Islamic Council of NSW v The Australian Federation of Islamic Councils
[2000] NSWSC 115
•2 March 2000
CITATION: ISLAMIC COUNCIL OF NSW & ANOR. V. THE AUSTRALIAN FEDERATION OF ISLAMIC COUNCILS & ORS. [2000] NSWSC 115 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): SC 4385/99 HEARING DATE(S): 07/02/00-11/02/00 JUDGMENT DATE: 2 March 2000 PARTIES :
Islamic Council of New South Wales Inc. - 1st Plaintiff
Ali Roude - 2nd Plaintiff
The Australian Federation of Islamic Councils Inc. - 1st Defendant.
See Court file for remaining 19 defendantsJUDGMENT OF: Hodgson CJinEq at 1
COUNSEL : Dr. C. Birch SC for plaintiffs
Mr. J. Whittle with D.A. Burwood for 1-12 defendants.
13-20 defendants took no active part in the proceedings.SOLICITORS: Pigott Stinson Ratner Thom, Sydney, for plaintiffs.
Tress Cocks & Maddox, Sydney for 1-12 defendants.CATCHWORDS: ASSOCIATIONS AND CLUBS - Incorporated associations - Federal and State associations - Purported intervention of Federal association in affairs of State association - Whether justified by Constitution of Federal and/or State association. LEGISLATION CITED: Associations Incorporation Act 1984 (NSW) ss.11, 16, 19, 20. CASES CITED: Burton v. Murphy (1983) 2 Qd.R. 321 distinguished. DECISION: See pars.109 onwards.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONCORAM: HODGSON, CJ in Eq.
Thursday 2nd March 2000
NO. 4385 OF 1999
ISLAMIC COUNCIL OF NEW SOUTH WALES & ANOR. V. THE AUSTRALIAN FEDERATION OF ISLAMIC COUNCILS INC. & ORS.JUDGMENT
1 The first plaintiff, which I will call ICNSW or the Council, is an association incorporated under the Associations Incorporation Act 1984 (NSW). The second plaintiff, Mr. Ali Roude, was elected chairman of ICNSW in 1983, and he continued in that position at least until July 1998. 2 The first defendant, which I will call AFIC, is an association incorporated under the Associations Incorporation Act 1964 (Tas). It appears that it was incorporated on 17th June 1980, ceased to be registered on 6th May 1999, and was re-registered on 14th October 1999. It was registered as a foreign company in New South Wales on 15th June 1984. 3 On 29th August 1999, the Executive Committee of AFIC decided to intervene in ICNSW and to appoint a Caretaker Committee to run its affairs until new office bearers were elected. AFIC convened a meeting of members of ICNSW to be held on 17th October 1999 to elect new office bearers and to effect certain amendments to ICNSW's constitution; and those things were purportedly done at that meeting. 4 The 2nd-12th defendants in these proceedings are persons purportedly elected as office bearers at that meeting. The 13th-20th defendants are, together with the second plaintiff, persons who the plaintiffs allege were office bearers prior to the intervention of AFIC. 5 In these proceedings commenced on 19th October 1999, the plaintiffs claim declarations that the meeting of 17th October 1999 and the purported election of office bearers and amendment of the constitution are invalid, and that the second plaintiff and the 13th-20th defendants are the office bearers of ICNSW; and they also seek consequential relief. 6 The second defendant, Mr. Gabr Elgafi, has put on a cross-claim in which he claims that a meeting of ICNSW held on 6th January 1999, at which he was purportedly removed as Vice President of ICNSW and the third, eighth, ninth and tenth defendants were purportedly elected as office bearers of ICNSW, was not validly convened; and he seeks declarations that his purported removal as Vice President was invalid, and that all subsequent meetings purporting to be meetings of office bearers of ICNSW are invalid and of no effect.7 I will begin by briefly outlining facts which are either not disputed or else are clearly proved. 8 ICNSW was incorporated in about 1976. Its membership comprises a number of Islamic societies, although its Constitution, by r.5(x), also provides for membership by not more than two individual Muslims. Each member society is represented at meetings of the Council by one, two or three representatives or delegates, depending upon the number of its financial members (r.5(viii)). 9 According to r.6(i), the Council and its office bearers are responsible for managing its affairs; but it seems that in practice the business of the Council is conducted by an executive committee consisting of the office bearers, who are elected once every two years at the Annual General Meeting (r.7(ii)). The office bearers include a Chairman, who is responsible for all the affairs of the Council and who presides at meetings (r.8(i)). 10 ICNSW is itself a member of AFIC, a national body whose members are the State Islamic Councils. AFIC was incorporated on 17th June 1980. 11 As noted earlier, Ali Roude was elected as Chairman of ICNSW in 1983; and he has remained in that position, at least until July 1998. 12 In 1993, Wazim Raza, who had previously been an office bearer of ICNSW in various capacities, commenced employment as the General Manager of ICNSW. His duties included management of the day to day operations of ICNSW, especially of its employment programs carried out in conjunction with the Federal Department of Employment, Education & Training. He supervised ten to twelve staff in ICNSW employment offices in Lakemba, Marrickville, Surry Hills and Chullora. 13 In about September 1996, there was a meeting between Mr. Raza, Ali Roude, Khadar Roude (Ali's brother) and a Mr. Ayoubi. Khadar Roude suggested a partnership between himself and Mr. Ayoubi on the one hand, and ICNSW on the other, to tender for an employment project. Mr Raza indicated his opposition to this, and it did not proceed. 14 In about September 1997, the Department of Employment, Education, Training & Youth Affairs (DEETYA) invited tenders for the provision of employment services, under the Federal Government's privatisation scheme. Mr. Raza asked all ICNSW staff who were to work on its tender, including Khadar Roude, whether any of them was submitting his own tender; and all said they were not. Consequently, all these people were given access to confidential information in and relating to the ICNSW tender. The ICNSW tender was submitted in late September 1997. 15 In January 1998, Khadar Roude told Mr. Raza that he had submitted his own tender, undercutting ICNSW's price, and had been offered twelve sites. Mr. Raza said in evidence that soon after this he had a conversation about this matter with Ali Roude, in which Ali Roude said he had known about his brother's application. Ali Roude denied this conversation. 16 In early February 1998, DEETYA advised ICNSW that its tender had been unsuccessful. 17 In late February 1998, Mr. Raza spoke to the 13th defendant Kemel Ismen, then the Vice Chairman of ICNSW, and told him about Khadar Roude's tender. It appears Mr. Ismen then spoke to Ali Roude, and then confirmed to Mr. Raza that he should sack Khadar Roude or procure his resignation. In fact, Khadar Roude resigned. 18 On 2nd March 1998, Mr. Raza wrote a letter to DEETYA, in the following terms:
OUTLINE OF FACTS
19 Mr. Raza supplied a copy of the letter to the Shadow Minister for Employment, who raised the issue in Parliament, giving rise to some publicity. 20 On 5th March 1998, there was a meeting of the Executive Committee of ICNSW. In the morning prior to the meeting, Mr. Raza had spoken to Tony Stewart, the Member for Lakemba in the New South Wales Legislative Assembly, and obtained from him a copy of a reference given by Mr. Stewart to Khadar Roude in October 1996; and it appears that Mr. Stewart had told Mr. Raza that Ali Roude had come together with Khadar Roude when Khadar Roude sought this reference. I note that in evidence Mr. Ali Roude denied that he had gone with his brother to Mr. Stewart, and Mr. Stewart said in evidence that he now believed it was not Ali Roude who came to him with Khadar Roude on that occasion. 21 At the meeting on 5th March 1998, according to the minutes taken of that meeting, the Executive Committee made the following resolutions:
Actions by one of our employees during the recent DEETYA tendering process may have breached the guidelines (specifically 1.8.11 Collusive Tendering and possibly 1.8.12 Conflicts of Interest). It may also have compromised our tender for provision of employment services.
A tendering committee was established within our organisation headed by myself and the printed DEETYA guidelines were reviewed. All staff working on our tender were asked to confirm that they understood the guidelines and were not involved in tendering for other organisations or other compromising activities. These assurances were given.
In early February, one of our Case Managers, Mr. Khadar Roude, advised a staff member that despite his earlier affirmation he had submitted an independent tender while helping to prepare our own tender. When I asked him about it he admitted his earlier deception, claiming confidentiality as his reason. Mr. Roude's tender was on his own behalf trading as Employment Interactive. He also said that though he had no premises, staff or facilities, he had "killed it" having been offered "virtually all the south-western area" and intended to sub-contract to others.
