Khmer Buddhist Temple Association Inc v Chhet (No 4)
[2024] VSC 572
•17 September 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2021 00158
| KHMER BUDDHIST TEMPLE ASSOCIATION INC (ABN 63 990 104 294) (and others according to the Schedule attached) | Plaintiffs |
| v | |
| HOUT CHHET (and others according to the Schedule attached) | Defendants |
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JUDGE: | GARDE J |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 23-25 July 2024 |
DATE OF JUDGMENT: | 17 September 2024 |
CASE MAY BE CITED AS: | Khmer Buddhist Temple Association Inc & Ors v Chhet & Ors (No 4) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 572 |
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INCORPORATED ASSOCIATIONS – Conduct of membership audit and committee election – Which rules apply – Preparation of list of members eligible to vote – Whether an auditor is an expert – Discretion – Summons to set aside membership list audit dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A Naidu of Acrolex Pty Ltd | |
| For the First to Fifth Defendants | Mr J Sutton | SDR Law |
| For the Sixth Defendant | No appearance |
HIS HONOUR:
Introduction
On 15 August 2023, a new committee was elected to the Khmer Buddhist Temple Association Inc (ABN 63 990 104 294) (‘association’) at a special general meeting at 99 Alexander Avenue, Thomastown (‘premises’) chaired by Ms Bettina Evert, special counsel (‘chairperson’) with the assistance of an interpreter following an audit of the membership of the association conducted by Mr Timothy Sowden of counsel, (‘auditor’).
The results of the election were:
(a) Mr Visal Mom, the second plaintiff, was the only nominee for the role of President and was elected unopposed;
(b) Mr Thay Choeung was the only nominee for the role of Vice President and was elected unopposed;
(c) Mr Serei Put, the third plaintiff, was the only nominee for the position of Secretary and was elected unopposed; and
(d) Ms Saran Saing was the only nominee for the position of Treasurer and was elected unopposed.
By summons filed 10 May 2023, the first to fifth defendants (‘defendants’)[1] seek various orders of the Court, including in substance that:
[1]The sixth defendant was excused from attendance at the case conference by order made on 6 December 2021, and has not subsequently participated in the proceeding.
(a) the Court declare that the auditor failed to complete the audit of members of the association as directed by the orders of Steffensen JR (now Steffensen AsJ) dated 24 March 2022 (‘March 2022 orders’);
(b) the list of members of the association provided by the auditor to the Court on or about 10 February 2023 be set aside;
(c) the appointment of the auditor be ended;
(d) a new independent person be appointed as auditor (‘new auditor’) to audit the association’s records to identify the names and addresses of the members of the association who are entitled to vote;
(e) the new auditor meet with the principal parties to discuss the audit process and any matters that the principal parties raise relating to the audit process;
(f) the new auditor prepare a draft list of association members who are entitled to vote;
(g) the new auditor complete a new audit within three months of appointment; and
(h) the Court appoint a manager from the nominees proposed by the principal parties for an election to be conducted at a special meeting of the association, to be conducted on a date on or before two months after the appointment of the manager by the Court.
The defendants claim that some nomination forms provided to the auditor were a recent concoction and that some receipts for membership subscriptions in the receipt book were falsely prepared. They say that there were no members of the association at the time of the audit.
There is no challenge to the conduct of the election at the special general meeting or to the election process adopted by the chairperson.
Background
The dispute between the plaintiffs[2] and the defendants has a lengthy history. I will summarise some of the key events:
[2]The terms ‘plaintiffs’ is used to refer to the second to fourth plaintiffs and excludes the first plaintiff (the association).
(a) the association is an incorporated association and was formed by Buddhist members of the Cambodian community in November 2009;
(b) following fundraising, the association was able to acquire the premises which were converted from residential premises to a Buddhist shrine and chapel;
(c) as at 2020, the committee of the association consisted of:
(1)Mr Sothy Samreth, President and second defendant;
(2)Mr Visal Mom, Vice President and second plaintiff;
(3)Mr Serei Put, Secretary and third plaintiff; and
(4)Mr Maxwell Zor, Treasurer and fourth plaintiff;
(d) from March 2020, the committee received complaints about the conduct of the first defendant who was a Buddhist monk and the Abbot of the association;
(e) the complaints were serious and went to the Abbot’s adherence to his monastic vows and duties of celibacy, renunciation of property ownership and his integrity;
(f) on or about 28 October 2020, the third plaintiff called a meeting for 14 November 2020 at the premises to resolve the complaints about the Abbot;
(g) a dispute then occurred as to the future of the Abbot and the return to the association of funds that it was alleged that the Abbot had taken;
(h) the committee was deadlocked, with the second defendant of one view, and all of other members of the committee of another view;
(i) the second defendant then purported to call a general meeting for 22 November 2020 without consulting or obtaining the concurrence of the committee;
(j) at least 100 people attended the 22 November 2020 meeting, including non-members of the association;
(k) there was much commotion and anger at the meeting and police attended;
(l) on 12 December 2020, the committee met and resolved to suspend the Abbot and establish a disciplinary committee to hear the allegations about the Abbot. The meeting was not convened by the second defendant;
(m) on 3 January 2021, the committee resolved to remove the Abbot from the list of members of the association;
(n) on 27 January 2021, the proceeding was issued;
(o) on 11 February 2021, I granted an interim injunction restraining the third to fifth defendants from acting as the committee of the association, and from various other actions;[3]
(p) on 14 July 2021, following a contested hearing, I granted interlocutory injunctions restraining the first defendant from acting as the Abbot of the temple or from residing or remaining in the premises after 12 August 2021;[4] and
(q) on 17 September 2021, the Court of Appeal refused leave to appeal from this decision.[5]
[3]Khmer Buddhist Temple Association Inc & Ors v Chhet & Ors [2021] VSC 45.
