Islamic Council of South Australia Inc v Australian Federation of Islamic Councils Inc

[2009] NSWSC 211

NEW SOUTH WALES SUPREME COURT

CITATION:
Islamic Council of South Australia Inc v Australian Federation of Islamic Councils Inc [2009] NSWSC 211

JURISDICTION:
Equity Division
Expedition List

FILE NUMBER(S):
6274/08

HEARING DATE(S):
13 February 2009

EX TEMPORE DATE:
16 February 2009

PARTIES:
Islamic Council of South Australia Inc (first plaintiff)
Islamic Council of Queensland Inc (second plaintiff)
Muslim Council of New South Wales Inc (third plaintiff)
Australian Federation of Islamic Councils Inc (defendant)

JUDGMENT OF:
Brereton J      

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable

COUNSEL:
Mr M R Pesman (plaintiffs)
Mr A P Cheshire (defendant)

SOLICITORS:
Carters Law Firm (plaintiffs)
Goldrick Farrell Mullan (defendant)

CATCHWORDS:
VOLUNTARY ASSOCIATIONS - Declaration and injunction sought requiring calling of meeting pursuant to requisition of member - Organisations – whether preconditions satisfied - whether requests to call meeting validly made - whether request via email “in writing” - held that requests validly made – held that email is writing – whether dispute justiciable - whether constitution of organisation constitutes a legally binding and enforceable contract – where Constitution had been treated by parties as binding in earlier litigation –held that organisation’s constitution is legally binding and enforceable – whether relief should be refused on discretionary grounds 

LEGISLATION CITED:
(NSW) Associations Incorporation Act 1984 s 11(2)
(NSW) Limitation Act 1969 s 54(4)

CATEGORY:
Principal judgment

CASES CITED:
B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147
Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647
Brambles Holdings Ltd v Bathurst Industry Council [2001] NSWCA 61, (2001) 53 NSWLR 153
Cameron v Hogan (1934) 51 CLR 358
Carter v NSW Netball Association [2004] NSWSC 737
Coleman v Liberal Party of the Australia (NSW Division) (No 2) [2007] NSWSC 736, (2007) 212 FLR 271
Dixon v Esperance Bay Turf Club Inc [2002] WASC 110
Exceptional Sunrise Pty Ltd v Jones [2008] QSC 190
Field v NSW Greyhound Breeders, Owners & Trainers Association [1972] 2 NSWLR 948
Goodwin v VVMC Club Australia (NSW Chapter) [2008] NSWSC 154
Green v Page [1957] Tas SR 66
Howard Smith & Co v Varawa (1907) 5 CLR 68
Islamic Council of NSW v Australian Federation of Islamic Councils [2000] NSWSC 115
Kovacic v Australian Karting Association (Qld) Inc [2008] QSC 344
McClelland v Burning Palms Surf Life Saving Club [2002] NSWSC 470, (2002) 191 ALR 759
McGuren v Simpson [2004] NSWSC 35
Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1
Plenty v Seventh-Day Adventists Church of Port Pirie [2009] SASC 10
Rose v Boxing New South Wales Inc [2007] NSWSC 20
Rush v WA Amateur Football League (Inc)[2007] WASCA 190
Rush v WA Amateur Football League(Inc) [2001] WASC 154
Scandrett v Dowling (Women's Ordination case) (1992) 27 NSWLR 483
South Norseman Gold Mines v MacDonald [1937] SASR 53

TEXTS CITED:

DECISION:
Declaration that AFIC has been bound to call a meeting of the Federal Council since 25 November 2008. Order that AFIC convene meeting.  Order that Defendant pay Plaintiff’s costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Monday 16 February 2009

6274/08Islamic Council of South Australia Inc & ors v Australian Federation of Islamic Councils Inc

JUDGMENT (ex tempore)

1. HIS HONOUR: The defendant, which I shall call “AFIC”, is an umbrella association of Islamic associations in each of Australia’s States and territories. Under its Constitution, AFIC is a federation of local Islamic societies, who upon admission to AFIC also become members of their local State Council, of which there are nine, one for each of the eight States and Territories of Australia, and one for Christmas Island. The objects and purposes of AFIC are set out in the Preamble to its Constitution, and in clause 7. In broad terms, AFIC is to further and promote Islamic ideals and the interests of Muslims. Some flavour is given to this by the Preamble, which is as follows:

   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 Almighty Allah (God), having formed local Islamic societies and in 1964 the Australian Federation 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 thereby replacing the Australian Federation of Islamic Societies.

2. AFIC operates a number of Islamic educational institutions, and has assets of some $25 million.  It undoubtedly plays an important role in the Islamic community in Australia, and in the lives of Australian Muslims.

3. The plaintiffs, which I shall call respectively “ICSA”, “ICQ” and “MCNSW”, are each State Councils, in South Australia, Queensland and New South Wales  respectively.  There is a dispute as to the present status of ICQ and MCNSW and, in particular, as to their ability to participate in the affairs of AFIC.  AFIC contends that ICQ is suspended from membership of AFIC.  In proceedings 5452 of 2008 in this Court, between MCNSW and AFIC, MCNSW seek declarations that certain local Islamic Societies in New South Wales are entitled to membership of AFIC, and therefore of MCNSW.  AFIC contends that by reason of an agreement entered into in connection with earlier proceedings which relate to the same dispute, MCNSW is not entitled to do anything other than in the ordinary course of business pending the resolution of that dispute.  A Statement of Claim was filed in those proceedings on 10 February 2009.  There is no realistic prospect of those proceedings being heard prior to the end of April 2009, when the next meeting of the Federal Congress – the supreme governing body of AFIC – is to be held.

