Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S ECI 2015 000050

IMAM ALI ISLAMIC CENTRE (REG NO. 983405)	Plaintiff
v
IMAM ALI ISLAMIC CENTRE INC (A0035337R)	Defendant

S CI 2015 01299

ALI DIRANI and others (according to the schedule)	Plaintiffs
v
IMAM ALI ISLAMIC CENTRE INC (A0035337R) and others (according to the schedule)	Defendants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	6–9, 13–16, 24 February, 14–17, 20–23 March, 26 April, 8 May 2017
DATE OF JUDGMENT:	31 July 2018
CASE MAY BE CITED AS:	Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc
MEDIUM NEUTRAL CITATION:	[2018] VSC 413	1^st Revision: 27 August 2018

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Proceeding S ECI 2015 000050

TRUSTS – Express trust – Resulting trust – Constructive trust – Where party A provides to party B funds to facilitate settlement of property – Where party A and party B subsequently intend for party C to hold the land on trust for party A – Whether party C holds the property on trust for party A – Party C held to have received property on the condition that it held the property on trust – Party C holds the property on constructive trust for the benefit of party A.

REAL PROPERTY – Indefeasibility of title – Exceptions – Right in personam against registered proprietor – Volunteer purchaser.

STATUTES – Operation and Effect – Interpretation – Whether acts of party B during period of temporary dissolution have valid effect – Where effect of revival of party B is subject to party C’s rights – Constructive trust not prevented from arising – Ontario Corporations Act (RSO 1990, c C-38) s 317(10).

EVIDENCE – Admissibility of evidence – The opinion rule – Where non-expert witness gives evidence as to satisfaction of conditions in an application form – Whether opinion evidence – Held to be evidence of witness’ subjective state of mind; not opinion evidence – Evidence Act 2008, s 76.

Proceeding S CI 2015 01299

ASSOCIATIONS AND CLUBS – Incorporated Associations – Membership – Dispute over current members – Identification of founding members – Whether founding members resigned or abandoned membership – Whether new members appointed in accordance with the association’s rules – Whether purported members nominated in writing by President of association – Whether purported signature on nomination forms was actually signed by President or forged – Declaration in respect of composition of current members.

EVIDENCE – Burden of proof – Standard of proof – Alleged forged signature – Proof of handwriting – Whether purported signature of President on application forms for membership were forged – Held to be forged – Evidence Act 2008, s 140.

EVIDENCE – Admissibility and weight of evidence – Expert evidence – Handwriting comparisons – Whether control signatures used for comparison are those of purported signatory – Selective production of materials to expert.

ASSOCIATIONS AND CLUBS – Incorporated Associations – Committee of management – Officers – Dispute over identity of President – Whether alternative purported Presidents were nominated in accordance with association’s rules – Neither validly appointed.

ASSOCIATIONS AND CLUBS – Incorporated Associations – Oppressive conduct – Declaration of oppressive conduct is unnecessary to remedy any default or resolve any dispute between the parties – Unnecessary to consider oppression allegation – Associations Incorporation Reform Act 2012, ss 68, 69.

PRACTICE AND PROCEDURE – Removal of parties – Oppression allegation aimed at incorporated association, not managers – No relief directed at managers – Not proper or necessary parties – Supreme Court (General Civil Procedure) Rules 2005, r 9.06(a).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R G Craig	Holding Redlich
For the Defendants	Ms M J O’Sullivan	Russell Kennedy

SCHEDULE OF PARTIES

S CI 2015 01299

ALI DIRANI	First Plaintiff/ First Defendant by Counterclaim
-and-
SAID EL-KHISHIN	Second Plaintiff/ Second Defendant by Counterclaim
-and-
SOUHAIL FNEICH	Third Plaintiff/ Third Defendant by Counterclaim
v
IMAM ALI ISLAMIC CENTRE INC (A0035337R)	First Defendant/ Plaintiff by Counterclaim
-and-
ALI AL BAKIRY (also known as ALI SAMI)	Second Defendant
-and-
AHMAD YATIM	Third Defendant

31 JULY 2018

TABLE OF CONTENTS

Defined terms
Introduction
Trust proceeding
Membership proceeding
Parties in the two proceedings
‘The plaintiffs’
‘The defendants’
Mr Al-Ali’s competency and evidence by video-link
Factual background
Trust proceeding
Dissolution and revival of IAIC Canada
Applicable principles - creation and nature of trusts
IAIC Canada and Al-Gadeer: initial purchase and the sister entity proposal
IAIC Canada and Al-Gadeer: Date of transfer to IAIC Australia
IAIC Canada and IAIC Australia: Knowing receipt under Barnes v Addy
IAIC Canada and IAIC Australia: Conditional receipt and acknowledgment
Ontario Corporations Act revisited: IAIC Australia’s rights
Conclusion
Membership proceeding
Introduction
Membership
Mutawalli
Officers
Oppressive conduct
Removal of parties
The future of IAIC Australia
Declaration and orders

Defined terms

Defined term	Para.
2 August letter	118
3 May letter	89
8 May letter	93
18 May letter	94
21 July letter	114
22 September letter	134
24 July letter	115
1998 trustee commission letter	203
2004 special general meeting	221
2013 trustee commission letter	317
ABA	229
AI Act	21
AI Regulations	507
AIR Act	215
Al-Gadeer	4
amended rules	221
annual statement	215
applicants	244
Arabic letter	572
Case Transfer Act	351
centre	2
contested application forms	246
control signatures	561
counterclaim	351
defendants	20
Dirani appointment meeting	334
Dr Al Bakiry	8
Dr Ali	301
Evidence Act	370
expert reports	560
FIRB	117
FIRB approval letter	125
first agency agreement	101
first Dirani appointment letter	312
first power of attorney	155
first report	560
first Toronto meeting	54
forged application forms	248
fourth report	560
Greenvale property	298
Hajj Ali	52
Hassan	244
IAIC Australia	1
IAIC Canada	3
IAIF	318
incomplete marriage certificate	571
Manitoba Companies Act	377
Membership proceeding	7
model rules	167
Mohammad	244
mortgage of land	574
Moussa	271
Mr Abbas	15
Mr Ahmed	208
Mr Al-Ali	5
Mr Al Battat	308
Mr Al-Hamdi	45
Mr Al-Saabary	334
Mr Al-Sukhni	303
Mr Ali	110
Mr Almeri	229
Mr Cooray	319
Mr Dirani	9
Mr Diwan	521
Mr El-Amine	321
Mr El-Khishin	9
Mr Ellyn QC	365
Mr Fakhrualdin	334
Mr Fneich	9
Mr Galgano	112
Mr Harrouk	341
Mr Holland	560
Mr Jasem	185
Mr Naqvi	51
Mr Nuri	84
Mr Sami	8
Mr Sharif	46
Mr Yatim	8
Mrs Sami	244
Ms Hakim	170
Ms Stevens	91
Muna	244
Mutawalli	8
OBCA	375
Ontario Corporations Act	196
Osamah	244
pink and black marriage register	570
plaintiffs	14
property	1
questioned signatures	561
red marriage register	562
Roah	244
Rules	680
Sami appointment meeting	292
second agency agreement	107
second Dirani appointment letter	315
second power of attorney	339
second report	560
second Toronto meeting	64
sister entity proposal	129
statutory declaration	573
third power of attorney	19
third report	560
Trust proceeding	3
Youssef	244

HER HONOUR:

Introduction

These two proceedings concern disputes between members of the Shia Muslim community over control of a property at 92–104 Lowson Street, Fawkner (‘the property’), and control of the incorporated association, Imam Ali Islamic Centre Inc (A0035337R) (‘IAIC Australia’), which is the registered proprietor of the property.

From 1995 until recently, the property has been used as a religious, educational and cultural centre (‘the centre’) for the Shia community in Melbourne. For the majority of that period the centre was known as the ‘Imam Ali Islamic Centre’.

Trust proceeding

The first proceeding (‘the Trust proceeding’) was initiated by Imam Ali Islamic Centre (REG NO. 983405) (‘IAIC Canada’), an association incorporated under the laws of Ontario, Canada. IAIC Canada claims that the property is held on trust for its benefit by IAIC Australia.

IAIC Australia acquired the property in 1998 from Al-Gadeer Islamic Association (A0026084E) (‘Al-Gadeer’), another association incorporated in Victoria. Al-Gadeer, like IAIC Australia, was incorporated broadly for the purposes of promoting the Islamic faith, providing religious education and fostering harmonious relations between the Muslim community and other communities in Victoria. The resolution of the Trust proceeding involves consideration of a series of events involving IAIC Canada and Al-Gadeer that occurred in Australia and Canada over a number of years, particularly between 1995 and 1998. Although Al-Gadeer was a central player to those events, it is not a party to this litigation as it was de-registered in 2003.

The genesis of the Trust proceeding was the acquisition of the property by Al-Gadeer in 1995. The evidence established that Al-Gadeer was able to pay for the deposit on the property but had insufficient funds to pay the balance of the purchase price. Representatives of Al-Gadeer travelled the globe for those willing to contribute towards the balance. They ultimately found a donor, Mr Mohammad Ali Al-Ali (‘Mr Al-Ali’), a businessman in Toronto, Canada, who was inspired to facilitate the purchase of the property. He did so through IAIC Canada, an entity he founded, which provided Al-Gadeer with funds to complete its purchase of the property. Although the factual history and legal considerations in the Trust proceeding are complex, in essence, it is that contribution by IAIC Canada that is the catalyst for its argument that the property is held on trust for its benefit.

The Court has determined that when IAIC Australia acquired the property from Al-Gadeer in 1998, it did so on the condition that it held the property on trust for IAIC Canada. IAIC Australia is acting unconscionably by now seeking to renege from the understanding upon which it received the property. IAIC Australia holds the property on constructive trust for the benefit of IAIC Canada.

Membership proceeding

The second proceeding (‘the Membership proceeding’) primarily involves a dispute over the identification of the current members and officers of IAIC Australia. The resolution of that dispute involves consideration of events starting from the incorporation of IAIC Australia in 1997 until up to the commencement of the Membership proceeding.

The purported members of IAIC Australia currently include, amongst others, the second and third defendants in the Membership proceeding, Mr Ali Al Bakiry, otherwise known as Ali Sami (‘Mr Sami’) and Mr Ahmad Yatim (‘Mr Yatim’). Mr Sami is the son of the late Sheikh Jaafar Al Bakiry (‘Dr Al Bakiry’), who was a member and President of IAIC Australia until his death in January 2013. Mr Sami claims to have taken over his father’s mantle as the President of IAIC Australia, a role that is referred to in its rules as ‘the Mutawalli’.

The three plaintiffs (and defendants by counterclaim) in the Membership proceeding, Mr Ali Dirani (‘Mr Dirani’), Mr Said El-Khishin (‘Mr El-Khishin’) and Mr Souhail Fneich (‘Mr Fneich’), dispute the current membership of IAIC Australia and Mr Sami’s claims to be the Mutawalli. The three plaintiffs are each long time members of the Shia community in Melbourne and were, to varying extents, involved in the events central to the Trust proceeding. They claim that they were the founding members of IAIC Australia in 1997, and remain the only members today. They claim that Mr Dirani, not Mr Sami, is today the Mutawalli of IAIC Australia.