[4]Khmer Buddhist Temple Association Inc & Ors v Chhet & Ors (No 2) [2021] VSC 418 (‘KBTA No 2’).
[5]Chhet v Khmer Buddhist Temple Association Inc [2021] VSCA 266.
In Khmer Buddhist Temple Association Inc & Ors v Chhet & Ors (No 2), published on 14 July 2021, I said:
Under the Act and Model Rules, the Committee would ordinarily decide the matters which I have to decide. The Committee appointed Mr Chhet as the Abbot of the temple, and has the power to remove him. However, it is deadlocked and dysfunctional. It cannot function lawfully or effectively.
It is essential for the Association to return to constitutional governance in accordance with the Act and Model Rules as soon as this is practicable. A committee election will need to be conducted after the Abbot has vacated the temple. The Association is likely to need external assistance to do so without a melee or confrontation. Court directions are likely to be needed to guide the process.
At the next election, a new committee will be elected to take charge of the affairs of the Association. It will be up to the new committee to determine who will be the Abbot of the temple. [6]
[6]KBTA No 2, [137]-[139] (citations omitted).
On 18 March 2022, Steffensen JR convened a case management conference to establish a procedure for the election of a new committee thereby permitting the members of the association to determine its future and removing the deadlock and dysfunction in the previous committee.
Following a case management conference on 18 March 2022, Steffensen JR made comprehensive orders for the conduct of a committee election (‘March 2022 orders’).
First, as to an audit of the register of members of the association, Steffensen JR ordered:
1.By 22 April 2022 the Plaintiffs and the First to Fifth Defendants (in these orders referred to as the “Principal Parties”) are to use their best endeavours, acting in good faith, to agree upon and jointly appoint an independent person to undertake an audit of the register of members of the First Plaintiff (Auditor), to ensure that it identifies the names and addresses of persons who are members of the First Plaintiff and presently entitled to vote under the Model Rules of an incorporated association. If no register of members exists, the Auditor is to prepare a list of members presently entitled to vote.
2. By dispatch prior to 25 March 2022 of the letter comprising Annexure A to this order to the Presidents of the Victorian Bar Association, CPA Australia Limited, and CA Australia and New Zealand, the Principal Parties are to request that by 8 April 2022 (or such other date as soon as possible thereafter) the bodies nominate a person to be appointed as the Auditor.
3. In the event the Auditor is not appointed by 22 April 2022, the Principal Parties shall immediately notify the Court and provide details of any nominations received, including resumes, rates and availability. The Auditor shall then be appointed by the Court.
4. By 2 May 2022 the Principal Parties provide to the Auditor such records as they may require to enable the audit to be undertaken, including a copy of this order, a copy of the Model Rules, and any documents which purport to be:
(a) applications for membership;
(b)minutes or other records of resolutions of the Committee to approve membership;
(c)financial records relating to the receipt of payment of current annual subscription fees;
(d)resignation notices received from members, or records of their death; and
(e) a register of members.
5. The Auditor may inspect the records of the First Plaintiff and Consumer Affairs Victoria for the purpose of conducting the audit.
6. Each of the Principal Parties must comply with the reasonable requests of the Auditor, including for the provision of any information or documents, including copy documents, as soon as reasonably practicable after the making of such a request.
7. All communications between any of the Principal Parties on the one hand, and the Auditor on the other, shall be in writing and copied to all of the Principal Parties.
8. The Auditor shall provide each of the Principal Parties with copies of any document which the Auditor has relied upon for the purposes of the audit.
9. Save with leave of the Court, or by agreement between the Principal Parties, no submissions shall be made to the Auditor with respect to the Auditor’s function.
10. The Auditor must complete the audit and provide a copy of the audited register or list of Members to the Principal Parties and the Court by 6 June 2022.
11. Subject to further order, the costs of the Auditor be paid by the First Plaintiff.
Then, as to the conduct of the special general meeting and election, Steffensen JR ordered:
12. By 5 August 2022, a Special General Meeting of the First Plaintiff (Meeting) be convened in accordance with the terms of this order for the purpose of electing the committee of the First Plaintiff (Election).
13.To the extent that this order conflicts with the Model Rules with respect to the conduct of the Meeting and the Election, this order takes precedence.
14. The meeting be conducted at the temple of the First Plaintiff.
15. The Election be conducted by way of secret ballot.
16. Voting at the Election by proxy be permitted.
17. The Meeting and Election shall be conducted in English and Khmer. All material distributed to members in respect of the Meeting and the Election shall be in English and Khmer, with translations prepared by a certified translator. A certified translator shall act as a translator at the Meeting.
18. Attendances at the Meeting be limited to:
(a) members of the First Plaintiff who are entitled to vote;
(b) the Manager (as defined in order 20 below);
(c)any person required for administrative purposes by the Manager; and
(d) lawyers acting for the parties.
19. The Principal Parties not engage in any conduct designed to coerce or induce a particular voting result by way of threats, inducements, or publication of defamatory material, and not cause or encourage any person to engage in such conduct.