4. The present dispute concerns a refusal on the part of AFIC to call a Federal Council Meeting following alleged requests from the plaintiffs and others to do so.  The plaintiffs contend that it is at least possible that a Federal Council meeting could resolve the dispute as to the membership of MCNSW prior to the next Federal Congress meeting, and without the time and expense involved in ongoing litigation, but that despite the requisite number of requests to convene a meeting from State Councils, AFIC nonetheless refuses to convene a meeting of the Federal Council.

5. AFIC’s affairs are governed by three organs.  Ultimate control of AFIC vests in the Federal Congress (Rule 8).  The Federal Congress is comprised of members of the Executive Committee and delegates from each State Council – being the Chairman of each State Council (or his nominee), and one representative of each local association which is a member of the State Council (Rules 11 and 12).  The powers of the Federal Congress relevantly include to “adjudicate on all matters of controversy” between Federal Council, Executive Committee and the State Councils, or between State Councils and their member societies (Rule 13(e)).  In addition, the Federal Congress elects most of the members of the Executive Committee (Rules 17 and 32).  It does not appear to be controversial that AFIC must convene a Federal Congress no later than 30 April 2009.

6. The next organ in the hierarchy is the Federal Council, which comprises four members of Executive Committee and the President or Chairman of each State Council (Rule 14).  The powers of the Federal Council relevantly include to “determine the time, place and agenda of the Meetings of the Federal Congress” (Rule 15(b)), and “to act for and exercise all the functions of the Congress between its meetings in all matters provided always that such actions or decisions might be ratified or reversed by the Congress” (Rule 15(c)).

7. The third organ in the hierarchy is the Executive Committee, which is responsible for the day-to-day running of AFIC.  It is specifically subject to the “control and scrutiny of both the Federal Congress and Federal Council” (Rule 19).

8. The convening of meetings of the Federal Council is governed by clauses 40 to 42 of the Constitution.

   41. Subject to this Constitution, a Council meeting shall be called by the Secretary of the Federation as directed by the Federal Executive Committee or upon written requests from four (4) or more State Councils.

   42.          Notice of Federal Council together with its Agenda shall be given by the Secretary of the Federation to the members of the Council at least (4) weeks prior to the date of such meeting.

9. AFIC has received requests from the following State Councils, which are said to be requests pursuant to Rule 41:  first, the Islamic Council of Western Australia on 3 November 2008; secondly, MCNSW on 20 November 2008; thirdly, the Islamic Council of Victoria on 23 November 2008; fourthly, ICSA on 24 November 2008; fifthly, the Islamic Council of Northern Territory on 25 November 2008; and sixthly, ICQ on 18 December 2008.   The only response from AFIC in relation to those requests was a letter dated 12 November 2008 – that is to say after receipt of the request from the Islamic Council of Western Australia, but before all the others – to all of the State Councils, signed by the Secretary of AFIC and indicating that a Federal Council meeting would be scheduled “as soon as possible”.  However, no such meeting has been convened and AFIC has proffered no explanation to the State Councils as to why no meeting has been convened.  On 15 December 2008, the Islamic Council of Western Australia withdrew its request for the convening of a Federal Council meeting.

10. The plaintiffs contend that by reason of the combination of clauses 13(e) and 15(c), it is at least possible that a Federal Council meeting could resolve the dispute about the New South Wales membership, both prior to the Federal Congress meeting, and without the time and expense of ongoing litigation.  The plaintiffs further contend that even absent those requests, AFIC is wrongly resisting convening a Federal Council meeting –because of timing issues arising from the 30 April 2009 deadline for the Federal Congress meeting, the effect of which is that in order for there to be a meeting of the Federal Congress by 30 April, notice of such meeting must be given by 19 March (as rule 37(1) requires six weeks notice); as the Federal Council determines the time, place and agenda of the Federal Congress (rule 15(b)) notice of its meeting must therefore be given by 19 February 2009 (as rule 42 requires four weeks notice of Federal Council meetings).  On the other hand, AFIC submits that the issues raised by the proceedings are not justiciable; secondly, that the Court does not have jurisdiction, or if it does, as a matter of discretion ought decline relief, since the matter about which complaint is made can be resolved at a general meeting of members; and thirdly, that there are not four valid requests validly made by four Councils.

11. The issues for resolution are:

• First, whether upon the proper construction of the Constitution and in the events which have happened, there have been validly written requests from four or more State Councils for the calling of a meeting of the Federal Council. This, in turn, involves a number of subsidiary issues relating to the alleged requests made by some of the State Councils;

• Secondly, if so, whether AFIC’s failure to convene such a meeting is justiciable; and

• Thirdly, if so, whether relief should nonetheless be declined as a matter of discretion.