Consistent failures to abide by the rules adopted by IAIC Australia over the years have left the membership and management of the association in an unsatisfactory state. The Court has determined there is now only one person, namely, Mr Dirani, who remains a member of IAIC Australia according to the processes prescribed by its rules. There has also been no valid appointment of a Mutawalli to replace Dr Al Bakiry. The identity of the other officers of the association similarly remain in legal limbo. In light of this, the Court will hear submissions as to the form of order for the Membership proceeding.

The Membership proceeding also included an allegation that IAIC Australia, through the actions of Mr Sami, had engaged in oppressive conduct against the duly appointed members of IAIC Australia. As explained below, that allegation is unnecessary to determine. Given the Court’s findings in the Membership proceeding, even if the Court were to be satisfied that IAIC Australia had engaged in oppressive conduct, a mere declaration in that respect would not be necessary to remedy any default or resolve any dispute between the parties.

As a final matter, the Court orders the removal of Mr Sami and Mr Yatim as defendants to the Membership proceeding as they are not proper or necessary parties to that proceeding.

Parties in the two proceedings

Alliances existed between various parties across the Trust proceeding and Membership proceeding. These reasons will refer to the parties by reference to these alliances.

‘The plaintiffs’

The plaintiff in the Trust proceeding, IAIC Canada, was allied in both proceedings with the three plaintiffs (and defendants by counterclaim) in the Membership proceeding, being Mr Dirani, Mr El-Khishin and Mr Fneich. In these reasons, they are referred to together as ‘the plaintiffs’.

IAIC Canada

IAIC Canada was incorporated on 19 June 1992, pursuant to the laws of the Canadian province of Ontario. It was dissolved on 18 February 1995 as a result of an administrative error and was not revived until 9 December 1998.[1] Its purposes broadly resemble the purposes of IAIC Australia, principally being to ‘foster and advance the teachings of Islam’ through religious services, instruction, education and charity. The founding directors of IAIC Canada were Mr Al-Ali and his sons, Yousif Al-Ali and Yahya Abbas Ali Al-Ali (‘Mr Abbas’).
[1]The legal effect of that dissolution for the purposes of this case is dealt with later in these reasons: see from [361].

Plaintiffs in the Membership proceeding

Mr Dirani, Mr El-Khishin and Mr Fneich are the plaintiffs in the Membership proceeding. All three are of the same generation as Dr Al Bakiry and were previously members of Al-Gadeer. They claim to be, along with Dr Al Bakiry, the founding members of IAIC Australia and now claim to be the only duly appointed members of the association.

Each of Mr Dirani, Mr El-Khishin and Mr Fneich, as community members associated with Al-Gadeer before the transfer of the property to IAIC Australia, also gave evidence in respect of the Trust proceeding. In particular, Mr Dirani can be seen as the plaintiffs’ lead witness in the Trust proceeding, having given lengthy evidence about the circumstances of the purchase of the property by Al-Gadeer.

The evidence of both Mr El-Khishin and Mr Fneich is essentially peripheral, particularly in respect of the Trust proceeding. Mr El-Khishin concedes that, prior to this litigation, he had no dealings with Mr Al-Ali. Mr Fneich was said to be in charge of maintenance on the property and said he attended the property on a daily basis between 1995 and 2013. He said he was paid for his work from donations made to Al-Gadeer and IAIC Australia as well as funds transferred by IAIC Canada. Otherwise his involvement in the events giving rise to these proceedings is limited.

Pursuant to a power of attorney dated 20 December 2013 (‘the third power of attorney’), IAIC Canada appointed Mr Dirani as its attorney to, inter alia, represent it in legal proceedings relating to the property or IAIC Australia. By that document, which is discussed further at [348], Mr Dirani claims to bring the Membership proceeding on behalf of IAIC Canada, despite not being named in that capacity in the originating process. The third power of attorney does not appoint or confer any powers on Mr El-Khishin or Mr Fneich. Mr Dirani also reviewed and presumably approved the plaintiffs’ pleadings in the Trust proceeding before they were filed. He appears to be providing instructions on behalf of IAIC Canada in relation to the Trust proceeding by reason of the authority conferred on him under the third power of attorney.

‘The defendants’

The defendant in the Trust proceeding and the first defendant (and plaintiff by counterclaim) in the Membership proceeding, IAIC Australia, was allied with the second and third defendants in the Membership proceeding, Mr Sami and Mr Yatim. In these reasons, they are referred to together as ‘the defendants’.

IAIC Australia

IAIC Australia was incorporated on 27 August 1997, pursuant to the now repealed Associations Incorporation Act 1981 (‘AI Act’).[2] The application for incorporation and accompanying declaration were signed on 8 August 1997 by Mr El-Khishin. Attached to the application and also signed by Mr El-Khishin was a statement of purposes, which reads as follows:
[2]The AI Act was repealed and replaced by the Associations Incorporation Reform Act 2012 on 26 November 2012.

1.To promote the Islamic Faith and its obligations in the Muslim community.
2.To establish schools and strive for the advancement of Islamic education for the Shia Muslim community in the State of Victoria.
3.To assist Shia Muslims to adapt to the local environment in practice of faith.
4.To foster harmonious relations with the wider Victorian community and to enrich the Multicultural Australia.
5.To establish an Islamic library and bookshop service to propagate Islamic ideology, arts, history.
6.To run classes for the Muslim children attending Government Schools to study languages (community languages) and religious instructions during the weekend and/or after hours.

Consistent with these purposes, IAIC Australia runs various programmes within the Shia Muslim community that include weekly prayers, an Arabic school, eulogies and other civil services, including marriage registrations.

The precise motivation for IAIC Australia’s incorporation was the subject of dispute between the parties in the Trust proceeding. In many respects, IAIC Australia was the successor to Al-Gadeer. Al-Gadeer was incorporated in 1992 with similar purposes adopted later by IAIC Australia. It performed the same functions as IAIC Australia later performed for Melbourne’s Shia Muslim community. Many of the people involved in Al-Gadeer became involved in IAIC Australia as the latter body assumed a more prominent role within the community. The two associations co-existed briefly before Al-Gadeer was voluntarily dissolved by a resolution of its members, passed at a special general meeting held on 1 December 2001. Al-Gadeer was subsequently deregistered on 12 June 2003.

IAIC Australia was led by Dr Al Bakiry from the time of its incorporation to his death on 6 January 2013. Dr Al Bakiry arrived in Australia on 10 August 1995 following his appointment as the religious leader of Al-Gadeer, known as the Sheikh or Imam. He assumed the same role in respect of IAIC Australia and acted as its leader until his death. His authority as the leader of IAIC Australia was never challenged. However, after his death, the management and control of IAIC Australia has been disputed by the parties to the Membership proceeding.

Other defendants in the Membership proceeding

In addition to IAIC Australia, the defendants in the Membership proceeding are Mr Sami and Mr Yatim. Mr Sami is the third son of Dr Al Bakiry and claims to be his successor as leader of IAIC Australia. In this, he is supported by the other members of Dr Al Bakiry’s immediate family. Mr Yatim has performed various administrative responsibilities of IAIC Australia since about 2007 and, since the death of Dr Al Bakiry, he appears to have acted as the Secretary of IAIC Australia on Mr Sami’s instructions.

Mr Al-Ali’s competency and evidence by video-link

An ancillary issue disputed between the parties issue was the competency of, and form of evidence to be given by, Mr Al-Ali, who was 82 years old at the time of trial.

As noted at [15], Mr Al-Ali was a founding director of IAIC Canada. He is a businessman and a philanthropist. He has been the leader of IAIC Canada since its incorporation and appears to have held a significant amount of discretion in its administration for most of the past 25 years. He was intimately involved in the events that gave rise to the plaintiffs’ claims in the Trust proceeding but, as explained at [34], he was unable to provide any evidence of substance about those events.

Mr Al-Ali gave evidence in the Trust proceeding via audio visual link from Canada over objections from both sides in the disputes. The first objection related to Mr Al-Ali’s competency to give evidence. Despite being the plaintiffs’ witness, the plaintiffs contended that Mr Al-Ali was not competent to give evidence by reason of lack of capacity.[3] The plaintiffs pointed to a number of doctors’ reports that suggested Mr Al-Ali was not capable of giving evidence about the specific and critical events occurring between 1995 and 1997 in the Trust proceeding. However, these reports merely stated conclusions and revealed little to no analysis of Mr Al-Ali’s competency to give sworn evidence in the Trust proceeding. For their part, the defendants argued that Mr Al-Ali was competent to give evidence.
[3]See Evidence Act 2008, s 13(1).

In the circumstances, Mr Al-Ali appeared via audio visual link in order to test his competency. The parties prepared a list of agreed questions on a number of uncontroversial matters that were asked of Mr Al-Ali for this purpose. At the conclusion of a brief examination by the Court, the parties agreed that Mr Al-Ali was competent to give evidence in the Trust proceeding.

The plaintiffs then sought to call Mr Al-Ali via audio visual link from Canada in order for him to give evidence on the substantive issues in the Trust proceeding.[4] As factors in favour of allowing his appearance via audio visual link, the plaintiffs relied on Mr Al-Ali’s age, his poor health, including mild dementia and recent heart problems that would be exacerbated by travel, and the fact that he would have to travel to Australia on his own as no family members or others were prepared to accompany him on the trip. The principal authority relied on by the plaintiffs on the exercise of the court’s discretion to allow evidence via audio visual link was the decision of Gordon J in Kirby v Centro Properties Ltd[5] (‘Kirby’). They also relied on the earlier authority of Sheldon & Hammond Pty Ltd v Metrokane Inc[6] where an application for a witness to appear by audio visual link was allowed upon evidence of the witness’s adverse medical condition.
[4]Pursuant to the Evidence (Miscellaneous Provisions) Act 1958, s 42E(1).
[5]Kirby v Centro Properties Ltd (2012) 288 ALR 601.
[6]Sheldon & Hammond Pty Ltd v Metrokane Inc [2002] FCA 1561 (16 December 2002).

The defendants resisted the plaintiffs’ audio visual link application. They emphasised that the plaintiffs’ claims in the Trust proceeding relied on establishing IAIC Canada’s intention at certain times. The key person capable of giving evidence as to that intention was Mr Al-Ali. The defendants submitted that, given the importance of Mr Al-Ali as a witness in the Trust proceeding, every accommodation should be made to allow him to give evidence in the courtroom. Furthermore, the defendants suggested that Mr Al-Ali’s cognitive difficulties might be alleviated somewhat by his personal attendance in court where the immediacy of the moment would be apparent to him and his examination would not be disrupted by the issues that often arise with audio visual connections. The defendants also queried the evidence concerning Mr Al-Ali’s poor physical health.

Ultimately, IAIC Canada’s application for Mr Al-Ali to give evidence via audio visual link was allowed. As set out by Gordon J in Kirby,[7] there are two competing approaches to the exercise of the court’s discretion to allow evidence by audio visual link. One approach emphasises the savings in time and costs where witnesses are able to give evidence via video link and suggests that a strong case would need to be made to a court to convince it to forego those savings. The other approach is more cautious, noting that the onus is on the party applying for a video link to persuade a court that it is appropriate in the circumstances. Relevant factors considered in the authorities include the commitments of an overseas witness, whether the witness’s credibility is in issue, whether the witness’s evidence is central to the case, whether cross-examination of the witness is likely to be frustrated by reason of the audio visual link and the health of the witness.[8]
[7]Kirby v Centro Properties Ltd (2012) 288 ALR 601, 603 [3]–[5] (Gordon J).
[8]Ibid 604–605 [10], and the cases cited therein; Sheldon & Hammond Pty Ltd v Metrokane Inc [2002] FCA 1561 (16 December 2002) [13] (Conti J).