Finally, as to the management of the special general meeting and election, Steffensen JR ordered:
20. By 22 April 2022 the Principal Parties are to use their best endeavours, acting in good faith, to agree upon and jointly appoint an independent person to manage the Meeting and the Election (Manager), and be the chairperson of the Meeting. The Manager may be the same person as the Auditor.
21. By dispatch prior to 25 March 2022 of the letter comprising Annexure A to this order to the Presidents of the Victorian Bar Association, CPA Australia Limited, and CA Australia and New Zealand, the Principal Parties are to request that by 8 April 2022 (or such other date as soon as possible thereafter) the bodies nominate a person to be appointed as the Manager.
22. In the event the Manager is not appointed by 22 April 2022 the Principal Parties shall immediately notify the Court and provide details of the nominations received, including resumes, rates and availability. The Manager shall then be appointed by the Court.
23. The Principal Parties shall provide a copy of this order to the Manager upon their appointment.
24. The Manager shall attend to such matters as are required for the orderly conduct of the Meeting and the Election as soon as practicable, including:
(a) calling for nominations for committee positions;
(b)convening of the Meeting on 14 days’ notice, including the provision to the members of brief biographical information of the persons who have nominated for election to the committee of the First Plaintiff, proxy forms, and such other information as is required;
(c)appointment of a Khmer translator certified to the highest available National Accreditor Translators and Interpreters level;
(d)preparation of an agenda and scripts for the conduct of the Meeting;
(e)addressing security at the Meeting and restricting admission to all persons other than those persons identified in order 18 above;
(f)appointment of returning officer;
(g)ballot procedure, including preparation of the ballot papers, conduct of the secret ballot, manner of verification of proxy votes;
(h)declaration of results of the Election; and
(i)drawing of minutes of the Meeting.
25. Each of the Principal Parties must comply with the reasonable requests of the Manager, including for the provision of any information or documents including copy documents, as soon as reasonably practicable after the making of such a request.
26. All communications between any of the Principal Parties on the one hand, and the Manager on the other shall be in writing and copied to each of the Principal Parties.
27. Subject to further order, the costs of the Manager be met by the First Plaintiff.
Orders made later in 2022 extended the time limits imposed in the March 2022 orders, to assist with the appointment and work of the auditor and the completion of the auditor’s preliminary and final reports.
On 10 February 2023, the auditor provided the audited list of members to the Court, having provided it to the parties on 30 January 2023. The defendants challenge the audited list of members.
The special general meeting was conducted under the direction of the chairperson who was the manager appointed under the March 2022 orders. It was held at the premises.
Election result
The committee election gave rise to a decisive result. The second defendant who was the previous President did not seek re-election. The second plaintiff who was the previous Vice President was elected as the new President. The third plaintiff who was the previous Secretary was re-elected. A new Vice President and a new Treasurer were elected. All candidates were elected unopposed in the presence of 73 members of the association, supported by 45 proxy votes. The previous deadlock and dysfunction that had existed in the committee was swept away by the election.
Evidence
In challenging the membership audit conducted by the auditor, the defendants called the auditor to give viva voce evidence, and relied on the affidavits and evidence of Mr Rim Loch, Mr Thou Koy, Mr Keat Te and Ms Channy Koy. All of these witnesses other than the auditor required the assistance of a Khmer interpreter and were cross-examined. The defendants also relied on the affidavit and exhibits of Mr Robert Sdraulig, their solicitor.
The plaintiffs relied on the affidavits and evidence of Mr Serei Put, the third plaintiff. He was cross-examined.
Evidence of Timothy Sowden
Mr Sowden is a practising barrister, and was retained by the parties under the March 2022 orders to conduct an audit of the register of members of the association. In July 2022, he commenced the audit by applying to Consumer Affairs Victoria (‘CAV’) for a copy of all of the documents filed by the association.
In a memorandum to the parties dated 30 January 2023, the auditor described what he did in these terms:
I have based my findings on the following assumptions:
1.…
2.I sought production of documents filed with Consumer Affairs Victoria (“CAV”) in July 2022. The documents provided by CAV show that (contrary to the position taken before Garde J and the Court of Appeal) the association is governed by its own rules (as opposed to the model rules) which I shall refer to as the Constitution. The Constitution governs the Cambodian Buddhist Association of Northern Victoria. According to the minutes of the AGM for 2009/10 the association registered a change of name with CAV on 30 December 2009. From the material it appears that the association has not formally adopted the model rules and accordingly (subject to what is noted below) I have based the membership criteria on the Constitution.
3.There are no records of the election of the committee under either the Constitution or the model rules.
4.As noted above I am mindful that the effect of the decisions of Garde J and the Court of Appeal was to restore on an interim basis the committee that had been in place immediately before the meeting of 22 November 2020. Serei Put is accordingly the secretary of the association. Under Rule 5 of the Constitution he is required to keep and maintain a register of members. He appears to have done so (albeit not strictly in conformity with the Act or the Constitution) and I have proceeded on the basis that this is a bona fide list of members.
5.The Constitution provides that to become a member a person must:
(a) Be nominated;
(b) Be Approved by the committee
(c) Pay the first year’s annual subscription
6.A person becomes a member upon being entered on the register of members pursuant to rule 7. The plaintiffs have provided me with:
Signed Nominations forms
A register of membersReceipts for subscriptions
7.I accept that the register of members does not strictly comply with the act or the rules. However, I do not see why this should act to the detriment of the members who have paid their subscriptions, noting that the non compliance does not appear to have perpetrated any prejudice or injustice. The plaintiffs issued proceedings in January 2021 and I think it proper to ignore the non payment of subscriptions beyond 2020 given the dispute over control of the organisation.