Mr. Roude had worked intimately with our own submissions for FLEX1, FLEX2 AND FLEX3, including preparation of costing, pricing and statistical information, while preparing his own. It is certain that his tender was significantly influenced by the costing and pricing included in our own, and utilised advice received from an external consultant hired by the Islamic Council.
This matter has been raised at our last Management Committee meeting and Mr. Roude was asked to resign. He has since done so and a copy of his resignation is attached.
I would be very grateful to receive your advice as to wheter:
1. The action by Mr. Roude is considered a breach of DEETYA guidelines,
2. Our response is considered by DEETYA to have been appropriate,
3. This tender or future tenders by this organisation have been compromised.22 On 9th April 1998, a letter was written to DEETYA on behalf of the Executive Committee of ICNSW, referring to Mr. Raza's letter of 2nd March 1998, and continuing:
1. Letter to be written to DEETYA informing them that the letter of complaint by Mr. Wasim Raza is not endorsed by the Council, it contained inaccuracies, and that it is rather his personal opinion and not the view expressed by the Council.
2. Mr. Wasim Raza stays responsible to the chairman Mr. Ali Roude in all matters.
3. No one from among the staff or the executive should discuss the issue with media, government or anybody else. All enquiries should be referred to the chairman.
4. Employment of employees of the Council who are employed under the employment program, including Mr. Wasim Raza ends on 30 April 1998, and ensure that the offices are closed before 30 April, and that he provide a full list before the end of April of all items in all the offices operating the employment programs.23 On 20th April 1998, a further letter was written to DEETYA on behalf of the Executive Committee, advising inter alia the following:
I have been instructed based on an executive decision of the Islamic Council of NSW Inc. to inform you that the information contained in the aforementioned letter is inaccurate, particularly in relation to the termination of the services of Mr. Khadar Roude.
Additionally I have been instructed to inform that the letter was sent without the consent of the executive committee of the Islamic Council of NSW Inc. and that the executive committee of the Islamic Council of NSW Inc disassociates itself from any information contained in the aforementioned letter.24 There was subsequent communications, but they did not in their ultimate effect alter the approach indicated in those letters. It appears that there was an investigation of the matter by the Department, but the outcome (as notified to Mr. Raza by the Commonwealth Ombudsman in a letter dated 22nd June 1999) was that the Department was "satisfied that Mr. Roude adequately met Departmental requirements on declaring conflicts of interest. I would comment that, on the material before me, it seems clear that Khadar Roude did not in fact meet those requirements, and the contrary was not submitted by the plaintiffs. This is not to say that, at the time of accepting the tender, DEETYA had any reason to suspect this. 25 It is necessary to go back in time here, to recount some matters in relation to Risallah College. In March 1997, a company limited by guarantee was incorporated to establish and manage an Islamic School. The school came to be called Risallah College, and the name of the company was in fact changed in March 1998 to Risallah College Limited. Clause 1(a) of the Memorandum of Association set out the object of establishing and managing this school, and went on to assert that the school was to be a subsidiary of ICNSW. 26 The subscribers to the Memorandum were Ali Roude and six others, four of whom were office bearers of ICNSW. By reason of being subscribers to the Memorandum, these persons thereby became members of the company (Article 3) and also Governors (that is, directors) until 31st July 2000 (Article 25). According to the Articles of Association, the trustees of the school, who were given extensive powers, were Ali Roude and two other named persons, to hold that office until 31st July 2017. Article 40(3) provided that members of the Executive Committee of ICNSW should not hold a salaried position or office of profit at the school. 27 On 14th August 1997, a joint meeting of the Executive Committee of ICNSW and the directors of this company purported to appoint Ali Roude full-time principal administrator, and to amend Article 40(3) to add the words "other than the position of Administrator/Principal". Since that time, Ali Roude has acted as full-time principal/administrator of the school, at a salary initially of $36,000.00 per annum and now of $40,000.00 per annum. 28 On 14th May 1998, Mr. Raza wrote to Ali Roude claiming that the amendment purportedly made at that meeting was not valid, inter alia because it had not been submitted to and approved by ICNSW in writing, as required by cl.6 of the Memorandum. 29 On 31st May 1998, there was a special meeting of ICNSW. The meeting discussed the tender problem, and also Ali Roude's appointment as principal of the school. A motion was put whereby delegates were asked to vote whether they had confidence in the Executive Committee. Before the votes were collected and counted, shouting and other noises disrupted the meeting. It appears that among other persons, Hassan Marhaba shouted to the effect that he wanted Ali Roude to stay and did not want the vote carried through. It appears that Ali Roude as Chairman proposed that the meeting be adjourned; and the meeting concluded without an adjourned date being set. It appears that the votes were destroyed. 30 During June and July 1998, there were letters of complaint written to AFIC by some member societies and/or representatives of such societies concerning this meeting and the situation concerning the school. 31 The Annual General Meeting of ICNSW was held on 26th July 1998. Ali Roude was elected Chairman, Gabr Elgafi Vice-Chairman, and the other office bearers elected were Mr. Softic (18th defendant), Mrs. Abdo, and Messrs. Toefy (16th defendant), Marhaba, Maseth, Genel (14th defendant) and Zreika (17th defendant). 32 In the latter part of 1998, Mr. Elgafi was requesting a meeting of the Executive Committee, complaining that such meetings were not being held and that he did not have access to information to which he should have access. On 22nd December 1998, Mr. Elgafi left Australia to travel overseas for some weeks. 33 On 6th January 1999, while Mr. Elgafi was overseas, there was a meeting of ICNSW. There is in evidence a notice dated 29th December 1998 of what the notice says to be "an up-coming special meeting" of ICNSW, apparently sent to member societies. The notice did not specify any business to be conducted at the meeting. It was not received by one member association, namely the Lebanese Muslims Association, until 4th January 1999. No notice was given to Mr. Elgafi or Mr. Marhaba. 34 At the meeting, there was a motion that the positions on the Executive Committee held by Mr. Elgafi and Mr. Marhaba be declared vacant, and this was carried. The meeting noted resignations by Mrs. Abdo and Mr. Softic, and four new members of the Executive Committee were elected, namely Messrs. Softic, Ismen (13th defendant), Sadien (20th defendant) and Beckric (19th defendant). 35 Solicitors acting on behalf of Mr. Elgafi wrote a number of letters alleging that Mr. Elgafi's dismissal was invalid, these letters being written between March and May 1999. 36 On 16th March 1999, AFIC wrote to ICNSW proposing a number of changes to the ICNSW Constitution, and seeking a response to those proposals. 37 The Annual Congress of AFIC was held between 2nd and 4th April 1999. On 4th April 1999, according to the minutes of the Congress, the following resolution was passed:
The Council's advise (sic) to your department is endorsed by the Executive Committee of ICNSW. The Council's position is that the letter dated 2 March 1998 does not represent the views of the ICNSW. The Council regards the letter signed by Wasim Raza as an expression of his personal view. While the Council is conscious that Wasim Raza is an employee of the Council and the letter of the (sic) 2 March was on a Council letterhead, the matters raised in the letter were never discussed with the Executive Committee nor brought to the attention of the Executive Committee before the letter was posted.
While the Council is adamant that the letter of the (sic) 2 March does not reflect the views of the Council, the Council's Executive Committee have (sic) difficulty in withdrawing allegations that have not been made by the Council. Similarly for the same reason feel they would be unable to give reasons for such withdrawal.
To clarify their position the Executive Committee of the Islamic Council of NSW wishes to go on record as saying that the Council has never made any allegations in connection with tender to DEETYA to provide employment services. Nor is it the intention of the Council to make any allegations in connection with this matter in the future.38 On 3rd May 1999, a notice was sent to members of the Executive Committee of ICNSW and the directors of Risallah College Limited of a meeting to be held on 23rd May 1999, to amend the Constitution. The notice refers to enclosed proposed amendments, but no such enclosure has been produced to the Court. The meeting was held on 23rd May 1999, and substantial amendments to the Memorandum and Articles of Risallah College Limited were passed, which would if valid have the effect of removing any control from ICNSW and entrenching control in the existing Governors and trustees. 39 On 20th May 1999, there was a letter from the Committee purportedly appointed by the Congress of AFIC to ICNSW, seeking submissions concerning the complaints which gave rise to the resolution at the Congress and seeking production of certain documents relating to those matters. 40 On 24th and 25th July 1999, the Committee took oral and written evidence in relation to the matters under investigation; and they produced a report dated 25th July 1999, in the following terms:
On a motion moved by Abbas Ahmed and seconded by Yasser Soliman it was unanimously resolved that "The President of AFIC appoint Haset Sali of Queensland, Saleh Parkar of Tasmania and will appoint after discussion with Bilal and Dr. Sikander Khan, another person who will not be associated with Exco or the Councils. They will have one month to investigate complaints, one month to report and one month to implement the findings".