While it may readily be accepted that Mr Al-Ali is a critical witness in the Trust proceeding, the relevant factors weighed in favour of the application for an audio visual link. Mr Al-Ali is an elderly man with the various medical issues that come with age. He suffers from memory loss and a mild form of dementia, as well as several physical conditions. It is likely that his cognitive abilities would have been reduced by his travel from Canada to Australia. Moreover, his credibility is not in issue in the proceedings. While it is generally preferable for a party to have the opportunity of cross-examining an opposing party’s witnesses in court, there was nothing to suggest that the cross-examination of Mr Al-Ali would be hampered by the audio visual link to the extent that the interests of IAIC Australia would be prejudiced.

Mr Al-Ali gave evidence at trial by way of audio visual link with the aid of an interpreter. Ultimately, his evidence was of no material benefit to the Court. It was clear that he could not recall even the most basic details of the critical events that occurred in the 1990s relevant to the Trust proceeding. When presented with copies of letters bearing his signature, he could not remember writing them, though he maintained they were correct. When asked what year it was currently, he could not say. In the circumstances, no weight is placed on Mr Al-Ali’s evidence in determining these proceedings.

This meant that the evidence of the two figures central to the issues in the Trust proceeding, Mr Al-Ali and Dr Al Bakiry, was not before the Court. It was therefore necessary to discern the relevant facts in the proceeding from alternative documentary and testimonial evidence.

Factual background

The events at the heart of the Trust proceeding centre on and around the purchase of the property by Al-Gadeer in 1995 and the transfer of the property from Al-Gadeer to IAIC Australia in 1998.

The events central to the Membership proceeding overlap with that time period, in particular around the incorporation of IAIC Australia in 1997 and extend up until the commencement of the proceeding.

Early days of Al-Gadeer

Al-Gadeer was incorporated on 28 September 1992. By 30 June 1993, it had over 100 members. Annual membership fees were set at $2, although some members gave more. Its major income came from donations, receiving $11,230.50 in donations in its first nine months. The donations were more than enough to cover Al-Gadeer’s expenses, the largest component of which was rent for premises in Brunswick at the time. As it grew, the need for more permanent premises became apparent.

In 1992 Mr Dirani moved to Melbourne and in 1993 he became involved with the activities of Al-Gadeer. The activities of the association at the time were Islamic celebrations and commemorations, the conducting of educational activities and assisting the settlement of refugees in Australia.

On 28 March 1994, Mr Dirani was appointed Public Officer of Al-Gadeer. Notice of the appointment was filed with the relevant regulator on 28 March 1994, pursuant to s 28(1) of the AI Act. Later that year, Mr Dirani was given responsibility by the Al-Gadeer committee members for finding suitable premises for the future operation of an educational centre for the running of Islamic programs. He did not specify the identity of those committee members in his evidence. According to Mr Dirani, this mandate coincided with his appointment as Vice-President of Al-Gadeer and his resignation as Public Officer. He says he was appointed Vice-President at a meeting of Al-Gadeer but he could not recall specific dates. No other evidence of that meeting was adduced.

Mr Dirani estimated that he was Public Officer of Al-Gadeer for less than a year before becoming Vice-President. This is contradicted by a document produced by Consumer Affairs Victoria, the government body currently responsible for incorporated associations, and entitled ‘incorporated association extract—full history’. That document, generated on 14 July 2014, lists various historical details of Al-Gadeer, including its former Public Officers and their terms of office. Mr Dirani’s name appears under the heading ‘ceased public officer(s)’ with two dates: ‘date commenced’, being 26 March 1994, and ‘date ceased’, being 29 May 2001. The records kept by Consumer Affairs Victoria directly contradict Mr Dirani’s evidence about his roles within Al-Gadeer. When asked about the contradiction in cross-examination, Mr Dirani suggested that the records were wrong. He maintained that he ceased to be the Public Officer of Al-Gadeer when he became its Vice-President at some time before February 1994.

Purchase of the property

Mr Dirani identified the property in his search for new premises for Al-Gadeer. The property was previously used as the ‘Fawkner Education Centre’ by the Victorian State Government, which had decided to sell the property through a tender process. According to Mr Dirani, Al-Gadeer was looking for a property that could house educational facilities as the association intended to operate an Islamic school from their new premises. In Mr Dirani’s view, the property had the capacity to cater for Al-Gadeer’s needs and activities. Mr Dirani lodged a tender for the property on behalf of Al-Gadeer and was ultimately successful.

On 13 December 1994, Al-Gadeer entered into a contract of sale for the purchase of the property. Al-Gadeer’s solicitors were Nuri & Kiratzis. The purchase price was $430,000 with settlement due on 1 June 1995. The reason for the extended settlement date was because Al-Gadeer did not have the requisite funds at the time of tender and required further time to raise the funds.

A deposit of $43,000 was paid by Al-Gadeer from donations made by Al-Gadeer’s members. Mr Dirani’s evidence was that the deposit was paid at the time of tender and the final 90 per cent was required to be paid in December 1994, leaving $387,000 of the purchase price outstanding. Al-Gadeer initiated an urgent fundraising effort to secure the balance before the settlement date. At first, attempts were made, led by Mr Dirani, to raise the funds within the Shia Muslim community in Australia. A fundraising day was held at the property in January 1995. Mr Dirani estimated that Al-Gadeer was able to raise a further $50,000 to $60,000 on that day and through related efforts, but Al-Gadeer was still well short of the funds required to complete the purchase of the property.

After approaching potential donors from other Shia communities within Australia, it became clear that Al-Gadeer would have to look elsewhere for sufficient donations. For the purposes of their international fundraising drive, Al-Gadeer sent certain promotional material, recorded on its fundraising day, to between 10 to 15 different prospective institutes or associations. In early 1995, Mr Dirani and a Mr Abd-Al-khaliq Al-Hamdi (‘Mr Al-Hamdi’) were nominated to travel overseas in an attempt to raise the funds needed to complete the purchase of the property. According to Mr Dirani, Mr Al-Hamdi was selected as his travelling companion simply because he was available and willing to commit the time. Nothing else is known about Mr Al-Hamdi, who was not called to give evidence in these proceedings.

Mr Akeel Sharif (‘Mr Sharif’) was the President of Al-Gadeer from 1992 to approximately December 1995. His evidence acknowledged that Al-Gadeer ‘faced a problem that it did not have the funds to settle’ the purchase of the property and, as a result, Al-Gadeer authorised Mr Dirani and Mr Al-Hamdi to travel overseas to raise the funds. Mr Sharif signed a letter of introduction that described Mr Dirani and Mr Al-Hamdi as the official representatives of Al-Gadeer ‘in regard to collecting donation [sic] for supporting the establishment of the Great Prophet Islamic Centre,’ being the name of the centre that Al-Gadeer intended to establish on the property. The letter was dated according to the Islamic calendar as ‘6 Ramadan 1415’. Mr Sharif could not recall the equivalent date in the Gregorian calendar but estimated that it was sometime in 1994. The date in fact translates to 6 February 1995, which accords with the evidence.

Mr Dirani says he and Mr Al-Hamdi took Mr Sharif’s letter with them to show any prospective overseas donors should they require some evidence of their association with Al-Gadeer. Mr Dirani says that their authority as representatives of Al-Gadeer was limited to the description in Mr Sharif’s letter. Anything beyond a donation, such as a loan or deal of any kind, would require the approval of the Al-Gadeer committee before an agreement could be reached.

First leg of the overseas fundraising drive

In early February 1995, Mr Dirani and Mr Al-Hamdi left Australia on their international fundraising drive. They travelled to Singapore, Malaysia, Dubai, Iran and the United Kingdom before going on to North America. Mr Dirani did not give a precise date for their departure but a stamp on his passport with the words ‘immigration Singapore’ above the date ‘08 FEB 1995’ give an indication of the timeline.

According to Mr Dirani, by the time the pair were preparing to leave the United Kingdom for Canada, their fundraising efforts had been largely fruitless. Despite meeting with over 30 different overseas organisations, a bank statement for an account held by Al-Gadeer suggests that a donation of $2,755.52 was received on 24 March 1995. Mr Dirani says that money likely came from a donor they had met in Dubai. Mr Dirani doubted at the time whether they had raised enough funds to even cover the costs of their flights up to that point.

First visit to Canada

The next stop for Mr Dirani and Mr Al-Hamdi was Toronto, Canada. Mr Dirani could not recall the specific date of their arrival. However, based upon the stamps in his passport, Mr Dirani agreed that it was likely that he and Mr Al-Hamdi arrived in Canada on 22 March 1995. There was a query over whether the Canadian stamps in Mr Dirani’s passport were entry stamps or exit stamps. During cross-examination, and in the context of being unable to remember where he and Mr Al-Hamdi stayed whilst in Toronto,[9] Mr Dirani agreed that they were more likely to be entry stamps. The Court has proceeded on that basis when referring to specific dates during Mr Dirani and Mr Al-Hamdi’s time in Canada.
[9]Counsel for IAIC Australia asked Mr Dirani to produce ‘any documents such as hotel receipts or credit card receipts or any other document such as a bus ticket which might be able to date the days you were in Toronto in late March 1995’. Mr Dirani indicated that he would search for such documents but ultimately did not produce anything in response to counsel’s request.

Toronto was included on their itinerary so that Mr Dirani and Mr Al-Hamdi could meet with a Canadian Muslim whom Mr Dirani referred to as Mr Naqvi. Mr Naqvi had, according to Mr Dirani, visited Al-Gadeer in Melbourne some time prior to 1995. He was involved in an Islamic organisation in Toronto from which Al-Gadeer intended to seek a donation and had connections with the broader Islamic community in Toronto.

The meeting with Mr Naqvi failed to secure any funds for Al-Gadeer’s purchase of the property. However, Mr Dirani and Mr Al-Hamdi were told to meet with another man in Toronto about a possible donation. They were told that the man was of Lebanese descent and owned a supermarket. Mr Dirani could not recall the man’s name other than that he was known as Hajj Ali, Ali being his first name and Hajj being a title given to Muslims who have completed the pilgrimage to Mecca. Mr Al-Ali’s son, Mr Abbas, tentatively recalled that Hajj Ali was a Lebanese man named Ali Nasreddin who owned a meat shop in Scarborough, Ontario. It is convenient, however, to continue to refer to him as ‘Hajj Ali’.

Mr Dirani could not give specific evidence about the meeting with Hajj Ali other than that they were again unsuccessful in securing a donation. However, Hajj Ali knew another man who would be able to sponsor the purchase of the property. That man was Mr Al-Ali.

First meeting with Mr Al-Ali

Mr Dirani and Mr Al-Hamdi met with Mr Al-Ali for the first time through an introduction given by Hajj Ali. Mr Dirani dated the meeting (‘the first Toronto meeting’) as having occurred on 24 March 1995. The meeting was attended by five people in total, being Mr Dirani, Mr Al-Hamdi, Hajj Ali, Mr Al-Ali and Mr Abbas. Of those five people, two, Mr Al-Hamdi and Hajj Ali, did not give evidence in these proceedings. For the reasons at [34], the third person, Mr Al-Ali, was not able to give any evidence of substance. Finally, the fourth person, Mr Abbas, was little more than an observer at the meeting and did not participate in any meaningful way. His evidence is largely based on what he has been told by Mr Al-Ali and otherwise on what he has observed in people’s words and demeanours. The Court is accordingly left with the recollection of the fifth person, Mr Dirani, as to what was said and done at that meeting.

