Kabir Ahmed v Ayubur Rahman Chowdhury [No. 3]

[2011] NSWSC 1597

Supreme Court

New South Wales

Medium Neutral Citation:	Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [No. 3] [2011] NSWSC 1597
Hearing dates:	15 December 2011
Decision date:	15 December 2011
Jurisdiction:	Equity Division
Before:	Slattery J
Decision:	(1) Parties to proceedings be restrained from diverting the income of the Association or expending money on its behalf pending further order; (2) Appoint Mr John Emmett McDermott as a referee under UCPR , r 20.15 to determine the persons eligible for approval as members of the Association in accordance with the Courts orders of 8 September 2011.
Catchwords:	ASSOCIATIONS AND CLUBS - incorporated associations - members - parties agree hold elections for Executive Council of Association 0 interim orders required to regulate the affairs of the Association before elections held. PROCEDURE - Supreme Court procedure - appointment of referee.
Legislation Cited:	Associations Incorporation Act 2009, s 96 Associations Incorporation Regulation 2010, Regulation 16 Civil Procedure Act 2005, ss 26, 56 Corporations Act 2001, ss 1321, 1322
Cases Cited:	Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [2011] NSWSC 893 Ahmed v Chowdhury (No 2) [2011] NSWSC 954
Category:	Consequential orders
Parties:	First Plaintiff/Respondent- Kabir Ahmed Second Plaintiff/Respondent- Saiful Islam Chowdhury Third Plaintiff/Respondent- Iftikhar Uddin Fourth Plaintiff/Respondent- Fazlur Rahman First Defendant/Applicant- Ayubur Rahman Chowdhury Second Defendant/Applicant- Moshiur Rahman Redoy Sheikh Third Defendant/Applicant- Harun Rachid Azad Fourth Defendant/Applicant- Motiur Rahman Fifth Defendant- The Bangladesh Islamic Centre of N.S.W Inc
Representation:	Plaintiffs/Respondents- R. Mitry, Mitry Lawyers Defendants/Applicants- in person
File Number(s):	2011/173388
Publication restriction:	No

EX TEMPORE Judgment

1. This is the Court's third judgment in these proceedings. In the principal judgment ( Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors [2011] NSWSC 893) the Court dismissed the defendants' motion, which claimed that these proceedings had been settled. In the second judgment (Ahmed v Chowdhury (No 2) [2011] NSWSC 954), the parties having agreed on holding fresh elections for the Executive Council of the Association at a general meeting, the parties were directed to approach the President of the Law Society of New South Wales to nominate a person suitable for appointment as a referee to determine who were the members of the Association for the purpose of such fresh elections.

Recent Directions

1. After the second judgment the matter came back before the Court on 6 September 2011. At that time the President of the Law Society of New South Wales had nominated a potential referee, Mr John Emmett McDermott, a very experienced Sydney solicitor. But a problem emerged. Mr McDermott's fees for the reference could not be guaranteed. There were funds available in the possession of the fifth defendant, the Association. But it did not then seem prudent to deplete the Association's funds for the purpose of a reference, particularly in circumstances where the losing party may have to reimburse the Association. This in turn would put the Association to the expense of attempting to recover the funds, if they were not paid.

1. So the Court decided to give directions, which it did on 8 September 2011. These directions were designed to bring the membership issues to determination. Both sides were required to:-

(a) identify the persons that each side claimed to be members of the Association or eligible for membership of the Association as at the date of expiry of a notice which the Court directed to be sent to all persons that each side claimed to be members or eligible for membership of the Association by 5pm on Monday, 19 September 2011;

(b) to set out the basis on which (by category where possible) those persons said to be eligible for membership; and

(c) to provide information as to the date each such person applied for membership, the subscription fee paid and the class of membership for which the membership application was made.

1. This was largely done in accordance with the Court's directions, except that the parties did not manage to define their differences by category of members. There turned out to be much disagreement about the status of individual applications for membership. This meant that the issues between the parties had become far less suitable for determination by the Court, and more suitable for determination by a referee.