1. I turn first to consider whether there have been valid written requests from four or more State Councils. The requests made by South Australia and the Northern Territory are uncontroversial; it is accepted they were valid requests for the purposes of Clause 41. The contentious request first made was that made by Western Australia on 3 November 2008. It is not in issue that it was initially, a valid request, but a question arises as to whether it has continuing relevance because of its purported withdrawal. It is convenient to defer dealing with that question until the other requests, made prior to the date of its withdrawal, have been resolved.

2. The next controversial request was that made by MCNSW on 20 November 2008.  On 25 September 2008, MCNSW instituted proceedings 4883 of 2008 against AFIC, claiming a declaration that a notice of meeting for a replacement AGM to be held on 28 September 2008 was invalid, void and of no effect, and unable to be acted upon or to be implemented by AFIC, and an order that AFIC be restrained from holding or conducting that meeting.  On 22 October 2008, MCNSW and AFIC entered into an agreement by which MCNSW agreed to call and hold a general meeting on 23 November 2008 under the control of a neutral Chair acceptable to AFIC for the purpose of new elections, but that if any body prior to 31 October 2008 commenced court proceedings challenging or seeking declarations as to membership of MCNSW, the convening of that general meeting would be deferred until final resolution of any such proceedings.   Paragraph 7 of this agreement provided that MCNSW would not take any action, expend any funds, or deal with any asset prior to the occurrence of the general meeting, adding “For the avoidance of doubt this paragraph does not prevent MCNSW commencing the proceedings contemplated in 2 above”.   Prior to 31 October 2008, MCNSW instituted proceedings 5452 of 2008 in this Court against AFIC, claiming declarations as to the membership of MCNSW and thus triggering a deferral of the general meeting referred to in the agreement. 

3. AFIC contends that for MCNSW to requisition a meeting of the Federal Council is contrary to this agreement, because to do so it is not in the ordinary course of MCNSW’s business and is inconsistent with the intent of the agreement that any dispute as to MCNSW membership be resolved by court proceedings.  However, it is not apparent why the exercise by MCNSW of a right given to it by the Constitution of AFIC to requisition a meeting of the Federal Council is other than in the ordinary course of MCNSW’s business.  A fundamental part of MCNSW’s business appears to be representing the interests of New South Wales Islamic Associations in AFIC and in the governance of AFIC.  Requisitioning a meeting of the Federal Council is an aspect of doing just that.  I do not accept that to do so is other than in the ordinary course of MCNSW’s business. 

4. This conclusion is supported by the “for the avoidance of doubt” clause in paragraph 7 of the agreement.  Those words are used in circumstances where it is accepted that the head provision covers the situation, but it is recognised that there might be a faint argument that it does not and therefore what is intended already to be covered is made more explicit than otherwise.  It is implicit from the use of those words that the head sentence of paragraph 7 did not prevent MCNSW from commencing proceedings and seeking declarations as to its membership.  If that is not outside of the ordinary course of MCNSW’s business, then it is impossible to see how requisitioning a Federal Council meeting would be outside the ordinary course of its business. 

5. Accordingly, MCNSW was entitled to requisition a meeting under clause 41. There is no other objection to the validity of its requisition. In my judgment, its requisition was a valid one.

6. The next contentious request is that of Victoria, made on 23 November 2008.  Unlike the other requests, it was contained in an email communication.  Relevantly, it was in the following terms:

   In our discussions you may recall our desire to have a Fed Council meeting.  I thought it was important to send an email confirming that we are awaiting the announcement of a Fed Council meeting at AFIC’s earliest convenience.  I realise as you mentioned a lot is happening at the moment.  Nevertheless, a Council meeting would help the Councils understand the ‘state of play’ in many areas.  This is particularly because we are due to have a meeting anyhow.

   I now know the Council’s situation in NSW is deteriorating.  However, the ICV really hopes we can resolve this issue without AFIC being seen as flexing its muscle excessively.

   I think a Council meeting at the very least will allow you to consider the wishes of Council members on key matters. 

   I hope we can fit a Council meeting in before the end of the year

   A A
   Ramzi

7. The first subsidiary issue is whether, for the purposes of clause 41, a request made by email is a “written request”. In Exceptional Sunrise v Jones [2008] QSC 190, de Jersey CJ considered whether a contractual provision that provided that the buyer was entitled to waive the benefit of a special condition and that if the buyer waived the benefit of that condition the date for settlement would be 30 days after the seller received “written notice” of the waiver, was triggered by an email communication, in the context that another clause of the contract provided that notices under the contract must be in writing (but also provided that notices were effectively given if sent to the other party’s facsimile number). Ultimately, however, his Honour said (at [30]):

   It has been unnecessary for me to deal with the submission that the communication of the ‘waiver’ by email was, because that medium was used, ineffectual.   (The submission did I feel gain strength from the requirement in special condition 3.6 that ‘written notice of the waiver’ be given, and the absence in cl 10.4, of any reference to email communication.)