The first Toronto meeting was held at Mr Al-Ali’s office in his textile factory in Toronto. It was conducted primarily in Arabic. Mr Dirani says that he only ever spoke to Mr Al-Ali in Arabic, including during the meetings in March 1995, although he spoke with others, including Mr Abbas, in English from time to time.

Mr Dirani’s recollection of the meeting was that he asked Mr Al-Ali whether he might consider offering Al-Gadeer a ‘goodwill loan’ for the purchase price of the property. The loan would be for a term of three years. He told Mr Al-Ali that Al-Gadeer was anxious to secure the necessary funds before the settlement date of 1 June 1995. Mr Dirani gave Mr Al-Ali a file containing information about the property, Al-Gadeer’s plans for the property, a video and other promotional material. The file also included the letter of introduction signed by Mr Sharif, Al-Gadeer’s President at the time, and a flyer produced by Al-Gadeer explaining its role within Melbourne’s Islamic community. The flyer noted the purchase price of $430,000 but did not describe the property other than as an ‘education centre’.

Mr Dirani says that Mr Al-Ali ‘promised to give anywhere between $6,000 to $7,000’ but would not sponsor the full purchase price. This was supported by Mr Abbas’ evidence, in which he recalled his father agreeing to provide $6,000 to support the purchase price. In cross-examination, Mr Abbas slightly revised this evidence to state that the amount offered by his father was $5,000, $6,000 or $7,000.

Mr Abbas also recalled that Mr Dirani and Mr Al-Hamdi (although Mr Abbas could not remember his name) was introduced to Mr Abbas and Mr Al-Ali through Hajj Ali. According to Mr Abbas, Mr Dirani told them that Al-Gadeer was looking for donations to have a centre to house the local community, including for the purposes of conducting Arabic and Islamic teaching and to commemorate events for Shia Muslims.

Mr Abbas further recalled that his father, after offering the amounts at [57], had told Mr Dirani that ‘if he was short of money then come back to me and I will finish it off for you’. Mr Abbas explained that if Mr Dirani was short by $20,000-40,000 then Mr Al-Ali would be able to provide the balance. This presumably referred to where Mr Dirani was unable to make up the full balance after his worldwide fundraising drive.

Dreams revived in New York

Having failed to raise the funds required for the purchase of the property during their first visit to Canada, Mr Dirani and Mr Al-Hamdi travelled to New York. They stayed at the Al-Khoei Foundation’s centre in Queens for two days. On the second day, they received a message while they were away from that centre that someone from Canada had tried to call them through the Foundation.

Mr Dirani says that Mr Al-Hamdi used the Foundation’s telephone to call the number that was left with the message. It was Mr Al-Ali’s telephone number. Evidence of their conversation was given by Mr Dirani, who says that he was standing close enough to Mr Al-Hamdi during the conversation to hear what was being said by both him and Mr Al-Ali through the telephone’s receiver. The telephone was not on a ‘loud speaker’ setting so Mr Dirani was apparently able to whisper to Mr Al-Hamdi during the conversation without Mr Al-Ali hearing him.

Mr Al-Ali told Mr Al-Hamdi that he had found someone willing to sponsor Al-Gadeer’s purchase of the property. Mr Dirani told Mr Al-Hamdi to ask Mr Al-Ali whether this new sponsor was serious as if this were the case, they would return to Canada to discuss the details of the sponsorship. Mr Al-Hamdi asked that question and Mr Al-Ali responded that the sponsor was indeed serious. According to Mr Dirani, he and Mr Al-Hamdi immediately booked flights to return to Canada and landed in Toronto later that day, being 28 March 1995.

There is no other evidence of what was said during the telephone conversation between Mr Al-Hamdi and Mr Al-Ali. The only other evidence of the surrounding events and circumstances comes from Mr Abbas. He recalls his father’s daily routine was to recite the Qur’an every morning. In the three days that followed the first Toronto meeting with Mr Dirani and Mr Al-Hamdi, Mr Al-Ali opened the Qu’ran at exactly the same place and read exactly the same verse, which was to the effect of ‘whoever build houses for God for worship, he would get a good deed’. Mr Abbas says his father interpreted this as ‘a message from God to buy the [property]’. Mr Abbas and his father accordingly made contact with the Al-Khoei Foundation in New York and requested that Mr Dirani and Mr Al-Hamdi return their call. Mr Abbas recalls that Mr Dirani made the call to Mr Al-Ali, but as recalled by Mr Dirani, it was in fact Mr Al-Hamdi who spoke to Mr Al-Ali on the telephone. Mr Abbas gave evidence that Mr Dirani told Mr Al-Ali that Mr Dirani and Mr Al-Hamdi had only collected about $25,000-26,000 and, as a result, Mr Al-Ali asked them to come back to Toronto to see him.

Second visit to Canada

Mr Dirani’s evidence was that he and Mr Al-Hamdi met with Mr Al-Ali for a second time on the same day of their return to Canada, 28 March 1995, however Mr Abbas recalls the meeting (‘the second Toronto meeting’) as having occurred one to two weeks after the first Toronto meeting. As before, they met at Mr Al-Ali’s office in his textile factory. The meeting was attended by the same five persons who attended the first meeting, being Mr Dirani, Mr Al-Hamdi, Mr Al-Ali, Mr Abbas and Hajj Ali, although Mr Abbas does not recall Hajj Ali being present.

Mr Dirani’s evidence of the second Toronto meeting with Mr Al-Ali was detailed in some respects and vague in others. He says Mr Al-Ali explained that the provision of the funds for the purchase of the property would be subject to certain conditions, namely that:

(a) the property be registered in the name of IAIC Canada;

(b) the identity of the benefactor remain anonymous;

(c) the property not be used in affiliation with any political movement or group;

(d) the property and the activities conducted on it abide by the laws of ‘the land that we are in’; and

(e) the property not ‘go back to any particular muraja’ah’.[10]

[10]A muraja’ah being a person akin to a professor who has expertise in Islamic law and jurisprudence and whose opinions are considered valid by Shia Muslims.

Mr Abbas’s evidence of the second Toronto meeting was that his father had told Mr Dirani that ‘there’s a charitable person who is willing to pay for the property’ but that there were conditions attached to that offer. Those conditions, according to Mr Abbas, were that:

(a) the property has to be registered ‘for the benefit of that person who is putting the money in’; and

(b) the property has to be used for ‘the teaching of Arabic faith’; and

(c) ‘there’s no politics whatsoever involved in the centre’;

(d) ‘it’s open for every Muslim to go there to practice their faith’.

At this point, two key facts remained unclear. First, the identity of the person or entity that was offering to provide the funds to Al-Gadeer. According to Mr Dirani and Mr Abbas’ recollection, Mr Al-Ali did not disclose the identity of the potential sponsor. Whilst Mr Al-Ali demonstrated that he had authority to deal with the funds the subject of the potential sponsorship by listing the conditions at [65]-[66], it was not clear whether those funds were to come from him or from someone else. Despite the ambiguity, Mr Abbas says the funds provided from Canada to Al-Gadeer ultimately originated from Mr Al-Ali. He says it is his family’s practice to donate money to IAIC Canada for the purpose of purchasing properties.

Second, the amount of the potential sponsorship had still not been disclosed at this stage by Mr Al-Ali. Turning back to his telephone conversation with Mr Al-Hamdi at [62], Mr Al-Ali had said the new sponsor was ‘serious’. In the context of Mr Dirani asking for a ‘goodwill loan’ to cover the purchase of the property during the first Toronto meeting, this might have indicated that the new sponsor was willing to provide the funds required for Al-Gadeer to complete the purchase, which at that time would have been in the vicinity of $330,000 factoring in other funds raised by Al-Gadeer.

In response to the conditions stipulated by Mr Al-Ali, Mr Dirani said that it would be very difficult to agree to the first condition – that the property be registered in the name of IAIC Canada – as it would require obtaining the consent of all the other donors towards the purchase of the property. Mr Dirani suggested that, if Mr Al-Ali wanted the property registered in the name of IAIC Canada, an alternative might be to provide the full amount of the purchase price. He says that Mr Al-Ali agreed to his counterproposal and said that 100 per cent of the purchase price would be paid, ‘it would all be registered’ and ‘any funds collected’ to that point could be used for a different project. When Mr Al-Ali spoke of ‘any funds collected’ he was presumably referring to the donations collected by Al-Gadeer for the purchase of the property from its members and others. However, it is not so apparent what he meant by the phrase ‘it would all be registered’.

Mr Dirani was asked during cross-examination about the significance of the second condition that the identity of the benefactor remain anonymous. Mr Dirani suggested that Mr Al-Ali did not want to publicise the extent of his wealth because of ongoing financial ties to Iraq, the country of his origin. By way of further explanation, Mr Dirani suggested that Mr Al-Ali owned property in Iraq and had business connections there at a time when Shia Muslims were being persecuted in Iraq and people of Mr Al-Ali’s faith might have legitimate concerns about the safety of their assets or their family. The act of making a significant financial donation to a Shia Muslim association might, in accordance with Mr Dirani’s suggestion, attract unwanted attention in Iraq.

Counsel for the defendants then asked Mr Dirani whether, to his knowledge, there was any significance in the Islamic religion to people giving charitable donations anonymously. Mr Dirani responded that the Qu’ran does not distinguish between charity given openly and charity given anonymously; both are recommended.

The condition of anonymity was also addressed by Mr Abbas, who recalled that Mr Al-Ali insisted upon it at the second Toronto meeting. Mr Abbas explained that his father, consistent with Mr Dirani’s explanation, wanted to remain anonymous to protect family living in Iraq. According to Mr Abbas, the Iraqi regime at the time would persecute the family of ‘whoever preached for Islam’, hence the condition of anonymity. Mr Abbas also says that his father preferred to remain anonymous in his charitable work because he did not seek publicity and further believed that God would reward a person who did good works whilst remaining unknown. Mr Abbas says it was important to his father that the funds for the property came from IAIC Canada and not him personally, even though the money used for the purchase ultimately came from his personal funds. Mr Abbas maintained, however, that his father’s intention was to buy the property for the benefit of the Melbourne Shia community, but for IAIC Canada to own it.

Shortly after Mr Al-Ali made the conditional offer at the second Toronto meeting, Mr Dirani says that he made two telephone calls, the first to Australia and the second to Iran. The first call was made to Mr Sharif, the President of Al-Gadeer. Mr Dirani relayed Mr Al-Ali’s proposal to provide the full amount of the purchase price to Mr Sharif, including the condition that the property be registered in IAIC Canada’s name. The telephone was then passed by Mr Dirani to Hajj Ali who, on Mr Dirani’s evidence, spoke to Mr Sharif before handing the phone back to Mr Dirani. Mr Dirani says that Mr Sharif then agreed to Mr Al-Ali’s proposal because Al-Gadeer would otherwise have no other means of settling the purchase of the property.

