Halaka v Liberal Party of Australia New South Wales Division

[2016] NSWSC 1620

Supreme Court

New South Wales

Medium Neutral Citation:	Halaka v Liberal Party of Australia New South Wales Division [2016] NSWSC 1620
Hearing dates:	9 November 2016
Decision date:	17 November 2016
Jurisdiction:	Equity
Before:	Stevenson J
Decision:	Proceedings dismissed
Catchwords:	UNINCORPORATED ASSOCIATIONS - requirement for procedural fairness in constitution of defendant - such requirement able to be waived in specified circumstances - where State Executive of defendant formed opinion that those circumstances existed - whether State Executive acted bona fide in forming that opinion - whether plaintiff sustained onus of showing State Executive did not act bona fide - in any event whether as a matter of discretion any relief should be granted
Legislation Cited:	Parliamentary Electorates and Elections Act 1912 (NSW)
Cases Cited:	Australian Workers’ Union v Bowen (No 2) (1948) 77 CLR 601 Paton v Sydney Press Club (1940) 57 WN (NSW) 57 Wilcox v Kogarah Golf Club Ltd (1997) 14 ACLC 421
Texts Cited:	P Young, C Croft and M L Smith, On Equity, (2009, Lawbook Company)
Category:	Principal judgment
Parties:	Ihab Adel Halaka (Plaintiff) Liberal Party of Australia New South Wales Division (Defendant)
Representation:	Counsel: J Loxton (Plaintiff) S Duggan (Defendant)   Solicitors: Robert Balzola & Associates (Plaintiff) Harpur Phillips (Defendant)
File Number(s):	SC 2014/44340

Judgment

1. The plaintiff, Mr Halaka, is a member of the defendant, the Liberal Party of Australia, New South Wales Division (“the Party”).

2. The Party is an unincorporated association and a political party registered under Pt 4A of the Parliamentary Electorates and Elections Act 1912 (NSW).

3. The Party is governed by its Constitution. The controlling body of the party is its State Council. The State Executive of the Party has the day to day management of the Party, subject to the Constitution.

4. Mr Halaka was at all material times the president of the Wentworthville Young Liberals Branch of the defendant (“the Branch”).

5. On 7 February 2014 the State Executive, by a series of motions, suspended the Branch until 28 March 2014.

6. A number of Party conferences were due to be held on 28 March 2014. Suspension of the Branch, if effective, would also have suspended Mr Halaka’s rights to attend and vote at those conferences.

7. On 12 February 2014, Mr Halaka commenced these proceedings seeking a declaration that the State Executive’s decision of 7 February 2014 was void and an injunction restraining the Party from preventing Mr Halaka and other office bearers from voting at those conferences.

8. On or about 19 February 2014, the Court was informed that Mr Halaka no longer sought interlocutory relief. It was common ground before me that the Branch’s suspension was lifted at around this time and that, as things turned out, Mr Halaka was not impended from voting at such conferences as he was entitled.

9. Nonetheless Mr Halaka, by an amended statement of claim filed on 1 November 2015 seeks declaratory relief to the effect that the decisions of the State Executive of 7 February 2014 were not reached bona fide and were void.

10. In my opinion, Mr Halaka has not made out his case. The proceedings should be dismissed.

The Constitution

11. Mr Halaka’s claim involves consideration of the terms of the Constitution.

12. Clause 20.2.1 of the Constitution provides that the “State Executive may suspend a Branch”.

13. Clause 20.2.2 of the Constitution deals with the “Procedure for Suspending a Branch” and provides, relevantly:

“State Executive may suspend a Branch…under clause 20.2.1 only if each member of State Executive and that Branch…is given at least 28 days’ notice in writing that a motion to suspend the Branch…will be put at a meeting of State Executive and with respect to that motion State Executive follows the procedural fairness provisions in Appendix 5.”

14. Appendix 5 is headed “Procedural Fairness” and states, relevantly:

“If this Constitution requires a Body of the Division to follow procedural fairness with respect to a…motion, that Body must:

(1)   give each of its members notice in writing that the…motion will be put at a general meeting of the Body;

(2)   give the Member who is the subject of the complaint or motion the particulars of any complaint against that Member;

(3)   give the Member who is the subject of the complaint or motion an opportunity to address the general meeting of the Body at which the…motion is put; and

(4)   carry any motion by not less than 60% of the members of the Body present and voting at the general meeting.”

15. Clause 20.2.5 provides that a Branch suspended by the State Executive has the right to appeal to the State Council, which may confirm or quash the suspension.

16. Clause 20.2.6 provides that once any period of suspension of a Branch expires “the rights of the Branch are deemed to have continued without interruption from the time it was suspended until the expiration of the suspension”.