1. The detailed issues raised between the parties require consideration of the membership provisions of the Association. Membership of the Association is in one of two categories, ordinary membership and life membership: Constitution, clause 7. The important provisions of the Constitution defining membership qualifications and nomination (clauses 8 and 9) provide as follows:-

"MEMBERSHIP QUALIFICATIONS

8. A person is entitled to be a member of the Centre is, but only if-

(a) The person is a person referred to in section 15(1)(a), (b) or (c) of the Act and has not ceased to be a member of the Centre at any time after incorporation of the Centre under the Act; or

(b) At least one of the person;s or nominee's parents is a descendent from Bangladesh;

(c) The person is a Muslim aged 18 years or over who is willing to subscribe to the aims and objectives of the Centre; and

(d) In the case of a member he/she:

(i) has been nominated for the membership of the Centre as provided by rule 9; and

ii. has been approved for membership of the Centre by the Executive Council of the Centre pr ay a General Meeting as provide by rule 9; and

iii. has paid the Centre membership fee in terms of either entrance fee or annual subscription

9. A nomination of a person for membership of the Centre:

(a) Shall be made by two members of the Centre in writing in the form set out in Appendix 1 to these rules and shall be lodged with the General Secretary of the Centre;

(b) As soon as practicable after receiving a nomination for membership, the General Secretary shall refer the nomination to the Executive Council which shall then determine whether to approve or reject the nomination for membership.

(c) Where the Executive Council determines to reject the nomindation for membership, it shall refer the nomination to the next General Meeting which shall determine whether to approve or to reject the nomindation.

(d) Where the Executive Council or the General Meeting determines to approve a nomination for membership, the General Secretary shall:

(i) within 28 days of such decision being made, notify the nominee of the approval; and

(ii) request the nominee to pay within 14 days after the receipt by the nominee of the notification the sum payable under these rules by a member as entrance fee and/or annual subscription (non-refundable) of the Centre.

(e) Notwithstanding rule 9(d)(ii) and rule 9(a) above, payment of the entrance fee or any outstanding annual subscription shall be made in accordance to rule 14.

(f) The General Secretary shall enter the nominee's name in the register of members and, upon the name being so entered, the nominee becomes a member of the Centre.

(g) Notwithstanding rule 9(f) above, the General Secretary shall be under no obligation to enter the nominees' name in the register of members should be the nominee and/or nomination fail to comply with rules 9(a) to 9(e), above.

(h) Only those members whose names appear on the register of members shall be entitled to vote at any General Meeting.

(i) Final eligible voters list will be prepared in accordance with rules 9(e) and 14(c) and will be made available to the Returning Officer 72 hours prior to the Annual General Meeting. No membership dispute shall be dealt with on the day of the Annual General Meeting.

(j) The Centre will advise member(s) in writing in due time to renew their membership by the deadline as decided by the Executive Council. It is the member(s) responsibility to renew their membership and check the eligibility of the member(s) to vote with the General Secretary 7 days prior to the final membership list being prepared for the Returning Officer by the Centre."

1. It is self evident from the terms of Clauses 8 and 9 that the Executive Council and the General Secretary have an essential role in perfecting and approving a person's application for membership of the Association. The present problem is that there is no agreement or acceptance among the parties as to who are the office bearers of the Association on its Executive Council. Thus not only can applications for membership not be completed but a register of members cannot be finalised (Constitution, clause 13) and membership fees are not being fully collected (Constitution, clause 14).

Two Present Challenges

1. The Association faces two present challenges: settling a list of members to hold elections; and, ensuring internal stability in the meantime.

1. The Association is the owner of land at Sefton, upon which the Sefton Mosque is erected. The Association has reached a stage in which the members of its Executive Council are in deep dispute with one another, such that they do not recognise the offices that each other holds on the council.

1. As a result, the Executive Council itself has become dysfunctional and is now not able to carry out many of the fundamental administrative affairs of the Association and, indirectly, the mosque itself.

1. Although the parties are in dispute, it can clearly be seen, from the recent course of these proceedings, that the members of the Executive Council are deeply concerned about the fact that it is not operating properly.

1. So they have all asked the Court to intervene. Fortunately the parties, despite their differences, have been able to agree upon a sensible approach to restoring proper legal order to the Association. They are the claimants to the principal executive offices within the Association. All parties wish for fresh elections of the Association to be held, probably in February next year to elect a new and recognised Executive Council under the Association's Constitution.