Mr Sharif’s recollection of the phone call was broadly consistent with Mr Dirani’s evidence. Mr Sharif says that he had been in regular contact with Mr Dirani and Mr Al-Hamdi during their fundraising efforts overseas and received updates on their progress every second day. He recalls the telephone call from Mr Dirani and Mr Al-Hamdi ‘about in March’ in relation to Mr Al-Ali’s offer to provide the purchase money for the property. Mr Sharif did not specify which of the two made the call, which was conducted in Arabic, but suggested that he spoke to both of them. He says that Mr Dirani and Mr Al-Hamdi told him that they were in Canada and had received an offer ‘to pay the full purchasing amount of the property’. Mr Sharif said that another man, whom Mr Sharif also referred to as Hajj Ali, joined the telephone conversation, which was a ‘surprise’ to Mr Sharif. After speaking briefly with Hajj Ali, Mr Sharif informed Mr Dirani and Mr Al-Hamdi ‘to keep the door open’ on the offer ‘until they return back to Australia so we could discuss it further with the executive committee of Al-Gadeer to come up with a decision’. Whilst giving evidence Mr Sharif explained that, in order to accept Mr Al-Ali’s offer, the Al-Gadeer executive committee had to approve it formally by vote and he did not have the individual authority to instruct Mr Dirani and Mr Al-Hamdi to accept the offer.

The second telephone call made by Mr Dirani was to Dr Al Bakiry, who was at that time living in the Iranian city of Qom. According to Mr Dirani, Al-Gadeer had by that time made an application for Dr Al Bakiry to become the resident Imam in Melbourne and, out of both respect and prudence, Mr Dirani sought Dr Al Bakiry’s opinion on Mr Al-Ali’s proposal. Mr Dirani described the proposal to Dr Al Bakiry, including the various conditions, in the same terms as he had described it to Mr Sharif.

After the calls, Mr Dirani told Mr Al-Ali that both Mr Sharif and Dr Al Bakiry agreed to the proposal, however, he explained to Mr Al-Ali that Al-Gadeer would need to convene a meeting of its committee, as well as the broader community, before confirming acceptance of the proposal. Mr Abbas’ evidence likewise recalled that Mr Dirani agreed to Mr Al-Ali’s conditions but had to check with the committee in Melbourne. Mr Dirani says that Mr Al-Ali indicated that he was ‘fine’ with that course and would await Al-Gadeer’s confirmation.

Return to Australia and Al-Gadeer meetings

Mr Dirani and Mr Al-Hamdi returned to Australia from Canada via New York. Mr Dirani says that they had been away for a total of 54 days. Assuming they left on 7 February 1995, being the day after Mr Sharif signed the letter of introduction authorising them to collect donations for Al-Gadeer and one day before they arrived in Singapore, the first country they visited, Mr Dirani’s evidence has them returning to Australia on 2 April 1995.

Shortly after returning, Mr Dirani says a meeting of the Al-Gadeer committee took place at his family home. Exactly who attended the meeting is not apparent. All Mr Dirani could say was that ‘the people came from the Al-Gadeer committee’. During the meeting, Mr Dirani says he gave the attendees ‘details of what had occurred in Canada’. He presumably relayed Mr Al-Ali’s offer to provide the full purchase price of the property. Mr Dirani said that he told the other attendees:

‘… that we had met with the person from Canada and the actual property has to be registered in their—in Imam Ali Islamic Centre Canada. It cannot be affiliated with any political agenda, it cannot return back to a particular muraja'ah because it's not from khums money and it is to be run by the school of thought of Ahl al-Bayt.’[11]

[11]‘Khums money’ is a term used by Shia Muslims to refer to the payment of 20 percent of an individual’s savings to a ‘muraja’ah’ or scholar. The ‘school of thought of Ahl al-Bayt’ refers to Shia Islam.

However, Mr Dirani’s evidence of what he told ‘everyone’ at that meeting otherwise remained vague and did not wholly match his description of Mr Al-Ali’s initial offer; for example, Mr Dirani did not mention the condition that the donor remain anonymous. Nonetheless, according to Mr Dirani, ‘there was an agreement between everyone because we did not have sufficient funds to settle on the property if we don’t take that offer up’.

One of the other attendees at the meeting was Mr Sharif, who recalled the meeting of the ‘executive committee of Al-Gadeer’ after the return of Mr Dirani and Mr Al-Hamdi. His evidence of that meeting was also vague, stating that, after a discussion of Mr Al-Ali’s proposal as described by Mr Dirani, ‘they were happy to approve it because we were worried to not have enough financial capability to do the settlement and in this case we are going to lose the deposit, and they were happy to approve it’. Mr Sharif did not, however, give evidence as to how Mr Dirani described Mr Al-Ali’s proposal during the meeting, or what he understood the proposal to be at the time. No formal vote appears to have been taken during the meeting and no minutes of the meeting were produced at trial.

Shortly after the meeting of the Al-Gadeer committee at Mr Dirani’s family home, a second meeting was held at the Brunswick property where Al-Gadeer conducted its activities. Mr Dirani recalls that the meeting was held on a Thursday afternoon by reference to its proximity with a particular religious observance, but he did not specify the precise date. According to Mr Dirani, members of the broader Al-Gadeer community were present, as well as the committee members. Mr Dirani gave evidence that he addressed the meeting in English and described his travels with Mr Al-Hamdi for the purpose of raising funds for the purchase of the property. He described a portion of his address to the meeting as follows:

‘I explained to them that the actual property, there is a person that's willing to sponsor through their association, Imam Ali Islamic Centre Canada, and the conditions that were laid to pay for the complete value of the property. That the property would be registered in Imam Ali Islamic Centre Canada. I mentioned that it would be - what do you call it? There would be no affiliation with any particular group and there will be no affiliation with any particular muraja'ah because it's not khums money. We explained at the present time if we don't accept this what other solution do we have and we don't have sufficient time to borrow the money to be able to settle.’

Mr Dirani says that, after the meeting, ‘everyone was happy to realise that the complete funds had been raised’.

Mr Sharif, who was the President of Al-Gadeer at the time, also addressed the meeting of the community. Mr Dirani says that Mr Sharif spoke in Arabic, apparently translating what Mr Dirani was saying in English. Like Mr Dirani, Mr Sharif says that ‘the community was happy’ with the arrangement described by Mr Dirani for Al-Gadeer to purchase the property.

After the meeting of the community, Mr Sharif says that ‘we [presumably referring to the Al-Gadeer committee] authorised Mr Ali Dirani to inform Canada to go ahead with the offer’. There is no written record of that authorisation. Nevertheless, Mr Dirani recalls that he made a phone call to Mr Al-Ali in Canada sometime after the community meeting ‘to confirm the offer has been accepted by the committee and by the community’. Mr Dirani did not otherwise elaborate on what he said to Mr Al-Ali, or what Mr Al-Ali said in response, during that conversation. However, Mr Abbas recalled that Mr Dirani had told his father that ‘his committee’ had agreed to Mr Al-Ali’s conditions.

Meeting with Nuri & Kiratzis

With the apparent authority of Al-Gadeer and consent of Mr Al-Ali, Mr Dirani proceeded to take the steps necessary to give effect to Mr Al-Ali’s proposal. He and Mr Sharif called Mr Ali Nuri (‘Mr Nuri’) of Nuri & Kiratzis, a law firm based in Brunswick East, which was named on the contract of sale as acting for Al-Gadeer.

Mr Dirani appeared to have sole responsibility on behalf of Al-Gadeer in regards to implementing Mr Al-Ali’s proposal and instructing Mr Nuri accordingly. Mr Sharif gave evidence that Al-Gadeer had authorised Mr Dirani to deal with Mr Nuri, although no documentary evidence of that authorisation was produced. Mr Dirani’s first meeting with Mr Nuri took place at the offices of Nuri & Kiratzis and was also attended by Mr Sharif. The date of the meeting is unknown but is likely to have taken place in early or mid-April 1995, based on the date of Mr Dirani’s return to Australia.

Mr Dirani recalls that he and Mr Sharif described Mr Al-Ali’s proposal to fund the purchase of the property to Mr Nuri, including the condition that the property be registered in the name of IAIC Canada. He says they asked Mr Nuri what they could do to facilitate the proposal. Mr Nuri responded to the effect that he would look into it but that the requirement for the property to be registered in the name of IAIC Canada would be very difficult given the contract of sale did not allow Al-Gadeer to nominate another purchaser.

Mr Sharif’s recollection of that meeting broadly aligns with Mr Dirani’s evidence. He says that they told Mr Nuri that they had found a purchaser for the property, being IAIC Canada. They then asked Mr Nuri to proceed with the settlement of the purchase of the property. Mr Sharif did not give evidence as to what Mr Nuri told them during the meeting. Given that Mr Nuri was not called to give evidence in these proceedings, the only evidence of what he said during the meeting comes from Mr Dirani.

Mr Sharif’s term as President of Al-Gadeer expired sometime in 1995. As such, he ceased to be involved in the arrangements for the purchase of the property shortly after the meeting with Mr Nuri. Mr Sharif continued to be an active participant in the community, although he was no longer a member of the committee. It appears that Mr Dirani was authorised by Al-Gadeer to proceed with the settlement of the property from that point forward.

Correspondence between Nuri & Kiratzis and IAIC Canada

By letter dated 3 May 1995 (‘the 3 May letter’), Nuri & Kiratzis wrote to IAIC Canada on the subject of the purchase of the property. The letter commences: ‘We act on behalf of Al Ghadeer Islamic Association in the purchase of the [property]’. It proceeded to describe the difficulty faced by Al-Gadeer in nominating IAIC Canada as purchaser of the property in the absence of an express power in the contract of sale to do so. The letter, which appears to be signed by Mr Nuri, also suggests that a direct transfer of the whole or part of the property from Al-Gadeer to IAIC Canada after settlement would be impractical given the additional stamp duty, transfer fees and legal costs.

The 3 May letter ultimately proposes that the purchase of the property proceed on the terms of the contract of sale, meaning that Al-Gadeer would become registered proprietor of the property upon settlement, with IAIC Canada ‘protecting and insuring the proper advancement of [its] funds by means of a registered mortgage or caveat over the relevant title’. The letter concluded by noting that settlement was due on 1 June 1995 and that IAIC Canada should seek alternative legal representation should it agree to the proposal as Nuri & Kiratzis cannot act as both ‘Solicitors for the Lender and Solicitors for the Purchaser’.

Mr Dirani says he received a copy of the 3 May letter — presumably from Mr Nuri — shortly after he and Mr Sharif met with Mr Nuri regarding the purchase of the property. Mr Dirani says he, not Mr Nuri, then faxed the letter to the office of Mr Al-Ali despite it bearing the Nuri & Kiratzis letterhead. It is likely that Mr Nuri also caused a copy of the letter to be sent to IAIC Canada directly as Ms Anne Stevens (‘Ms Stevens’), lawyer for IAIC Canada, recalls receiving it ‘very shortly after 3 May 1995’.

Having faxed the letter, Mr Dirani called Mr Al-Ali to talk through their options for purchasing the property. The precise date of the call is unclear. Mr Dirani explained the difficulties with nominating IAIC Canada as the purchaser and the additional costs a transfer of the property would incur. He says Mr Al-Ali asked what other options they had to resolve the problem. Mr Dirani responded that he would be talking to his solicitor about their options. Mr Dirani, however, did not refer to the 3 May letter in the conversation despite it raising the possibility of a mortgage or caveat as an alternative option to a nomination or transfer.

