Raja v DARUL-IMAN (WA) Incorporated - [2011] WASCA 79

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: RAJA -v- DARUL-IMAN (WA) INCORPORATED [2011] WASCA 79

CORAM: PULLIN JA
HALL J

HEARD: 10 MARCH 2011

DELIVERED : 10 MARCH 2011

PUBLISHED : 8 APRIL 2011

FILE NO/S: CACV 120 of 2010

BETWEEN: FAYYAZ AHMAD RAJA
Appellant
AND
DARUL-IMAN (WA) INCORPORATED
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MASTER SANDERSON
Citation  :DARUL-IMAN (WA) INCORPORATED -v- RAJA [2010] WASC 299
File No  :CIV 1241 of 2005

Catchwords:

Practice and procedure - Application to join and substitute party - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Appellant:     Mr R J Nash
Respondent:     No appearance
Intervener:     Mr R G S Harrison for Mr Abdullah Ahmad Saaid

Solicitors:

Appellant:     Arns & Associates
Respondent:     Tottle Partners
Intervener:     Tottle Partners

Case(s) referred to in judgment(s):

Nil

REASONS OF THE COURT: An application was made by Abdullah Ahmad Saaid, who is not a party to the proceedings. He sought an order that he be joined as a party to the appeal to act as an intervener on behalf of the respondent. At the conclusion of the hearing the court ordered that the application be dismissed. These are the reasons for making that order.
The background is as follows. The respondent (the association) sought specific performance of a contract whereby the appellant (Mr Raja) had agreed to sell land to the association. At the time Mr Raja entered into the contract, he was a member of the association and a Mr Ahmed was his brother. Mr Ahmed claimed that he was the president of the association pursuant to a resolution passed at an annual general meeting on 3 October 2004. He claimed that the association was controlled by persons elected at that meeting. That group (the Ahmed group) includes the appellant.
This group was and is opposed by a group associated with a Mr Omar and Mr Abdullah (the Omar group). The Omar group maintains that the association is controlled by persons who were elected at a general meeting on 10 October 2004. Members of the Omar group who claim to be the office bearers of the association entered into a retainer agreement with Tottle Partners on behalf of the association and instructed Tottle Partners to commence proceedings against Mr Raja for specific performance, which they did.
Mr Raja applied for an order from Master Sanderson striking out or staying the proceedings on the basis that the proceedings were in effect, an abuse of process, because the persons instructing the association's lawyers were not office holders of the association and, therefore, had no authority to instruct Tottle Partners to conduct the proceedings or to issue process.
The master in his reasons for decision said that:
A party challenging a retainer has the onus of establishing on the evidence a lack of authority. That means in this case, the defendant must produce sufficient evidence to negative the proposition that the plaintiff's solicitors have authority. Once the evidence establishes that proposition, then an evidentiary onus shifts to the plaintiff (at [8]).
The master went on to say at [9] that:
It is important to note what is attacked in this application is the contractual arrangement between the plaintiff and its solicitors. The defendant is not a party to that contract. What the defendant is attacking is the legal capacity of one party - the plaintiff - to enter into a binding agreement. If, for whatever reason, there exists a valid contract which presently binds both the plaintiff and its solicitors, then the defendant's challenge must fail.
The master in his reasons referred to s 15(1) of the Associations Incorporation Act 1981 (WA) which provides that a contract made with an incorporated association is not invalid by reason of any deficiency in the legal capacity of the association to enter into or carry out the contract unless the person contracting with the association had actual notice of the deficiency. Section 15(3) provided that the section 'does not prejudice an action by a member of an incorporated association to restrain the association from entering into a transaction that lies beyond the powers conferred on the association by this Act or its rules'.
The master then said at [12]:
The thrust of the defendant's argument is that those purporting to act on behalf of the plaintiff do not have proper authority. In other words, there is a deficiency in the legal capacity of the plaintiff association to enter into the retainer agreement with its solicitors. This would seem to be covered by s 15(1) of the Act. There is no evidence the solicitors purportedly acting for the plaintiff had any notice of the deficiency of the legal capacity of the Association at the time they entered into the retainer agreement.
Mr Raja's position was that s 15 did not deal with the situation because it did 'not overcome the circumstance where the contract entered into was not the contract of the Association as distinct from a circumstance where the contract is made by the Association albeit beyond its constitutional power' (at [15]). That submission was rejected. The master held at [26]:
[T]he plaintiff and its solicitors have now entered into a contractual arrangement in circumstances where, on the evidence, the solicitors did not have any actual notice of the want of authority of the office holders with whom they were dealing. That being the case, there is no basis upon which the retainer can be impinged and no grounds for staying the proceedings.
Mr Raja in this appeal alleges this reasoning reveals error. It is not necessary or appropriate to make any comment about the merits of the appeal. The master said at [27]:
That conclusion makes it unnecessary to determine whether or not the Omar Group may properly be regarded as the office holders of the plaintiff.
Notwithstanding the above statement, the master then continued in his reasons for decision at [27]:
