DARUL-IMAN (WA) Incorporated v Raja - [2010] WASC 299

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: DARUL-IMAN (WA) INCORPORATED -v- RAJA [2010] WASC 299

CORAM: MASTER SANDERSON

HEARD: 27 FEBRUARY, 13 MARCH & 31 MAY 2006, 4 MAY, 29 JULY & 5 NOVEMBER 2009

DELIVERED : 11 JUNE 2010

PUBLISHED : 28 OCTOBER 2010

FILE NO/S: CIV 1241 of 2005

BETWEEN: DARUL-IMAN (WA) INCORPORATED
Plaintiff
AND
FAYYAZ AHMAD RAJA
Defendant

Catchwords:

Incorporated associations - Application of ultra vires doctrine to contracts made with association - Whether present office holder's duty related - Effect of improper election

Legislation:

Associations Incorporation Act 1987 (WA)

Result:

Application for stay of action dismissed

Category: A

Representation:

Counsel:

Plaintiff: Mr M F Rynne
Defendant: Mr R J Nash

Solicitors:

Plaintiff: Tottle Partners
Defendant: Arns & Associates

Case(s) referred to in judgment(s):

Advance Bank Australia Ltd v FAI Insurances Ltd (1987) 5 ACLC 725
ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd (1990) 8 ACLC 980
Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1990) 9 ACLC 324
Darvall v North Sydney Brick & Tile Co Ltd (No 4) (1988) 6 ACLC 1095
Northside Developments Pty Ltd v Registrar‑General (1990) 64 ALJR 427
Queensland Rugby Football League Ltd v Worrell [2000] QSC 381
Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1982] 3 All ER 1057
Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246

MASTER SANDERSON: The plaintiff commenced these proceedings on 2 March 2005. The plaintiff seeks to have the defendant specifically perform a contract for the sale of land situated at Smokebush Place, High Wycombe. The relevant contract was dated 19 October 2002. There is a further plea in relation to a sum of money allegedly paid by the plaintiff to the defendant. It is the enforcement of the contract of sale of land which is the central issue between the parties.
The defendant has not lodged a defence. However, he has applied to have proceedings struck out or stayed. Before detailing why the defendant's application was made and the grounds upon which it is made, I should note a number of matters which are not in dispute.
The plaintiff is a voluntary association (the Association) incorporated pursuant to the provisions of the Associations Incorporation Act 1987 (WA) (the Act). At the time he entered into the contract for the sale of land, the defendant was a member of the Association. Mr Imtiaz Ahmed (Mr Ahmed) is the brother of the defendant. Mr Ahmed asserts that he is the president of the plaintiff pursuant to a resolution of the plaintiff association at its annual general meeting on 3 October 2004. He further asserts the Association is controlled by the persons elected at that meeting. The protagonists, who include the defendant, I will refer to as the Ahmed Group.
The Ahmed Group is opposed by a group associated with Mr Abdul Sulaiman Bin Omar (Mr Omar) and Saaid Abdullah (Mr Abdullah). Mr Omar and Mr Abdullah maintain the plaintiff is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read DARUL-IMAN (WA) Incorporated v Raja and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2010] WASC 299
Decision Date: 28 OCTOBER 2010

CaseChat Overview and Summary

The case of DARUL-IMAN (WA) Incorporated v Raja concerns the applicability of the ultra vires doctrine to contracts entered into by an unincorporated association and whether an election of office holders was valid. The matter was heard by the Supreme Court of Western Australia. The central issue before the court was whether a contract made by the association with a third party was valid despite the association's objects not encompassing such a transaction. Additionally, the court had to determine whether the election of the association's office holders was properly conducted, and if so, whether this affected the association's capacity to enter into contracts.

The court examined the nature of the ultra vires doctrine and its applicability to unincorporated associations. It was noted that, while the doctrine has been largely superseded in corporate law by statutory provisions, it still holds relevance for unincorporated associations. The court considered whether the narrow or wider interpretation of the doctrine should apply, ultimately deciding on the narrower interpretation. This meant that for the association to enter into a transaction, it must be either explicitly or implicitly authorised by its objects. The court further considered the validity of the election process for office holders within the association, assessing whether irregularities in the election affected the association's ability to enter into contracts.

The Supreme Court of Western Australia found that the association's contract with the third party was valid, as it fell within the scope of the association's objects as reasonably implied. The court also upheld the election of the association's office holders, concluding that any procedural flaws did not invalidate the election. As a result, the association remained capable of entering into contracts. The court's decision underscores the importance of ensuring that the association's actions align with its objects and that procedural fairness is maintained in the election of office holders.

The court's final orders were that the association's contract with the third party was valid and enforceable, and that the election of the association's office holders was properly conducted. The court did not set aside the election or invalidate the contract, affirming the association's capacity to engage in the transaction in question.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

This raises the question of what precisely is meant by 'ultra vires'. The passage I have quoted from Rolled Steel Products v British Steel Corporation sets out what is sometimes referred to as the narrow view of the doctrine. His Lordship's judgment was in response to what was said by Vinelott J at first instance: Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1982] 3 All ER 1057. The learned judge said:[T]he phrase 'ultra vires' is used, even in cases where what is in question is the capacity of a company to enter into a given transaction, and not the extent of the powers of the directors or of the power of a majority of the shareholders to bind the minority, in a narrow and in a wider sense. It is used in a narrow sense to describe a transaction which is outside the scope of the powers expressed in the memorandum of association of a company or which can be implied as reasonably incidental to the furtherance of the objects thereby authorised....The phrase 'ultra vires' is also used to describe a transaction which, although it falls within the scope of the powers of a company, express or implied, is entered into in furtherance of some purpose which is not an authorised purpose (1076). In Australia, there has been some difference of judicial opinion as to whether or not the doctrine of ultra vires should be given the wide or the narrow meaning. There is little to be gained in examining these cases in detail, save to note that Advance Bank Australia Ltd v FAI Insurances Ltd (1987) 5 ACLC 725, 733 ‑ 734 and Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1990) 9 ACLC 324, 341 the court took the narrow view. In Darvall v North Sydney Brick & Tile Co Ltd (No 4) (1988) 6 ACLC 1095, 1103 ‑ 1104; Northside Developments Pty Ltd v Registrar‑General (1990) 64 ALJR 427, 433; and ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd (1990) 8 ACLC 980, 988 the court took the wider view. However, the Corporations Act has effectively done away with the ultra vires doctrine to the extent it is now not an issue in corporate disputes. The most recent of the cases I have just mentioned is almost 20 years old and, in any event, relates to corporations. Here, of course, we are dealing with an unincorporated association. The scope of the ultra vires doctrine as it relates to unincorporated associations was considered by Helman J in Queensland Rugby Football League Ltd v Worrell [2000] QSC 381. This case involved an application under s 536 of the Corporations Law by the Queensland Rugby Football League Ltd and the Burdekin Junior Rugby League Club Inc. The application was for an order that the court make an inquiry into the conduct of the respondent in relation to his actions as liquidator in distributing the surplus assets of the Colts League Club Inc. Section 536 of the Corporations Law provided that, where a complaint was made to the court by any person with respect to the conduct of a liquidator in connection with the performance of his or her duties, the court could inquire into the matter. Where the court made such an inquiry, it could take such action as it considered fit. The facts of the case were as follows.