The Consequences of a Decision

At a board meeting on 27 March, a joint advice from barristers Robertson Wright and Robert Bromwich was tabled. In their opinion, members of the two clubs had not been transferred properly and the club should go to the Supreme Court to verify this.

At the same meeting, the Board voted to re-appoint Greg Evans to the Board. The tension in the aftermath of the aborted election saw Terry Heidtmann briefly align himself with the group. Heidtmann voted for the reappointment of Evans, restoring the Five’s numbers on the Board.

On the weekend of the cancelled election, a group of managers had a session with Terrence Lynch, a barrister who specialises in the field of licensing and had appeared many times on behalf of the Department of Gaming and Racing (DGR).

The management team used Steve Bowers to brief Bernie Coles QC and Lynch for an opinion on the transfer process that had been used. Putting together the amalgamation strategy had been a painstaking and meticulous exercise. It had been put under the microscope many times because of the concerns of some directors. They were confident that they had followed a properly executed amalgamation policy, but now they needed a legal opinion to support that position.

Coles and Lynch advised that the management’s understanding of amalgamation was correct and that the Club had acted correctly. However, if there were any irregularities in the process, they could very easily be overcome by the court. 

According to Cowan, Steve Bowers estimated that in order to fix this problem – assuming there was a problem – it would cost a maximum of $25,000. Coles and Lynch did not think it necessary to go to the Supreme Court at all. They only suggested it because the other legal team thought there were irregularities.

The Supreme Court may have ruled that nothing needed to be done – that the transfer of membership had been done correctly. If it had ruled in favour of the other team – that then transfers had been illegal – it had the power to rule that they were all members of Panthers. Either outcome offered a way of resolving the membership question, although neither necessarily produced the result being sought by the Five.

Lynch says,

The essential difference between the two advices was that – if you accepted that there had been a problem about the memberships, their approach said “let’s not make them members” and our advice said “here’s how we can get them in”.

That was the fundamental difference. They wanted declarations that people weren’t members and we suggested means by which they could be confirmed as members, if it was the case that they weren’t.

The competing legal opinions reflected very different briefs and very different objectives. Brett Boon briefed Wright and Bromwich, and communication between the club and Boon was through members of the Five. Their evidence indicates that the outcome they were seeking was one that would prevent Newcastle and Port Macquarie members from voting or standing for the Board.

From management’s perspective, the distinction was stark: one side was asking, “How can we keep our promises?”; the other, “How can we break those promises?”

Lynch says his view concurs with that of John Ralston as to when amalgamation occurs and memberships combine.

The licensing act provisions never really say at what point an amalgamation actually occurs. The court cancels the old club’s certification, and there’s really not much of a notion of amalgamation. There’s some things that happen that tell you it’s before the event, and then these provisions in the law say this has occurred, but you never really know when it does happen …

So, if the members are part of the whole entity that is the club, and then two clubs merge and become one, how can you separate one part of the entity from the rest?

Wright and Bromwich had recommended an application to the Supreme Court. Steve Bowers points out that this would also not have been acceptable to the Five.

Their proposal was to make application to the Supreme Court to have all the members from the amalgamating clubs removed from Panthers’ membership register. I attended an urgent conference in the chambers of Robertson Wright SC with Robert Bromwich, barrister, and Brett Boon, for the purpose of discussing how the matter could be expedited before the Court.

I met Terrence Lynch immediately prior to the Wright conference to seek his advice. This was a very significant issue – Panthers was going to take action to toss out its amalgamating members. I listened carefully to [Wright’s and Bromwich’s] discussion about the nature and seriousness of the membership problem and how it should be resolved. Lynch believed that there was an insurmountable problem in this approach. It would require evidence that Panthers never intended that the amalgamating members become members of Panthers.

I asked them;

“Who will we get to give evidence that the Club never intended to make them members? Roger Cowan can’t do it. He is on the record as having stated that membership of Panthers was a condition of amalgamation.”

I pointed out that no senior manager could give evidence for the same reason.

The mood in the room changed. The futility of approaching the Supreme Court under these circumstances was apparent. I realised at that moment there would be no urgent application to the Supreme Court – in fact there would be no application at all.¹

The vote was unanimously in favour.

Roger Cowan says he was extremely concerned at what Panthers was doing to the other clubs.