41 On 6th September 1999, AFIC wrote to ICNSW in the following terms:
Pursuant to the 1999 AFIC Congress resolution, this Committee has considered the written information and oral submissions of the interested parties involved in the ICNSW.
The Committee initially talked with Ali Roude, Riedwan Toefy and Ali El Gammal on 24 July 1999 and discussed summarised points of disputes with them. Then on 25 July 1999 we talked with Essam Khalil, Gabr El-Gafi, Wasim Raza, Dr. Mahmood Khan, Ashfaq Ahmad Chaudhary, Faruk Hadid, Dr. Shujatullah Kirmani, Zainal Arifin Aly and Dr. Rashid Rashed.
The key points of concern were summarised and discussed with the 10 persons we met on 25 July 1999. After considering the submissions and all the written material received previously and at the meeting, we report as follows:
1. RISALLAH COLLEGE
We have established the College Constitution was on 23 May 1999 altered unconstitutionally. The result of the unconstitutional amendment was to divest the ICNSW of its ownership and control of this College. As a consequence the ownership of the College now stands in the name of individuals who refuse to acknowledge the ownership of ICNSW.Also, in our opinion, a conflict of interest situation was created when an amendment to Risallah College constitution was made to enable the Council Chairman to take the paid position of Principal of the College while also being a Director of the College.
Recommendations:
(i) In these circumstances AFIC Exco needs to act immediately to ensure the ownership of the College of ICNSW is restored to ICNSW by all necessary legal means.(ii) AFIC Executive should take immediate steps to amend the ICNSW and Risallah College Constitutions to reinstate conflict of interest provisions therein and to rectify the present situation.
2. ISLAMIC RADIO STATION
Islamic Broadcasting Corporation of Australia Pty. Limited (Voice of Islam)We have established this station was set up with funds provided by ICNSW and for all intents and purposes should be a subsidiary of ICNSW.
However, it appears there are three individuals holding the shares of the above company. Accounts of income, expenditure and donations have not been properly presented to ICNSW.
Recommendations :
In these circumstances, AFIC Exco needs to act immediately to ensure the ownership of the Radio Station is restored to ICNSW and proper accounting procedures and reporting be put in place.3. OTHER MATTERS OF CONCERN RE ICNSW
(a) ICNSW in their meeting of 6 January 1999 in our view acted unconstitutionally. Hence, the removal of the two office bearers was invalid.Recommendation
Both office bearers are still elected office bearers and should not be barred from fulfilling their duties under the ICNSW.AFIC Exco needs to act immediately to ensure ICNSW's Constitution is complied with.
(b) Tender Process
The statement of Ali Roude that he had no prior knowledge of his brother submitting a tender in competition with ICNSW was totally refuted by most of the people we spoke to on 25 July 1999.Recommendation
4. General Comments and Recommendation:
In future related party matters need to be very carefully scrutinised.
In the event that AFIC Exco's efforts to implement these recommendations are obstructed, AFIC Exco is advised to exercise its powers under the AFIC Constitution.42 On 12th September 1999, at ICNSW's Annual General Meeting, resolutions were passed rejecting that letter, and advice to that effect was sent to AFIC on 13th September 1999. 43 On 20th September 1999, AFIC sent a notice to at least some of the member societies of ICNSW advising of a meeting of ICNSW to be held on 17th October 1999 to amend the ICNSW Constitution and elect an executive committee. Despite protests from the Executive Committee of ICNSW, that meeting took place, and resolutions were purportedly passed amending the ICNSW Constitution and electing a new executive committee, comprising the 2nd to 12th defendants.
Considering the seriousness of the matters and the persistent defiance by yourself and the current ICNSW Executive Committee to rectify the breaches in the past, AFIC Executive Committee has come to the view that it had no option but to exercise its emergency powers under the constitution to rectify the situation forthwith. Consequently, the AFIC Executive Committee decided as follows:
1. That the current ICNSW Executive Committee ought not to be recognised as lawfully representing the ICNSW effective from 29 August 1999.
2. That the membership of the ICNSW as a constituent State Council of AFIC be suspended with immediate effect and it be restored only after a new ICNSW Executive Committee is elected.
3. That a Committee of three persons be appointed whose paramount role shall be to do everything in its power to organize and conduct a new election for the ICNSW Executive Committee forthwith but not later than 17 October 1999.
4. Upon election of the new ICNSW Executive Committee, the ICNSW shall be required to attend to the implementation of all the recommendations of the Congress-appointed Investigative Committee forthwith but not later than 31 December 1999.
5. Further details about the Committee and the election process shall be communicated as expeditiously as possible to member societies of AFIC in New South Wales.
In conclusion, I am somewhat saddened at this turn of events. The AFIC has been trying to bring about a just and acceptable solution to the problems in NSW for quite some time now but without success. The Congress's directive for investigation of the complaints has revealed the very serious nature of breaches of the law, which went on unabated for a long time. The AFIC Executive Committee has been left with no options but to take these serious actions and I am hopeful that this action will prevent division in the community and any such violation in the future. I pray that all concerned will cooperate to facilitate a just conclusion to this unfortunate saga in the best interest of Islam.44 A number of factual issues were raised. These involved some consideration of the credibility of a number of the witnesses, including Ali Roude, Mr. Marhaba, Mr. Raza, and Mr. Stewart. There was dispute as to whether Mr. Ali Roude was shown to have known of his brother's tender at the time it was made, and there was some dispute concerning the events at two meetings in particular, namely the ICNSW meeting of 31st May 1998, and the AFIC Congress meeting on 4th April 1999. There was also an issue concerning the evaluation of various aspects of the conduct of participants on both sides. 45 The next issue for resolution is whether the dismissal of Mr. Elgafi by the meeting of 6th January 1999 was valid, and, if necessary, the consequences of any invalidity thereof. 46 The next issue was whether, in the circumstances of the case, the Constitution of AFIC empowered the Committee of AFIC to intervene in the affairs of ICNSW, and if so, what action was authorised. The former question involved consideration of whether there were events such as could justify intervention, and also whether the matters were of sufficient urgency to fall within the description "emergency" in the relevant AFIC rule. 47 Next, there was the issue whether, having regard to the provisions of the AFIC Constitution, the ICNSW Constitution and the Associations Incorporation Act, the meeting of 17th October 1999 was valid and whether the resolutions purportedly passed were effectual. This issue involved consideration of whether certain associations, which the plaintiffs contend were members of ICNSW and which were not served with notice of the meeting, were in truth members entitled to be given notice and to have representatives at the meeting. 48 Finally, there was the question of whether relief should be granted on the cross-claim and/or the claim, and if so, on what terms.
issues
49 Mr. Whittle SC, who appeared for those defendants opposing relief and also for the cross-claimant, submitted that the Court should conclude that Ali Roude knew in advance of his brother's application. He prevaricated in the witness box. His brother was not called. Mr. Raza's evidence should be accepted, particularly as it was corroborated by Mr. Stewart's letter Exhibit D31. His subsequent conduct, along with that of the rest of the ICNSW Executive Committee, has been to frustrate any investigation of the matter, and to disregard any possibility of recovery of compensation from Khadar Roude. Mr. Whittle submitted that I should find Mr. Marhaba an unreliable witness, because I should reject his evidence that he signed the letter which is part of Exhibit D25 in blank. 50 Dr. Birch SC, who appeared for the plaintiffs, submitted that Ali Roude would not have been so naïve as to knowingly permit his brother to make a competing tender application: if it succeeded it would become public and this would then reflect on Ali Roude himself. His subsequent conduct reflected knowledge that his brother's conduct was indefensible. 51 Having regard to Mr. Stewart's oral evidence, a letter written by Mr. Stewart to the Commonwealth Ombudsman on 13th March 1998, in so far as it suggested prior knowledge by Ali Roude, had no weight whatsoever. In fact, Ali Roude's dealings with Mr. Stewart indicated complete confidence that Mr. Stewart's file notes would confirm that Ali Roude did not have dealings with Mr. Stewart indicating support for or knowledge of his brother's tender. 52 Dr. Birch submitted that the subsequent conduct of Ali Roude and the Executive Committee of ICNSW was entirely appropriate. Khadar Roude was sacked. The matter was investigated; the Executive Committee was entitled to accept Ali Roude's assurance that he had no prior knowledge of the tender; and the Committee was entitled to make the judgment that to have pressed for an enquiry would have brought about publicity which could harm the reputation of the Muslim community.