But because extensive evidence was led on this issue and the deponents were cross-examined on their affidavits, and because a determination of the question may be relevant in other proceedings, I will deal with this issue.
The proceedings before the master developed in a surprising fashion. The de facto protagonists became the Ahmed group and each group contended, in effect, that the master should make findings about the validity of the election of office bearers of the association. These contentions were advanced without the parties or the master seeming to appreciate that if the dispute between the Omar group and the Ahmed group was to be determined, then all persons likely to be affected by the findings of fact should have been joined as parties to the proceedings. The logical way to resolve this dispute would have been either for a counterclaim to be instituted by Mr Raja, or alternatively, separate proceedings commenced by Mr Raja or the Ahmed group, seeking a declaration as to the office holders. That would have required the joinder of all parties who might be affected. That course was not followed.
The master then made findings of fact at [37] as follows:
I accept neither Mr Ahmed nor the defendant were given notice of the alleged annual general meeting held on 10 October 2004. That being so, the meeting was not properly called and any decisions taken at that meeting were invalid. For the purposes of this application, that is the end of the matter. In my view, it is clear Mr Omar and the present committee do not have the authority to act on behalf of the plaintiff.
The master then added some obiter at [38]:
That conclusion leaves the plaintiff's present solicitors in a difficult position. They now have actual knowledge of the lack of authority of the individuals purporting to instruct them on behalf of the Association. At the same time, they have a retainer which requires them to represent the plaintiff's interests in this litigation and entitles them to payment for their services. Accordingly, while I would not stay these proceedings on the present application, there is, I think, a real question as to how the matter should proceed hereafter.
Mr Raja subsequently instituted his appeal against the master's decision. At the moment, the respondent's answer has not been filed. It is not beyond the bounds of possibility that the respondent will contend that the master erred in making findings affecting the interests of parties who were not joined to the proceedings.
Mr Saaid, who is clearly sympathetic to the Omar group's wish to seek specific performance, makes his application to be joined as a party. Counsel appearing for Mr Saaid, frankly admitted that this was prompted by the concern of Tottle Partners about its position following the master's obiter (and with respect unnecessary) comments in [38] of his reasons (ts 10).
Mr Saaid relied upon O 18 r 6(2)(b) and O 18 r 13 of the Rules of the Supreme Court 1971 (WA) as provisions empowering this court to make the order sought. These provisions apply by reason of r 5 of the Supreme Court (Court of Appeal) Rules 2005 (WA).
Neither of these provisions provide any justification for joinder in this case. Order 18 r 6(2)(b) reads:
At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -
…
(b)order that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, be added as a party.
It would have been wise for the parties to have considered O 18 r 6 during the course of proceedings before the master. If there had been a counterclaim by Mr Raja seeking a declaration as to persons who were the officers of the association, it would then have been appropriate to order the joinder of all persons who might have been affected by the findings which the Omar group and the Ahmed ground were contending for.
Order 18 r 6(2)(b) does not assist Mr Saaid. If he is a member of the association then perhaps he should have been joined as a party in the proceedings before the master, but Mr Saaid's joinder as a party on this appeal is not necessary for complete determination and adjudication of this appeal. Counsel for Mr Saaid said that it was necessary to join Mr Saaid so that there was a proper contradictor (ts 11). However, the arguments Mr Saaid wishes to advance in support of a decree that the contract be specifically performed, are arguments which will be advanced by Tottle Partners pursuant to their retainer. This is not a situation where only one side of the argument will be presented. Tottle Partners are presently on the record and instructed to argue that there should be specific performance and Mr Raja contends otherwise.
Order 18 r 13 does not assist Mr Saaid. It is a provision providing that the court may in proceedings concerning the construction of a written instrument, if satisfied that it is expedient to do so and that one or more of the conditions specified in paragraph 2 are satisfied, appoint one or more persons to represent any person or class who is, or may be interested in or affected by the proceedings. The conditions in O 18 r 13(2) are that:
(a)that the person, the class or some member of the class, cannot be ascertained or cannot readily be ascertained;
(b)that the person, class or some member of the class, though ascertained, cannot be found;
(c)that, though the person or the class and the members thereof can be ascertained and found, it appears to the Court expedient (regard being had to all the circumstances, including the amount at stake and the degree of difficulty of the point to be determined) to exercise the power for the purpose of saving expense
In this appeal, the issue does not concern the construction of a written instrument and, in any event, it is not expedient to join Mr Saaid because he will do no more than advance arguments via Tottle Partners which will already be advanced by Tottle Partners pursuant to the retainer which was unsuccessfully attacked by Mr Raja. For those reasons, the application was dismissed.