AUSTRALIAN KARATE FEDERATION (QLD) INC and AUSTRALIAN KARATE FEDERATION INCORPORATED

[2004] QSC 53

[2004] QSC 053

SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION

FRYBERG J

No BS 2539 of 2004

AUSTRALIAN KARATE FEDERATION (QLD) INC	Applicant
and
AUSTRALIAN KARATE FEDERATION	Respondent
INCORPORATED
BRISBANE ..DATE 19/03/2004
ORDER

WARNING: The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal offence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for their protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those categories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings.

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19032004 T26/EAM19 M/T 3/2004 (Fryberg J)

HIS HONOUR: This is an application by an incorporated	1
association, the Australian Karate Federation (Queensland) the Australian Karate Federation Incorporated. The latter is an incorporated association incorporated under the equivalent

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New South Wales legislation. It has both individual members and, what it calls, affiliate members some of whom are State bodies such as the applicant.

The relationship between the applicant and the respondent has,

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in recent times, been somewhat turbulent. The applicant was a
member of the respondent and was previously recognised by it
as a State Association for Karate. That position came to an
end, whether lawfully or not does not now matter, in August

last year when the respondent introduced a new set of rules

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and shortly prior to that time terminated the applicant's
membership.

The problems which now arise, arise under the new rules. The interest which the applicant has in the proceedings arose in

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this way. From toward the end of last year until recently,
the applicant has embarked on a course designed to achieve
reinstatement as a member of and recognition by the

respondent.

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It wrote to the respondent, referred to certain provisions of the respondent's new rules, and required that it be recognised as a "recognised State body". The respondent took legal advice and ultimately responded that, very reluctantly - I put 19032004 T26/EAM19 M/T 3/2004 (Fryberg J) 2 ORDER 60

it mildly, the language is perhaps a little more colourful	1
than that - it accorded the applicant that recognition.
The applicant subsequently applied for membership of the respondent as an affiliated body, a status to which it became

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entitled by reason of its recognition. Whether it was
necessary for the applicant to seek membership as a separate
step or whether such membership flowed automatically from the
rules, is now in dispute. But it does not seem to me to

matter because the respondent certainly treated the applicant

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as a member adopting the view that membership flowed
automatically by reason of the recognition.

This application today, therefore, must be approached on the basis that the applicant is both a recognised State

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Association and a member of the respondent.

During the period when the applicant was not a member and was
not recognised from about August 2003, another body in

Queensland was given recognition and presumably became a

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member. That means that with the accession of the applicant
to membership and recognition, there are now two Associations
in Queensland which hold the same status. It is plain on the
evidence that the respondent finds that situation intolerable.

It is not surprising that it should do so.

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Although it is not a true federal body, the respondent has a
number of characteristics of such a body and two persons
representing a State would be embarrassing. More
19032004 T26/EAM19 M/T 3/2004 (Fryberg J) 3 ORDER 60

interestingly, there is apparently some arrangement whereby	1
Associations operating within a particular State, which have the status of recognition from the respondent, receive money from State governments. The evidence before me indicates that
recognition is worth something between $40,000 and $60,000 to

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the applicant.

The respondent having, as I said, reluctantly conferred the status upon the applicant has now set about doing something to rid itself of the problem. The correspondence which has

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emanated from the respondent indicates that it proposes first to place a resolution before a special general meeting of the respondent to be held this evening to amend its rules.

Among the amendments is one which provides that, if an

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affiliate membership is obtained through the according of
recognised State Association to a body, then upon revocation
of such status, affiliate membership automatically ceases and
has no further effect. That proposed change must be read in

the light of the provisions governing affiliate membership and

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recognition. They are to be found in rules 5 and 7 of the
rules of the respondent. Those rules make it clear that the
committee of the respondent may revoke the status of

recognised State Association at any time.

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It follows therefore that if the rule change which is proposed to be implemented this evening and which apparently has the support of some 93 per cent of the membership of the respondent is carried, all that will stand between the 19032004 T27/JLP15 M/T 3/2004 (Fryberg J) 4 ORDER 60

applicant and the termination of its membership is a	1
resolution to revoke its status as a recognised State association.
It is clear from the material, in my view, that the respondent

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is intent upon adopting that course and I therefore do not
think that the proceedings are premature as submitted by Mr

Hackett on behalf of the respondent.

The proposed resolution does not contain any saving in respect

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of any member of the association, and I am now referring in
particular to rule 7 paragraph 11, for any person whose
membership exists at the date of the change. It seems to me
that this is tantamount to a rule which effectively permits

the termination of membership of a person of the description

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in the rule.

Mr Hackett submitted that that did no more than mirror the existing position under the rules. He submitted that the committee already had the power to terminate and that

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continuing recognition as a recognised State body was a
requirement for the continuation of affiliated membership. I

do not read the existing rule in this sense.

Recognition confers a right to become a member. The word is

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"become". There is no requirement for recognition in order
for an affiliated member to be or remain a member. I
therefore think that the proposed rule changes the present
position and does so in a way which is adverse to the
19032004 T27/JLP15 M/T 3/2004 (Fryberg J) 5 ORDER 60

applicant and which I have no trouble in concluding is	1
deliberately intended to be used to terminate the applicant's membership upon the termination in the future of its recognition.