FACTUAL ISSUES
Submissions53 One unfortunate aspect of the dispute is that, in my opinion, all the protagonists have acted in what they think to be the best interest of the Islamic community in New South Wales. Although Ali Roude has a salaried position at Rissalah College, he left other employment to stay in that position, and I do not think he has been motivated by any consideration of personal gain. However, there are clear conflicts in the evidence, particularly between that of Ali Roude and Mr. Raza, which I must try to resolve. 54 As noted above, Mr. Stewart wrote a letter to the Commonwealth Ombudsman in March 1998, suggesting communications with Ali Roude which confirmed Ali Roude's prior knowledge and support of his brother's tender. However, Mr. Stewart's sworn evidence was to the effect that, in one respect he believed he was mistaken and in another respect he had absolutely no recollection of the matters set out in the letter. The difficulty was compounded by the circumstance that, as a result of a fire in his electoral office, Mr. Stewart's files relating to the matter had been destroyed. The letter was admitted into evidence under s.64 of the Evidence Act, as asserting matters which were fresh in Mr. Stewart's memory at the time he wrote the letter, the relevant matters being the content of certain files and a telephone conversation with Ali Roude some six months earlier. However, having heard Mr. Stewart's evidence, I find myself unable to draw any useful conclusion about the content of Mr. Stewart's files, and I am extremely doubtful whether the phone call said to be six months earlier was indeed fresh in Mr. Stewart's memory in March 1998. For those reasons, the letter carries little if any weight. 55 However, there are other matters which make me doubtful about Ali Roude's evidence. I note in his favour that he did go along with the dismissal of his brother, and it is fair to say that he could quite properly have considered Mr. Raza's action in writing his letter of 2nd March 1998 without reference to the Council, and particularly the provision of a copy of that letter to the Shadow Minister, as being insubordinate, imprudent and disruptive. However, in my opinion, Ali Roude plainly had a major role in sending the letters of 9th April and 20th April to the Department, and those letters were misleading and inappropriate. The letters referred to "inaccuracies" in Mr. Raza's letter, in circumstances where the only inaccuracy (concerning the circumstances in which Khadar Roude's employment came to an end) was entirely immaterial to the substantive allegations being made; and the letters otherwise discredited the allegations in Mr. Raza's letter by asserting that ICNSW itself made no such allegations and disassociated itself from the information in the letter . In my opinion, those misleading letters did have the effect of minimising the possibility of any proper investigation of the matter. Furthermore, by focusing the attention of the Executive Committee on complaints about Mr. Raza's conduct, Ali Roude brought about a situation where apparently no consideration whatsoever was given to seeking any redress from Khadar Roude. In circumstances where dishonest conduct by Khadar Roude was calculated to undermine work which ICNSW was attempting to do for the Muslim community through the provision of employment services, and may have been instrumental in bringing that work to an end, the conduct of Ali Roude and the other members of the Executive Council who participated was unsatisfactory. 56 In the witness box, Ali Roude was very ready to characterise Mr. Raza's conduct as dishonest, although when questioned about this he conceded, with much hesitation and reluctance, that it could not properly be so characterised. However, he was reluctant to concede that what his brother did was dishonest; and would not concede that the letters written on behalf of the Executive Committee in April 1998 were misleading. In these respects I considered Ali Roude an unsatisfactory witness. 57 On the other hand, I have no reason to believe that Mr. Raza was doing anything other than attempting to give truthful evidence, to the best of his ability and recollection. There is some possibility that Mr. Raza could have misremembered the conversation of January 1998, and some possibility that there could be confusion with the earlier proposal of a partnership involving Mr. Roude and ICNSW. However, on balance I think it is not likely that Mr. Raza misremembered the conversation, and, although I cannot be certain, I find on the balance of probabilities that a conversation did take place in January 1998 along the lines given in evidence by Mr. Raza; and that accordingly Ali Roude did have at least some prior knowledge of his brother's tender. It is possible that he did not appreciate the full significance of his brother's tender and his brother's dishonesty, until later. However, my finding means that I cannot be confident in accepting Mr. Roude's evidence. 58 As regards Mr. Marhaba, I think it is unlikely in the extreme that he would, as he claimed in evidence, have signed a page in blank in the position in which his signature appears in Exhibit D25. For that reason, I do not consider Mr. Marhaba to be a reliable witness. 59 I consider I have no reason to think that any of the other witnesses were doing other than giving evidence honestly and with reasonable recollection. 60 Coming to the meeting of ICNSW which took place on 31st May 1998, the disruption that occurred was plainly inappropriate and undemocratic, but I am unable to find that it was orchestrated by any particular person or group of persons. However, I think Ali Roude must bear some responsibility for the outcome, namely the adjournment of the meeting without setting a date for resumption and the loss or destruction of the ballot papers which had been filled out. 61 A further question of fact was whether, as claimed by Mr. Elgafi, he told Ali Roude that he was going overseas shortly before the meeting of ICNSW was called for 6th January 1999. Again, this is not a matter which I could find as a matter of certainty or beyond reasonable doubt; but having regard to the concerns I have indicated concerning Ali Roude's evidence, on the balance of probabilities, I find that Mr. Elgafi did inform Ali Roude of this. 62 The final question of fact which I consider is whether the resolution recorded in the minutes of the Congress meeting of 4th April 1999 was in fact passed at the meeting. The evidence against this having happened is evidence given by Ali Roude and Mr. Marhaba, and thus is evidence about which I would have concerns. On the other hand, the minutes have not been confirmed, no evidence has been called from the person who took the minutes, and the handwritten notes on which the typed minutes are based have not been produced. There is evidence from Mr. Mahboob, though not in satisfactory form, that the resolutions were passed. 63 On the whole, I do not think this evidence is satisfactory to establish on the balance of probabilities either that those resolutions were passed as recorded in the minutes, or that they were not so passed.
DecisionDISMISSAL OF MR. ELGAFI
64 The question of whether the purported dismissal of Mr. Elgafi at the meeting of 6th January 1999 was valid requires consideration of Rules 9-11 and 13-14 of the Constitution of ICNSW, which are in the following terms:
65 Mr. Whittle submitted that the meeting was invalid because the notice of meeting was not signed by the secretary; the notice did not give 21 days' notice; and there was no indication of the business of the meeting. Even if the meeting were treated as an ordinary meeting, 7 days' notice was required; and at least one member association did not receive notice until 4th January. 66 Dr. Birch submitted that notice of the meeting was given to the Manly-Warringah Islamic Council, of which Mr. Elgafi claims to be a delegate; and that association was represented at the meeting. Mr. Elgafi himself was not entitled to notice of the meeting. The removal of an office bearer can be effected at an ordinary meeting, which only requires 7 days' notice and does not require a notice specifying the nature of the business to be conducted. Even if there was a non-compliance with the Rules, no relief ought now be given. There has been a long delay in bringing the proceedings, and it would be inconvenient if subsequent activities of the Executive Committee were held to be invalid.
9.(i) The Council may meet for the dispatch of business, adjourn and otherwise appoint and regulate its meetings as it deems fit. The Chairman may convene at any time and the Secretary, upon the written request of any three members shall, within fourteen days from the date of receipt of the request, convene a meeting provided notice is given to members seven days prior to the date of the meeting.
(ii) Questions or resolution arising at any meeting of the Council other than a Special Meeting shall be decided by a majority of votes of those present. In case of an equal division of votes the Chairman shall have a second or casting vote.
(iii) Proceedings of business transacted at any meeting shall be forthwith entered in the Minute Book by the Secretary and be confirmed at the next meeting and signed by the Chairman.10(i) The Annual General Meeting shall be held within six (6) weeks of the conclusion of the financial year.
(ii) The Secretary shall give at least fourteen days notice in writing of Annual General Meetings to the Members, Member Societies and Muslim Student Organisations of the Institute of Tertiary Education conclusion of the financial year.