8. In McGuren v Simpson [2004] NSWSC 35, Harrison AsJ, considering whether there had been a written acknowledgment for the purposes of Limitation Act s 54(4), concluded that an acknowledgment contained in an email was for that purpose a written communication. At [20], her Honour said:

   However, in Lockheed-Arabia v Owen [1993] 3 All ER 641, Mann LJ held that a photocopy constituted “writing” for the purposes of the Acts Interpretation Act 1978 (UK). Importantly at [814] Mann LJ stated that in reaching this finding “an ongoing statute ought to be read to accommodate technological change”. Similarly in Wilkens v Iowa Insurance Commissioner (1990) 457 NW 2d 1 (US), the court found that a requirement to keep a written record of an insurance contract was satisfied by an insurer keeping written records on its computer system. The Law Commission for England and Wales in its paper entitled “Electronic Commerce: Formal requirements in Commercial Transactions – Advice from the Law Commission” has also reached a view that is consistent with that expressed in Wilkens, that being that a document which can be printed and stored is “in writing”: see S Christensen, “Moving the Statute of Frauds to the Digital Age” (2003) 77(7) ALJ 416.

9. The purpose of requiring that notices and the like be in writing is usually at least twofold.  One is to ensure that there is a formal act, so that doubt does not attend the intent of the party giving the notice.  A second is often to avoid later disputation by ensuring that there is a permanent record of the notice.   That said, the concept of “writing” is concerned with the form in which words are used, and not the surface on which they are written.  The fundamental distinction is between the written word and the spoken word.  While “writing” often contemplates writing on paper, it is nonetheless writing and not speech, if written in invisible ink.  It is nonetheless writing, if written in the sky by an aircraft engaging in skywriting.  To my mind, it is nonetheless writing, if it appears on a computer screen, as a result of the entry of data into a computer. 

10. For those reasons, and the reasons given by Harrison AsJ, I am satisfied that for the purposes of clause 41 a written request includes a request made by email.

1. It was also argued that in order for there to be a written request within clause 41 the request had to be signed. Clause 41 of the Constitution does not explicitly require that a request be signed. In this respect, it is to be distinguished from clause 34(2)(b), which makes provision for convening of special meetings of the Federal Congress “upon receipt of written request setting forth the object of such a meeting and signed by the Chairman-President of at l least four (4) State Councils for and on behalf of their respective Councils ... “. In any event, a typed name (as distinct from a holograph) can be a signature, and has been held to be so in many cases relating to the Statute of Frauds. The distinction between the two provisions of the Constitution to which I have referred warrants the conclusion that so long as the request was from a State Council, it did not have to be formally signed; but if it were necessary that it be formally signed, the word “Ramzi” was subscribed to the email with the intent of authenticating the communications, and constitutes a signature notwithstanding that it appears in typewritten and not handwritten form.

2. Next, it was argued that a request ought to specify the business of the meeting to be convened. I reject this submission. Again, in distinction to clause 34(2)(b), clause 41 contains no such explicit requirement. It may be that State Councils would desire to convene a Federal Council meeting without having any special business in mind, just for the purpose of monitoring the affairs of the Association from time to time. But even if some reference to the business to be conducted is required, it would be sufficient, in the absence of a provision such as 34(2)(b), that one of the requests specify the business to be conducted, as that would enable an agenda of the meeting to be determined. Here, more than one did so, so that there is no difficulty in formulating an agenda identifying the business of the proposed meeting.

3. The final subsidiary issue concerning the Victorian request is the submission that it was not a request under clause 41 at all, but merely expression of a wish or desire or hope that a meeting be convened. There is a difference between expressing a hope or desire that a meeting be called, and a formal requisition that such a meeting be called under clause 41. The email contains no specific reference to clause 41. It contains no use of the word “request”, but merely asserts that, after having received AFIC’s letter of 12 November, “we are awaiting” the announcement of a Federal Council meeting. It proceeds to recognise some of the asserted difficulties about convening a meeting, which is inconsistent with the communication being a formal request under clause 41: such difficulties would be entirely irrelevant if the communication was intended to be a formal requisition.

4. I do not think that this email was intended to be an exercise of the power conferred by clause 41 to requisition a meeting of the Federal Council. Accordingly, I conclude that the Victorian request was not an effective request for the purposes of clause 41.

5. I return then to the Western Australian request and its purported withdrawal on 15 September 2008.  In South Norseman Gold Mines v Macdonald [1937] SASR 53, the secretary of the company received a requisition calling upon the directors to convene an extraordinary general meeting of the company signed by four persons, admitted to be shareholders representing at least one-tenth of the issued capital of the company. Subsequently, the company received a further letter from one of the requisitionists to the effect he desired to withdraw from the requisition and did not require the meeting to be called. The effect of that withdrawal was that the remaining requisitionists held less than one-tenth of the issued capital, so that if the withdrawal was effective there would be no obligation to convene the meeting. The Supreme Court of South Australia (Reed AJ) held that the lodging of a requisition calling for a general meeting signed by shareholders having necessary voting power and number of shares was the sole condition for bringing into existence the duty of the directors to call a general meeting, and the subsequent withdrawal by one of the requisitionists did not affect the rights of the remaining requisitionists to have the meeting convened. His Honour said (at 58):

   It seems to me that the lodging of a requisition, signed by shareholders carrying the necessary voting power and number of shares, is the sole condition, as it were, for bringing into existence the duty of the directors to call a meeting.  The actions which one of the requisitionists subsequently takes after the lodging of the requisition cannot affect the rights which the remaining requisitionists may have.  That seems to me to be intended by reason of the provision of sub-sec 3, which confers the right to call a meeting on requisitionists who hold more than one-half of the total voting rights of all of them.  I cannot see how I can escape from this conclusion in view of those words, which really carry more weight than the other parts of the section in arriving at a construction of it.