17. Centrally to the dispute before me, cl 13.2.4 of the Constitution, entitled “Special Powers of State Executive” provides, relevantly:

“If State Executive decides that…future compliance with…any…procedural requirement specified in this Constitution:

(1)   will:

(a)   result in damage to the reputation of the Division [the Party] or Organisation [the Liberal Party of Australia];

(b)   cause embarrassment to the Division or Organisation, the Party or a Parliamentary Leader;

(c)   reduce the Division’s or Organisation’s prospects of success in any election; or

(d)   amount to a waste of resources…

State Executive may by motion of 75% of those present and voting, waive the requirement and substitute any other mechanism or formal or procedural requirement it thinks fit.”

18. In order that cl 13.2.4 be enlivened it is necessary that the State Executive “honestly and bona fide” form the opinion contemplated by the clause (see Australian Workers’ Union v Bowen (No 2) (1948) 77 CLR 601 at 638).

19. There was no dispute before me about that, nor as to the proper construction of these provisions. It was common ground that, but for a decision made bona fide under cl 13.2.4 of the Constitution, the State Executive was obliged by cl 20.2.2 of the Constitution to afford procedural fairness to the Branch in accordance with Appendix 5.

The decision of the State Executive of 7 February 2014

20. On 7 February 2014, the State Executive:

1. stated that it had formed an opinion in accordance with cl 13.2.4;

2. purported to waive the procedural fairness provisions in Appendix 5; and

3. purported to suspended the Branch until 28 March 2014.

21. The minutes of the State Executive’s meeting are as follows:

“2.   Wentworthville Young Liberal Branch

2.1   The Branch was ‘frozen’ in June 2013 following an acrimonious and ultimately adjourned AGM, on the basis that further meetings of the Branch in the lead up to the Federal Election may compromise the Division’s prospects.

2.2   The adjourned AGM was the subject of two rulings by the Secretariat, both of which required extensive and time consuming investigations and one of which was appealed to the Disputes Panel.

2.3   The Branch was ‘unfrozen’ on 31 October 2013, following a meeting attended, in order to ensure the maintenance of control, by the then State Director, the Manager of the Voluntary Party & General Counsel, the Deputy Campaign Manager and the Membership Manager.

2.4   The next meeting of the Branch was the subject of a request for a ruling by the Secretariat and an appeal to the Disputes Panel. The ruling was, once again, only possible following an extensive investigation.

2.5   The Branch held a further meeting in late January 2014. Since then, allegations of intimidation and harassment have been brought to the Secretariat’s attention. This is not the first time such allegations have been made in relation to this Branch. Such allegations were also made in relation to the adjourned AGM. The Secretariat investigated these allegations as best as it could, but was unable to make a recommendation to State Executive.

2.6   Every meeting of the Branch since June 2013 has resulted in extensive disputation and caused the Division to expend resources it does not possess. Threats of intimidation have also been made against Branch members which, in the Secretariat’s view, should be appropriately referred to the Police.

2.7   In light of the above, the Secretariat recommended that proceedings be commenced to dissolve the Branch. State Executive was of the view that this course of action was overly hasty and extreme, but that the Branch had shown itself as being presently incapable of contributing to the Division at any level without generating controversy and wasting Secretariat resources. On this basis, State Executive was minded to immediately suspend the Branch and its executive from all conference and selection committee participation, including nominating for conference office bearing positions and voting on same, until the next meeting of State Executive on 28 March 2014, by which time a suitable mediator, appointed by the State President, will have conducted mediation in relation to disputation in respect of the Branch and reported back to State Executive.”

22. The State Executive then passed motions to the effect that:

1. compliance with the requirements in cll 20.2.2 and 20.2.3 pertaining to “notice of proposed branch suspension” and procedural fairness would result in damage to the reputation of and embarrassment to the Division and the State Parliamentary Leader, waste resources and reduce the Division’s prospects of success at the 2015 State election;

2. the requirements in cll 20.2.2 and 20.2.3 be waived and the Branch be suspended until conclusion of the 28 March 2014 meeting of State Executive; and

3. a suitable party member be appointed to conduct a mediation in respect of the Branch and report to the State Executive in that regard at the 28 March 2014 meeting.

23. The minutes thus reveal that the State Executive resolved that the Branch be suspended and that, having regard to the matters set forth in pars 2.1 to 2.7 of the minutes, compliance with the procedural fairness provisions in Appendix 5 and, in particular, the requirement to give “notice of proposed branch suspension”, would result in damage to the reputation of and embarrassment to the Division and the State Parliamentary Leader, would reduce the Division’s prospects of success in the 2015 State election and would amount to a waste of resources; and thus satisfy each of the requirements of cl 13.2.4(1) of the Constitution.

24. The reference in pars 2.5 and 2.6 of the minutes to allegations and threats of intimidation was based, at least in part, on a number of emails sent by Branch members to an officer of the Party’s Secretariat.

25. Those emails were sent between 26 January and 3 February 2014. In one, a branch member said that she had received a telephone call from a private number saying that she should “back off” and “not show up” to a general meeting of the Branch scheduled for 28 January 2014. Another made a similar complaint and encouraged the Party’s Secretariat “to intervene to put a stop to the bullying that is currently taking place at this branch”. Another referred to “threats” received by a branch manager and stated that the writer did “not believe this branch should be operational in the future”.

