Healy v The Real Estate Institute of Western Australia (Inc) - [2004] WASC 163

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: HEALY & ORS -v- THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA (INC) [2004] WASC 163

CORAM: COMMISSIONER ODES QC

HEARD: 28-30 JUNE 2004

DELIVERED : 27 JULY 2004

FILE NO/S: CIV 2830 of 2001

BETWEEN: MAXWELL RAYMOND HEALY
First Plaintiff
JENNIFER ANNE STAGEMAN
Second Plaintiff
COUNTRY AND METRO REAL ESTATE PTY LTD (ACN 084 788 563)
Third Plaintiff
AND
THE REAL ESTATE INSTITUTE OF WESTERN AUSTRALIA (INC)
Defendant

Catchwords:

Incorporated Associations - Eligibility for membership - Appeal by aggrieved applicant - Whether rules applicable on appeal those in force at date of application for membership or date of appeal - Whether appeal stricto sensu or in form of rehearing - Parties bound by rules "for the time being in force" - Meaning of

Legislation:

Associations Incorporation Act 1987 (WA)

Result:

Action dismissed

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr M J McPhee
Second Plaintiff            :     Mr M J McPhee
Third Plaintiff               :     Mr M J McPhee
Defendant:     Mr G R Donaldson

Solicitors:

First Plaintiff                :     Michell Sillar McPhee
Second Plaintiff            :     Michell Sillar McPhee
Third Plaintiff               :     Michell Sillar McPhee
Defendant:     McCallum Donovan Sweeney

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

Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Coulton v Holcombe (1986) 162 CLR 1
Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192
Ellison v Thomas (1862) 31 LJ Ca 867
Hall & Ors v Job & Ors (1952) 86 CLR 639
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41
Maxwell v Murphy (1957) 96 CLR 261
Nurses Memorial Centre of SA Inc v Beaumont (1987) 44 SASR 454
Re Ryan; Ex parte Travaglini [1979] WAR 23
Rodway v The Queen (1990) 169 CLR 515
The Chiropractic & Osteopathic College of SA Inc v Struthers & Ors, unreported; FCt of SA; Judgment No 5874; 2 December 1981
Victrawl Pty Ltd v Telstra Corp Ltd (1995) 131 ALR 465

Case(s) also cited:

Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656
Bailey v New South Wales Medical Defence Union Ltd 184 CLR 399
Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410
Church of Scientology v Woodward (1982) 154 CLR 25
Clarke v ALP (SA Branch) Hurley & Ors & Brown [1999] SASC 365
Commonwealth v Verwayen (1990) 170 CLR 394
Fitzgerald v Masters (1956) 95 CLR 420
Gardner v Dairy Authority of New South Wales (1977) 18 ALR 55
Gra-Ham Australia Pty Ltd v Perpetual Trustees WA Ltd (1989) 1 WAR 65
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Harris v Harris [1952] 1 All ER 401
Healy & Ors v The Real Estate Institute of Western Australia Incorporated [2003] WASCA 32
In re Duty on the Estate of the New University Club (1887) QBD 720
JN Taylor Holdings Limited (In liquidation) v Bond (1993) 59 SASR
Lindsay Petroleum Co v Hurd (1874) LR5 PC 221
Mahoney v Lindsay & Ors (1980) 33 ALR 601
Orr v Ford (1989) 167 CLR 316
Peter Turnbull and Company Pty Ltd v Mundus Trading Company (Australasia) Pty Ltd (1954) 90 CLR 235
Peters' American Delicacy Co Ltd v Heath (1939) 61 CLR 457
South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch 496
Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133
Trenorden v Martin [1934] SASR 340
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

COMMISSIONER ODES QC: This action deals with a dispute between the parties in relation to unsuccessful attempts by the plaintiffs in early 1999 to become members of the defendant. The defendant is an association incorporated in terms of the Associations Incorporation Act 1987 (WA) ("the Act"). As such, the defendant is governed by a set of articles or rules which have been amended or substituted from time to time. Much of the factual background is common ground between the parties, who consented to the handing in of an Agreed Bundle of documents (Ex 1 – 76) ("Agreed Bundle") on which in addition to the evidence adduced, they relied in argument.

The Background

The essence of the dispute relates to the effects of amendment to the eligibility and appeal provisions of the articles of the defendant and the consequence thereof on the relief presently claimed by the plaintiffs.
On 3 December 1998, at a special general meeting of the defendant, its members unanimously resolved to adopt a set of amendments to the articles which, relevantly for present purposes, altered its eligibility criteria for membership and the appeal provisions ("the New Rules").
The defendant assumed that those amendments came into operation from the date on which the resolution was passed by its members and thereafter proceeded to apply them inter alia to all applications for membership. Unknown to the defendant at the time, the provisions of s 17(3) of the Act required such amendments to be registered with the Ministry of Fair Trading (as it was then called) before they became enforceable.
This oversight on the defendant's part only emerged later (on 16 July 1999) and the New Rules (to which a further amendment was added by resolution of its members on 8 July 1999) were eventually registered with the Ministry on 27 October 1999, from which date they became of force and effect.
Because the determination of the issues in the action depends to a large extent upon a proper construction of the articles of the defendant as it existed from time to time as well as the terms of the application form for membership completed by the plaintiffs, it is necessary to set out the provisions thereof which are relevant and to which the argument of counsel was primarily directed.