6. At the time of the withdrawal on 15 December 2008, and since 25 November 2008, AFIC was in receipt of valid requests from Western Australia on 3 November, New South Wales on 20 November, South Australia on 24 November, and Northern Territory on 25 November.   On 25 November, therefore, AFIC became obliged to convene a meeting of the Federal Council.  In my view, and consistent with South Norseman, that obligation crystallised on 25 November and was unaffected by any subsequent withdrawal of any one or more of the requisitionists.  It is not necessary to consider what would have been the position if the request of Western Australia were withdrawn before a total of four requests had accumulated.  I accept, without deciding, that the position might have been different in that situation; but once the obligation to convene a meeting was triggered by the accumulation of four valid requests, it persisted.  Accordingly, AFIC became bound on 25 November to convene a meeting of the Federal Council, and that obligation was unaffected by the purported subsequent withdrawal of Western Australia’s request.

7. The final controversial request is that of Queensland.  In view of the decision to which I have come in respect of the other requests – so that there were in any event four – it is strictly unnecessary to consider the Queensland request, since the obligation to convene a meeting had already crystallised before that request was made on 18 December 2008; but it may be relevant to the exercise of discretion and it may be relevant if I be incorrect about the standing of MCNSW, or about the effect of Western Australia’s purported withdrawal.

8. Queensland’s request of 18 December 2008 included, inter alia: “I also request that one of the most urgent matters concerning my Council is the lifting of suspension of ICQ and I request that this matter be placed on the agenda of the Federal Council meeting”. I am unable to accept that that manifests an acceptance or acknowledgment by ICQ that it was validly and effectively suspended from exercising the rights of a State Council under AFIC’s Constitution. No provision in the Constitution authorises suspension of a State Council. I am unable to see how, in those circumstances, Queensland could be deprived of its right to request that a Federal Council meeting be called, under clause 41. Accordingly, in my view, Queensland’s request was a valid one for the purposes of clause 41.

9. As the result is that AFIC was obliged under clause 41 to convene a Federal Council meeting it is strictly unnecessary to consider the alternative basis advanced by the plaintiffs, that a meeting had to be called in any event because of the deadline of 30 April for a Federal Congress meeting. I am, however, unconvinced that a meeting of the Federal Council is an essential prerequisite for a Federal Congress meeting. Clause 35 of the Constitution seems to contemplate that the Executive Committee may determine the time and place of a Federal Council meeting. It is true that there is no specific reference in clause 35 to fixing the agenda, a function which is given to Federal Council under clause 15((b), but if the Executive Committee is entitled to fix a time and place of a Federal Congress meeting, then in my view a power to settle the agenda must be implicit. I would therefore have been unconvinced that the mere circumstance that there was an impending Federal Congress was sufficient to justify the relief claimed by the plaintiffs.

10. I turn then to the second main issue, which is that of justiciability.  Courts do not as a matter of course intervene in the affairs of voluntary associations, unincorporated or incorporated (Cameron v Hogan (1934) 51 CLR 358, 378). In order that a court be persuaded to intervene, a plaintiff must establish some interference with its property rights or interests, or some breach of contract, or some threat to its livelihood or reputation [Field v NSW Greyhound Breeders, Owners & Trainers Association [1972] 2 NSWLR 948, (1986) 43 SR; Carter v NSW Netball Association [2004] NSWSC 737; Rose v Boxing New South Wales Inc [2007] NSWSC 20, [59]; Kovacic v Australian Karting Association (Qld) Inc [2008] QSC 344 [26].

11. In the present case there is no question of interference with proprietary rights or interests, nor as to injury to livelihood or reputation.  As the claims for relief necessarily include a mandatory order to convene a meeting and are not limited merely to a claim for declaratory relief, the Court’s plenary power to grant declaratory relief, to which reference was made in Rose (at [55]-[56]), is insufficient to avail the plaintiff in this case. The crucial question then is whether the plaintiffs can establish a right in contract, which in turn depends on finding a clear intent contractually to be bound by the Constitution.

12. Although in respect of associations incorporated under the (NSW) Associations Incorporation Act such claims are now facilitated by s 11(2), which provides that the rules of an incorporated association are binding on the association and members, so that there is a deemed contract between all of the members and the association on the terms of the rules [McClelland v Burning Palms Surf Life Saving Club [2002] 191 ALR 759, [103]-[109]; Rose v Boxing New South Wales Inc, [57]; Goodwin v VVMC Club Australia (NSW Chapter) [2008], NSWSC 154, [30]-[38]], there is no equivalent provision in the Tasmanian Act under which AFIC is incorporated.

13. The position is also to be contrasted with that which applied in Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1, where the South Australian Act provided that the rules bound the association and all its members. Although, in Millar, Besanko J said (at [109]) that the fact of incorporation may be sufficient of itself to lead to the conclusion that the rules had legal effect, I agree with Wilson J in the Supreme Court of Queensland in Kovacic that the mere fact of incorporation under such a statute, absent ANY such provision AS s 11 in the New South Wales Act, is insufficient of itself to make the internal affairs of a voluntary association –even an incorporated one – justiciable [see Kovacic, [27]-[28]]. Besanko J’s observations in Millar were made in the context of an Act which included a provision similar to s 11 in the New South Wales Act.

