address a situation where CA ANZ conducted the case other than through a governance committee made up of persons disinterested in the outcome.

When it was eventually acknowledged during the main hearing that counsel was instructed by the CA ANZ board (whose Chair had been a director since 2015), Justice Black nevertheless allowed the accused wrongdoers to proceed as if this was of no consequence.

In my lay view, Justice Black did not appreciate that the three Law Lords in Wallersteiner stipulated an ex parte approach in these circumstances to recognise that the voice of the victim corporation cannot be heard through its alleged wrongdoing controllers. 

Justice Black rightly insisted on providing procedural fairness to the victim corporation, yet he somehow missed the point recognised by the UK Law Lords that such fairness would unlikely be achieved through allowing the alleged wrongdoers to influence the proceedings, at least during the initial stages.

The approach taken by Justice Black is also, in my view, plainly at odds with longstanding fiduciary duties such as directors being obliged not to place themselves in a position of conflict, and also not to use funds for an improper purpose. Regardless of whether or not wrongdoing is eventually proved, how is it possible for a director to be perceived as being free of conflict when instructing lawyers to thwart action against the director? And how can this be a proper use of member funds?

The upshot is that Justice Black denied the use of CA ANZ funds to uphold its rights against alleged wrongdoers who, in turn, were permitted to use member funds to stifle the accountability which CA ANZ exists to promote.

Unfortunately, Justice Black's fellow jurists in the NSW Court of Appeal and the High Court locked the door to any consideration of my objections to his opinions (see further below).

What about the substantive issues?

As noted above, the task before Justice Black under the general law was to determine whether the matters brought plainly before him constituted a reasonable case for the CA ANZ corporation to bring against its controlling officers. In other words, based on the known circumstances, would an honest and impartial Board believe that taking legal action against the controlling officers was warranted.

As a former Tax Manager with one of the largest accounting firms, I analysed hundreds if not thousands of judgements of varying degrees of comprehensibility. Despite this experience I could not discern credible reasons in Justice Black's judgement which would warrant concluding that a reasonable case does not exist in relation to any of the four main matters plainly put before him, let alone all of them.

As a general observation, it seems to me that Justice Black skirted the task in an obfuscatory way, rather than embrace it with the degree of judicial exactitude which the community would reasonably expect. Since I'm not a lawyer, I could be under a misapprehension in holding such an opinion.

Apart from straw-man arguments and considerations inexplicably irrelevant to the proceedings, the closest Justice Black got to forming a view, in my opinion, was in relation to the issue of 38 member motions being quashed when the CA ANZ charter provides that the exercise of all the Board's powers is subject to the control and regulation of any general meeting (such rights being the opposite of the situation for the vast majority of companies whose constitutional rules stipulate such powers vest with the Board).

Justice Black stated that he "recognised that there may be a question in this case as to whether the position that would likely exist as to a [typical] company is diluted or excluded by the terms of that article, as Mr Jaworski submits, but it is not necessary to determine that question in order to determine the proceedings." [2025] NSWSC 457 at [41].

Recognising that a legitimate question exists around the rights of members to control the Board, how can justice have been served by blocking the means of exercising those rights, or even having them properly examined?

What about the Appeal Court?

Justice Stern of the Appeal Court of NSW determined that my appeal from the decisions of Justice Black was incompetent.

This arose through CA ANZ engaging its lawyers to prevent the appeal itself  from being considered. In this regard, Justice Stern apparently had no qualms around repeating the same error I had complained about Justice Black making, being to allow the alleged wrongdoers to use CA ANZ resources and influence the proceedings.

My understanding is that even though Justice Black made it very clear that the whole of the proceedings were dismissed, there nevertheless exists a technical/theoretical possibility that it could be reinstated, in which case my appeal should have instead been a request for an appeal, and since it was not so framed, then it was deemed to be legally incompetent.

It is not clear to me why my appeal could not have been treated as a request, especially since I had specifically noted that a request would not have been meaningfully different, and in two cases relied upon by Justice Stern, the judgements treated the appeal as being a request for appeal.

What about the High Court?

The High Court operates a similar system: applicants like me have no inherent right, but must instead apply for special leave to appeal. In my case, the High Court disposition issued by Justices Edelman and Gleeson refused my application on the basis of their opinion that it did not raise any question of law of public importance and had no prospects of success.

Result so far from justice system

The upshot appears to be that directors of corporations not formed under the Corporations law are able to use a victim corporation's resources to thwart being made accountable for alleged wrongdoing.