The New Rules

The articles of the New Rules, adopted in December 1998, which are pertinent for present purposes provided relevantly as follows:
"30.Eligibility for Membership
30.1No person shall be eligible for membership of any of the classes of membership stipulated in article 29:
30.1.1unless that person agrees in writing to abide by the rules, articles, codes, regulations, by‑laws, resolutions and policies of the Institute; or
30.1.2if that person:
…
(d)has been convicted of an indictable offence:
…
30.2Subject to Article 30.1 a person's eligibility for membership of the various classes … shall be as follows:
…
30.2.2Corporate member
(a)Any corporation, firm or partnership which is a licensed agent SUBJECT TO THE REQUIREMENT THAT all directors, partners and branch managers of the proposed Corporate Member must be either Ordinary Members or Associate members unless …
…
31.9Any applicant for membership aggrieved by a decision of the Council or Executive Committee under this Article to reject an application for membership may appeal against such a decision pursuant to Article 45.
…
CESSATION OF MEMBERSHIP
39.39.1 A member shall cease to be a member of the Institute upon:
39.1.1The member ceasing to hold the qualifications stipulated in Article 30.1 as being required for membership;
…
APPEALS
45.1Any person who is given a right to appeal against a decision pursuant to the provisions of these Articles may so appeal by notice in writing addressed to the Executive Director; such notice of appeal to be lodged with the Executive Director, together with a written statement of the grounds of that appeal, within fourteen (14) days from the date of the decision appealed against.
45.2All appeals pursuant to Article 45 shall be heard by an Appeals Board made up of the following persons appointed by the Council from time to time:
(a)an office bearer member of Council;
(b)two ordinary members of Council;
(c)a member of the Institute who is a member of one of the arbitration panels created by the Council pursuant to Article 44; and
(d)a legal practitioner." (Emphasis added)

The Amendment to the New Rules

The amendments to the New Rules, passed by the defendant at a special general meeting held on 8 July 1999 provided that unless the corporate entity became a member of the defendant, no individual associated with that entity as a director or partner could become a member in isolation (TS 169).
These alterations are reflected by the addition of a proviso to the eligibility criteria of an ordinary member and a minor amendment to the eligibility of a corporate member in article 30.2 which relevantly provided as follows:
"30.2Subject to Article 30.1 a person's eligibility for membership of the various classes stipulated in article 29 shall be as follows:
30.2.1Ordinary member
(a)a person (not being a corporation, partnership or other body corporate) who is:
(i)a licensed agent;
… or
(b)…
PROVIDED THAT no person shall be entitled to be an Ordinary member unless that person is a director or partner of an entity that is a Corporate Member or that person is a Corporate Member by virtue of being the sole proprietor of a real estate business.
30.2.2Corporate member
(a)Any corporation, … PROVIDED THAT the entity concerned is actively conducting a real estate business and is the holder of a current triennial certificate … SUBJECT TO THE REQUIREMENT THAT all directors, partners, branch managers … must be either Ordinary Members or Associate Members …" (Emphasis added)
The previous policy of the defendant, now enshrined in the New Rules as amended, was that the focus was placed on corporate membership. The corporation was the trading entity which carried on real estate business and the eligibility provisions were primarily aimed at that entity. Individual ordinary membership was no longer countenanced unless he/she was a director or partner of a corporate member or was a sole proprietor of the business.
I pause to note at this stage that whenever in these reasons reference is made to "the New Rules", that term includes the July 1999 Amendment to those rules unless the context indicates otherwise.
The plaintiffs applied for membership on 22 January 1999 ie after the New Rules had been approved by a Special General Meeting in December but before they had been registered on 27 October 1999 with the Ministry as required by the Act. The rules which therefore should have been applied to the plaintiffs' applications in January 1999 were those to be found in the 1993 Articles ("the Old Rules").

The Old Rules

The eligibility and appeal provisions under the Old Rules relevantly provided as follows:
"30.ELIGIBILITY FOR MEMBERSHIP
(a)The Council may prescribe from time to time standard, conditions and qualifications … as prerequisites for eligibility for election and admission to membership of the Institute, such eligibility being governed by compliance with such standards and conditions set by the Council …
(b)No person shall be eligible for membership of any class unless he is a person of good character and good business reputation …
…
86.RIGHT OF APPEAL
(a) Any person aggrieved by a decision or recommendation of the Council, Executive Committee, … may appeal against any such decision or recommendation to either:
…
or
(ii)An Independent Arbitrator appointed by the President for the time being of the Institute of Arbitrators (Western Australia Chapter)." (Emphasis added)
The then existing Code of Practice required the appeal to be lodged within 14 days of the decision.