14. Absent the equivalent of such a provision, the question is whether the Constitution was intended to constitute a legally binding and enforceable contract between the various members and the Association. No such intent could be found by the High Court in Cameron v Hogan in respect of the Victorian branch of the Australian Labor Party, even though that party no doubt held considerable property, played an important role in the affairs of the nation, and enforced provisions of its Constitution by expelling members (including the subject of that case, the then Premier of the State of Victoria). In Cameron v Hogan it was said that the Court would only find such a contract if a clear intent to create legally enforceable contractual relations was apparent.  In Rose v Boxing New South Wales Inc, I found that independently of s 11(2) there was such an intention. I drew this conclusion from the inclusion amongst the objects of the Association of one “to inflict fines and penalties by way of suspension, expulsion or otherwise for any breach of the rules and/or regulations of the Association”, as illustrating an intent that the Constitution be enforceable against its members. As has been pointed out by Mr Cheshire for AFIC, that conclusion was unnecessary to the decision, as Boxing NSW was incorporated under the New South Wales Act, so that there was a deemed contract in any event. On reflection, both in the light of Cameron v Hogan and other cases to which I shall come, I doubt now whether the reference to suspension, fines, expulsion and other penalties for breach of the Constitution or rules would be sufficient to warrant inference of a contractual intent, in the absence of some such provision of such as s 11(2).

15. In Rush v WA Amateur Football League [2001] WASC 154, Templeman J found it seriously arguable that there was contractual intent where members of the League had completed an application form by which, inter alia, they undertook to abide by the Constitution and by-laws of the League. That is a rather stronger case, because of the express undertaking to be bound, but since his Honour’s decision and some intervening steps, the matter proceeded to the Western Australian Court of Appeal ([2007] WASCA 190) Pullin JA, with whom Wheeler and Buss JJA agreed, concluded that there was no such contractual intent. Pullin JA said (at [35]-[37])

    [35] The circumstances here were that the respondent was an incorporated body concerned with the running of amateur football. Neither the players nor the officials do what they do for any financial reward.  The appellant, in applying for registration to play football, was obliged to sign a statutory declaration that he was an amateur, was not playing football for pecuniary gain, and was not in receipt of any promise or inducement of gain. The application form advised the appellant that no player should be permitted to take part in any match under the control of the council unless he was an amateur.  The application for registration was also signed by the Secretary of the Bayswater club, stating that the secretary had stressed the importance of the appellant being an amateur. The by-laws provided for the imposition of fines to be paid by players or officials in certain circumstances, but the only sanction for non-payment of a fine was that the player was disqualified from playing football and an official disqualified from acting in any capacity during the period of non-payment (cl 9.4). The by-laws established in-house tribunals to resolve disputes.

    [36] Those circumstances must have suggested to the appellant and the respondent at the time the appellant applied for registration that the resolution of any disagreements which might arise between the respondent and the appellant would not involve litigation in the courts. As a result, it seems reasonable to conclude that when Commissioner Odes said, at the conclusion of [52], that there was a ‘consensual relationship’ between the parties, he meant to indicate that, although there had been mutual promises, there was no intention to create contractual relations. There was no attempt made by the appellant to contend that, because the form of relief was declaratory in nature, this should have justified the intervention of the court, which would have in turn raised arguments of the kind which were dealt with in Plenty v SDA Church (supra).

    [37] In the particular circumstances of this case, in the absence of any property, income or reputational interests, this Court has no jurisdiction to decide issues arising out of the consensual but non-contractual relationship between the parties. The appellant did not submit that Cameron v Hogan could be ignored because it was decided in 1934.  Wootten J came perilously close to saying this in McKinnon v Grogan [1974] 1 NSWLR 295. Intermediate courts have no authority to ignore a binding High Court decision on the basis that it might be thought to be out of touch with the times. In any event, this case shows that Cameron v Hogan is not out of touch with the times. The case ran for five days before Commissioner Odes, involved another action which had to be settled, involved three interlocutory injunction applications and then this appeal to the Court of Appeal. The dispute has involved the time of seven Judges. There has been an absurd amount of time, money and valuable court resources consumed in resolving a dispute which has no effect on property, income or reputation and which is about whether the appellant could play footy or give up some of his leisure hours to coach or help with administration for no financial reward.

16. In Dixon v Esperance Bay Turf Club Inc [2002] WASC 110, Roberts-Smith J observed that the Western Australian Act contained no provision making the rules binding, and on this basis his Honour distinguished the first instance decision of Templeton J in Rush holding that no contractual intent was established (at [112]).

17. In Scandrett v Dowling (1992) 27 NSWLR 483, the Court of Appeal held that, although the Constitution of the Anglican Church was incorporated in a schedule to an Act of the State Parliament, it had effect only as a consensual compact which was not binding on the parties at law, except insofar as the Act made it binding, which was limited to “in respect of the property” of the Church.

18. More recently, indeed only days ago, in Plenty v Seventh-Day Adventists Church of Port Pirie [2009] SASC 10, it was concluded, despite earlier decisions in related litigation to the contrary, that no contractual intent was to be found in the disciplinary provisions of the church manual of the Seventh-Day Adventist Church.