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The evidence does not disclose any intent on the part of the respondent to use the powers of expulsion contained in the rules to expel and, as I understand the submissions on behalf of the applicant, paragraph 1(a) of the application is not intended to refer to any such proposal but rather is intended

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to refer to the procedure being adopted this evening.

I see no need for an injunction in the terms of paragraph
1(a), at least not at the present time, but I am prepared to

grant an injunction in terms of paragraph 1(b). I should

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however make it clear that the injunction would not extend to
a resolution which contained not only the proposed changes but
also provision to preserve the position of any existing

member.

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Whether it is within the power of the respondent to permit the amendment of special resolutions in such a way is something about which I cannot comment.

Mr Hackett submitted that the applicant being merely an

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affiliate member of the respondent and therefore not entitled
to vote, lacked the standing to complain about the proposed
motion and meeting. That is not to me an acceptable
submission. It is true that the applicant does not have a
19042004 T28/AMS37 M/T 2/2004 (Fryberg J) 6 ORDER 60

right to vote. That is an incident of being an affiliate	1
member. However that does not mean its membership is valueless and it certainly does not permit the respondent to terminate the applicant's membership without reasonable cause.

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Mr Hackett also submitted that the rules of the respondent contain a dispute resolution procedure in rule 15. However that procedure is apt only for disputes between members, not for a dispute of the present sort.

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As regards the relief sought in paragraph 1(c), that is an injunction to prohibit the respondent from taking steps to revoke the applicant's status as a recognised State
association, I am not persuaded by the evidence at this stage

that the respondent proposes to ignore the requirements of

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rule 10 of the model rules. On the material before me it does seem that any dispute between the parties as to the revocation of the applicant's status ought to be dealt with in the manner set out in that rule before any revocation is to occur.
Moreover, the respondent has invited the applicant to show

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cause why the revocation should not occur and the applicant
has responded. The respondent's reaction to that is unknown.

In my view the respondent should be given the opportunity to demonstrate its bona fides. If it accepts what the applicant

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has submitted by way of response to the requirement to show cause, there will be no dispute over the revocation because there will not be a revocation. It may be a little naive to

consider that possibility having regard to the relations
19042004 T28/AMS37 M/T 2/2004 (Fryberg J) 7 60

between the parties. If the respondent does not accept the	1
submissions, as seems highly likely, it should in my view of the evidence before me, avail itself of the procedure set out by rule 10. Any attempt to exercise the power of revocation without doing so would appear on the evidence to be misguided.

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It is, however, a matter for the applicant to demonstrate the existence of such an intention. It has not at any stage sought assurances on this point from the respondent. It has not asserted the existence of a dispute on this point and on

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the whole I am not satisfied that the matter is, in relation to that paragraph, yet ripe for an injunction. I would hope that the need for the parties to return to Court will be
obviated by what I have just said about the procedure which

ought to be followed by the respondent. It is to be hoped

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that it will not try to present the applicant with a fait
accompli but rather will consider the position carefully in
the light of what has been said. No doubt if it acted

otherwise, the applicant would have remedies in this Court.

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The respondent also submitted that there is no jurisdiction in this Court to deal with the question. The respondent is incorporated in New South Wales. The evidence is a little uncertain about whether it carries on business in Queensland but it would appear that it probably does so. Its secretary

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is located in Queensland and correspondence to the applicant
has emanated from the secretary in this Stage.
19032004 T29/NW1 M/T 3/2004 (Fryberg J) 8 60

More importantly, when the matter was called on this morning,	1
the respondent appeared in the matter by counsel. The appearance was not conditional. Mr Hackett submitted that the unconditional appearance should not be treated as submitting to the jurisdiction because his outline when later handed up

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showed that the respondent was, in fact, challenging the
jurisdiction. In my view, that is not good enough. There has

been, I think, a submission to the jurisdiction.

In the end, I do not think that matters very much. As I say,

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it is quite likely that the respondent is carrying on business vesting legislation and that is a sufficient power for me to exercise if all else fails. There is, I think, no issue of
in the jurisdiction and also I have the jurisdiction of the

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significance as to jurisdiction.

One matter of some concern is the sufficiency of the applicant's proposed undertaking as to damages. The only evidence is that the applicant is solvent. That does not

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satisfy me. The applicant ought also to provide security to
support its undertaking in the sum of $10,000 in a form
satisfactory to the Registrar by 4 p.m. on next Monday, 22

March.

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...

HIS HONOUR: I should say that a further reason for my desire
to have the undertaking supported by security is the delay
19032004 T29/NW1 M/T 3/2004 (Fryberg J) 9 ORDER 60

which has occurred in bringing these proceedings. That delay	1
is unexplained and has possibly led to members of the respondent incurring some cost.
...

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HIS HONOUR: Direction Number 3 will be: I direct that the parties inquire as to the willingness of the Queensland Karate Association Incorporated to participate in a mediation and provide a joint report to me on the prospects of a mediation

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succeeding, giving reasons for their views, within 28 days.

...

HIS HONOUR: I order in accordance with the draft initialled

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by me and placed with the papers.

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10 ORDER 60