The Application Form

When the plaintiffs applied for membership on 22 January 1999, they were required to complete and sign an application form, the relevant portion of which, for present purposes, provides as follows:
"I declare I am a Partner/Director … and agree … to abide by and be bound by the Rules, Code of Ethics, and directions of the Council of the Institute for the time being in force so long as it (sic) is a member of, or an applicant for membership of the Real Estate Institute of Western Australia …" (Emphasis added)
As can be seen from the above, the criteria for admission to membership of the defendant depended, under the Old Rules, upon the applicant being a person "of good character and good business reputation" while the New Rules precluded membership to several categories of persons among whom was a person who "has been convicted of an indictable offence". The other substantial difference between the two sets of rules for present purposes was that an aggrieved applicant for membership was afforded a right of appeal under the Old Rules read with its Code of Practice, within 14 days of the Council's decision inter alia to an appointed arbitrator whereas the New Rules required the aggrieved party to lodge an appeal within that time frame to an Appeals Board consisting of five individuals including four members. Apart from the number of persons comprising an Appeals Board being reduced from five to three individuals (including one member) the remaining corresponding articles of the presently updated rules are identical to the New Rules set forth above.
The first plaintiff had been convicted of an indictable offence in 1995 for attempting to pervert the course of justice. After the applications for membership were made, two members of the defendant lodged objections to the application for membership by the first plaintiff based on that conviction. He and the second plaintiff were both directors of the third plaintiff, but on 29 March 1999, he resigned as a director and became a branch manager of the third plaintiff while the second plaintiff remained a director and principal.
Applying the New Rules erroneously before they were registered in terms of the Act, the defendant refused the applications for membership of the first, second and third plaintiffs and notified them thereof on 16 July, 4 August and 12 July 1999 respectively. In its letter to the second plaintiff in her capacity as principal of the third plaintiff, the defendant informed her that applicants for membership had a period of two weeks to appeal against the Council's decision of rejection, commencing from the date of the letter. (Ex 62; Agreed Bundle p 245).
On 16 July 1999, the defendant discovered that its failure to register the New Rules meant that they were ineffective. The defendant did not advise the plaintiffs of its discovery. As indicated above there is uncertainty as to when the plaintiffs became aware that the New Rules were ineffective until they were registered, possibly sometime before December 1999 but certainly no later than 1 June 2000 when informed thereof by their solicitor.
The appeal against the defendant's rejection of the plaintiffs' applications for membership was lodged on 1 May 2001, requiring the appeal to be heard and determined by an arbitrator according to the eligibility provisions of the Old Rules.
The defendant relying on the New Rules, contends that the appeal is futile broadly because:
(i)an arbitrator has no locus standi to adjudicate an appeal;
(ii)the plaintiffs fail to satisfy the eligibility criteria under the New Rules; and
(iii)the appeal has been lodged out of time.
The plaintiffs now seek an order declaring that an arbitrator appointed in terms of the Old Rules to be validly appointed and declaring that any award made by him on appeal to be valid and binding on the parties.
It is necessary to set out the pleadings briefly in order to deal with each of the issues raised therein.

The Pleadings

(a) The Statement of Claim

The plaintiffs applied for membership in or about January 1999 it being alleged that in each case a contract was entered into on or about 28 January 1999 (partly in writing and partly to be implied by conduct) between the plaintiffs and the defendant. The contract – it is alleged – set out the terms upon which the plaintiffs' application for membership would be regulated.
It is alleged that in the case of each of the three plaintiffs the contract was created by the following:
(i)the written application completed by each on or about 22 January 1999;
(ii)the payment of a nomination fee by the third plaintiff on behalf of the first and second plaintiffs in relation to their applications;
(iii)the receipt by the defendant of the nomination fee for the plaintiffs on or about 28 January 1999;
(iv)the granting to the plaintiffs of provisional membership pending the processing of the application;
(v)the defendant allowing the plaintiffs to use stationery, logos and materials of the defendant pursuant to such provisional membership and;
(vi)the processing by the defendant of the respective applications.
It is pleaded that it was an express term of each agreement that the plaintiffs would be bound by the Rules, Code of Ethics and directions of the Council of the defendant "at the time being enforced (sic) so long as the plaintiff was a member or an applicant for membership of the defendant". (Paragraph 14 of the amended statement of claim).
It is further alleged to have been an express written, alternatively an implied, term of the agreement that, in dealing with the application of each of the plaintiffs, the defendant would abide by and be bound by those rules at the time being in force at the date of the application for membership or alternatively by the rules in force on the date when the application was dealt with by the defendant.
The plaintiffs allege that by article 86 of the Rules then applicable at the time of their application, provision was made for a right of appeal against an adverse decision. As quoted above article 86 of the Old Rules conferred a right of an appeal upon any aggrieved person inter alia to an independent arbitrator appointed by the President for the time being of the Institute of Arbitrators (Western Australian Chapter).
In breach of the contracts pleaded above the plaintiffs state that the defendant rejected their applications by notice given in letters from the defendant to the first and second plaintiffs dated 16 July 1999 and 26 July 1999 respectively.
It is alleged that the rejection of the plaintiffs' applications was in breach of the agreements pleaded because the defendant did not, and refused to, apply the rules of the defendant which were applicable at the time the plaintiffs applied for membership and at the time those membership applications were dealt with, namely the Old Rules.
The plaintiffs then aver that pursuant to article 86 the plaintiffs sought and obtained the nomination of Mr C D Raymond, a barrister of Perth, to act as an arbitrator in the appeal by the plaintiffs against the refusal by the defendant to admit them as members.
The plaintiffs allege that the defendant has refused and continues to refuse to recognise the right of the plaintiffs to nominate the arbitrator.
The plaintiffs therefore approach the court seeking declarations in the terms referred to above.