(ii)(sic)The Secretary shall give at least fourteen days notice in writing of Annual General Meetings to the Members, Member Societies and Muslim Student Organisations of the Institute of Tertiary Education specifying the place, the day and the hour of meeting and the general nature of the business to be dealt with at the meeting.
(iii) All voting at Meeting of the Council shall be conducted and supervised by a Returning Officer duly appointed for this purpose by the Council.11(i) The Council may call a Special Meeting at any time provided a due notice is given to Members, Member Societies and Muslim Student Organisation and Muslim Youth Movement of New South Wales at least twenty one (21) days prior to the date set for the meeting.
(ii) Questions or resolutions arising at a Special Meeting of the Council shall be decided by a two thirds majority of votes.
(iii) The purpose of a Special Meeting is to discuss and resolve matters arising under Rule 13, Paragraph (i), sub-paragraph (f), under Rule 14, Rule 20 and Rule 21 of this Constitution.12. ...
13(i) The membership and office of a member, Office Bearer or Trustee shall become vacant:(a) upon his decease;
(b) if his representation is withdrawn in writing by the Society of any Member Society;
(c) if the Member Society of which he is a member is expelled or has withdrawn its membership or its membership is lapsed; by absenting himself from the Council meeting for five consecutive times without notice;
(d) if he becomes mentally ill or a person whose person or estate is liable to be dealt with, in any way under the law relating to mental health;
(e) if he resigns his office or membership in writing to the Council and it is accepted by the Council;
(f) upon being removed or expelled, through a Special or an ordinary meeting, from the membership of the Council.(ii) Upon a vacation of membership, the bona fide organisation to which the member vacating the membership represented shall be called upon to nominate a new Member.
14(i) The Council may suspend or expel any Member Society:
A. If the Society has absented itself from the Council meeting for five consecutive times without notice.
B. If the Society failed to pay annually subscription for two consecutive years.
C. If the Society's constitution or its activities are detrimental to the interest of the Council.
(a) The resolution for suspension or expulsion is passed in a Special Meeting of the Council in which the Member Society whose expulsion is under consideration is allowed to offer an explanation of its conduct or activity verbally or in writing or both at the option such member Society before a resolution of (sic) suspension is passed by Council.
Submissions67 The relevant Rules are confusing and seemingly contain inconsistencies. However, it seems clear that there can be ordinary meetings of ICNSW which are not annual general meetings: 7 days' notice is required for such meetings (see Rule 9(i)); whereas an annual general meeting requires 14 days' notice specifying the general nature of the business (the second Rule 10(ii) - the first Rule 10(ii) is plainly a typographical error); while a special meeting requires 21 days' notice (Rule 11(i)). 68 At meetings other than special meetings, a simple majority is sufficient for the passing of resolutions (Rule 9(ii)). For special meetings, a two-thirds majority is required (Rule 11(ii)). 69 Rule 11(iii) suggests that a special meeting is required for matters arising under Rule 13(i)(f); whereas Rule 13(i)(f) itself suggests that removal or expulsion of office bearers may be at a special or an ordinary meeting. 70 Although this was not submitted by Mr. Whittle, it may be that dismissal at an ordinary meeting cannot take place unless the matter has first been at least discussed at a special meeting: otherwise, the provisions concerning a special meeting seem otiose. In any event, the notice of the meeting identified it as a special meeting; and although Ali Roude suggested this was a "mistake", I do not think that affects the characterisation of the meeting, particularly where the meeting was called for a purpose specifically identified by the Rules as being a purpose of a special meeting. Further, as submitted by Mr. Whittle, it seems clear that less than 7 days' notice was given to at least one member. 71 I would not consider it fatal to the meeting that the notice was not signed by the secretary; but the matter of notice is in my opinion sufficient to invalidate the meeting. I will consider later what, if any, relief should be granted. 72 I think also Mr. Elgafi was entitled to notice of the meeting and to natural justice; but this has not been pleaded. One other matter that was not argued was whether Rule 13(i)(f) in fact only empowered removal or expulsion from membership of the Council, which would in turn cause the person no longer to be an office bearer. That could be the literal reading of this subparagraph itself; but it would not make sense, because most office bearers are not members of the Council, but representatives or delegates of the member associations.
Decision73 In order to consider the validity of the resolution of the AFIC Executive Committee to intervene in the affairs of ICNSW, it is necessary to look at some of the Rules of AFIC's Constitution. I set out the preamble, and Rules 5, 8-10, 13, 15 and 18-19:
VALIDITY OF INTERVENTION
74 The AFIC Congress generally meets annually or bi-annually (Rule 34). The AFIC Council meets not more than four times per year (Rule 40). The Executive Committee meets at times and places as it thinks fit (Rule 43).
PREAMBLE
We, the Muslims of Australia, in our desire to order our lives according to the Holy Qur'an and the Sunnah and in order to promote religious, social and cultural welfare of the Muslims throughout Australia, humbly relying on the blessings of the Almighty Allah (God), having formed local Islamic societies and in 1964 the Australian Federal of Islamic Societies have further agreed to establish State Councils of Islamic societies in the States and Territories of Australia and now join together to form the Australian Federation of Islamic Councils Inc. thereby replacing the Australian Federation of Islamic Societies....
5(1) The organisation of the Federation shall consist of State Councils themselves formed by the local Societies of each State or Territory of Australia. Where there is only one Society in a State or Territory, that Society shall act as State Council for that State or Territory until such time as other Society or Societies are formed in accordance with this Constitution.(2) It shall be incumbent on each State Council to remain a constituent body of the Federation, and on each local Islamic Society to be constituent part of the State Council. It shall also be incumbent on each Society and State Council to ensure that in principle its constitution is in conformity with this Constitution, and is registered with relevant State or Territory Government authorities.
(3)(a) For the purpose of this constitution each Islamic Society should have a membership of not less than one hundred financial members except the Societies in remote areas where no other Society exists. Remote areas may be declared as such by the concerned State Council in agreement with the Executive Committee of AFIC.
(b) A person who is already a member of the Federation by virtue of membership in a Society may not enrol as a member of another Society unless he resigns his membership in that Society.
(4) The membership subscription payable to the AFIC shall from time to time be determined by the Federal Council.
(5) Each State Council shall be responsible for administering the Islamic affairs of the State or Territory coordinating Islamic activities and establishing communication between the member Societies, other State Councils and the AFIC.
(6) Each State Council and Society shall have full control of its properties and full responsibility to administer them.
(7) Acceptance of new member Societies or expulsion of an existing member Society shall be in accordance with the provisions of this Constitution and relevant resolutions of the Federal Congress/Council. Only member societies of the AFIC which have paid their membership subscription to the AFIC are eligible to participate in the affairs of the AFIC or the relevant State Council.
...
8. The Federal Congress shall be the highest policy-making organ of the Federation, and shall have ultimate responsibility to achieve the objects and purposes of the Federation.9. The general government and control of the affairs of the Federation shall be vested in the Federal Council and it shall exercise its power as the governing body subject to this Constitution and the resolutions of the Federal Congress.
10. The business and affairs of the Federation shall be manned and administered by the Executive Committee in accordance with this Constitution and the resolutions of the Federal Congress and the Federal Council.
...
13. In addition to any powers conferred upon it by the Constitution the Federal Congress shall have powers:
(a) To control, manage and administer the affairs of the Federal generally.
(b) To amend, alter or rescind the provisions of this Constitution.
(c) To make, amend, alter or modify its by-laws, rules and regulations for proper management of the affairs the Federation in accordance with the objects set out.
(d) To advise and adjudicate upon all disputes concerning the Federation and Islamic Affairs and give decisions in respect thereof.
(e) To adjudicate upon all matters of controversy and differences between the Federal Council, Executive Committee and the State Councils or between State Councils and their member Societies and give decisions in respect thereof.
(f) To have and exercise full powers in all matters relating to the Funds and Properties of the Federation.
(g) To borrow, raise, invest and utilize monies in such manager as it may think fit and proper.
(h) To constitute a society in any part of Australia in the absence of a State Council and/or define the area of an existing society on the request of a State Council.
(i) To appoint from its own members or otherwise, such Trusts, Boards, Committees or Sub-Committees as it may deem expedient and necessary.
(j) To co-opt any person to serve on any Trust, Board Committee or Sub-Committee appointed by it as it may deem expedient and necessary.