1. That Executive Council will, once elected, take upon itself the future administration of the affairs of the Association and of the Sefton Mosque. But a fundamental procedural obstacle exists to the holding of an election to satisfy the parties' wishes for the settlement of this dispute. That obstacle is the present paralysis within the Executive Council which prevents Constitution, clauses 9 to 13 operate, as I have described above.

1. The Court has powers under Associations Incorporation Act 2009, s 96, Associations Incorporation Regulation 2010 and Corporations Act , s 1322 to overcome this obstacle. The Court can settle and then validate the list of members under these provisions despite any procedural defects in the nomination and approval of members. Despite my initial view that this was not the right course, the Court will refer to a referee, the issue of determining the current membership of the Association.

1. Mr McDermott has agreed to become the referee. He is not a person known to any of the parties to the proceedings. Mr McDermott's task as referee, will be to determine who the members of the Association are or who are the persons eligible for membership of the Association, were there a properly functioning Executive Council.

1. It is not possible for Mr McDermott himself to approve the persons for membership. The Court's orders below do not ask him to take on that function under clause 9 of the Association's Constitution. But the inquiry process which the Court's orders initiate does request him to inquire and report upon who would be eligible for membership if there was a properly functioning Executive Council. The Court can then decide who are members for the purpose of providing a list of members to the Returning Officer under Constitution, clause 9(i).

1. There will be one complication to Mr McDermott's task. The Court has already made orders on 8 September 2011, in anticipation of a referee's report, for the parties to gather the applications for membership that they wish to provide and to give them to Mr Sheikh, the second defendant, the treasurer of the Association by 5.00pm on 19 September 2011. I am pleased to say that Mr Sheikh, is trusted by all sides of this dispute to carry out some essentially neutral administrative tasks for the Association.

1. One of Mr Sheikh's tasks was to collect the membership applications and membership moneys in accordance with the Court's 8 September orders. But it appears that some of the applications were late by a period of between one and thee hours. So, I anticipate one issue which the referee will encounter is one party seeking to put before the referee the names of 107 candidates, whose applications were provided to Mr Sheikh within three hours after the 5.00pm expiry time of the orders.

1. It would be of assistance to the Court if that matter were dealt with in the course of the reference. The Court will probably be asked to consider giving an extension of time to allow these 107 applications to be taken into account. But the court will be reluctant to do this unless there has been a fair opportunity granted to any other party to demonstrate that such other party could also have provided the names of identified potential members to Mr Sheikh by up to three hours after the 5.00pm expiry of the orders.

1. If such evidence is available in the reference, the Court will be assisted in exercising its ultimate discretion as to whether the orders of 8 September should be relaxed. If the orders are relaxed then not only may the 107 late applicant become members but others who may have been able to lodge applications to become a member of the Association, within the same slightly extended period.

1. I will appoint Mr McDermott in the orders below as the referee. He has indicated his consent to appointment. Under UCPR , r 20.21 he is, of course, at all times, entitled to come to the Court and seek any further directions in relation to the reference. I will be sitting as duty judge next week.

1. The Association's other challenge is to ensure order in its affairs before elections are held. This has largely been achieved by agreement. Both sides have explained their concerns about the interim administration of the Association's affairs to the Court and the Court has fashioned a series of interim restraining orders that are designed to address the parties' concerns and ensure medium term stability, particularly in the financial affairs of the Association. These various restraints are set out in the orders below.

1. The Court orders, until further order:-

(1)   that each party to these proceedings be restrained from:-

(a)   taking any step to remove the second defendant ("Mr Sheikh"), as a signatory on the two bank accounts of the fifth defendant, The Bangladesh Islamic Centre of N.S.W Inc ("the Association"), referred to in the Schedule to these orders ("the two bank accounts") and;

(b)   from interfering with Mr Sheikh's position as a signatory on the two bank accounts and;

(c)   adding any additional signatories to the said bank accounts;

such that Mr Sheikh's consent for the writing of cheques on the account will continue to be necessary.

(2)   that Mr Sheikh continue to administer the two bank accounts and be responsible for making any payment from them necessary to meet any current liability of the Association and to do so by cheque only and not in cash.