(b) The Defence

In its defence the defendant basically admits that the Old Rules were the rules of the defendant up to and including 3 December 1998 alternatively to and including 27 October 1999. (I interpolate at this stage to record that it was common ground at the hearing that the Old Rules continued until 27 October 1999 when the New Rules were registered).
In relation to the application by the third plaintiff the defendant alleges that it was at all material times its rule that a corporation was ineligible for membership as a corporate member unless all directors and managers of branches of the business of the corporation were individual members of the defendant. It pleads further that at all material times a person was ineligible for membership as an ordinary member unless the person was a director of a corporate member or a sole trader.
The defendant pleads that if the Old Rules remained the applicable rules of the defendant until 27 October 1999 and the New Rules did not take effect until that date then for the purposes of article 30 of the Old Rules it was a prescribed standard, condition and/or qualification and a prerequisite for eligibility for admission to membership that a person should not have been convicted of an indictable offence.

The defendant denies specifically that any contract was created between the plaintiffs and the defendant in relation to the plaintiffs' application for membership.
It pleads in the alternative if contracts were created in relation to those applications for membership then:
(i)it was an express term of those contracts that the plaintiffs would abide by and be bound by the Rules, Code of Ethics and directions of the Council of the defendant for the time being in force and
(ii)by virtue of the express contractual term referred to above and the factual matters pleaded relating to the substitution of the Old Rules by the New Rules that any reconsideration of the plaintiffs' applications which took place in the future was to be assessed under the eligibility criteria provided for under the New Rules.
The defendant further pleads that if as at January 1999 the applicable rules were the Old Rules then at all material times the Members' Code of Practice required that any appeal of a decision made pursuant to article 32 of the Old Rules was to be made within 14 days of the notification of the decision to the aggrieved person. Notification of the decision was given to the plaintiffs on 16 July, 4 August and 12 July 1999 respectively.
The defendant avers that in or about May 2001 the plaintiffs sought to appeal the decisions of the defendant by the purported appointment of an arbitrator. It accordingly avers that the appeals are out of time in terms of the Old Rules.
The defendant pleads that as from 27 October 1999 the applicable rules governing the defendant were not the Old Rules but the New Rules, and accordingly avers that as from that date at the latest those rules have governed the defendant with the result that the declaration sought by the plaintiffs is purely theoretical, abstract and hypothetical. The defendant makes the latter averment by relying on the New Rules which prohibit a person from membership if he or she has been convicted of an indictable offence and any member convicted of such an offence shall ipso facto cease to be a member.
The defendant avers that the first plaintiff was tried and convicted on an indictment of conspiracy to pervert the course of justice in 1995 and that accordingly pursuant to the New Rules even if the first plaintiff was to be deemed a member at any time as and from 27 October 1999, by reason of the conviction, he would instanter cease to be a member.
It is alleged further for the purposes of article 30 of the Old Rules that at all material times it has been "a prescribed standard, condition and/or qualification and a prerequisite for eligibility for election to membership" that a person should not have been convicted of an indictable offence. It is accordingly alleged that even if the first plaintiffs' eligibility for membership of the defendant were to be assessed with reference to the Old Rules he would be ineligible for such membership.
In relation to the application for membership of the third defendant it is averred that pursuant to both sets of rules no corporation is eligible for membership unless all directors and branch managers are members. By reason of the fact that the first plaintiff has at all material times been a director and/or branch manager of the third plaintiff the latter has at all material times been ineligible for membership by reason of the first plaintiff's conviction.
In relation to the rejection of the second plaintiff's application it is averred that both sets of rules require a person seeking membership to be a director of a corporate member. By reason of the fact that the second plaintiff has at all material times been a director of the third plaintiff which in turn is ineligible for membership the second plaintiff as a director thereof could not qualify.
It alleges further that to the extent that the court is exercising its equitable jurisdiction the plaintiffs are by reason of laches precluded from seeking the declaration sought.
The defendant avers further that the plaintiffs have each been aware of the above matters from June 2000 and have been aware that the declaration sought is purely theoretical, abstract and hypothetical and that by reason thereof, the proceeding is an abuse of the process of the court. (It should be noted that this defence was neither argued before me nor canvassed by the defendant in evidence or in its written submissions. I accordingly do not propose to deal with it further).

(c) The Defendant's Counterclaim

The defendant has filed a counterclaim in which it basically relies on the allegations made by it in the defence and states that at the hearing of any appeal the arbitrator would be required to conduct any consideration of the plaintiffs application for membership under the eligibility criteria stipulated in the New Rules and that the plaintiffs cannot satisfy those criteria.
In the alternative, the defendant avers that the plaintiffs cannot satisfy the eligibility criteria for membership stipulated in the Old Rules and the standards, conditions and qualifications prescribed thereunder and that the arbitrator appointed would be bound to reject the plaintiffs' application for membership at the hearing of any appeal.
The defendant accordingly claims:
(i)a declaration that at the hearing of any appeal to an arbitrator the latter would be required to conduct any consideration of the plaintiff's application for membership under the eligibility criteria stipulated in the New Rules;
(ii)the plaintiffs cannot satisfy those criteria under the New Rules or the Old Rules and;
(iii)that an arbitrator would be bound to reject the plaintiff's application for membership at the hearing of any appeal.