26. Mr Loxton, who appeared for Mr Halaka accepted that:

1. the matters recited in pars 2.1 to 2.7 of the minutes accurately stated the facts leading up to the 7 February 2014 meeting of the State Executive;

2. the State Executive had in fact formed the opinion set out in par 2.8; and

3. the State Executive had no obligation to give reasons for its decision to form that opinion.

27. Mr Loxton submitted, however, that the conclusion implicit in the opinion set out at [22(1)] above could not follow from the matters set out at pars 2.1 to 2.7 of the minutes and that it followed from that proposition, and from the fact that the Party had offered no justification for the conclusion beyond the matters set out in pars 2.1 to 2.7, and the emails to which I have referred, that the State Executive had not reached the conclusion bona fide.

28. I do not accept that submission.

29. The State Executive referred to the fact that:

1. the Branch was “frozen” in June 2013 following an “acrimonious” annual general meeting;

2. there had been two rulings by the Party’s Secretariat into the circumstances of the adjournment of that annual general meeting;

3. the Branch was “unfrozen” on 31 October 2013 but at the subsequent meeting the Secretariat was requested to make a ruling, which was referred to the Party’s Disputes Panel;

4. there were allegations of intimidation and harassment in relation to the meeting of the Branch convened for late January 2014; and

5. every meeting of the Branch since June 2013 had resulted in extensive disputation and had caused the Party to expend valuable resources.

30. Ultimately, the State Executive’s conclusion, unchallenged before me, was that the Branch had shown itself as being “presently incapable of contributing to the Division at any level without generating controversy and wasting Secretarial resources” (see par 2.7 of the minutes).

31. As Mr Duggan, who appeared for the Party, submitted, in effect and although it did not use this language, the State Executive concluded that the Branch was currently dysfunctional.

32. In those circumstances, my opinion is that it was open to the State Executive to conclude that, if it gave notice to the Branch of it proposed suspension, and otherwise afforded the branch the procedural fairness opportunities referred to in Appendix 5, representatives of the Branch would contest the matter and thereby cause further resources of the Party to be expended.

33. Whether or not it would flow from that fact that the Party’s reputation would be damaged, that embarrassment would be caused to the Division, the Party or the State Party leader, that the Party’s electoral prospects would be reduced, or whether such expenditure would be wasted, are matters about which minds might differ.

34. In an affidavit, Mr Halaka said that he had not been told by anyone on the State Executive, and had himself no reason to believe, that “the dispute over the control of the [Branch] would cause the [Party] to fear any of those consequences or to believe that they would occur”.

35. But that is not the point.

36. The question is whether Mr Halaka has shown that the State Executive’s conclusion that these results would flow from compliance by it with Appendix 5 bespeaks a want of bona fides on its part.

37. The question, as posed by Mr Loxton was, in effect, whether the conclusion that the State Executive reached was so unreasonable or irrational that it could only be explained by attributing a want of bona fides to the State Executive. Mr Loxton emphasised that Mr Halaka eschewed any suggestion of mala fides.

38. In that regard, Mr Duggan drew my attention to the observations of Jordan CJ in Paton v Sydney Press Club (1940) 57 WN (NSW) 57 at 58, in a similar context, as follows:

“In such a case, the question whether the Board’s decision is unreasonable becomes relevant only where the reason which it states for its opinion can be regarded as so obviously absurd that it may be inferred that it was not really of the opinion at all. An opinion which is sought to be supported only by an obvious absurdity may fairly be regarded as never having existed.”

39. I am not persuaded I should reach this, or any similar, conclusion. The State Executive’s decision may have been robust; it may not be the only decision to which the State Executive could have reasonably come. But the State Executive was faced with a most troublesome branch, which was (on the agreed facts) riven with internal discord and which was subject to very recent allegations of intimidation and harassment. In those circumstances, I cannot conclude that the State Executive acted otherwise than bona fide.

40. For that reason the proceedings should be dismissed.

Discretion

41. In any event, had I come to the conclusion that the State Executive did not act bona fide, a real question arises as to whether, as a matter of discretion, any relief should be granted.

42. I have real doubt as to the “practical” utility of making the declarations sought by Mr Halaka (for example see Wilcox v Kogarah Golf Club Ltd (1996) 14 ACLC 421 at 424 per Young J (as his Honour then was) and see generally P Young, C Croft and M L Smith, On Equity, (2009, Lawbook Company) at [16.820]).

43. It is now almost three years since the State Executive’s purported suspension of the Branch. The suspension was brief and, as things turned out, did not affect Mr Halaka’s right to vote at the conferences in March 2014. The State Executive’s decision was made in the context of the particular facts to hand. No precedent was set. The Branch could have appealed to the State Executive against the suspension (see [15] above). No issue arises as to the proper construction of the Constitution.

44. However, in view of the conclusion to which I have come, it is not necessary for me to consider this aspect of the matter further.

Conclusion

45. The proceedings should be dismissed with costs.

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Decision last updated: 17 November 2016