Coogee Diggers boss cops serve from judge as club eyes Paddo RSL takeover

A judge has delivered a scathing assessment of Coogee Diggers chief executive Peter Gallagher’s credibility as the eastern suburbs club attempts a takeover of cash-strapped Paddo RSL.

The proposed amalgamation, under which the Paddington institution would be dissolved and its assets transferred to the beachside club, has split the community in one of Sydney’s most elite suburbs.

Gallagher has declared Coogee Diggers will spend at least $6 million renovating Paddo RSL and keep it running for at least 20 years.

But under the terms of a memorandum of understanding between the clubs, the property could be disposed of after only two years if it accumulates losses of more than $1 million and community campaigners fear it will be sold to developers.

While the Paddo RSL premises is listed in the club’s financial reports with a value of $4 million – the price of a Paddington terrace – it is estimated to be worth more than $20 million on the open market.

The amalgamation needs the approval of both clubs and the Independent Liquor and Gaming Authority, and Paddo RSL announced on Friday 84.5 per cent of its members had voted in favour of it.

But opponents claim the validity of the ballot had been undermined by a misleading poster inside Paddo RSL that wrongly suggested the deal would guarantee its future.

A NSW Supreme Court judge also cast doubt on Gallagher’s integrity this week while ruling against Coogee Diggers in a dispute over flooding from a childcare centre operating on its old bowling green.

Justice Ian Pike criticised Gallagher’s appearance as a witness in the case, saying the club CEO admitted statements he had made in emails to the childcare centre were false.

“A reader of his affidavits would have had the impression that the statements were true and the contrary was belatedly extracted out of Mr Gallagher after some obfuscation on his part. This aspect of his evidence is particularly troubling because the court cannot even place reliance on Mr Gallagher’s contemporaneous communications,” he said in his judgement.

The judge ruled Coogee Diggers’ termination of the childcare centre’s lease was invalid and said he approached Gallagher’s evidence with “considerable caution”.

“He did not present as an overly impressive witness. He was prone not to answer simple questions but rather make statements he thought would assist Coogee Diggers. In at least two respects he admitted that his evidence was not correct,” he said.

Gallagher could not be contacted through the club but in a note to members before a December 6 extraordinary general meeting, he said Paddo RSL would continue to trade under its existing name or Paddo Diggers for a minimum of 20 years and pay off Paddo RSL’s $660,000 debt to the National Australia Bank.

He told members Coogee Diggers had already given $350,000 to Paddo RSL in emergency financial support and expected more would be provided before the merger was completed “because Paddo RSL currently is trading at best marginally profitably”.

Paddo RSL president Terry Farley declined to comment, but in an address to a general meeting on November 9 the club’s lawyers, Pigott Stinson, told members it had been in a precarious financial position and such amalgamations were intended to save the facilities of registered clubs.

The club lawyers said the Coogee Diggers commitment was the longest they had seen in such an amalgamation but admitted the RSL premises were grossly undervalued in its financial reports and that a sign on display at the club was incorrect in guaranteeing it would remain open for 20 years “secured by deed”.

A co-operative founded in 1959, the Oxford Street club has a rich history as a live venue and a hub for veterans and other members of the community, with strong links to local schools, but it has run into financial trouble.

According to half-year figures released by Paddo RSL as part of the proposal to amalgamate, it had only $348 in cash at the end of July.

Another popular eastern suburbs club, North Bondi RSL, this year offered a rescue package that it claimed would secure the viability of Paddo RSL without it having to surrender its assets.

But Paddo RSL had already turned to Coogee Diggers and members were asked to submit postal votes on the amalgamation over the past two weeks.

“I went in wanting to vote yes because of the very clear undertaking they gave about keeping the club going for 20 years. Now that they’ve had to admit it’s not true after people have already voted, it feels like a scam,” said Yaron Finkelstein, Scott Morrison’s former chief political strategist, a long-time RSL club member and chair of a local school council.

“I’ve seen some dodgy ballots in my time, but this one must be one of the worst.”

Campaigners against the merger believe the club’s overall financial position has been mischaracterised and used to present the deal as the only option for survival.

“The community essentially paid for this site through their membership and through donations since it was first established in 1959. This deal basically hands it to a public company that has the right to shutter it,” said Paddington resident Ceri Binding.

“There has been no attempt to look at alternative solutions, of which there are myriad, and no attempt to harness the expertise in the local community.”

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