(d) The Reply and Defence to Counterclaim

In their reply, the plaintiffs, apart from contesting the defendant's construction of the Old and New Rules, raise an estoppel defence in relation to the failure to lodge an appeal within 14 days as prescribed under both sets of rules ("the time limit"). The plaintiffs plead that it would be unconscionable for the defendant to be able to rely on the time limit because:
(i)although the defendant notified the third plaintiff on 12 July 1999 of the time limit, the defendant was referring to the then inapplicable New Rules;
(ii)in so advising the third plaintiff, the defendant failed to advise it that the New Rules were of no effect and that it had applied the incorrect rules and therefore the incorrect criteria;
(iii) the defendant failed to advise the third plaintiff of a right to appeal to an arbitrator under the Old Rules;
(iv)in the case of the first and second plaintiffs, the defendant failed to notify them of a right to appeal at all;
(v)the defendant failed to provide them with a copy of or refer them to the Old Rules;
(vi)in so doing, the defendant misled the plaintiffs as to their rights of appeal. (Papers for the Judge p 31 – 32).

The Contract Contention

Although the defendant has denied that there was a contractual relationship existing between each of the plaintiffs and the defendant, that proposition was faintly argued before me. As indicated above, the defendant is an association incorporated under the Act. Its objects are, consistently since its formation and subsequent incorporation, directed inter alia towards the advancement of the knowledge of its members and the promotion of the reputation and status of its members, not only within the profession but within the broader community. Those objects embrace the awarding of scholarships and bursaries, co‑operation with colleges, institutes and universities for the purpose of lecturing and providing lectures and seminars and establishing a degree or diploma in Real Estate Law.
It is clearly not a social club but an organisation of professional people formed to promote and improve the education and standing of its members. "Considerable financial and other business implications" attach to being members of the defendant. (cf The Chiropractic & Osteopathic College of SA Inc v Struthers & Ors, unreported; FCt of SA; Judgment No 5874; 2 December 1981).
As was stated in the joint judgment of the High Court in Hall & Ors v Job & Ors (1952) 86 CLR 639 at 649:
"Such an association is an exclusive society of persons between whom a nexus is provided by a contract, to which they and no others are parties and by which they agree to pursue together some common purpose of their own. It is only in accordance with the contract between them, or by their common consent, that members may leave or be excluded from the society and that new members may be admitted to it. All the mutual rights and obligations of members as such depend upon the terms of their agreement, and may be altered or abrogated in any manner which the agreement may provide or which the members may unanimously approve."
The application form for membership which the plaintiffs were each required to sign in which they agreed inter alia "to abide by and be bound by the Rules, Code of Ethics and directions of the Council … for the time being in force … so long as it is … an applicant for membership" serves to underline the contractual nature of the relationship between the parties. (See also Nurses Memorial Centre of SA Inc v Beaumont (1987) 44 SASR 454 at 466‑467).
By reason of the aforegoing, I find that a contractual nexus between each of the plaintiffs and the defendant has been established, enabling the plaintiffs to invoke whatever rights which may have been conferred upon them upon a proper construction of the contents of the defendant's rules and the application forms signed by each of them.
The plaintiffs' argument as to the ambit of their rights focussed on the corresponding obligation of the defendant to abide by its articles "for the time being in force" ("the phrase"). Counsel argued that the phrase, properly construed, obliged the defendant to apply the terms of the articles as they existed at the date of the application for membership or as at the date the application was dealt with by the defendant. The contract – so the argument ran – was fixed in its terms and could not be affected in any way by an alteration to the articles of the defendant made subsequent to those dates.
Counsel for the plaintiffs accordingly contended that the parties were contractually bound to apply those provisions which existed under the Old Rules in relation to criteria for membership and to any appeal which was lodged by the plaintiffs thereafter, no matter when in the future the litigation took place.
I am unable to accept the plaintiffs' contentions in this regard. It is conceded that the phrase or words to a similar effect may have several meanings. Thus the words "for the time being" (which plaintiffs' counsel argued had for present purposes the same meaning as the phrase):
"may according to its context, mean the time present, or denote a single period of time; but its general sense is that of time indefinite, and refers to an indefinite state of facts which will arise in the future and which may (and probably will) vary from time to time."
(Stroud's Judicial Dictionary, 6th ed, Vol 3 p 2668; Ellison v Thomas (1862) 31 LJ Ca 867 at 869).
Viewed in its context I am of the opinion that the phrase is used in the general sense referred to above and that it deals not only with the rights and obligations of the parties at the time of the application for membership but also with their subsequent rights and obligations as members. The rules and regulations referred to in the application form are intended to govern the conduct of prospective members not only in relation to the time at which they apply for membership but to regulate their conduct for the duration of their membership. That being so, the phrase upon which the plaintiffs rely must mean those rules and regulations which are "in force at any given time" or "in force from time to time". If that were not the proper construction to be applied to the phrase it would mean that the conduct of members of the defendant would have to be gauged and regulated by different sets of rules depending upon the time at which they were admitted to membership. Founding members and those of long standing would be governed by different and antiquated rules and regulations long since cast aside by members in general meeting as being unsuited to the changing needs of the association. The absurdity of that situation is self evident.
Counsel for the plaintiffs sought to circumvent the absurdity of the proposition by arguing that it was only the eligibility and appeal provisions of the Old Rules which were frozen while an applicant would be bound by all the other rules which may be changed from time to time. No basis is furnished by counsel as to why only those two rules should be singled out for being static while the membership of the defendant in all other respects would be regulated by rules which are altered from time to time, and I am unable to conceive of one.
The pleadings aver that the above construction was, in the alternative, an implied term if not an express one. For the reasons adverted to by me above that the construction advocated by the plaintiffs would give rise to the absurdity of having a multitude of different sets of rules applicable to members, I find that it is not possible, on the basis of the criteria required to be applied in relation to implied terms, to imply such a term (see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347, 404; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 65, 117‑118, 121; Greig & Davis, "The Law of Contract", page 547 et seq).
Counsel for the plaintiffs further contended that the defendant was in breach of that contract in failing to advise the plaintiffs of:
(a)the correct criteria for membership;
(b)the right of an appeal to an independent contractor; and
(c)the procedure for instituting any such appeal.
It should be noted in regard to the latter contention that apart from the fact that there has been a failure to plead such a term, (save in relation to the estoppel plea) there does not appear to me to have been any obligation on the part of the defendant upon a proper construction of the contract to advise the plaintiffs in relation to the matters averred or at all. The high water mark of the contractual obligation is an obligation by the parties "to abide by and be bound by" the rules and regulations of the defendant. An obligation to advise cannot be extracted from the terms embodied in the application form nor can it be implied in any way from the pleaded obligation to abide by and be bound by the rules.
In light of the above I have come to the conclusion that the wording of the phrase in the application form on its proper construction spells out an obligation to apply and to abide by the rules and regulations of the defendant as they exist from time to time. I also conclude that there was no obligation upon the defendant to advise the plaintiffs as alleged. It follows therefore that the construction contended for by the plaintiffs cannot prevail. By reason of this conclusion it is unnecessary for me to deal with the defendant's defence relating to the meaning in article 39 of the New Rules of the term "ceasing to hold the qualifications" for membership.