19. Since Cameron v Hogan, statutory recognition of political parties has brought about a change in the attitude of courts to intervention in their affairs which are regarded as justiciable at least to the extent that declaratory relief may be granted [see, for example, Coleman v Liberal Party of the Australia (NSW Divn) (No 2) [2007] NSWSC 736] but Scandrett v Dowling and the recent decision in Plenty v Seventh-Day Adventist Church show that there has been no such change in the area of church affairs.  The rule is, therefore, still as stated in Cameron v Hogan. In the joint judgment, Rich, Dixon, Evatt and McTiernan JJ (at [370]-[371]):

    There are, however reasons which justify the statement that, at common law as well as in equity, no actionable breach of contract was committed by an unauthorized resolution expelling a member of a voluntary association, or by the failure on the part of its officers to observe the rules regulating its affairs, unless the members enjoyed under them some civil right of a proprietary nature.  As a generalization it expresses the result produced by the application of a number of independent legal principles: it is not in itself the enunciation of explanation of a rule or rules of the common law.  One reason which must contribute in a great degree to produce the result is the general character of the voluntary associations which are likely to be formed without property and without giving to their members any civil right of a proprietary nature.  They are for the most part bodies of persons who have combined to further some common end or interest, which is social, sporting, political, scientific, religious, artistic or humanitarian in character, or otherwise stands apart from private gain and material advantage.  Such associations are established upon a consensual basis, but, unless there were some clear positive indication that the members contemplated the creation of legal relations inter se, the rules adopted for their governance would not be treated as amounting to an enforceable contract.

1. In the present case, it was contended that the requisite clear intention should be inferred from a number of circumstances, including that AFIC was a national peak body with substantial membership and assets.  These matters I think are entirely equivocal:  the same might have been said of the Australian Labor Party in the 1930s or the Anglican Church in the 1990s.  The Anglican Church certainly held extensive property, much more extensive than that in question here.  The circumstance that AFIC’s purposes are largely of a religious character tends to finding against a binding contractual relationship, as distinct from a consensual compact of the kind referred to in Scandrett v Dowling. 

2. The circumstances that there are some limited powers of enforcement or discipline conferred by the Constitution do not show an intention that the Constitution be enforceable in the ordinary courts, as distinct from internally. Indeed, the Constitution in clause 60 provides internal mechanisms of mediation, resolution by AFIC itself and Islamic Arbitration, which suggests that “rights” under the Constitution were to be enforced internally and not in the ordinary courts; cf the decision of the Western Australian Court of Appeal in Rush.

3. But for one matter, I would have been unable to find sufficient indicia of a clear contractual intent in the AFIC Constitution.  However, it is well established that post-contractual conduct is admissible on the question of contractual intent (as distinct from construction) [Howard Smith v Varawa (1907) 5 CLR 68, 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647, 668, 669, 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,147, 9,149, 9,154-9,156; Brambles Holdings Ltd v Bathurst Industry Council [2001] NSWCA 61 [25] 53 NSWLR 153, 164].

4. In 2000, the Islamic Council of New South Wales brought proceedings against AFIC which were heard and decided by Hodgson CJ in Eq, as his Honour then was, who said, [[2000] NSWSC 115, [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.

5. That observation may ultimately have been obiter because his Honour concluded (at [101]) that the act of the AFIC Executive Council in purportedly setting up an interim body to control the affairs of ICNSW was ineffectual under the rules of ICNSW, and so was not effectual to remove the office bearers of ICNSW.  But his Honour did add (at [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.

6. It does not appear to have been suggested at that time that AFIC or ICNSW, which I take to be the predecessor of MCNSW, was not contractually bound by AFIC’s Constitution.

7. In proceedings in this Court 2880 of 2008 – Patel v Sali – AFIC was the tenth defendant.  Albeit without admission of liability, declarations were made by consent on 24 July 2008 that all steps be taken or business conducted or purported to be taken or conducted by the Federal Congress, Federal Council or Executive Committee or any body purporting to be any of them between 17 May and 23 May 2008 were invalid and of no effect.  A further declaration was made as to the Constitution of AFIC’s Executive Committee.  It is quite plain that by those consent orders, albeit without admission of liability, it was intended to enter into and give effect to binding legal obligations.

8. In 2006 there were proceedings in the Federal Court of Australia Victorian District Registry for the appointment of a receiver to AFIC.  These proceedings are of less significance, because it must be possible for the Court to appoint a receiver even to an unincorporated association that holds property, quite apart from any question of whether its internal affairs are justiciable. But in proceeding 4883 of 2008 in this Court, to which reference has already been made, between MCNSW and AFIC, the agreement of 22 October 2008 – which plainly related to the internal affairs of AFIC – was also plainly intended to establish and give effect to legal obligations. 

9. It would be astounding if AFIC, believing its affairs were immune from review in the ordinary courts, had not in any of this litigation up to this point taken the Cameron v Hogan point. In my view, it is just too late for it to do so now. It failure to do so at any prior time manifests or evidences, albeit it post contractually, the existence of an intent that the Constitution constitutes a legally binding and enforceable contract between AFIC and its member institutions.

10. On that basis, I conclude that AFIC’s affairs are justiciable.  Given the importance which it plays in Islamic affairs and the lives of the Australian Muslims, that is a conclusion which I reach without regret. 