(k) To amend, alter or rescind any resolution passed by any antecedent meeting of the Federal Congress as provided by this Constitution.
(l) To make, amend, alter or rescind standing orders or rules on conduct for the proper management of the affairs of the Federation.
(m) To remove any restriction imposed upon any member or office-bearer of the Federation.
(n) To delegate any of its powers and functions to the Federal Council and/or Executive Committee or any Trust, Board or Committee appointed by it....
...
15. The powers and Functions of the Federal Council shall be:
(a) To carry out decisions and resolutions of the Federal Congress, and to exercise such powers as may be delegated to it by the Federal Congress.
(b) To determine the time, place and agenda of the Meetings of the Federal Congress.
(c) To act for and exercise all the functions of the Congress between its meetings in all matters provided always that such actions or decisions may be ratified or reversed by the Congress.
(d) To appoint any Committee, Sub-Committee for any special purpose as it may deem essential for the purpose of carrying out the objects and functions of the Federation.
(e) To delegate any of its powers and functions to the Executive Committee or any other Committee or Sub-Committee appointed by it.
18. The powers and functions of the Executive Committee shall include:
(a) To manage and administer the business and affairs of the Federation.
(b) To carry out decisions and resolutions of the Federal Congress and the Federal Council, and to exercise such powers and functions as may be delegated to it by them.
(c) To appoint Sub-Committees to perform such functions as it may be decided upon by the Federal Council or Federal Congress, and co-opt such members of the organisation or individuals as may be regarded fit for the purpose.
(d) To supervise the activities of any Trusts, Boards or Committees appointed by the Federal Congress and the Federal Council. To ensure that membership of any Trusts, Boards, Committees or Sub-Committees set up by or with the concurrence of the Federal Congress, the Federal Council or the Executive Committee shall only be by virtue of ex-officio positions, in the case of members of the Executive Committee, and for a period not exceeding two (2) years, in the case of other appointees.
(e) To exercise emergency powers and directly intervene in the affairs of a State Council only if the situation warrants immediate action by A.F.I.C. The degree and form of intervention will be determined by the Executive Committee itself. The Executive Committee may seek and obtain the advice of all the members on the panel of Islamic Arbitrators as per Rules for the Conduct of Islamic Arbitration as per Seciton 60(12) and act on this advice as early as possible to address and resolve the problems/disputes occurring in a member state Council or Islamic Society. Examples of circumstances which require invoking of these powers are:(i) Infiltration of non-Muslims in the State Council.
(ii) Infiltration of persons widely suspected to be non-Muslims by the State Council.
(iii) Persistent defiance of AFIC policies and AFIC Constitution by the State Council.
(iv) Long absence from meetings of the majority of the office-bearers of the State Council paralysing the affairs of the State Council.
(v) Serious division in the State Council members to run the affairs of the Council. Action taken under these powers shall be presented to and ratified by the Federal Council(f) To appoint a suitable member of the Federation resident in Tasmania to be the public officer of the Federation under Section 14 of the Act.
19. The powers and functions of the Executive Committee shall be subject to the control and scrutiny of the Federal Council and the Federal Congress.
(g) To perform, subject to this Constitution, all such acts and things as appear to the Executive Committee to be essential for the proper management and administration of the business and affairs of the Federation.
(h) To have the power to appoint, remove and exercise disciplinary control over the AFIC staff.75 Dr. Birch submitted that the intervention was not authorised by AFIC's Constitution because (a) the matters complained of were not matters of a sort that could warrant intervention under Rule 18(e); (b) the matters were not an emergency and did not warrant immediate action, but were stale matters of which the Congress and Council were already seized; (c) on the defendants' case, the Congress had already passed a resolution specifying the manner and type of intervention, and the intervention by the AFIC Executive Committee was not in accordance with that resolution; and (d) natural justice had not been given to the ICNSW Executive. There was no managerial or administrative failure in the operation of ICNSW. The intervention was not by the Executive Committee itself, but by individuals named as a caretaker committee. 76 Dr. Birch submitted that if the Congress resolution had indeed been passed as alleged by the defendants, it was to set up a committee which was itself to implement its findings. The report of the Committee was to the effect that the ICNSW was to be required to do things, and that if these things were obstructed, then the Executive Committee should intervene. The recommended step of requiring ICNSW to do these things was not taken, so the intervention was not in accordance with the findings of the Committee, and thus not in accordance with the Congress resolution. 77 On the other hand, if the Congress did not pass the resolution as claimed, the situation was that the Congress was seized of the matter, and had not effectively acted, so that the situation, whatever it was, could not be considered an emergency. If any AFIC body could have taken action, it was the Council, under Rule 15(c). 78 Turning to the matters said to justify intervention, Dr. Birch submitted that, as regards the DEETYA tender, Khadar Roude had been sacked, any personal failure by Ali Roude could not justify removal of other office bearers of the ICNSW; the Executive Committee had adequately dealt with the matter; and there was no suggestion that the intervention was for the purpose of taking further action in the matter. 79 As regards Rissalah College, this was not an asset of ICNSW. It was a matter for the members, directors and trustees of the College to determine what relationship it would have with the ICNSW. The alteration of the memorandum to remove cl.1(a) providing that the company should be a subsidiary of ICNSW had no effect, as the company was not such a subsidiary and the provision was mere verbiage. The Constitutional amendments had been effected on legal advice, and for proper purposes. 80 In so far as intervention was said to be justified by the failure of ICNSW to act on the requirement from AFIC to amend its Constitution, those amendments were not required by Rule 5(2) of AFIC's Constitution, because the required amendments did not arise from disconformity between the two constitutions. In any event, the committee of enquiry made no mention of the constitutional amendments or suggested that any intervention on that ground was justified. 81 In relation to the school, Dr. Birch submitted that ICNSW was never a member or owner of the school: it was set up with money from United Arab Emirates, and a loan from ICNSW which had been repaid. If any complaint could be made, it would be by the members of the company, not ICNSW. The action taken is understandable, because it is easy to stack membership and thereby change control of a community organisation: it was reasonable to seek a situation where control of the school should not change with the vagaries of the politics of ICNSW. 82 Mr. Whittle submitted that the word "emergency" in cl.18(e) is wide enough to cover events which develop gradually but reach a point where they are of extreme seriousness. Similarly, the words "immediate action" means action which cannot be deferred for any length of time. Because of the nature of the clause, natural justice does not apply: in many situations, there would neither be the opportunity nor the occasion for natural justice. In any event, the power is not disciplinary but rather protective. 83 Mr. Whittle submitted that a number of matters justified intervention in this case. 84 There was a concerted, deliberate and persistent attempt by Ali Roude and the ICNSW Executive to frustrate and prevent a proper investigation of the circumstances of Khadar Roude's tender. 85 As for Rissalah College, the purported change to Article 40(3) was invalid: the absence of production of any notice, plus the way the matter was dealt with in the minutes of the meeting, showed that no notice was given. The purported changes made on 23rd May 1999 were also invalid: less than 21 days' notice was given, the notice produced did not show the proposed changes, and there was nothing to show that any changes of which notice was given were the same as those which were passed: see Re Morgate Mercantile Holdings (1981) WLR 227. In any event, the changes were highly improper: they showed a careful and deliberate attempt to remove the school from the control of ICNSW and to place Ali Roude in a position to completely control it. The amendments were invalid also because Mr. Elgafi was entitled to be given notice and to be present at the meeting, but was not. Four of the persons who did vote for the amendments were directors of ICNSW, owing fiduciary duties, which they breached. 86 Furthermore, Mr. Whittle submitted, ICNSW refused to bring its constitution into line with that of AFIC: a request had been made at least by 20th October 1998, and repeated on 16th March 1999. 87 Finally, Mr. Whittle submitted that, if Ali Roude was entitled to natural justice, he was not denied it. He was given a full opportunity to know the allegations against him, to answer those allegations, and to hear the evidence of those who made the allegations. The committee which investigated the allegations was effectively the decision-making body, and there was no occasion for a re-application of the rules of natural justice, before the Federal Executive Committee acted.