We had told them that they would start out as full members. When the time came to renew their membership, they could opt for a lower membership fee or remain as full members.

Now, we were being told that members of the Newcastle club should have applied for membership of a new entity. … Every one of the 30,000 members of Newcastle would have had to find a member of Panthers to sign a nomination. Furthermore, the Newcastle member would have had to be known by the nominator. Very few would be able to become members under that set of rules.

Just imagine the stupidity of it. We address a meeting of Newcastle
members and say to them:

“We want you to agree to sign over more than $40 million worth of your assets to us. In return we will pay out your debt of $14 million and we will treat you fairly and equitably as members of the company that will own all those assets”.

After the assets are signed over and the debt rearranged, we go back to the members and tell them:

“Sorry but now we have decided that you cannot become members of the entity that has taken over your assets unless you can find an existing member who will recommend you for membership”.

The opinion of Coles and Lynch was presented to the Board at a meeting on 23 April, but the minutes record no substantive discussion of it. Instead, the Footy Five group commissioned the Acuiti solicitors to find a solution to the membership problem. Acuiti was also asked to carry out a thorough review of the procedures used by management in amalgamations.

Steve Bowers warned the Board that their solution would probably cost more than $400,000. He suggested that the matter could be handled much more quickly by asking for a court ruling, which would probably cost around $25,000. The Five dismissed the suggestion and accused Bowers of trying to mislead the board. As it turned out, Bowers had underestimated the final cost.

But there were other costs that were harder to quantify — wasted management time, stress, interruption to the more important tasks of running the club, legal costs, lost opportunities and the diversion of resources. Some examples have already been documented.

Roger Cowan also noticed a toll on his management team:

The cancellation of the election strengthened the resolve of some managers who were already growing weary of the constant bickering and obstruction in the boardroom to find other employment.

John Wilson was a good example. The management team had done quite a lot of management exercises on recognising and understanding values, and honesty came out as the most important value for John. He was resentful that the Board had put that value to the sword by breaking promises that he had made to members and directors of other clubs. He said he could not work comfortably in such an environment.

There are many other values that drive individuals. Barry Walsh, for example, would be high in the value of loyalty. He was not in the management team, but it seems obvious. If Barry is in a team, he will never let the team down. Keith Rhind has a good way of describing this value – “If we are ever struggling through the desert, I will be happy to let Barry carry our water”. Clashes in values almost always lead to irresolvable conflict. The secret is to understand and respect the differences and avoid clashes.

The atmosphere in Panthers’ boardroom during this period has been described as ‘horrendous’, and a ‘never-ending nightmare’ by those who experienced it. Meetings went on for many hours and left everybody drained and frustrated. Management saw the Acuiti review as a cynical exercise by the Five to find something to discredit management, and to justify the decision to cancel the election, which they knew was being investigated by the DGR.

A 70-page report was prepared by Brett Boon and his associate and presented to the Board in May.

Ian Temby found in the conclusion to his report,

… the club aborted the March 2002 election because of some apprehension that, if carried through to conclusion, it would or might lead to loss of power by the existing board’.

He continued,

Most [directors] were more concerned about outcome than principle.

He said the decision stemmed partly from their distrust of management, and partly because Boon’s advice was ‘palatable’.

His [Temby’s] report attached no blame to the management team for any problems relating to amalgamation of the cancelled election. It says,

Cowan fought hard to deliver on the promises he had made, and he was pursuing the interests of all members, not just those from the Penrith site.

He adds that most members of the board, however, saw their principal allegiance as being to the Penrith members. He went on,

Cowan’s approach is to my mind distinctly preferable to theirs.

Allegiance to Penrith members may have been one factor. But Temby’s findings also identified apprehension about the existing Board losing power, while the evidence of some directors acknowledged concerns about their positions. The aborted election had exposed divisions that were now becoming increasingly difficult to contain. Those divisions would soon move into a new and more destructive phase.

Removed from The Series
The original Chapter 17 concluded with a lighter account of what happened when members of the Panthers management team informally reconstructed the result of the abandoned election. Read: On a Lighter Note

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1. No Supreme Court proceedings were ultimately commenced over the membership issue. Ian Temby later recorded that an administrative solution was pursued instead. ↩︎

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