By letter dated 8 May 1995 addressed to Al-Gadeer and referenced ‘Ali Dirani’ (‘the 8 May letter’), Nuri & Kiratzis noted that IAIC Canada ‘…has or will advance to [Al-Gadeer] the funds to purchase the [property] on the security of the [property]’. It continued to state that ‘[i]n the event of [Al-Gadeer] failing to meet the repayment within the agreed repayment period, [IAIC Canada] may foreclose the property and re-possess’. Mr Dirani confirmed that he received the 8 May letter by fax to his business address. The letter refers to a recent telephone conversation, presumably between Mr Dirani and Mr Nuri, and appears to confirm that IAIC Canada had agreed to transfer the funds needed for the purchase in exchange for a mortgage over the property.

By letter dated 18 May 1995 (‘the 18 May letter’), Nuri & Kiratzis wrote to Ms Stevens of IAIC Canada regarding the purchase of the property in the following terms:

Re: Al Ghadeer Islamic Association Inc.
Purchase of Fawkner Education Centre
Further to your recent correspondence, we have received instructions from our client [Al-Gadeer] advising that they are agreeable to you [IAIC Canada] registering a registered first mortgage over the title to the [property] in consideration of your client advancing $430 000.00 to them.
We are instructed that the preparation and registering of the security documents will take place after settlement of the matter by a Solicitor to be nominated. We are further instructed that our client will at the expiration of nine months from the settlement date, agree to affect a transfer of the Fawkner education centre to your Association on the understanding that your Society to [sic] attend to payment of all legal costs stamp duty and registration fees on the transfer.
Our clients are anxious to settle the matter on or before the 25^th May 1995 and we suggest that the funds to be advanced be directly credited into an account of our client purely as a record of such advancement.
Should you have any queries, please advise.

When asked about the 18 May letter, Mr Dirani recalls that it was drafted at a ‘very important time’ given the proximity to the settlement date of 1 June 1995. He confirmed that he had seen the letter in draft, had provided the instructions referred to in the letter and that the letter conformed with his instructions.

Ms Stevens has been involved with IAIC Canada since its incorporation in 1992. In that year, Mr Al-Ali, who had previously engaged Ms Stevens on unrelated matters, sought her advice regarding the incorporation of a charitable organisation for the Shia Muslim community in Toronto, Canada. As noted, IAIC Canada was subsequently incorporated on 19 June 1992. Ms Stevens has continued to provide legal services to IAIC Canada and Mr Al-Ali since that time and became a director of IAIC Canada in October 1992, an office she still held at the time of giving evidence at trial. She says she was the sole provider of legal services to IAIC Canada between 1992 and 1998, excluding the Australian lawyers for IAIC Canada. She appears to be responsible for the administrative affairs of IAIC Canada, which she concedes have been ‘conducted on a rather casual basis’. As a result, she describes IAIC Canada’s records and minutes of meetings as ‘very sporadic’.

Ms Stevens recalls first discussing the potential purchase of the property with Mr Al-Ali in March or April 1995. She says Mr Al-Ali mentioned the possibility of donating some money to a Shia Muslim organisation from Australia trying to raise funds for the purchase of a property. This turned out to be Al-Gadeer’s purchase of the property. According to Ms Stevens, sometime later, but she was unable to say exactly how long after the initial discussion, Mr Al-Ali called her and said he was now thinking of buying the property outright. She advised him that ‘the quickest and cleanest thing to do’ would be to take an assignment of the contract of sale from Al-Gadeer as purchaser. However, for the reasons set out in the 3 May letter from Nuri & Kiratzis, that course was not adopted.

Ms Stevens and Mr Al-Ali then discussed the alternatives to an assignment of the contract of sale. She says their ‘principal concern at the time was getting title to the property’ for IAIC Canada:

Counsel for the plaintiffs: What if anything did Mr Al-Ali say to you?---Well, he said that that just - the idea of taking a mortgage, it might be a temporary expedience but really, our intention was to own the property outright and to be registered on title as the owner.

Ms Stevens says the ultimate agreement was that IAIC Canada would provide the funds for Al-Gadeer’s purchase of the property in return for a transfer of the property to IAIC Canada within nine months of the settlement date. Although she did not participate in any discussions with Al-Gadeer to this effect, she says that she was informed by Mr Al-Ali sometime between 3 and 18 May 1995 that this was the agreement he had reached with Al-Gadeer, most likely through Mr Dirani. That agreement was subsequently set out by Nuri & Kiratzis in the 18 May letter, including Al-Gadeer’s consent to IAIC Canada registering a mortgage over the property in the meantime.

Upon receiving the 18 May letter, Ms Stevens says she immediately faxed a copy to Mr Al-Ali and pointed out to him that Al-Gadeer had agreed to transfer the property to IAIC Canada within nine months of settlement. She says that she expressed some concern to Mr Al-Ali that, despite the 18 May letter from Nuri & Kiratzis, they did not have ‘anything in writing’ from Al-Gadeer binding it to the terms of their agreement. In response, she says Mr Al-Ali told her that he or IAIC Canada, but she could not say which, had an agency agreement in place with Al-Gadeer. On that basis, Ms Stevens told Mr Al-Ali the arrangement with Al-Gadeer was fine despite the fact that she had not seen the agency agreement at the time. In cross-examination, Ms Stevens was adamant that she did view the agency agreement sometime before the commencement of these proceedings but was unsure of the date. She also admits that the ‘recent correspondence’ referred to in the first line of the 18 May letter was a letter from her to Nuri & Kiratzis which has subsequently gone missing, despite her searches to locate it.

Agency agreements

Although it unclear from her evidence, the agency agreement that Ms Stevens refers to is likely an agreement dated 21 March 1995 and signed by Dr Al Bakiry on behalf of Al-Gadeer (‘the first agency agreement’). The identity of the IAIC Canada signatory is unclear, although the weight of probability suggests it was Mr Al-Ali as he acted as the undisputed leader of the organisation at the time. By that agreement, IAIC Canada purports to appoint Al-Gadeer as its agent for a period of five years for the purpose of ‘the purchase of a building to be used solely for religious, educational and community relief services’. It contains various conditions, including that Al-Gadeer provide progress reports to IAIC Canada on its use of ‘any funds or other resources transferred to it’ by IAIC Canada, that Al-Gadeer provide copies of any legal or financial documents that reflect IAIC Canada’s ‘participation’ and the manner in which its funds are being used, and that Al-Gadeer ‘segregate [IAIC Canada’s] funds and property from those of [Al-Gadeer] and to keep separate books and records in respect of its expenditures’.

The first agency agreement is problematic in several respects. First, it purports to have been made on 21 March 1995, a day before Mr Dirani and Mr Al-Hamdi arrived in Canada and three days before their first meeting with Mr Al-Ali. It contemplates an arrangement whereby Al-Gadeer purchases a building for religious, educational and community services as agent for IAIC Canada. Such an arrangement was not discussed at the first meeting with Mr Al-Ali. It is strange that IAIC Canada should execute an agreement appointing Al-Gadeer as its agent on 21 March and then ignore it when meeting with Al-Gadeer representatives on 24 March. Stranger still is that Mr Al-Ali should then call Mr Dirani and Mr Al-Hamdi several days later to propose an arrangement allegedly already in place by written agreement.

The second troubling aspect of the first agency agreement is the signature of Dr Al Bakiry on behalf of Al-Gadeer. Dr Al Bakiry did not assume the leadership of Al-Gadeer until August 1995. As noted, Mr Dirani says Al-Gadeer had, by the time of the second meeting with Mr Al-Ali in March 1995, made an application for Dr Al Bakiry to become the resident Imam in Melbourne. However, during that second meeting, Mr Dirani called Dr Al Bakiry to inform him of Mr Al-Ali’s proposal. That proposal reflected the first agency agreement that was purportedly signed by Dr Al Bakiry a week earlier. Mr Dirani does not say that Dr Al Bakiry indicated any prior knowledge of the arrangement during that call. In the context of Mr Al-Ali’s dealings with Mr Dirani and Mr Al-Hamdi as the authorised representatives of Al-Gadeer, it is highly improbable that IAIC Canada would execute an agreement with Dr Al Bakiry on behalf of Al-Gadeer.

The third point about the first agency agreement is that it is made on Al-Gadeer letterhead and includes Lowson Street, Fawkner, being the address of the property, as Al-Gadeer’s address. It was accepted by Mr Dirani that, with the exception of a fundraising day in January 1995, Al-Gadeer did not take possession of the property until after settlement on 1 June 1995. It would have been premature in the extreme for Al-Gadeer to include Lowson Street as its address in March 1995, particularly when at that time it was unsure of its capacity to settle the purchase of the property.

In cross-examination, Mr Dirani hypothesised that the date on the face of the first agency agreement, 21 March 1995, was simply a clerical error and that it was actually made on another date. He does not guess as to what the actual date might have been. He also suggests that Dr Al Bakiry could have requested paperwork with Al-Gadeer letterhead around that time. Mr Dirani concedes, however, that these explanations are little more than speculation and that the discrepancies in the first agency agreement can only be addressed by the person who prepared it, a person whose identity remains unknown.

Finally, the first agency agreement is in relatively complex terms and entirely in English, seemingly without an Arabic translation. It is signed by Dr Al Bakiry and Mr Al-Ali, both of whom had difficulty reading and writing English. This is particularly significant given the lack of evidence around the authorship of the document, other than Ms Stevens’ evidence that she was not the draftsperson.

A separate agency agreement between IAIC Canada as principal and Al-Gadeer as agent was executed on an unknown date (‘the second agency agreement’). That agreement was also made on Al-Gadeer’s letterhead and signed by Dr Al Bakiry on behalf of Al-Gadeer. It is in simple terms:

Imam Ali Islamic Centre hereby appoints Al-Ghadeer Islamic Association Inc. as its agent, And Al-Ghadeer Islamic Association Inc. accepts such appointment, For the follwing [sic] purposes only: For the purchase of a building for religious, Educational and community relief services.

The second agency agreement bears an incomplete date under the signature of Dr Al Bakiry: ‘30/8/199_’. Mr Dirani recalls Dr Al Bakiry advising him that he had signed the second agency agreement and was sending it, presumably to IAIC Canada. He accepts, however, that the incomplete date means that it could have been signed by Dr Al Bakiry in any year in the 1990s. He could not say in which year the second agency agreement was executed and admits that he was not involved in its preparation or execution.

Settlement of the purchase of the property

As a result of the discussions between Ms Stevens and Mr Al-Ali about the 18 May 1995 letter, IAIC Canada proceeded to arrange for the transfer of the funds from IAIC Canada to Al-Gadeer.

On 23 May 1995, Mr Al-Ali signed and sent a note to a Mr Sher Ali (‘Mr Ali’), senior account manager at the Royal Bank of Canada, authorising the transfer of $430,000 CAD from an account held in the name of IAIC Canada, to a Commonwealth Bank account held in the name of Al-Gadeer. The Royal Bank of Canada account was the only account held by IAIC Canada at the time. A Commonwealth Bank statement for the transferee account shows a credit of $435,173.63 AUD on 24 May 1995. The statement is headed ‘Al-Ghadeer Islamic Association Inc – The Great Prophet Islamic Complex Fund’ which Mr Dirani explained was the name initially given to the property by Al-Gadeer.