Submissions88 On this aspect of the case, three broad issues are raised: firstly, whether the requirements of Rule 18(e) of AFIC's Constitution were satisfied; secondly, whether the action that was taken was contrary to a resolution made by the AFIC Congress; and thirdly, whether there was a denial of natural justice. However, although I have expressed these issues as straight-out questions, it must be remembered that it is the plaintiffs that are seeking the intervention of the Court, so that the onus lies squarely on the plaintiffs to make out an affirmative case that Rule 18(e) was not satisfied, or that the action was contrary to the resolution of Congress, or that natural justice was denied. 89 Looking first at Rule 18(e), I accept that the references to "emergency" and "immediate action" must be read in the light of wider powers that are given to the Congress and Council by Rules 13(e) and 15(c); and that they do carry with them the notion of a requirement for urgent action that cannot await the attention of the Council or the Congress. However, I also accept Mr. Whittle's submission that the words can be satisfied by a situation that has built up over an extended period of time, but reached a stage where action is required that cannot be deferred for any length of time. The onus is on the plaintiffs in this case to show either that there was no such situation in this case, or possibly that the question whether or not there was such a situation was not properly addressed. 90 In my opinion, when one puts together the circumstances concerning ICNSW's actions in opposing a proper investigation of the employment services tender, the dismissal of Mr. Elgafi, and the action taken to put Rissalah College largely under the personal control of Ali Roude, I find myself unable to be satisfied either that there was not, as a matter of objective fact, an emergency and a situation requiring immediate action, or that the Executive Committee did not properly address the question. 91 Next, for reasons I have given, I am not affirmatively satisfied that a resolution was passed at the Congress meeting as set out in the Congress minutes. That means that I cannot be affirmatively satisfied that the Executive Committee's action was contrary to a resolution of Congress. Nor do I think that, if it be the case that no such resolution was passed, it could be said that there could not be an emergency or a situation warranting immediate action, because the matter had been brought to the attention of Congress, and Congress had done nothing effective. On any view, following the Congress meeting, there had been investigation of the matters by the three-person committee, and further steps had been taken in relation to Rissalah College in May 1999; and both of these matters could be considered as contributing to a need for immediate action. In those circumstances, I do not think there is anything in what Congress did in March 1999 which goes against the findings or lack of findings indicated in the previous paragraph. 92 As regards natural justice, I accept Mr. Whittle's submission that Rule 18(e) will cover some situations at least where it would be impractical to afford natural justice to people or organisations who might be affected by intervention. In any event, in the present case, I am not satisfied that the natural justice which was provided by the three-person committee to Ali Roude and to other persons involved with ICNSW fell short of whatever natural justice was required.
Decision93 Even if intervention was authorised by AFIC rules, this does not necessarily mean that the intervention which took place was valid and effectual. This question depends upon provision of the Associations Incorporation Act 1984 (NSW) and upon the ICNSW Constitution. 94 The main provisions of that Act dealing with the rules of incorporated associations are ss.11, 16, 17, 19 and 20. Section 11(2) is in the following terms:
INTERVENTION AND ICNSW RULES
95 As mentioned earlier, ICNSW is a member of AFIC, which is incorporated under the Associations Incorporation Act of Tasmania. There appears to be no provision in that Act about the binding effect of rules on the members of an association; but I will proceed on the assumption that members are at least contractually bound by those rules. 96 The ICNSW rules themselves do not mention AFIC, except in Rule 5(xii), which is in the following terms:
11(2) Subject to this Act, the rules of an incorporated association bind the association and the members of the association to the same extent as if the rules had been signed and sealed by each member and contained covenants on the part of each member to observe all the provisions of the rules.
Section 16 is headed "Rights and Liabilities of Members and Officers"; but in fact it only deals with their lack of rights to property of the association and their lack of liability for debts and other obligations of the association. Section 17 is headed "Powers of Incorporated Associations", and s.18 is headed "Restrictions on Incorporated Associations"; but they have little relevance to this matter. Sections 19 and 20 are in the following terms:
19.(1) The objects of an incorporated association are the objects stated in the statement of objects that accompanied the application for its incorporation under this Act, as altered by the incorporated association from time to time in accordance with section 20.
(2) The rules of an incorporated association are:
(a) where the application for incorporation of the association was accompanied by a copy of rules that complied with section 11---those rules as altered by the incorporated association from time to time in accordance with section 20 and those rules deemed to be included by subsection (3), or
(b) except where paragraph (a) applies---the model rules as in force from time to time, as altered from time to time by the incorporated association in accordance with section 20.(3) Where in relation to any matter the model rules make provision but the rules of an incorporated association do not make provision, the provision of the model rules shall, in relation to that matter, be deemed to be included in the rules of the incorporated association.
(4) An object or a rule of an incorporated association is of no effect if it is inconsistent with this Act or contrary to law.
20.(1) An incorporated association may, by special resolution, alter its statement of objects or its rules.
(2) The public officer of an incorporated association shall, within 1 month after the passing of a special resolution altering the statement of objects or the rules of an incorporated association, lodge with the Commissioner notice in an approved form, verified as prescribed and accompanied by the prescribed fee, setting out particulars of the alteration.
Maximum penalty: 1 penalty unit.(3) Any such alteration has effect when the notice is lodged with the Commissioner and the requirements of subsection (2) are complied with in respect of the alteration.
(4) An alteration of the rules of an incorporated association is of no effect unless those rules, as so altered, comply with section 11.97 Other rules of ICNSW relevant to the validity of the meeting held on 17th October 1999, in addition to those set out earlier, are Rules 6, 7, 8(iii) and 12, which are in the following terms:
(xii) An annual membership subscription shall be paid by all members societies, as determined by the Council from time to time in accordance with the decision of the AFIC Congress and/or Federal Council decision. The Muslim student organisation and Muslim Youth Movement of New South Wales shall pay $100 as annual membership fee.
98 Dr. Birch submitted that the intervention which took place was ineffective. The meeting of 17th October 1999 was convened by officers of AFIC, not by ICNSW or its secretary, as required by ICNSW rules. AFIC could not validly conduct business on behalf of ICNSW merely by collecting together some of its members and asking them to vote on resolutions. ICNSW Constitution contains no recognition of or provision for the AFIC Executive to intervene in its affairs. The members of ICNSW are not members of AFIC, and cannot have their rights as members affected or overridden by the rules of AFIC. There is no interdependence between the Constitutions of ICNSW and AFIC: contrast the position in Lewis v. Heffer (1978) 1 WLR 1061 and Burton v. Murphy (1983) 2 Qd.R. 321. The statutory force of ss.11(2), 19 and 20 of the Associations Incorporations Act preclude the possibility that ICNSW rules could be altered merely by ICNSW becoming a member of AFIC. 99 Mr. Whittle submitted that ICNSW, by becoming a member of AFIC, gave AFIC the right to intervene in its affairs in accordance with AFIC's rules: see Burton v. Murphy. The preamble to the AFIC Constitution showed an intention in the State Councils, including ICNSW, to be governed by AFIC rules as well as their own. Mr. Whittle referred me to Burton v. Murphy, particularly to the judgments of D.M. Campbell, J. and W.B. Campbell, J. He also referred me to Fletcher, Non-Profit Associations (Law Book Co.1986), pp.280-3 in the volume on incorporated associations, and pp.39-43 in the volume on unincorporated associations.
6(i) The Council and its office-bearers are responsible for the management of the affairs of the Council.
(ii) No Member of the Council shall be appointed to any salaried office of the Council nor shall any member receive from the Council any remunerated or other benefit in money or monies worth, except by way of payment of any reasonable disbursements, expenses properly due and payable by the Council.7(i) The Office Bearers shall consist of Chairman, Vice-Chairman, Secretary, Assistant Secretary, Treasurer, Assistant Treasurer and such other officers as may be decided upon by the Council.
(ii) The Office Bearers shall be elected once every two years at the Annual General Meeting.
(iii) Should the Chairman's office become vacant before the term of office expires, the Vice Chairman shall become immediately the Chairman for the rest of the unexpired term. Except in the position of Chairman, a casual vacancy may be filled by a person duly elected by the Council and such person shall then hold office for the unexpired term of that position.8. ...
12. At any meeting of the Council the quorum shall consist of presence of at least fifty per cent of the Member Societies of the Council. If within an hour of the time set down for a meeting to commence, a quorum not (sic) present, then the meeting shall be adjourned to be held within one (1) month from that date. If at such adjourned meeting a quorum be not present, then those Members attending shall be deemed to be a quorum, provided the number of such Member (sic) is not less than three.
(iii) The Secretary shall be responsible for convening meetings of the Council and recording Minutes of the Council and shall be the custodian of all the papers, registers, and documents of the Council except as required under Rule 19, Paragraph (iii) of this Constitution, and shall attend to all correspondence.