This is even when the main objective of the victim corporation is to uphold accountability, transparency and integrity.

In other words, Australian courts now have a precedent to look the other way if directors of such companies choose to misbehave. 

A lawyer may be able to clarify whether that's limited to corporations constituted under a royal charter and overseen by the Australian Governor-General (who, coincidentally, appoints High Court judges).

More information on the four substantive matters

Without going into detail or unduly repeating the information in the Open Letter, below is some background information concerning the four main issues brought for consideration by the courts.

38 Member AGM motions quashed

The legal issue centres on Article 13 of the CA ANZ Supplemental Charter, which provides that the exercise of all the board’s powers is subject to the control and regulation of any general meeting. CA ANZ asserted that the proposed motions were illegal due to legal principles which CA ANZ had “thoroughly tested”, yet refused to share with members.

It appears that CA ANZ may have relied upon widely appreciated rules that restrict activist shareholders from interfering with the management of a company. Here is how a large law firm summed up the law around that time: "The Full Court of the Federal Court has confirmed that activist shareholders may not propose resolutions which usurp powers properly vested in the board to manage the company, unless a company's constitution or the Corporations Act 2001 (Cth) says otherwise." [https://www.allens.com.au/insights-news/insights/2016/07/shareholder-activism-full-court-says-no-to-revolution-by/]

The problem with the stance adopted by CA ANZ is that it conflicts with the assumption "unless a company's constitution ... says otherwise" . In relation to CA ANZ, Article 13 clearly "says otherwise", so the general rule restricting activists should not apply. This appears to be what Justice Black was alluding to in the extract of his judgement quoted above.

In terms of ethical conduct, questions arise such as:

• If the general rules did in fact create technical hurdles; surely it is open to CA ANZ as a member organisation to provide members with a democratic means of setting priorities?

• Why did CA ANZ repeatedly refuse over many years to share the legal principles which it claimed to have "thoroughly tested"?

• Why did CA ANZ leave practically no time for revision when advising the requisitioners of the claimed showstopping issues?

• Why did CA ANZ not specify the claimed showstopping issues relating to form, nor point to any authority in the By-Laws requiring a particular form?

Ten-fold more difficult to raise member motions

In the year following the quashing of member requistions, CA ANZ orchestrated to increase the number of members required to make an AGM requisition from 10 to 100.

The legal question centres on the alleged lack of notice/details for a motion having such a detrimental impact on members’ rights.

For example, the email sent to members regarding the 2021 AGM made no mention of the proposed change.

This begs the question of how many members would have been aware when voting, that they were significantly diminishing their rights to hold CA ANZ to account?

In attempting to justify the change, CA ANZ made reference to provisions in the Corporations Act which have no application to CA ANZ.

CA ANZ also made reference to addressing such motions as historically being expensive for CA ANZ, without mentioning that the only known historical motions occurred in the preceding year, and the way they were 'addressed' was to have them quashed. This is after asserting that such motions had no meaningful support amongst the membership, however members were denied the means of establishing such support.

It is notable that CA ANZ did not explain how proposals made by a group of ten unrelated members could somehow be less legitimate than apparently self-serving decisions (such as the quashing) made by ten conflicted directors who were not elected by a direct member vote.

Questions around authorisation of directors' remuneration since 2015

As noted in the Open Letter, uncertainty exists around whether required member approvals were obtained for directors’ remuneration since the amalgamation in 2015. Some of the notable features are outlined below.

By-Law 136A relevantly provides that directors' remuneration shall be within the parameters and principles approved by members.

The context is that without such a restriction, the Board would be unconstrained in setting their own remuneration.

Each year in its Annual Reports, CA ANZ has asserted or implied that it has the required member approval.

In 2018 and early 2019, CA ANZ ignored challenges to point to where such member approvals may be found.

In 2019, CA ANZ orchestrated to hold its AGM in Wellington NZ and include a show-of-hands vote on a motion to obtain member approval for a 3-year period from 1 January 2020.

It is notable that key AGM announcements leading up to the AGM, including the email notice and the 2019 Annual Report failed to mention the proposed item of special business to obtain member approval and significantly increase the remuneration pool for directors and office bearers by around 15%.

It appears that CA ANZ relies on a "notice" which was placed on its website. That document did not include relevant economic details such as wage growth at that time.

Repeated requests for attendance details for the 2019 AGM were initially refused by CA ANZ. 