The Time Contention and Estoppel

It is clear from a recital of the appeal provisions of the Old and the New Rules that any aggrieved party (which includes the plaintiffs) was and is entitled to appeal against an adverse decision of the Council of the defendant within a period of 14 days of that decision. It is common ground that the plaintiffs failed to lodge an appeal in that time. In answer to that defence, the plaintiffs' counsel urges upon me the argument that there has been a failure on the part of the defendant to advise his clients of the existence of the right of appeal and of the time limit within which to exercise that right. I have already dismissed that contention above.
In any event, it was pointed out to the second plaintiff in her capacity as principal for the third plaintiff in a letter addressed to her on 12 July 1999 that there was a right to appeal and that such right was to be exercised within a period of two weeks of the decision (Ex 62 Agreed Bundle p 245) ("the letter"). Counsel for the plaintiffs submitted that the letter related only to the application of the third plaintiff and dealt with the provisions under the New Rules which were at that stage inoperative. I have difficulty in accepting the argument that because the letter dealt with the third plaintiff's application under the New Rules that the directors of the third plaintiff were not made aware that a right of appeal having a time limit existed. Nor can it be argued that an appeal process was not brought to their attention so as to alert them of the need to lodge an appeal within a limited time period. The letter was addressed to the second defendant as principal of the third defendant and clearly notified both the second and third plaintiff of the existence of a right of appeal and of a time limit in relation thereto. It is not an answer to contend that the plaintiffs were entitled to ignore that notification on the basis, unknown to them as well as the defendant, that such a right and time limit related to a set of articles which were at that stage not yet registered and therefore ineffective.
The proposition borders on the unarguable when consideration is given to the testimony of the first plaintiff that he was handed a copy of the Old Rules when he and the second plaintiff completed their application forms in January (TS 96 Ex A1 par 16). A perusal of the Old Rules must have alerted them first to the existence of a right of appeal and secondly, to the possibility that the incorrect criteria for membership might have been applied to their applications.
Having been so alerted by the letter read with the Old Rules the plaintiffs should, together with their solicitor (appointed by them in May 1999 (Ex 37 Agreed Bundle 155)) have made further independent enquiries as to their rights. Counsel's opinion was sought (TS 106) which was furnished on 17 July 2000 (TS 153), some one and a half months after the latest date (1 June 2000) on which the plaintiffs discovered that the New Rules were not effective until they were registered in 27 October 1999. The first plaintiff in fact testified that he discovered the true position as early as December 1999 (TS 121) or earlier (TS 103, 105). The second plaintiff deposed that she also became aware in December 1999 (TS 130‑131) of the non‑applicability of the New Rules at the time of application for membership. Their evidence further reveals that after a rapid interchange of correspondence between the plaintiffs' solicitors and the defendant ending in June 1999, little was done thereafter for a considerable period to assert their rights under the applicable articles.
The argument proffered by the plaintiffs as above is therefore, in my view, merely an ex post facto attempt to justify their failure to take any meaningful steps to ascertain their rights and to appeal timeously or to appeal within a reasonable time after discovery of the non‑applicability of the New Rules at the time of applying for membership.
The only answer which the plaintiffs are able to provide in relation to the time limit failure is to rely on the doctrine of estoppel.
As appears from the plaintiffs' reply, the defence of estoppel is confined to the time limit point and rests upon the failure of the defendant:
(i)to advise the plaintiffs in the respects set out above; and
(ii)to provide a copy of the Old Rules which contained the applicable rules relating to the appeal. (Papers for the Judge p 29‑ 30).
It is contended that because of these failures, the plaintiffs were misled as to their rights, and that it would be unconscionable for the defendant to invoke the time limit against them.

