22-158

22-158 | 11 October 2022

Relevant for Directors, CEOs and Managers

As Member Clubs may be aware, there has been widespread recent media commentary regarding legal proceedings involving ClubsNSW and Mr Troy Stolz, a former ClubsNSW contractor who then converted to an employee.  

It is not ClubsNSW's practice to comment on ongoing litigation. However, in light of recent biased media reporting, it is important that Member Clubs are aware of the following matters and facts. 

There are two sets of legal proceedings, the first of which was commenced by Mr Stolz against ClubsNSW.  

The litigation and the events surrounding it have been afoot for more than two years (since early 2020) and predate — and have no connection with — any diagnosis of Mr Stolz’s ill health, the diagnosis of which ClubsNSW was informed on or around early June 2022.  

Mr Stolz has been legally represented and advised at all times. He is currently represented by Xenophon Davis, a law firm established by former Senator and anti-gambling advocate Nick Xenophon. 

Proceedings Commenced by Mr Stolz 

Mr Stolz began the litigation when, in early February 2020, he commenced proceedings against ClubsNSW claiming certain employment-related payments (Mr Stolz alleges that he was at all times an employee, not a contractor) and making claims that he had been defamed.  

Mr Stolz is still actively pursuing his legal claim against ClubsNSW. As ClubsNSW is the defendant in these proceedings it has no right to simply discontinue the litigation. 

In or about November 2019, ClubsNSW became aware that Mr Stolz, following his resignation, registered the following business names to a company linked to him (Amethyst Industries Pty Ltd): 

• ClubCompliance 
• ClubSAFE consulting 
• ClubSAFE Premium 
• Club Comply 
• ClubGRANTS 
• ClubPATHWAYS 
• ClubSAFE Ambassador 
• ClubsHR 
• Club Director’s Institute. 

Member Clubs will note that the above business names are identical and/or similar to a number of ClubsNSW’s existing trademark registrations, as well as a number of common law trademark rights acquired by ClubsNSW over time.  

As of September 2022, some remain in his possession. 

ClubsNSW wrote to Mr Stolz regarding the business names and requesting that he cease holding them. Concurrently, ClubsNSW notified Member Clubs via circular that Mr Stolz had registered the above names and that ClubsNSW considered this to be an infringement on its trademarks. 

Mr Stolz claims the circular defamed him and is seeking $1.9 million in damages. 

ClubsNSW says in its defence that Mr Stolz has no entitlement to the payments he claims, and ClubsNSW has not defamed him. Importantly, truth is a defence to defamation. Accordingly, ClubsNSW is defending those proceedings, which are due to be heard in December 2022. 

Proceedings Commenced by ClubsNSW 

Shortly after Mr Stolz commenced the above proceedings, ClubsNSW became aware that Mr Stolz had retained a large amount of information which ClubsNSW considers to be its proprietary information. 

A court-ordered disclosure regime — consented to by Mr Stolz — identified approximately 2.3 million files relating to ClubsNSW in the possession of Mr Stolz and his wife (see Registered Clubs Association of New South Wales v Stolz [2021] FCA 576 at paragraphs 6 to 8 at this link). 

In April 2020, ClubsNSW commenced proceedings against Mr Stolz claiming, among other things, that Mr Stolz retained ClubsNSW information in breach of his contractual obligations and engaged in the unauthorised disclosure of that information to third parties (including competitors of ClubsNSW) for his commercial gain. Those proceedings are defended by Mr Stolz.  

In the context of these proceedings, Mr Stolz has communicated with the media and published his own commentary on social media which, in part, portrays him as a 'whistleblower' and makes allegations that ClubsNSW seeks to 'silence' him. ClubsNSW's position is that Mr Stolz is not a 'whistleblower', and that it is acting properly to protect its interests and those of its Member Clubs. 

The statements made by Mr Stolz to the media and his social media posts have previously been the subject of an interlocutory judgment of the Federal Court of Australia in Registered Clubs Association of New South Wales v Stolz (No 2) [2021] FCA 1418 (No 2 Judgment).  

In that judgement, the Federal Court stated at paragraph 170 that:  

“[Mr Stolz has] embarked on a pattern of behaviour calculated to bring pressure to bear on [ClubsNSW] in respect of its conduct of the proceeding, through media and public comment that condemns [ClubsNSW] for bringing and maintaining its proceeding against the respondents. It suggests that the opportunity to condemn is exploited every time [ClubsNSW] takes a significant step in the proceeding...” 

and at paragraph 159: 

“…uncontradicted evidence suggests that from the time when proceeding was in contemplation, Mr Stolz has sought to generate the public narrative, through the media, that [ClubsNSW] has made its claims, and brought its proceeding, against him and Mrs Stolz as nothing more than an act of retribution – to 'bash' a whistleblower."   

"… the evidence suggests that the object of [Mr Stolz's] conduct has been to arouse not just sympathy for Mr Stolz’s cause, but also to foment public condemnation of the applicant for bringing and maintaining its proceeding, with the object of bringing pressure to bear on the applicant to influence its decision-making in, and in respect of, the proceeding, including whether it should persevere with them, and/or to impede [ClubsNSW's] conduct of the proceeding."  

and at paragraph 171: 

“On the evidence before [the Court], it is clearly arguable that Mr Stolz’s conduct has had, and if continued is likely to have, the real, clear, and definite tendency to interfere with the course of justice in this case.”   

Member Clubs can view the judgment referred to above at this link. 

It is ClubsNSW’s position that, in his recent media communications, Mr Stolz has breached court orders, including those arising from the above interlocutory judgment, and in those circumstances has had to initiate contempt of court proceedings against him. This is the subject of an application filed by ClubsNSW in July 2022, which is also in progress and has not yet been allocated a hearing date. ClubsNSW is seeking for this application to be heard as soon as possible so that the factual position can be properly explained through a court judgment to avoid any misrepresentation or misreporting of the facts.  

While Mr Stolz has maintained in the media that he is a whistleblower motivated by a desire to reform the industry, his actions and their consequences have demonstrated other motivations. Mr Stolz has posted the personal contact details of a number of current and former ClubsNSW employees. He also distributed the contact details of ClubsNSW’s external lawyers. The public distribution of those contact details is both a breach of privacy and clearly unrelated to the compliance history or obligations of clubs. Some of those individuals and others who work for ClubsNSW have received numerous communications from members of the public, some of which ClubsNSW considers threatening and offensive. One of many examples includes: “I hope you catch cancer and die … If you have kids I hope they die too. Painfully. You scum f**k fa***t c**t.” (Censored for the purpose of this ClubsNSW circular.) 

In relation to the substance of Mr Stolz’s allegation that the club industry has low levels of compliance with anti-money laundering requirements, ClubsNSW does not and never has collected information about Suspicious Matter Reports directly from clubs. This information is collected by AUSTRAC and is highly confidential. Accordingly, Mr Stolz is not, and has never been, in a position to assess those matters.  

ClubsNSW recognises that some in the media have an ideological agenda against gaming machines. It is also unfortunate that Mr Stolz has continued to use the media to pursue his agenda despite the Federal Court’s orders (including those orders made in the No 2 Judgment) and given proceedings are still ongoing. As a party to court proceedings, ClubsNSW is obliged to respect, abide by and maintain the integrity of court processes.