8.I note that there are arguments raised as to the bona fides of the documents with which I have been provided. I am not in a position (nor is it my role) to make forensic determinations based on such allegations. However, for the record I have carefully scrutinised the receipts for subscriptions and have been unable to find any anomalies that would indicate fraud or recent invention.
9.The lynchpin when it comes to membership then is the registration of a person’s name on the register of members and the payment of subscriptions. I have compiled a list of members accordingly.
In evidence, Mr Sowden said that he accepted that the documents received from CAV were the operative documents. The 2009 constitution had primacy over the model rules.[7] The 2009 constitution was slightly more flexible about membership of the association. He said that if a person’s name had been entered in the register of members and approved by the committee, and if subscriptions had been paid, the person was a member. Mr Sowden produced a copy of the 2009 constitution which he had obtained from CAV.
[7]Associations Incorporation Reform Regulations 2012 (Vic) sch 4.
Mr Sowden prepared a list of members of the association which listed 135 persons and stated their addresses. He said that the plaintiffs provided him with a list of members that contained 168 names, while the defendants provided a list containing 306 names. The list of 306 names stated that they all became members in 2020. He did not accept that the list was a list of members.
He said that he took the view that it would be an unfortunate result if there were no members of the association. If a list of members could be salvaged, that would be in the best interests of the association. He said that his conclusion was that there had been members, and that he was satisfied that the names in a schedule attached to his reasons were the members of the association. He said that he was shown only one register, and while it didn’t comply strictly with the Associations Incorporation Reform Act 2012 (Vic) (‘Act’), he thought that it complied with it sufficiently as to pass muster.
Mr Sowden said that he looked to see if a person had lawfully applied to become a member, and continued to pay their annual fee or subscription under the relevant rules. He said that he went scrupulously through hundreds and hundreds of nominations placing the names in a schedule. He said that he was not given any particulars as to how the nomination forms were in any way a recent concoction or invention. He said that he formed the view that this allegation was a red herring. The defendants did not give him any details or particulars of any fraudulent activity at all.
Mr Sowden said that he was given copies of a receipt book which was voluminous. He said that the receipts and the receipt book looked genuine to him.
Mr Sowden said that he was advised of some members who had died. Their names were removed from the register.
Mr Sowden said that he was unable to find anything to indicate that any rules had replaced the 2009 constitution. This would require a special resolution.[8] Neither the plaintiffs nor defendants knew about the 2009 constitution.
[8]See Associations Incorporation Reform Act 2012 (Vic) s 50.
Mr Sowden agreed that rules 4(1) and 4(2) of the 2009 constitution provided for an entrance fee of $1, and an annual fee of $4 payable on 1 July every year. He agreed that there were many receipts which had amounts of $10 or $15. He did not accept that this suggested that the receipts were bogus or alerted him to fraudulent activity. It did not alert him in any way to a fraud. It was not uncommon for a committee of management to determine subscriptions and to levy them from the members. He said that this is what had happened here. He did not believe that the receipts were bogus.
Mr Sowden obtained from CAV the returns filed by the association in the 2011, 2012, and 2014-2017 years. He said that he treated 2020 as the cut off year when subscriptions had to be paid.
Mr Sowden agreed that while there was no register of members that strictly complied with the Act or model rules there was a register which was in substantial compliance. He was not unfamiliar with the Act, and did not think that he had ever come across a register that was fully compliant.
Mr Sowden said that he was particularly mindful of subscriptions being up to date, that the names were on the register and that there were nomination forms. He said that he alerted both parties to his final findings and to his chain of reasoning.
Receipts for membership payments
Four persons gave evidence that they had not paid membership fees as recorded by receipts in the receipt book. When shown receipts for purported payments made by them, they said that the receipts were false.
In an affidavit filed on 3 August 2023, Mr Rim Loch, a forklift operator, said that he had understood himself to be a member of the association from about 2020. He said that the receipts for $10 payments dated 13 January 2017, 9 January 2019 and 21 June 2020 were bogus. In cross-examination, he said that he was overseas in Sri Lanka on 13 January 2017, and that he paid his 2020 subscription on 19 July 2020.
In an affidavit also filed on 3 August 2023, Mr Thou Koy, retired, said that receipts of $10 each purporting to be receipts for membership fees made on 10 January 2017, 9 January 2019 and 12 July 2020 were false. He was not a member of the association in 2017, 2018 or 2019. In cross-examination, he said that he did pay a membership fee of $5 on 17 April 2020 to a committee member.
Mr Keat Te, the third defendant, retired, deposed in an affidavit also filed on 3 August 2023 that he understood himself to be a member and committee member of the association from about 2020 to at least 2021. He said that he did not make payments of $10 each for membership fees on 13 January 2017, 9 January 2019 and 12 July 2020 as shown on receipts. He said that he was not a member of the association in 2017, 2018 or 2019 and that the receipts for those years were bogus. In re-examination, he said that he did not make the payments and could not identify the signature on the receipts.
Ms Channy Koy, healthcare worker, deposed in an affidavit also filed on 3 August 2023 that she did not make the payments of $10 for membership fees shown in receipts dated 10 January 2017, 9 January 2019 and 12 July 2020 and did not receive an original or copy of the receipts. In cross-examination, she said that she had attended the temple since mid-2013, and had not paid membership subscriptions.