Upon receipt of the funds from Canada, Al-Gadeer completed the purchase of the property on 1 June 1995. Al-Gadeer produced a receipt, signed by Dr Al Bakiry and dated 25 December 1996, which described the purpose of the funds as being for the purchase of the property. By transfer of land dated 19 July 1995, Al-Gadeer became the registered proprietor of the property.

Engagement of Poloni & Galgano by IAIC Canada

After settlement, and as suggested by Nuri & Kiratzis in the 3 May letter, IAIC Canada sought separate legal representation in Australia in respect of its interest in the property. As Mr Dirani describes it, Mr Nuri advised Al-Gadeer that it would be a conflict of interest for him to act for both Al-Gadeer and IAIC Canada in respect of the latter’s interest in the property. Mr Dirani asked Mr Nuri whether he knew any other local solicitors who might act for IAIC Canada and Mr Nuri referred him to Nino Galgano of Poloni & Galgano (‘Mr Galgano’). Mr Galgano’s details were subsequently forwarded to IAIC Canada by either Mr Dirani or Mr Nuri.

Ms Stevens confirmed that IAIC Canada engaged Poloni & Galgano, and in particular, Mr Galgano. According to Ms Stevens, IAIC Canada in particular sought expertise in mortgage transactions because IAC Canada ‘were seeking to place a mortgage on the property on an interim basis to secure out interest in the property prior to the transfer to us’.

By letter dated 21 July 1995 (‘the 21 July letter’), Mr Al-Ali wrote to Mr Galgano on behalf of IAIC Canada. The letter is signed by Mr Al-Ali but Ms Stevens says she was the original draftsperson of the letter that provides as follows:

Re: Imam Ali Islamic Centre mortgage to Al Ghadeer Islamic Association Inc
Fawkner Education Centre, Lowson Street, Fawkner
I am writing on behalf of [IAIC Canada], of which I am an officer and director. [IAIC Canada] is a Canadian charitable corporation operating a mosque and religious school in Toronto, Ontario, Canada.
[IAIC Canada] has recently provided a loan in the amount of Canadian $430,000.00 to [Al-Gadeer] of Melbourne to assist it in its recent purchase of a property known as the Fawkner Education Centre, Lowson Street, Fawkner. We would like to retain your services with regard to placing a mortgage in that amount on the said property.
Your name has been forwarded to us by Nuri & Kiratzis, Barristers & Solicitors, of Brunswick, Melbourne, solicitors for [Al-Gadeer]. Would you kindly advise as to your expertise in such mortgage transactions and as to your fee structure and expected disbursements.

The terms of this letter are consistent with Ms Stevens’ evidence that IAIC Canada was concerned to secure its interest in the property by way of a mortgage.

By letter dated 24 July 1995 and addressed to Mr Al-Ali as representing IAIC Canada (‘the 24 July letter’), Poloni & Galgano responded to the 21 July letter. The letter sets out Poloni & Galgano’s expected fees and disbursements, based on the applicable scale of costs, and estimates of stamp duty and registration costs. According to Mr Dirani, those fees were paid out of the surplus $5,173.63 transferred from Canada to Al-Gadeer for the purchase of the property.

After inviting IAIC Canada to confirm its instructions, the 24 July letter from Poloni & Galgano continued as follows:

We ask you to note that the Australian Department of Treasury has rules governing foreign interests purchasing or advancing funds in respect to land. The rules require the Foreign Investment Review Board (FIRB) to approve all land transactions which involve a non resident [sic].
The FIRB will require that the mortgage documents provide that in the event of your Centre foreclosing on the Mortgage that the security property will be sold to an Australian Resident as soon as possible.

(b) clause 15 deals with quorums at general meetings. Clause 15(2) refers to a quorum being ‘[t]hree members personally present including the Mutawalli (being members entitled under these Rules to vote at a general meeting)’. ‘Members’ is defined in clause 2(1) of the amended rules as meaning ‘a member of the Association’. This again supports the implication from the amended rules that the Mutawalli must also be a member, rather than merely holding an officer on the committee of management of IAIC Australia.

It can be seen from clause 25, in conjunction with the requirement that the Mutawalli must be a member of the association, that there are two distinct paths for a person to become Mutawalli. Either:

(a) the existing Mutawalli may nominate another member as the new permanent substitute Mutawalli (clause 25(4)); or

(b) if the Mutawalli dies without having nominated a successor or the Mutawalli has nominated a successor but that person does not accept the nomination, a member of the association may nominate another member as the new Mutawalli, and that nominee is then elected by the committee of management by special resolution (provided that the nominated person complies with certain characteristics) (clause 25(5)).

Mr Sami

Dr Al Bakiry’s intention was for his third son, Mr Sami, to become his successor as Mutawalli of IAIC Australia. As recounted at [283]-[284], Dr Al Bakiry had indicated to various people that his intention was for Mr Sami to take the lead of IAIC Australia, albeit perhaps after Mr Sami had completed further training. The problem is that, for the reasons considered at [622], Mr Sami was not a member of IAIC Australia.

Dr Al Bakiry, in expressing his desire for Mr Sami to take over as Mutawalli, was in all likelihood acting on the assumption that Mr Sami was a member. The 2004 special general meeting had recorded that Mr Sami had been appointed as member. The involvement of Mr Sami, amongst other family members, in the meetings of IAIC Australia in the years prior to Dr Al Bakiry’s death suggests that, in Dr Al Bakiry’s mind, Mr Sami was a member of IAIC Australia. But the subjective view of Dr Al Bakiry does not circumvent the requirement for compliance with the rules of the association. The amended rules only permitted Dr Al Bakiry to nominate a member of IAIC Australia as his successor as Mutawalli.

The meetings of the ‘members’ contested by the defendants after the death of Dr Al Bakiry likewise do not support the appointment of Mr Sami as Mutawalli. Although Mr Sami’s family members, Mr Yatim and Youssef may have treated him as Mutawalli, Mr Sami was not a member of IAIC Australia in accordance with the amended rules. Neither were those others in a position, as validly appointed members of IAIC Australia, to nominate Mr Sami as Mutawalli. Mr Sami did not become Mutawalli in accordance with the amended rules.

Mr Dirani

The plaintiffs contended, consistent with the consideration at [653]-[655], that Dr Al Bakiry never validly nominated another member to become Mutawalli before his death. It was therefore open for a member of the association to nominate another member to become the new Mutawalli, in accordance with clause 25(5) of the amended rules.

The plaintiffs pleaded that Mr Dirani was appointed as the new Mutawalli pursuant to the resolutions passed at the Dirani appointment meeting, as recounted at [334]-[335]. The defendants, however, raised a fatal problem with the validity of those resolutions. There was no quorum at the meeting, which was prescribed under the amended rules as being three members being entitled under the amended rules to vote (clause 15(2)). In the defendants’ submission, the only potential member who attended was Mr Dirani. Mr El-Khishin did not attend and Mr Al-Saabary and Mr Fakhrualdin were merely prospective members prior to their purported appointment at the meeting. Mr Dirani conceded in cross-examination that there was no quorum. For those reasons, the resolutions passed at the meeting were invalid.

During his evidence Mr Dirani appeared to draw a distinction between different senses of appointment as Mutawalli. He said that he was appointed in substance as Mutawalli by IAIC Canada pursuant to the first Dirani appointment letter and second Dirani appointment letter, but that the minutes of the Dirani appointment meeting merely related to an appointment for legal purposes. This distinction was most obvious from the following evidence provided in cross-examination:

Counsel for the defendants: Do you agree that you were not mutawalli prior to [the Dirani appointment meeting]?---I am not mutawalli based upon the Australian law. Nothing had been submitted to the actual government but I was mutawalli based upon the letter I received from Canada.

While Mr Dirani, amongst others including Mr Sami, may have acted at times on the assumption that the appointment of the Mutawalli and the other members was to be initiated and controlled by IAIC Canada, that is not reflected in the terms of the amended rules, which is the document governing the composition and management of IAIC Australia. Mr Dirani was not validly appointed as Mutawalli in accordance with those rules.

The result is that there has not been a valid appointment of a new Mutawalli after the death of Dr Al Bakiry. The future of IAIC Australia, including the office of Mutawalli, is discussed at [683]-[684].

Officers

The parties in their pleadings did not seek any declaration in respect of the identity of the current officers of IAIC Australia. However, the issue will be referred to briefly given the defendants touched upon the composition of the officers in their closing written submissions.

Officers under the amended rules

The amended rules provides that the officers of IAIC Australia include the following positions: Mutawalli, Mutawalli’s Assistant, Treasurer, Secretary and General Coordinator (clause 24(1)). Each position, except for the Mutawalli, is to be filled by election of the members of the association at each annual general meeting (clauses 11(3)(c), 23(3), 24(3)).

Given that the officers of the association are elected by the members, the defendants were correct to conclude in their submissions that ‘the Court’s determination as to who are the present committee members will in part be dictated by who are the present members (and Mutawalli) of the Association’. But since the Court has concluded that only Mr Dirani is a member of IAIC Australia, and that there is no validly appointed Mutawalli of IAIC Australia, there is no composition of officers that the Court can support consistent with the amended rules.

Secretary under the AIR Act

The defendants made further submissions that the Court should recognise Mr Yatim as the current Secretary of IAIC Australia for the purposes of the AIR Act. The defendants noted that the appointment of Mr Yatim as Public Officer on 20 February 2012 was not disputed by the plaintiffs. The Public Officer of an association under the AI Act was, upon the commencement of the AIR Act, taken to be the Secretary of the association for the purposes of the AIR Act.[215]
[215]AIR Act, sch 4, s 9(1).

Notwithstanding the evidence that Mr Yatim has been performing the secretarial duties of the association since around 2007, and more recently in the formal statutory capacity of Secretary, the Court does not propose to make any declaration in respect of the identify of IAIC Australia’s Secretary for the purposes of the AIR Act. This is because the parties did not seek such a declaration in their plea for relief and that it is best, if possible, to leave any changes in the identity of the Secretary to the membership of the association.

The future of IAIC Australia, including the composition of its officers, is discussed at [683]-[684].

Oppressive conduct
Introduction

The plaintiffs also sought an order in the Membership proceeding that IAIC Australia, through the actions of Mr Sami, had engaged in oppressive conduct. The plaintiffs’ pleadings alluded to oppressive conduct in the body of the pleading but did not expressly seek such an order in their plea for relief. However, the plaintiffs’ closing written submissions clarified that a declaration as to oppressive conduct was sought under ss 68 or 69 of the AIR Act.

Sections 68 and 69 of the AIR Act provide the Court with various powers in respect of oppressive conduct by incorporated associations. The terms of s 68 are immediately directed at the Magistrates’ Court as the default forum for litigation involving associations incorporated under the AIR Act. As noted at [351], the Membership proceeding was commenced in the Magistrates’ Court and subsequently transferred to this Court to be heard with the Trust proceeding.