As stated above the first plaintiff in cross‑examination conceded that he, in the company of the second plaintiff, was given a copy of the Old Rules when they lodged their application forms in January 1999. The admission made by the first plaintiff of the receipt of the Old Rules coupled with the conclusion arrived at by me that there was no obligation on the part of the defendant to furnish advice to the plaintiffs, completely undermines the very foundation upon which the pleaded estoppel defence is founded.
In any event the failure to furnish a copy of the Old Rules (even ignoring the first plaintiff's admission in the latter regard) does not in any way stamp the conduct of the defendant with the label of unconscionability. The rules were readily available to any applicant at the Ministry of Fair Trading on the payment of a fee. There was, on my finding, no obligation on the defendant to render advice. I find, on the evidence adduced that the defendant laboured under a bona fide misapprehension that the New Rules were triggered by the resolution of members in December 1998. The amendments to the Old Rules were in no way introduced to defeat the plaintiffs' rights, as they were passed by the members prior to their application for membership. Indeed the evidence of Griffith, the chief executive officer of the defendant, that the introduction of the New Rules was prompted by the requirements of the ACCC (TS 158‑159) was completely unchallenged.
No cross‑examination or argument was aimed at demonstrating that the failure to register the New Rules was anything other than a bona fide oversight. The unchallenged evidence of Griffith was that while he was aware that alterations to the rules were required to be registered, he was unaware that they were of no force and effect until they were registered. The fact that the plaintiffs were misled by being erroneously provided with extracts from the New Rules by the defendant's solicitors in the correspondence (upon which great emphasis was placed on behalf of the plaintiffs) does not for the above reasons, provide a basis for finding unconscionable conduct on the part of the defendant.
Accordingly I am of the view that there is nothing in the evidence and arguments adduced to conclude that the defendant's conduct was unconscionable.
Counsel for the defendant has furthermore argued, that, in any event, the defendant did not misrepresent the position and therefore did not mislead the plaintiffs. The information which was requested of the defendant related to the date upon which the New Rules were adopted by the defendant (see the letter of the plaintiffs' solicitors to the defendant dated 10 May 1999 – Ex 42, Agreed Bundle page 162 and facsimile from the plaintiffs' solicitors to defendants' solicitors dated 14 May 1999 – Ex 45 Agreed Bundle p 195). The response given by the defendant's solicitors on the same day was that the articles were "adopted" by the defendant on or about 3 December 1998 (Ex 46, Agreed Bundle p 199). No request was ever directed to the defendant by the plaintiffs as to when the New Rules were registered as it did not occur to the plaintiffs or the plaintiffs' solicitors that their efficacy was dependent upon registration in terms of the Act. The defendant's counsel therefore submits that the defendant did not misrepresent the position to the plaintiffs. I am not entirely comfortable with the proposition that when a request was made by the plaintiffs or by their solicitors on their behalf as to when the rule was "adopted" that it was not understood by all parties that the information sought related to when the New Rules became operative. It may well be that the defendant's solicitors were also unaware of the non‑registration and of the consequence thereof. However, it is not necessary for me to come to a firm conclusion on that argument by reason of the conclusions arrived at by me in relation to the other issues discussed herein.
Furthermore, I am of the opinion, even if an estoppel could be spelt out from the facts set out above, that the consequences of such a defence could not operate indefinitely. At most they could apply only until such time as the plaintiffs became aware of the true position. Although the first plaintiff in his evidence gave varying dates upon which he became aware that the New Rules were ineffective until they were registered (both he and the second plaintiff stated they could have become aware in December 1999 as mentioned above) the latest date upon which they became so aware, on the version most favourable to them, was 1 June 2000 when they were informed by their then solicitor of the true position. That being so, the plaintiff should have been galvanized into immediate action from that date. There is no basis in my view in either equity or in law upon which a party misled by another is able to rely upon a misrepresentation for an indefinite period after discovery of the falsity thereof particularly in relation to a time limit for the lodging of an appeal. In actual fact the appeal was lodged some 11 months later on 1 May 2001.
Counsel for the plaintiffs has argued that the delay of 11 months could not be described as unreasonable and that the estoppel persisted until the date upon which the appeal was in fact lodged. I cannot accept that submission. The fact that the conduct of the defendant may have given rise to an estoppel does not afford a licence to adopt a supine attitude and to ignore time limits once the true factual situation is discovered. Even assuming therefore that the estoppel operated until such time as the plaintiffs were apprised of the true state of affairs at the latest (in their favour) on 1 June 2000 I find that the failure to lodge an appeal within the time limit or indeed within 11 months thereafter is fatal to their claim.
For the reasons stated above, I find that the estoppel defence cannot succeed and that the defendant's allegation that the appeal was lodged out of time is well‑founded.