Evidence of Sothy Samreth
Mr Sothy Samreth, process worker and the second defendant, deposed to affidavits filed on 19 December 2022 and 3 August 2023. In his first affidavit, he said that he was one of the original group of people who founded the association. He had performed the functions of a committee member of the association since it was incorporated on 30 November 2009. He said that it had become apparent to him that the processes and statutory records and returns of the association had been incomplete and on many matters irregular.
Mr Samreth said that no annual subscription or joining fee was ever formally approved by the committee of the association and that the practice of allowing people to vote was ad hoc and variable. The amount of fees requested varied from time to time at the whim of those who collected money. Fees of $5, $10 and $15 were sought. He said that there did not appear to be any consistent payment each year of an annual subscription by all purported members. He said that a practice appeared to develop where interested parties would pay a fee to enable them to vote ad hoc at informally called general meetings with the fee being extracted immediately or shortly prior to the meeting.
Mr Samreth said that at a meeting on or about April 2013, Mr Put acknowledged that the association did not have a list of members as at that point and had not yet set up a membership fee structure. Mr Put said that a membership fee structure would be set up.
Mr Samreth said that at a meeting held in or about November 2017, Mr Zor, the fourth plaintiff, said that the association did not have an application form. He said that the first defendant was able to print out the current application form.
In his second affidavit, Mr Samreth said that he did not make payments of $10 for membership fees on 7 January 2017, 5 January 2019 or 12 July 2020 as shown in receipts of those dates. He said that the receipts appeared to be in the handwriting of the second plaintiff, Mr Mom, the Vice President.
Evidence of Robert Sdraulig
Robert Sdraulig, solicitor for the first to fifth defendants, deposed to affidavits filed on 10 May 2023, 3 August 2023 and two on 4 August 2023.
In his first affidavit, Mr Sdraulig said that after the making of the March 2022 orders, the defendants provided the auditor and the plaintiffs with the documents in their possession relating to membership. The plaintiffs provided the auditor and the defendants with their documents relating to membership. On 17 June 2022, a Zoom meeting was conducted between the auditor and the lawyers for the parties to discuss a preliminary spreadsheet that the auditor had prepared and the steps that needed to be taken before the auditor issued a final list or report.
In his second affidavit, Mr Sdraulig referred to the receipts issued for membership fees. He said there were no deposits recorded in the association’s bank statement that appeared to correspond to the total of monies recorded in the receipts. There were cash deposits of $2,745 on 20 January 2020 and of $1,000 on 24 February 2020. As at 24 February 2020, only $75 was recorded in the receipts for membership fees in the calendar year 2020 up to and including that date. There was a deposit into the association’s bank account on 27 May 2020 of $500 which is described in a bank statement as ‘Mumba money’.
In his third affidavit, Mr Sdraulig said that the documents provided by the plaintiffs to the defendants under cover of a letter dated 9 May 2022, and previously provided to the auditor, did not appear to include any financial records relating to the receipt of payment of current annual subscription fees, resignation notices received from members, records of their death or any document which complied with the model rules as a register of members.
In his fourth affidavit, Mr Sdraulig observed that it was apparent from the auditor’s memorandum dated 30 January 2023 that the auditor had relied on the receipts for subscriptions and annual membership payments and the plaintiffs’ list of members in compiling his own list of members.
Evidence of Serei Put
Mr Put, a tram driver and the third plaintiff, provided the auditor with an affidavit deposed on 14 September 2022, which was exhibited to Mr Sdraulig’s first affidavit. He also deposed to affidavits filed on 9 March 2023, 2 May 2023, 9 May 2023 and 25 September 2023.
In his first affidavit, Mr Put said that he was the Secretary of the association and a founding member when it was formed on 30 November 2009. He said that he had been a committee member of the association since its establishment, and was formerly its Public Officer registered with CAV. He said he had lodged returns with CAV on that basis. He said that on the establishment of the association it was the practice to levy an application fee of $15 for new members, and $10 for annual membership. These fees were adopted by the committee by resolution on 10 March 2013. A new form of membership application was adopted by the committee at the same meeting.
In his second affidavit, Mr Put said that between May 2022 and January 2023, the parties’ lawyers conferred with Mr Sowden and provided documents in accordance with the March 2022 orders. Mr Sowden prepared an initial and provisional list of members requesting additional information on some members listed in the association’s register of members.
In his fifth affidavit, Mr Put stated that he attended the special general meeting on 15 August 2023. The elections were organised and managed by the chairperson. He said that the manager took steps to ensure that only eligible members whose names appeared on the list of members audited by Mr Sowden were allowed into the premises. The manager required members to produce their photo identification with evidence of residential addresses to check their name off against the list of members provided by the auditor. Mr Put said that the election process concluded successfully.
Mr Put said that a list of 306 persons provided by the defendants to the auditor of persons purportedly admitted to membership in 2020 included persons living in South Australia as well as persons named Edward Jalenzuela, Lalitha Wimalaratna and Maggie Nguyen. He said that to his knowledge as a founding member of the association, it had never had a non-Cambodian member. Mr Put said that he did not see the defendants’ list until after it was provided to the auditor on 9 May 2022 along with 152 purported applications for memberships in a form that he said was not authorised or in use by the association. The list was not a list of association members.