Sections 68 and 69 of the AIR Act provide relevantly as follows:

68   Oppressive conduct
(1)     A member or former member of an incorporated association may apply to the Magistrates' Court for an order under this section on the ground that the association has engaged, or proposes to engage, in oppressive conduct.
(2)     Unless the Magistrates' Court grants leave to apply at a later date, an application under subsection (1) by a former member must be made within 6 months after the person ceases to be a member of the association.
(3)     The Magistrates' Court may only grant leave under subsection (2) if the Magistrates' Court is satisfied that there is sufficient public interest to do so.
(4)     On hearing the application, the Magistrates' Court may, if satisfied that the incorporated association has engaged, or proposes to engage, in oppressive conduct, make one or more of the following orders—
(a) an order for regulating the conduct of the association's affairs in the future;
(b) an order directing the association to institute, prosecute, defend or discontinue specified proceedings, or authorising a member of the association to do so on behalf of the association;
(c) an order restraining a person from engaging in specified conduct or from doing a specified act or thing;
(d)an order requiring a person to do a specified act or thing;
(e) an order for the alteration of the rules of the association;
(f) an order that a former member be reinstated as a member of the association;
(g) an order terminating a person's membership of the association;
(h) subject to subsection (5), any other order that is, in the opinion of the Court, necessary to remedy any default or resolve any dispute.

(5) The Magistrates' Court must not make an order that an incorporated association be wound up.
(6) For the purposes of this section—
(a) oppressive conduct, in relation to an incorporated association, includes conduct that is—
(i) unfairly prejudicial to, or unfairly discriminatory against, a member of the incorporated association (including in the member's capacity as a member of the committee); or
(ii) contrary to the interests of the members of the incorporated association as a whole; and

(b) a reference to engaging in conduct includes a reference to refusing or failing to take action.

69 Oppressive conduct—transfer of proceeding to Supreme Court
(1) The Magistrates' Court must transfer a proceeding under section 68 to the Supreme Court if—
(a) the Magistrates' Court has explored all possible avenues of achieving a negotiated settlement and a negotiated settlement has not occurred; and
(b) it appears to the Magistrates' Court that an order that the incorporated association be wound up may be an appropriate order in the proceeding.

(2) If a proceeding has been transferred to the Supreme Court under subsection (1), it may be continued and completed as if steps taken in the proceeding prior to the transfer had been taken in the Supreme Court.
…
(3) In a proceeding under this section, the Supreme Court may make—
(a) an order that the incorporated association be wound up; or
(b) any order the Magistrates' Court may make under section 68(4).

(4) The Supreme Court must not make an order under this section that an incorporated association be wound up if it is of the opinion that the winding up of the association would unfairly prejudice members affected by the conduct of the association.
…

There are some preliminary observations regarding the applicability of these provisions. The first observation is that an application by a former member of an association may only be validly made under s 68 within six months of that person ceasing to be a member unless the Court otherwise grants leave.[216] It is unnecessary to determine for those purposes the precise point in time when Mr El-Khishin and Mr Fniech, as former members of IAIC Australia, ceased to be members of the association. It is sufficient to note that Mr Dirani, as a current member of IAIC Australia, has standing under s 68(1) of the AIR Act.
[216]AIR Act, s 68(2).

The second observation is that the Court does not have jurisdiction to make an order under s 69 in the current Membership proceeding. The power for this Court to make certain orders under s 69(3) only applies where the proceeding has been transferred by the Magistrates’ Court under s 69(1). The Membership proceeding was transferred to this Court, not pursuant to s 69(1) of the AIR Act, but as an individual transfer under the Case Transfer Act, as noted at [351].

The Case Transfer Act expressly provides that where the transferee court is lower than the transferor court in the Victorian court hierarchy, the transferee court is to have the same powers to grant relief as possessed by the transferor court if the proceeding had not been transferred.[217] But that Act is silent on where, such as for the transfer of the Membership proceeding, the transferee court is higher than the transferor court in the court hierarchy. It is sufficient to conclude that, upon receiving the Membership proceeding from the Magistrates’ Court, this Court has at least the same powers as the Magistrates’ Court to make orders under s 68(4) of the AIR Act.
[217]Courts (Case Transfer) Act 1991, s 22(1)(a).

Submissions

The plaintiffs’ pleaded that Mr Sami, while purportedly acting as Mutawalli of IAIC Australia, had engaged in oppressive conduct by:

(a) inconsistently with the amended rules and purposes of the IAIC Australia;

(b) in a manner unfairly prejudicial to or unfairly discriminating against IAIC Australia’s members; and

(c) in a manner contrary to the interests of IAIC Australia’s members as a whole,

taking the following actions:

(d) purportedly removing Mr Dirani, Mr El-Khishin and Mr Fniech as members;

(e) purportedly nominating and recording the applicants as members; and

(f) discovering both the forged application forms and contested application forms in the proceedings, which the plaintiffs contended were both forged.

The plaintiffs only pressed the ground referred to at [673(e)] at trial. The plaintiffs’ closing written submissions further identified the invalid appointment of Mr Sami as Mutawalli as an alleged act of oppression. The plaintiffs’ closing written submissions put their argument as follows:

… it is also open to the Court to make orders that the (invalid) appointment of the [applicants] and the invalid nomination of Mr Sami [as Mutawalli] were oppressive conduct within the meaning of sections 68 and 69 of the [AIR Act].
…
In the present case, the wholesale failure of the defendants to follow clause 5 and clause 25 of the [amended rules] was contrary to the interests of the members as a whole, being Messrs Dirani, El-Khishin and Fniech. In particular, the rights and privileges of membership could only be bestowed by the process under clause 5 and it was a concomitant right and privilege of membership that only the members could nominate a new Mutawalli, pursuant to the provisions of clause 25. Accordingly, the conduct of IAIC Australia and those purporting to control it was oppressive within the meaning of the Act.

The AIR Act makes it clear that the oppressive conduct complained of must be that engaged in by the incorporated association.[218] If the Court were to make a declaration of oppressive conduct pursuant to s 68 of that Act, it would be that IAIC Australia, not Mr Sami personally, had engaged in oppressive conduct. It is ultimately unnecessary, however, to determine whether IAIC Australia engaged in oppressive conduct.
[218]AIR Act, s 68(1).

Conclusion

Even if the Court was to be satisfied that the invalid nomination of the applicants as members, or the invalid nomination of Mr Sami as Mutawalli, constituted oppressive conduct of IAIC Australia for the purposes of the AIR Act, the Court would not grant a mere declaration in respect of that legal conclusion.

The orders that the Court may make upon being satisfied that an incorporated association has engaged in oppressive conduct are listed in s 68(4) of the AIR Act. The specific orders listed in paragraphs (a)-(g) do not cover a mere declaration of oppressive conduct, as sought by the plaintiffs. Section s 68(4)(h) does, however, relevantly provide that the Court may make ‘any other order that is, in the opinion of the Court, necessary to remedy any default or resolve any dispute’.

Even if the Court were to be satisfied that IAIC Australia had engaged in oppressive conduct, a mere declaration in that respect would not be ‘necessary to remedy any default or resolve any dispute’. The dispute over control of IAIC Australia has been resolved as set out above. The applicants were not validly appointed as members. There was no valid appointment of a Mutawalli to replace Dr Al Bakiry. Mr Dirani remains the sole member of IAIC Australia. A mere declaration of oppressive conduct would not be necessary to remedy and default or resolve any dispute between the parties.

Removal of parties
Introduction

In their closing written submissions, the defendants submitted that Mr Sami and Mr Yatim were not proper or necessary parties to the Membership proceeding and, therefore, should be removed by the Court as parties to that proceeding.

The power of the Court under r 9.06(a) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) to order that a person who is not a proper or necessary party cease to be a party specifically extends to the making of such an order ‘[a]t any stage of a proceeding’. Accordingly, it is open to the Court to make such an order for removal of Mr Yatim and Mr Sami even at the point of determination of these proceedings.

Applicable law

The phrase ‘proper or necessary’ in r 9.06(a) is linked with the operation of the conditions for joinder of parties under the Rules.[219] The relevant principles were summarised in a recent decision of this Court:[220]
[219]Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd [2004] VSC 390 (8 October 2004) [21] (Hollingworth J); Russell v Abbey [2018] VSC 259 (22 May 2018) [21] (Ierodiaconou AsJ). This approach was also accepted by Lansdowne AsJ without the benefit of submissions from counsel in Swindells v Victoria [2012] VSC 457 (3 October 2012) [12] (Lansdowne AsJ).
[220]Russell v Abbey [2018] VSC 259 (22 May 2018) [21] (Ierodiaconou AsJ) (citations omitted).

(a) a person is a ‘necessary’ party for the purposes of r 9.06(a) if the conditions for joinder under r 9.03 are satisfied (i.e. broadly where that party claims any relief to which the original plaintiff is claiming); and

(b) a person is a ‘proper’ party if either:
(i)the conditions for joinder as a party under r 9.02 are satisfied (i.e. broadly where either (i) if separate proceedings were brought by two or more parties, some common questions of law or fact would arise in those proceedings, (ii) all rights to relief claimed in the proceeding are in respect of or arise out of the same transaction or series of transactions, or (iii) the Court otherwise gives leave to the joinder); or

(ii)the conditions for joinder as a party under r 9.06(b) are satisfied (i.e. broadly where (i) the presence of that party is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon, or (ii) there may exist questions involving that party which it is just and convenient to determine in the proceeding).

Mr Sami and Mr Yatim are not proper or necessary parties

As explained at [675], an allegation of oppressive conduct for the purposes of s 68 of the AIR Act is an allegation against the incorporated association, not specific individuals managing the association. Individuals managing an incorporated association may, however, be proper or necessary parties to proceedings involving an allegation of oppression against that association where the form of relief requires orders to be directed to those individuals. This was not the case in the Membership proceeding. The only relief sought by the plaintiffs in respect of their oppression allegation was a declaration that IAIC Australia had engaged in such conduct. No relief sought by the plaintiffs was directed to Mr Sami or Mr Yatim. Therefore, they are not proper or necessary parties to the Membership proceeding. Accordingly, the Court will order their removal as defendants to the Membership proceeding.

The future of IAIC Australia

The consistent lack of procedural compliance in the affairs of IAIC Australia throughout its history has left behind substantial legal turmoil. Johnson J in the Supreme Court of Western Australia was required to consider a similar deficiency of compliance in a previous decision of that Court.[221]Her Honour commenced the reasons for that decision with the following passage, which are apposite to predicament in which IAIC Australia as an entity finds itself:

This case is an object lesson in the importance of operating an incorporated association as a legal entity, separate and distinct from those who operate it, and in accordance with the association's constitution. It also underscores the importance of maintaining proper records. If the parties had adhered to these fundamental requirements it is unlikely that these proceedings would have been necessary.[222]

[221]Lai v Tiao [No 2] [2009] WASC 22 (12 February 2009).

[222]Ibid [1] (Johnson J).

IAIC Australia currently has one member, no validly appointed Mutawalli and no other validly appointed officers. One potential response is for the Court to order the winding up the association on the basis that it is just and equitable to do so in light of the lack of members and the history of non-compliance with its governing rules and legislation.[223] However, it is premature for the Court to make such an order given the parties have not had the opportunity to make submissions in that respect.
[223]AIR Act, s 126(1)(g).

Declaration and orders

The Court declares that IAIC Australia holds the property on trust for the benefit of IAIC Canada.

The Court orders the removal of Mr Sami and Mr Yatim as defendants to the Membership proceeding pursuant to r 9.06(a) of the Rules.

Otherwise the Court will hear submissions as to the form of order for the Membership proceeding and as to the costs of both proceedings.

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Citations

Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413

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[2018] VSC 413

31 July 2018