The Relief Claimed

Perhaps the most cogent arguments raised on behalf of the defendant related to the relief claimed by the plaintiffs. As stated above, the plaintiffs seek an order declaring that the appointment of the arbitrator is a valid appointment and that the ruling to be made by him will be binding on the parties. In argument the plaintiffs' counsel indicated that should that relief be granted, he envisaged that the appointed arbitrator would be required to hear evidence in relation to the eligibility of the plaintiffs in terms of the Old Rules and that witnesses would be called to satisfy the eligibility criteria thereunder, namely the "good character and good business reputation" of the plaintiffs. He correctly indicated that the fact that the first plaintiff had been convicted of an indictable offence would not necessarily have disqualified him from membership under the criteria applicable at the time when the Old Rules were operative.
It is clear from the above that the envisaged appeal would be one by way of a rehearing and counsel for the plaintiffs – correctly in my view – conceded that that would be the nature of the appeal before the arbitrator. In Da Costa v Cockburn Salvage & Trading Pty Ltd (1970) 124 CLR 192 at 208‑209, the High Court dealt with the various kinds of appeal and described an appeal by way of a rehearing in the following terms:
"This does not mean that the appeal is a complete rehearing as a new trial is. It means that the case is to be determined by the Full Court, its members considering for themselves the issues the trial Judge had to determine and the effect of the evidence he heard … but applying the law as it is when the appeal is heard not as it was when the trial occurred …" (Per Windeyer J (emphasis supplied))
This dictum was approved by that Court in Coulton v Holcombe (1986) 162 CLR 1 at 7.
In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 at 619‑620) Mason J (as he then was) adverted to the distinction between an appeal in the strict sense (stricto sensu) and an appeal by way of a rehearing. His Honour continued as follows:
"The appeal by way of rehearing involves rehearing of the cause at the date of the appeal, that is 'by trial over again on the evidence used in the Court below; but there is special power to receive further evidence'. On such an appeal, the rights to the parties must be determined by reference to the circumstances as they then exist and by reference to the law as it then exists; the appellate court may give such judgment as ought to be given if the case at that time came before the court of first instance." (At 619‑620) (Emphasis supplied).
(See also Re Ryan; Ex parte Travaglini [1979] WAR 23).
If therefore the appeal were to be heard (be it before the arbitrator under the Old Rules or before the Appeals Board under the New Rules) the provisions applicable to its determination would not be those existing at the time when the application for membership was made but those applicable as at the date of the hearing of the appeal. In the context of the present dispute, the current articles of the defendant (ie the New Rules) would have to be applied. It was properly conceded by the plaintiffs' counsel that had the New Rules been validly registered before their applications for membership were made and considered, those applications would have been correctly rejected.
It follows that even if the incorrect criteria had been applied by the Council of the defendant when it originally considered the applications of the plaintiffs, those same criteria, now current, would have to be applied at the hearing of any appeal with the result that the applications for membership would be bound to fail.
In any event, at the time the appeal was lodged in May 2001, the only entity vested with the power to entertain and determine such appeals was "an Appeals Board", a position which still obtains today. No jurisdiction was conferred upon any single individual to dispose of appeals after 27 October 1999 when the New Rules were registered and came into force.
The existing rights of an applicant to appeal the decision of the Council were in no way affected by the substitution of a sole arbitrator by an Appeals Board. This was not an amendment to the rules of the defendant which modified or abolished substantive rights but one which dealt merely with the pursuit of remedies (Maxwell v Murphy (1957) 96 CLR 261 at 286; Victrawl Pty Ltd v Telstra Corp Ltd (1995) 131 ALR 465 at 479 - 480).
As was stated by the High Court in Rodway v The Queen (1990) 169 CLR 515 at 518:
"The rule at common law is that a statute ought not be given a retrospective operation where to do so would affect an existing right or obligation unless the language of the statute expressly or by necessary implication requires such construction. It is said that statutes dealing with procedure are an exception to the rule and that they should be given a retrospective operation. It would, we think, be more accurate to say that there is no presumption against retrospectivity in the case of statutes which affect mere matters of procedure. Indeed, strictly speaking, where procedure alone is involved, a statute will invariably operate prospectively and there is no room for the application of such a presumption. It will operate prospectively because it will prescribe the manner in which something may or must be done in the future, even if what is to be done relates to, or is based upon, past events. A statute which prescribes the manner in which the trial of a past offence is to be conducted is one instance."
There appears to me to be no reason in principle or logic why the above dictum should not apply to the articles of an incorporated association. The alteration to the composition of an appeal body does not in any way impinge upon the substantive rights of an appellant. It merely regulates the manner in which and the forum before which, those rights are to be pursued.
The replacement of an arbitrator by an Appeals Board was therefore purely procedural, no question of retrospectivity arising for consideration. The cases cited by counsel for the plaintiffs dealing with the interference with pre‑existing rights are not, in my view, germane to procedural alterations which, subject to exceptions not applicable to the present case, speak from the date of their introduction. Applying that approach to the present case all appeals from decisions of the Council of the defendant lodged after 27 October 1999 are to be heard by the Appeals Board. Thereafter it was no longer open to an aggrieved person to appeal to a sole arbitrator.
It therefore follows that the relief sought by the plaintiffs to declare the sole arbitrator as validly appointed and to declare that any decision made by him as binding on the parties would be incompetent. Such an order would fly in the face of the express provisions of the New Rules and would seek to cloak the single arbitrator with a power which no such individual any longer possessed subsequent to 27 October 1999.
By reason of the conclusions arrived at by me above it is unnecessary for me to consider the remaining arguments put forward by counsel for the defendant on the basis of the equitable doctrine of laches. Nor is it necessary for me to consider the argument raised by him that although the New Rules were not registered until 27 October 1999 those rules nevertheless were to be regarded as "standards, conditions and qualifications … as pre‑requisites for eligibility for … admission to membership of the Institute" which were "prescribed" by the Council under cl 30(a) of the Old Rules. I should observe however, that I am not prima facie attracted to that argument as it appears to be an argument the effect of which would circumvent the provisions and underlying purpose of the Act.
It follows for the above reasons that the plaintiffs' action is dismissed.