Mr Put said that the statement by Mr Samreth in his evidence, that there were ad hoc payments by members at meetings to allow them to vote, was incorrect. He said that while Mr Samreth had been a longstanding member of the association, he had not assumed a significant role until he became Vice President in 2017, later being elected as President.
Mr Put said that as the association’s Public Officer or Secretary, he had nearly always been in possession of the association’s documents, while Mr Zor, the Treasurer, also had possession of the association’s receipts and financial documents. He said that many of the association’s documents had gone missing during an occupation of the premises by the defendants. He said that he had been careful to try and ensure the preservation of the association’s documents and records.
Mr Put said that many of the association’s members were related and were members of each other’s extended families. He said that many members would pay the subscriptions for other family members. He said that he would then issue a receipt for the members notwithstanding that they were not present.
Mr Put said that the receipts provided for payment of subscriptions for Mr Rim Loch, Ms Channy Koy, Mr Keat Te and Mr Thou Koy were genuine records of payments for subscriptions.
Mr Put said that the association’s annual membership subscription was only $10. He said that the association would only receive several hundred dollars in subscriptions per year and a few hundred dollars more in joining fees. These fees were not the principal source of the association’s income. Monies received into the temple would ordinarily be banked unless there were expenses to be met.
Mr Put said that he had always attempted to discharge his duties and responsibilities as Secretary to the best of his ability. He confirmed, in providing documents to the auditor, that the existing records of the association accurately described its affairs and its membership as a small Cambodian Buddhist temple servicing the community in the northern suburbs of Victoria.
In oral evidence, Mr Put said that the 2009 constitution was in use from 13 November 2009 until late 2012 when the model rules were adopted. He said that he acted as the Public Officer of the association from 2009 until 2012 when his role changed to Secretary. The model rules had been used ever since.
He said that in 2012 the model rules were shown to the committee. There was no other formal process. He did not lodge new rules with CAV. He did not seek legal assistance. The association was a small community and the work was voluntary.
Mr Put said that as Public Officer he lodged reports with CAV from 2010. He said that the association had membership application forms rather than nomination forms. Mr Put said that the fee payable at the beginning of the association was a $5 entrance fee and a $10 annual fee giving a total of $15 for new members. There was never a fee of $4.
Mr Put said that CAV sent out a copy of the model rules to the association. He produced a letter dated October 2012 from CAV addressed to the Public Officer of the association, which said in part:
The Associations Incorporation Act 1981 is being replaced by the Associations Incorporation Reform Act 2012, which comes into effect on 26 November 2012. The new Act includes changes that will affect how your incorporated association operates and specifically, your obligations as a public officer.
A summary of the changes – which include associations being able to keep records in a language other than English, and to make better use of technology at meetings – is attached to this letter.
The summary attached to the letter stated in part:
Associations using their own rules
If an association uses its own rules (that is, not the model rules), these continue to be valid, but once members decide to make any changes, the rules must also address every item required in Schedule 1. In the meantime, if there is an inconsistency between the association’s existing rules and the new Act, the requirements of the new Act apply.
Associations using model rules
Those associations should review the new model rules to determine if they are suitable for their purposes. If these associations do not notify Consumer Affairs Victoria about their rules within 12 months of the new laws commencing, their current rules will automatically be replaced with the new model rules.
…
The new model rules address all items the new Act requires to be included in the rules.
…
An association’s rules (whether their own or model rules) must address all items required under Schedule 1. If they do not, the relevant provision of the new model rules addressing that item is deemed to be included in the rules.
Mr Put acknowledged that in the year ended 30 June 2017, the association had 25 members and 39 membership receipts between 7 January 2017 and 30 June 2017. He said that he could not recall why this was so but it may have been because there were new members. At a meeting of the committee on 19 November 2017, 28 new members of the association were confirmed. Mr Put said that after 2017 there was no need to lodge statements with CAV. They were sent to the Australian Charities and Not-for-profits Commission (‘ACNC’) instead. The number of members was normally included in the return statements to ACNC.
The defendants’ submissions
The defendants made written submissions dated 15 August 2024 (‘closing submissions’) and written submissions in reply dated 26 August 2024 (‘reply submissions’).
The main points made in the closing submissions were:
(a) the 2009 constitution contained the applicable rules because the model rules had never been adopted and registered with CAV;
(b) the list of members prepared by the auditor was not strictly or in substance the list that he was required to produce under the March 2022 orders;
(c) the auditor did not make sufficient inquiry or findings as to who the members are or whether any members’ memberships had ceased;
(d) the auditor did not make sufficient inquiry as to the validity or genuineness of the application or nomination forms;
(e) the auditor failed to cross-check the alleged receipts he received from the plaintiffs against bank records;
(f) the auditor considered it part of his task to consider evidence that there were members rather than find that there were no members;
(g) the evidence of Mr Put should not be accepted unless supported by independent or reliable evidence, or where advanced contrary to interest;
(h) only Mr Put gave evidence on behalf of the plaintiffs; and
(i) the evidence of the defendants’ witnesses as to receipts should be accepted.
The main points additionally made in the reply submissions were:
(a) there was no evidence of any new rules being lawfully adopted or lodged for registration with CAV;
(b) it is likely that the association’s logo was added to a copy of the model rules;
(c) there are differences between the requirements of rule 3(7) of the 2009 constitution and rule 11 of the model rules concerning new membership;
(d) the list of members prepared by the auditor was not a list of members entitled to vote under the 2009 constitution or the model rules;
(e) the auditor had no authority to ignore the non-payment of subscriptions after 2020, and prejudged the matter;
(f) there was no express engagement of the auditor as an expert in law, or as a judicial officer;
(g) the parties did not agree to be finally bound by the auditor’s decision; and
(h) the Court has power of supervision and review of the auditor’s determination.