It is notable that the 2017 AGM was also held in Wellington NZ, so CA ANZ would have been aware of details of likely attendance for the 2019 AGM. A copy of the 2017 AGM minutes was obtained without CA ANZ cooperation, and these revealed that CA ANZ could reasonably be assured of having a majority of interested supporters for a motion proposed by CA ANZ if the attendance profile in 2019 matched that of the 38 who attended in 2017. As it turns out, around 40 of the 50 members present at the 2019 AGM appear to be connected with CA ANZ.

Noting that main councillors instigated and apparently supported the 2019 motion, my analysis reveals that 7 of the councillors present at the meeting would later become office-bearers/directors.

Two key questions are first, whether the 2019 motion was valid in light of circumstances such as the notice/details provided to members and the attendance profile of members physically in attendance.

Second is whether for the 5-year period 1/1/2015 to 31/12/2019, CA ANZ can rely on authorisation it claims was provided by members of ICAA in 2013. Such authorisation would clearly not have included New Zealand members, and was also in relation to a method significantly different to that used after amalgamation.

In short, how was it possible for ICAA members in 2013 to provide the approval required by the amalgamated body after 1/1/2015 where a different set of parameters was used? And after 1/1/2020, can CA ANZ rely on the 2019 AGM motion in light of circumstances such as outlined above?

Again, regardless of the legal position, the ethical question is whether CA ANZ has done the right thing by its members in the circumstances described.

Do financial reports give the required true and fair view?

The core question under this heading is whether the financial reports issued by CA ANZ provide information which would allow meaningful analysis of management performance.

Examples are mentioned on the pages headed 'Financial security' and 'Other conduct', and also in the 38 Member Motions which were quashed (see Note 1 on the Home page).

This is in the context of an accounting membership body expected to set the gold standard in transparency and accountability.

Why is CA ANZ a party to a current proceeding before the Administrative Review Tribunal (ART)?

When CA ANZ quashed the 38 motions proposed for the 2020 AGM, opinions about me were published which were less than flattering. I asked CA ANZ to remove the statements which I regarded as being false and defamatory, and on refusal, I lodged a complaint to the Privacy Commissioner alleging a breach of privacy.

After initially refusing to investigate the complaint, the Privacy Commissioner was found by the Federal Court to have fallen into error, and subsequently commenced an investigation.

After two preliminary findings against CA ANZ, lawyers were engaged by CA ANZ and they succeeded in convincing the Privacy Commissioner to issue a final determination finding that CA ANZ had not breached the Privacy Act.

In broad terms, since the Privacy Commissioner had not reconciled her final determination to the two preliminary findings of wrongdoing, the ART was requested to review her decision, and CA ANZ's application to become a party to the proceeding was accepted by the ART.

At the initial stage of the ART proceedings, it became evident that CA ANZ and the Privacy Commissioner had colluded to keep certain information secret not only from the public but also from me as the complainant.

At an interlocutory stage of the ART process, CA ANZ abandoned its claim to secrecy on all the relevant documents except in relation to some names of staff, and two members who had provided CA ANZ with copies of messages seeking support for the 38 proposed motions.

The ART decided to allow CA ANZ to keep those names secret from the public and from me.

This begs questions such as why would CA ANZ collude with the Privacy Commissioner to provide information in a 'Star Chamber' fashion, against one of its own members?

The ART process continues at the time of writing.

Links to key court judgements

Supreme Court of NSW

13/5/2025 Justice Black Decision

Gerald Jaworski v Chartered Accountants Australia and New Zealand (No 4) [2025] NSWSC 457

https://www.caselaw.nsw.gov.au/decision/196c7db8a45ab1ed7849c918

10/6/2025  Costs

Gerald Jaworski v Chartered Accountants Australia and New Zealand (No 5) [2025] NSWSC 590

https://www.caselaw.nsw.gov.au/decision/1975755db8dfe3c9e844ad28

Appeal to Supreme Court of NSW Court of Appeal

Hearing 4/8/2025 orders 7/8/2025 (Interlocutory - dismissal as incompetent)

Jaworski v Chartered Accountants Australia and New Zealand [2025] NSWCA 177

https://www.caselaw.nsw.gov.au/decision/1987e0d6d6485b64e6dc855c

High Court - Application for special leave to appeal

6/11/2025 - Application for special leave rejected

Jaworski v Chartered Accountants Australia and New Zealand

[2025] HCADisp 247

https://www.hcourt.gov.au/cases-and-judgments/judgments/special-leave-dispositions/jaworski-v-chartered-accountants-australia-and-new-Zealand

Privacy Commissioner (OAIC) determination

https://classic.austlii.edu.au/au/cases/cth/AICmr/2025/18.html