11. That then leaves for consideration the third major issue, which is the question of discretionary withholding of relief.  AFIC submits that relief should be declined on the basis that the issue relates to an irregularity of procedure or an internal matter, which could be resolved by Federal Congress – for which purpose it referred to Dixon v Esperance Bay [2002] WASC 10; Millar v Houghton Table Tennis & Sports Club Inc [2003] SASC 1. In the first of those judgments, Roberts-Smith J referred to what was said by Burbury CJ in Green v Page [1957] Tas SR 66 (at 77):

    Nor would the court have jurisdiction to entertain the present action if the issues between the parties merely involved questions of irregularities in internal management which could be resolved by a general meeting of the members.  In the case of irregularities in procedure laid down by the rules of an organisation for convening meetings and in conducting meetings the court refuses to interfere at the instance of individual members of the organisation.  This is in accordance with the rule in Foss v Harbottle (1843) 2 Hare 461. The basis of the rule was explained by the Court of Appeal in Cotter v National Union of Seamen [1929] 2 Ch 58, Romer J (as he then was) said:

    In my opinion, if the thing complained of is a thing which in substance the majority of the company are entitled to do, or if something has been done irregularly which the majority of the company are entitled to do regularly, or if something has been done illegally, which the majority of the company are entitled to do legally, there can be no use in having a litigation about it, the ultimate end of which is only that a meeting has to be called and then ultimately the majority gets its wishes.

12. Those observations of Romer J in fact make clear that the rule does not apply in the present case.  The import of what his Lordship said is that if the majority does something intra vires but irregularly, the Court will not intervene because the majority could bring about the same result by convening a meeting to ratify the irregularity.   No question or intra vires but irregular act arises here.  The majority of AFIC could not, within power but irregularly,  refuse to convene a meeting of the Federal Council in circumstances where four State Councils requested such a meeting. 

13. It was also submitted that the purpose of the meeting to be called was to resolve the MCNSW membership dispute, which could be resolved by Federal Congress in any event.  However, while that may be the ultimate purpose of convening a meeting, the real issue in this litigation is not the ultimate purpose of the meeting to be convened, but the failure to convene a meeting when duly requisitioned by State Councils.  That the ultimate purpose of the requisitionists might be achieved otherwise does not detract from their entitlement to have a meeting convened.

14. It was further submitted that there would be no utility in convening a meeting because there would still be dispute and debate as to who would be entitled to vote at any such meeting and that it was unclear that Federal Council would in fact be able to resolve the dispute as to the New South Wales membership.  I am prepared to accept that whether Federal Council can exercise the power of resolving disputes between itself and a State Council is capable of dispute.  It is clear enough that the peak organ, the Federal Congress, is authorised to resolve disputes between Federal Council and Executive Committee on the one hand and State Councils on the other.  The general delegation of powers to Federal Council does not necessarily carry with it power to determine disputes between itself and State Councils.  But it seems to me that the Federal Council could meet and make decisions as to its attitude to proceedings 5452 of 2008, including whether they should be defended, albeit subject to ultimate ratification or reversal by Federal Congress. 

15. It has troubled me that the purpose of the proposed meeting might be to achieve, extra-curially, the result which at least one of the plaintiffs, MCNSW, has sought from the Court in proceedings 5452 of 2008 – namely, resolution in its failure of the dispute as to membership of MCNSW.  But I accept that the calling of a meeting of Federal Council is not necessarily a cynical exercise of obtaining by force of numbers what MCNSW concurrently seeking in a court of law.  Several State Councils, not just MCNSW, seek a meeting the outcome of which might inform or resolve the position of AFIC in the litigation which it faces, and which might result in that litigation being avoided and the associated costs incurred.  By analogy, it would not be impermissible for minority directors in a corporation to convene a meeting of the Board of Directors to discuss the corporation’s attitude to their pending oppression suit and to consider whether the suit should be defended, or conceded, or settled – although questions of conflict of interest might impact on the ability of the minority to participate in some of the decision making. 

16. Ultimately, therefore, I am unpersuaded there is sufficient reason to decline relief on discretionary grounds. 

17. My conclusions are as follows. 

18. First, by 25 November 2008 and a fortiori by 18 December, there had been valid written requests for four or more State Councils for the calling of a Federal Council meeting. The obligation to convene a meeting was thereupon triggered, and not affected by the subsequent withdrawal of one of those requests. 

19. Secondly, AFIC’s failure to convene a meeting pursuant to those requests is justiciable, AFIC’s conduct in multiple earlier lawsuits being strong evidence that there was an intent that the Constitution be a legally enforceable contract, and not merely a consensual non-binding compact. Thirdly, there is insufficient reason to decline the relief sought on discretionary grounds.

20. My orders are:

    (1) Declare that upon the true construction of the Constitution of AFIC and in the events which have happened, AFIC is and has since 25 November 2008 been bound to call a meeting of the Federal Council pursuant to clause 41 of its Constitution.

    (2)          Order that AFIC convene a meeting of its Federal Council by 17 February 2009.

    (3)          Order that the defendant pay the plaintiff’s costs.

(4)          Reserve liberty to the parties to apply in the event of any difficulty arising.

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LAST UPDATED:
27 March 2009