The association
The association is a small voluntary association of members who gather together to practise Buddhism as their common religion. The members are Cambodian or Khmer. Most and nearly all do not speak English, or only marginally so. The office bearers are all voluntary, and maintain records in their spare time. They have no training for their various roles and act in those capacities to support the association.
The association should be approached with forbearance and understanding, and not with linguistic pedantics or legal niceties. The purpose of the election was to restore governance to the association according to the will of the members, as the previous committee was deadlocked because of a continuing division between the President and other members of the committee. It was unable to operate effectively.
The membership audit
The auditor was retained by the parties to undertake an audit of the register of members of the association in order to identify the names and addresses of the members of the association who were presently entitled to vote under the model rules of an incorporated association. If no register of members existed, the auditor was to prepare a list of members entitled to vote.
The auditor is a practising barrister independent of the parties. He was chosen by the parties because of his independence, legal experience and expertise concerning incorporated associations.
I accept the auditor’s evidence and his findings.
It is plain that the auditor commenced his task appropriately by making searches of the association’s records at CAV. It was the auditor who first identified that the 2009 constitution applied to the association, and not the model rules as all parties, and as a result the Court, had previously understood was the position. The auditor also obtained copies of, and reviewed, the previous annual returns of the association.
The auditor conducted the audit of members on the correct basis that the 2009 constitution was the operative document. He was aware of the relatively minor differences between rule 3 of the 2009 constitution that applied to new memberships, and rules 9-11 of the model rules which were the equivalent rules. He considered the 2009 constitution to be slightly more flexible in this regard than the model rules.
In preparing the list of members entitled to vote, the auditor received appropriate documentation from the parties and consulted with their legal advisers.
It is plain from the auditor’s evidence and the course of events that the auditor applied caution and care to the completion of his task. He reviewed and considered whether each person suggested to be member of the association satisfied the membership criteria set out in the 2009 constitution. He rejected entirely the defendants’ list containing 306 persons said to have become members in 2020. He examined individually the 168 persons in the list provided by the plaintiffs, ultimately reducing the list of names and addresses to 135 persons who he considered were members entitled to vote.
I accept the auditor’s evidence that he went through many hundreds of nominations, receipts, resolutions and documents, and acted scrupulously in preparing his schedule of names. I find that he ensured that the requirements of the 2009 constitution as they relate to new memberships were observed.
It is notable that Mr Sowden did not include Mr Loch, Mr Koy, Mr Te or Ms Koy in his list of members entitled to vote at the special general meeting. They were not permitted to attend the special general meeting or vote in the election.
Mr Sowden was plainly correct when he took the view that he had to go back to the 2020 year to determine who the members of the association were. In subsequent years, the committee had been deadlocked and fallen into dysfunction. A conclusion that there were no members of the association would have been an absurd result and would have achieved nothing. It would have been necessary for another membership audit to have been conducted.
Mr Sowden was also correct when he took steps to confirm whether each person had applied to become a member, been approved by the committee at the time, recorded in the memberships register or records of the committee, and continued to pay their annual fee or subscription to the association. He was alert for deaths and resignations.
It is significant that Mr Sowden looked through hundreds of records and documents, including the receipt book, and came to the conclusion that the allegations of recent concoction and invention made by the defendants were without foundation and were a red herring. The auditor is an independent expert and has examined the books and records of the association more comprehensively than anyone else. I accept his conclusions.
Mr Sowden also examined the receipt book, concluding that it looked genuine to him. Again I accept his conclusions, supported as they are by Mr Put’s evidence. Mr Put gave evidence that the receipts in the receipt book were valid and that it was common for family members or members of extended families to pay for each other. Sometimes receipts were issued in the absence of the person. It is possible too that receipts were written out in the expectation of payment but that payment did not eventuate; or that one or more of the defendants’ witnesses were mistaken as to whether they or someone else on their behalf made payment in years gone by.
In any event, the evidence given by the defendants’ witnesses as to payments and receipts does not affect the results of the election. None of Mr Loch, Mr Koy, Mr Te or Ms Koy were accepted by the auditor as members of the association. None were entitled to attend or stand for election at the special general meeting. None gave evidence that they sought to.
I accept Mr Put’s evidence that the amount of money received by the association from membership and joining fees is low and that the association is not dependent on these fees for revenue. There is no evidence that the association routinely banks membership and joining fees upon receipt. Rather, the practice of the association is to use cash on hand to meet expenditure first and to bank cash only if there are funds available after expenditure is met.
I accept that the minutes, books and registers of the association were not in pristine condition at the time of the audit. There would be very few (if any) small incorporated associations supported by volunteers where this could be said to be the case. The first language of the members of the association is Khmer, which is based on a different script to English. It is not easy or possible for many association members to understand written or spoken English. In addition to these matters, the association has experienced a period of committee deadlock and dysfunction when it could not operate effectively. It is very difficult for office bearers to maintain accurate, up-to-date records in such circumstances.
Did the auditor perform his task?
The auditor departed from the March 2022 orders in one respect. He identified that the 2009 constitution applied to the association and not the model rules. He applied the membership requirements in the 2009 constitution, and not those in the model rules. He was correct to do so. The model rules did not apply to the association.