Submissions100 I accept Dr. Birch's submission that, by reason of the provisions of the Associations Incorporation Act and the rules of ICNSW, the affairs of ICNSW are regulated by those rules and not by the rules of AFIC. It is not possible in this case, as it was in Burton v. Murphy, to treat the Federal organisation and the States organisation as being, in substance, the one organisation governed by both the Federal rules and the State rules. 101 Accordingly, in my opinion, the act of the Executive Council of AFIC in purportedly setting up an interim body to control the affairs of ICNSW was ineffectual under the rules of ICNSW. It was contrary to Rules 6 and 7 of the ICNSW Constitution, which are in turn given statutory effect by s.11(2) of the Associations Incorporation Act. Accordingly, this action by the AFIC Executive Committee was not effectual to remove the office bearers of ICNSW from their position. 102 However, ICNSW is contractually bound by the rules of AFIC, and those rules authorised intervention; and, as I have found, the plaintiffs have not shown that the circumstances of this case did not justify intervention. On the assumption that intervention was justified, ICNSW was contractually bound to submit to intervention, in any way consistent with its own rules; so that for example, if AFIC had required ICNSW to call a meeting of members, it would have been contractually bound to do so, and if it had failed to do this, AFIC could have sought specific performance of that obligation. However, although I do not need to decide this, it is questionable whether that would justify the direct calling of a meeting by the AFIC Executive Committee itself.
DecisionVALIDITY OF 17 OCTOBER MEETING
103 Apart from the question whether the meeting was properly called, which I have just referred to, there are a number of possible grounds of invalidity of resolutions passed at this meeting. 104 First, notice was not given to five associations which the plaintiffs claim were members of ICNSW, these being generally referred to as the Turkish Muslim associations. The defendants for whom Dr. Birch appeared justified this on the basis that the associations had not paid their dues to AFIC, and accordingly pursuant to Rule 5(7) of the AFIC Constitution were not entitled to participate in the affairs of ICNSW. Another ground relied on for invalidity was that one association participated in the meeting which, according to ICNSW, was not a member of ICNSW. A third ground was an alleged lack of a quorum at the meeting, this depending to some extent on whether the five Turkish Muslim associations were or were not to be treated as members of ICNSW entitled to attend and vote at the meeting. Finally, it was submitted for the plaintiffs that, in circumstances where existing office bearers had not properly been removed, as previously discussed, the appointment of office bearers could not be valid.
Submissions
105 Dr. Birch submitted that the Constitution of AFIC could not alter the rights of the members of ICNSW under its own Constitution, and a member comes under a disability of not being able to vote at meetings only if it has been dealt with under Rule 14 of the ICNSW Constitution. That had not happened in relation to the five Turkish Muslim associations. The reference to AFIC subscriptions in the Rules of ICNSW did not assist the defendants' case: that provision only related to the calculation of fees to be paid by ICNSW. Dr. Birch submitted that the Western Suburbs Islamic Association was not a member of ICNSW yet was allowed to vote; and the Newcastle Islamic Association was wrongly ruled ineligible to vote. A quorum for the meeting was ten members, whereas at best only nine members were present during the election and the vote on the resolution to amend the Constitution. When the number of members dropped below that for a quorum, the meeting lapsed: Graymouth Point Elizabeth Railway Co. (1904) 1 Ch. 32. Further the attempt to amend the Constitution of ICNSW was ineffectual as it required a special resolution; Associations Incorporation Act, ss.5(1) and 20. Finally, there were no vacancies in the office bearers to which anyone could be elected. 106 Mr. Whittle submitted that Rule 5(7) of the AFIC Constitution did have the effect of precluding any society which had not paid membership dues from having any participation in the affairs of the relevant State Council. This included receiving notice of meetings. The submission of lack of quorum depended upon the Turkish Islamic associations being entitled to notice and to attend. The suggestion that the meeting was invalid because there was a society represented that was not a member of ICNSW was not well-founded: Leary v. National Union of Vehicle Builders (1971) 1 Ch. 34, at pp.53-55. In the present case, the presence of the extra participant did not affect the conduct of the meeting.107 In my opinion, Rule 5(7) of the AFIC Rules is not incorporated into the ICNSW rules, so that the Turkish Muslim associations were entitled to notice of the meeting and were entitled to attend and vote at the meeting. For that reason alone, in my opinion the meeting was invalid and the resolutions at the meeting were invalid. In my opinion also, the purported election of office bearers was invalid because the previous office bearers had not validly been removed from office. 108 In those circumstances, it is not necessary to consider the other grounds relied on.
Decision109 As to what, if any, relief should be granted, it was submitted by Dr. Birch that no relief should be granted to Mr. Elgafi, because of his delay in bringing the proceedings and because of the inconvenience that would ensue if all proceedings of the Executive Committee of ICNSW since January 1998 were held to be invalid. 110 There was debate also as to the standing of Ali Roude to have any relief at all. It was submitted by Mr. Whittle that only a delegate of a member association or a person made an individual member under Rule 5(x) could become an office bearer; and that Ali Roude was neither a delegate, nor was he made an individual member under Rule 5(x) at the annual general meeting of July 1998. Accordingly, he was not validly an office bearer of ICNSW. Dr. Birch submitted that there was no requirement in the Constitution of ICNSW that an office bearer must either be a delegate or an individual member under Rule 5(x), and he referred to Rule 4(x); and in any event, Ali Roude had previously been made an individual member under Rule 5(x) and there was no basis to assume that that membership expired. 111 Finally, there was a question whether, because of the problems which gave rise to the AFIC intervention, I should grant relief to the plaintiffs; or, if I did grant relief, whether that should be on some condition which would require an early general meeting of ICNSW and election of new office bearers. 112 In relation to Ali Roude's standing, I accept Dr. Birch's submissions: there appears to be nothing in the ICNSW Constitution that requires an office bearer to be either a delegate of a member association or an individual member under Rule 5(x); and in any event, there does not seem to be any basis for saying that Ali Roude's previous appointment as an individual member under Rule 5(x) ran out. 113 In my opinion, I should grant relief to the plaintiffs and to the cross-claimant, but not unconditional relief. The purported intervention by AFIC has been largely ineffectual, because, although ICNSW is contractually bound to submit to it, the Rules of ICNSW prevent a taking over of its affairs in the way which the AFIC Executive Committee attempted; but it has not been shown that intervention was not authorised by AFIC Rules, and I have given reasons why I believe AFIC had real cause for concern. There has been delay by Mr. Elgafi, which in my opinion makes unconditional relief inappropriate in his case also. 114 It would appear that this Court does not itself have power to remove office bearers; but this Court can declare in accordance with these reasons that the purported election of four office bearers in January 1999 was invalid, and it can require, as a condition of relief being granted to them respectively, that Ali Roude and Mr. Elgafi resign as office bearers. It can require that ICNSW attempt to procure the resignation of the remaining office bearers; and that, if this is not obtained, a resolution for the removal of the remaining office bearers be put to a meeting. I propose to make it a condition of relief that these things happen, and that a meeting be called, and an election held for the vacancies in the office bearers, which I expect will be all the office bearers. 115 The relief to be granted to the plaintiffs, on these conditions, would be a declaration that the purported removal of ICNSW office bearers, and the resolutions purportedly passed on 17th October 1999, were invalid. The relief to be granted to Mr. Elgafi, on those conditions, would be a declaration that his purported removal and the purported election of four office bearers on 6th January 1999 were invalid. I would not in these proceedings make any declaration of invalidity concerning subsequent actions of the ICNSW Executive Committee. 116 My findings concerning the January 1999 meeting could raise a question as to the instructions given to ICNSW's solicitors, and as to who can call and chair a meeting of ICNSW. There has been no challenge to the retainer of the solicitors, and I do not think my findings require me to decide that they had no retainer. As regards calling and chairing a meeting, in my opinion s.23 of the Supreme Court Act confirms that this Court can give directions which ensure this is validly done. 117 If there is any dispute between the parties to these proceedings as to who should be treated as members of ICNSW for the purposes of this meeting, or as to the numbers of delegates for any association I would give directions for the resolution of that dispute in these proceedings. The plaintiffs should prepare short minutes of orders giving effect to these reasons, which include directions for the calling and conduct of the meeting.
RELIEF
Key Legal Topics
Areas of Law
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Corporate Law & Governance
Legal Concepts
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Implied Terms
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Unconscionable Conduct
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Fiduciary Duty
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