(3)   that each party to these proceedings be restrained from permitting or encouraging the collection of monies for the Association by any person other than Mr Sheikh, or a person authorised in writing by Mr Sheikh for that purpose.

(4)   that each party be restrained from obstructing, hindering or preventing Mr Sheikh from collecting moneys for the Association;

(5)   that Mr Sheikh attend at the celebration of all Muslim Holy Days at the Sefton Mosque, which is erected on the land of which the Association is the registered proprietor ("the Sefton Mosque"), for the purpose of making, and authorising the making of, collections for the Association and preventing unauthorised collections for the Association, provided he may be excused from attendance on such occasions if, by reason of medical or other similar emergencies, he is unable to do so;

(6)   that the parties acknowledge that during the operation of these orders that Mr Sheikh may suffer financial loss because of his requirement to attend the Sefton Mosque on Muslim Holy Days and that he may make a claim upon the funds of the Association in respect of that loss, which will be determined when these orders are discharged.

(7)   that Mr Sheikh report in writing on a fortnightly basis to all parties, all income and all expenditure received and made by him for the Association on the two bank accounts and to do so each fortnight, reporting on a Monday, commencing on Monday, 9 January 2011;

(8)   that Mr Sheikh acknowledges that under his administration of the collections in these orders the collections will be deposited into the ANZ account, of the two bank accounts, and the ANZ account will be first used by him for expenditure but that the Commonwealth account will be used only if the contents of the ANZ account is insufficient to meet a current liability of the Association.

(9)   that all the parties assist Mr Sheikh to prevent any persons from taking up collections at the Sefton Mosque who Mr Sheikh has not authorised to take up collections.

(10)   that, if Mr Sheikh proposes to appoint a substitute to collect monies at the Sefton Mosque, he will notify all parties of the name of that substitute collector a reasonable time before the substitute is to undertake his role and that Mr Sheikh must authorise such substitute in writing for that purpose.

(11)   that all the parties acknowledge that Mr Sheikh shall with their concurrence and co-operation during the term of these interim orders remove any donation collection boxes which are in the Sefton Mosque and which may collect monies for causes or interests other than for the Association itself, which collection boxes are not placed within the Sefton Mosque with Mr Sheikh's authority and approval.

(12)   order Mr Sheikh to remove any items in the Sefton Mosque, including donation collection boxes that are not on the Sefton Mosque premises with his approval.

(13)   that each party to these proceedings give such reasonable assistance to Mr Sheikh in carrying out order 12 as he may reasonably require of them.

(14)   order that each party who received or sends any written or electronic correspondence on behalf of the Association after the making of these orders will provide a copy of such correspondence to all other parties.

(15)   that Mr Sheikh post a copy of these orders in a prominent place or places in or near the Sefton Mosque;

(16)   Appoint Mr John Emmet McDermott, Suite 502, Level 5, 135-137 Macquarie St, Sydney NSW 2000, as a referee under UCPR , r 20.14.

(17)   The following questions are referred to Mr McDermott for enquiry and report to the Court namely:-

(a) the identity of the current members of the Association who would be entitled to vote at a general meeting of the Association; and

(b) the identity of the persons, who, if not members of the Association are nevertheless, eligible for approval as members of the Association if the Association had a functioning Executive Council.

(18)   Direct Mr McDermott to report to the Court by 10 February 2012.

(19)   Note the agreement of the parties that, Mr Sheikh:-

(a) is authorised to pay out no more than $1,500 per week from the two bank accounts referred to in the Schedule to these orders with the exception of the payments to Mr McDermott, the referee referred to in (b); and

(b) will pay Mr McDermott's invoices for the reference from the ANZ Account as and when they fall due and payable.

(20)   The fees of the referee be paid by the Association within the terms of Mr McDermott's invoices for his work as referee on the reference by Mr Sheikh from the Commonwealth bank account of the Association.

(21)   The referee may conduct the proceedings under the reference in such manner as the referee thinks fit.

(22)   Liberty to apply.

(23)   I adjourn the proceedings before me for mention at 9.30am on Thursday, 16 February 2012.

**********

Decision last updated: 20 December 2011