In all other respects, I find that the auditor complied with the requirements of the March 2022 orders. Whether or not the list of names and documents provided to him is treated as the register of members, it is plain that the auditor undertook the necessary searches and audit work to identify the names and addresses of persons who are members of the association and presently entitled to vote, and to prepare a list of members presently entitled to vote.
I find that the auditor undertook and completed the duties required of him under the March 2022 orders with the 2009 constitution correctly substituted for the model rules.
Limitation of time and cost
The auditor said that the association was paying for his time. The subscriptions were for relatively modest amounts. They were entered chronologically and as payments were made. There were no anomalies that would indicate fraud or recent invention. He considered that individual enquiries of the persons named in receipts as to whether they had paid the money would be prohibitively expensive. There were many people who would have to be interviewed.
In my view, the inquiries undertaken by the auditor were appropriate and reasonable, particularly given that there was no indication of fraud or that the documentation had been concocted.
Is the auditor an expert?
The plaintiffs submitted that the only basis on which the expert determination of Mr Sowden could be reviewed on the ground of error was according to whether the determination answered the contractual description which the expert was required to determine. The plaintiffs relied on the well-known decision of Legal and General Life of Australia Ltd v A Hudson Pty Ltd, a case involving a valuer, where McHugh JA said:
By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision.[9]
[9](1985) 1 NSWLR 314, 335.
In AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd, the Court of Appeal said:
I agree with the judge that the question of whether it is open to review an expert determination on the ground of error is in the first place to be decided according to whether the determination answers the contractual description of what the expert was required to determine. I also agree with the judge that the question of whether an error in determination deprives the determination of compliance with the contractual description of what the expert was required to determine is in the first place to be answered according to whether the error occurred in respect of a task which the contract entrusted to the expert. As Mason, P. explained in Holt v Cox, although mistake is not itself a ground for vitiation of a final and binding expert determination, a mistake may still be of such a nature that the resultant determination is beyond the realm of contractual contemplation – beyond anything which the parties may be supposed to have intended to be final and binding – and therefore susceptible to review.
The situation is analogous to that which faces a court in a cases of judicial review of administrative error. Just as an administrative decision maker has an area within which he or she may make mistakes without relevant consequence, so too an expert appointed under contract has an area within which the contract contemplates that he or she may make mistakes without relevant consequence. Similarly, just as there are some administrative mistakes which amount to jurisdictional error, and so expose a decision to judicial review, those appointed under contracts to make determinations may make errors which are beyond the area of tolerance which it is to be supposed the contract had in view.[10]
[10][2006] VSCA 173, [51]-[52] (Nettle JA; Maxwell P and Bongiorno AJA agreeing) (citations omitted).
In the present case, I am satisfied that the auditor performed his function and task under the March 2022 orders, as he was retained to do, and that no error by the auditor has been shown. There is no need to consider the effect of the authorities which admit that in limited circumstances, errors by an expert in the course of an expert determination may be open for review by a court if it can be said that the determination does not answer the contractual description.
2009 constitution
Since 2012, Mr Put and the committee of the association have understood that the model rules had replaced the 2009 constitution. Until the auditor searched CAV’s file and discovered that the 2009 constitution had not been superseded, it was the understanding of all parties to this proceeding that the model rules were the operative rules.
Mr Put’s evidence was that he understood that the 2012 model rules had replaced the 2009 constitution based on his understanding of the 2012 correspondence from CAV. The correspondence is legalistic in expression and not easy to understand. It is not surprising that a person whose primary language is Khmer and who required an interpreter to give evidence would misunderstand the purport of the correspondence, especially in the absence of legal advice.
As I have said, the misunderstanding was corrected by the auditor.
Identity and eligibility checks
The audit process did not stand alone. In order to gain access to the special general meeting, additional screening was undertaken. Members were required to produce photographic identification with residential address to the chairperson in order to gain access to the room where the special general meeting was to take place.
Would a fresh audit achieve anything?
I am of the view that the auditor did everything reasonably possible to undertake the audit and provide a list of names and addresses of persons eligible to vote at the special general meeting. If the audit were undertaken again, I consider it highly likely that it would arrive at the same or a very similar result. The election result would be unchanged.
I consider that no useful purpose would be achieved by the conduct of a second audit at significant expense to the association or the parties.
Conclusion
The election gave a strong mandate to the new committee to perform its role. No candidate stood for election against any member of the new committee. No vote was cast against the new committee. The new committee does not suffer from the deadlock and dysfunction of the former committee. It is able to work effectively. Its work for the association should not be subject to a cloud of uncertainty as to the validity of its election.
To set aside the audit and election now would have a most unsettling effect on the association and its members. It is a course that I would follow only with great reluctance. It would not advance the purposes of the association. For the reasons that I have given it is not appropriate to do so.
It follows that the summons must be dismissed.
SCHEDULE OF PARTIES
S ECI 2021 00158
BETWEEN:
KHMER BUDDHIST TEMPLE ASSOCIATION INC First Plaintiff
(ABN 63 990 104 294)
VISAL MOM Second Plaintiff
SEREI PUT Third Plaintiff
MAXWELL ZOR Fourth Plaintiff
-and-
HOUT CHHET First Defendant
SOTHY SAMRETH Second Defendant
KEAT A TE Third Defendant
SONN TOP KIM Fourth Defendant
DARARATH UCH Fifth Defendant
DARO YOM Sixth Defendant
0
5
0