Re Islamic Co-ordinating Council of Victoria
[2024] VSC 332
•20 June 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2021 04195
| AUSTRALIAN (NUR THE) LIGHT FOUNDATION INC & ORS (according to the attached Schedule) | Plaintiffs by Cross-Claim |
| v | |
| TAREK KHODR & ORS (according to the attached Schedule) | Defendants by Cross-Claim |
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JUDGE: | Gorton J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18-21, 25-28 March and 15 April 2024 | |
DATE OF JUDGMENT: | 20 June 2024 | First Revision 21 June 2024 |
CASE MAY BE CITED AS: | Re Islamic Co-ordinating Council of Victoria | |
MEDIUM NEUTRAL CITATION: | [2024] VSC 332 | |
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CORPORATIONS – Shareholder oppression – Winding up on just and equitable ground – Where factions on board developed and some oppressive acts took place and periods of dysfunction existed – Whether those oppressive acts and periods of dysfunction justify orders for buy out or winding up – Where members of company are 11 societies concerning Islamic faith in Victoria – Where majority not personally advantaging themselves at expense of minority – Where winding up or related relief would affect functioning halal certification business and low-fee school – Where company not akin to partnership with relationship breakdown – Effect of passage of time on previous periods of dysfunction – Where company solvent and presently functional – Relief sought not justified in circumstances – Deputy Commissioner of Taxation v Casualife Furniture Pty Ltd (2004) 9 VR 549 – Exton v Extons Pty Ltd (2017) 53 VR 520 – Re Dawning Investments Pty Ltd (2022) 68 VR 226 – Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749 – Corporations Act 2001 (Cth) ss 232, 233 and 461(1)(k).
COSTS – Where claims brought but not pursued due of shift in control of company – Where claims not unreasonably brought and not adjudicated on – Reserved costs to lie where they fall – Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 – Australians for Sustainable Development Inc v Minister for Planning (No 2) [2011] NSWLEC 70 – ASTA Developments (Aust) Pty Ltd v Amasya Enterprises Pty Ltd [2016] VSCA 186.
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APPEARANCES: | Counsel | Solicitors |
| For the Second to Fifth Plaintiffs by Cross-Claim (‘Applicants’); and Defendants by Original Proceeding with respect to costs only | Mr S Rosewarne KC and Mr K Raghavan | Strongman & Crouch MinterEllison |
| For the First to Third, Fifth to Ninth and Eleventh to Thirteenth Defendants by Cross-Claim (‘Respondents’); and Plaintiffs by Original Proceeding with respect to costs only | Mr P Bick KC and Mr C Lum | SBA Law Russell Kennedy |
| For the Tenth Defendant by Cross-Claim | Mr J D Catlin | Princeton Legal Neylon Legal Brand Partners Commercial Lawyers NOH Legal |
TABLE OF CONTENTS
A. Introduction.................................................................................................................................. 1
B. The member societies and individuals involved................................................................... 1
C. Some of the relevant events....................................................................................................... 3
C.1The resolution of an earlier dispute.................................................................................... 3
C.2The three periods during which different groups had control of the board................ 4
C.3Issues that arose during the Aug-Dec 2020 Khodr period.............................................. 5
C.4Issues that arose during the Dec 2020-Oct 2022 Ismail period....................................... 9
C.5Issues that arose during the current Khodr period........................................................ 17
D. The initiation and development of this proceeding........................................................... 20
E. What must be established to obtain relief?........................................................................... 21
F. Should the applicants obtain the relief they seek?.............................................................. 24
F.1Overview of conclusions – the claim for relief fails........................................................ 24
F.2The Aug-Dec 2020 Khodr period....................................................................................... 30
F.2.1 The distributions issue – ground of oppression 2.............................................. 30
F.2.2The appointment of Mr Fahour............................................................................. 31
F.2.3The food certification course – ground of oppression 1.................................... 34
F.2.4Exclusion of Ismail-aligned directors from the EPIC board – ground of oppression 3.................................................................................................................................. 37
F.2.5The response to the nomination of Mr Hoosen – ground of oppression 4..... 40
F.2.6Failing to consult or keep informed – ground of oppression 5........................ 42
F.3The Dec 2020–Oct 2022 Ismail period............................................................................... 43
F.3.1Attempting to prevent the Ismail-aligned directors from joining the EPIC board – ground of oppression 7......................................................................................... 43
F.3.2Deleting Mr Fahour’s email address – ground of oppression 6....................... 48
F.3.3The attitude to Mr Hoosen’s directorship – ground of oppression 8.............. 50
F.3.4Failing to approve the 2021 financial statements – ground of oppression 9.. 53
F.4The current Khodr period................................................................................................... 54
F.4.1Failing to pay EPIC staff – ground of oppression 10......................................... 54
F.4.2The review of the halal certification business – ground of oppression 11...... 56
F.4.3Failing to keep members informed – grounds of oppression 12 to 14............ 57
F.5Irretrievable breakdown in relationships impeding fulfilment of purposes – ground of oppression 15...................................................................................................................... 62
F.6Conclusion............................................................................................................................ 64
G. The costs associated with the discontinued claims and applications.............................. 66
G.1The original proceeding and the interlocutory applications........................................ 66
G.2The plaintiffs’ discontinued claims.................................................................................. 69
G.3The interlocutory applications.......................................................................................... 70
H. Disposition.................................................................................................................................. 71
HIS HONOUR:
A. Introduction
The Islamic Co-ordinating Council of Victoria Pty Ltd (‘ICCV’) is a company the shares in which are owned equally by 11 ‘member societies’. Those member societies are associated with different mosques or Islamic communities around Melbourne. ICCV, among other things, owns and runs a school through a wholly-owned subsidiary and is the trustee of a discretionary trust that operates a halal certification business. Four of the member societies (‘the applicants’) claim that ICCV has been run in an oppressive manner and contrary to the interests of the member societies as a whole, and have applied for orders that they be bought out by the other member societies or that they buy out the other member societies or that ICCV be wound up. These reasons consider that claim.
These reasons also concern the costs of some applications that were brought in the proceeding but were not adjudicated because events made the adjudication unnecessary.
For the most part, the member societies are associated with individual persons who have acted as their representatives. Five of these individuals are also named as defendants to the claim, although no relief is sought against them.
I will first identify the member societies and individuals involved, then provide an overview of some of the more important events, then consider the complicated procedural background, then consider whether there has been conduct that attracts the relief sought, and then consider the costs of the applications that were not determined.
B. The member societies and individuals involved
The following table sets out the names of the 11 member societies, their acronyms, and the persons associated with them. Because of the length of the names of most of the member societies, I will use the acronyms in these reasons. The member societies and individuals in rows 1 to 5 tended to have a common approach and four of those member societies are the applicants for the relief sought in this proceeding, and the member societies and individuals in rows 6 to 10 tended to take a different approach and those member societies and some of those individuals are the respondents to the applicants’ claim. The eleventh member society aligned itself with either group depending on whether it was represented by Mr Ebrahim Hoosen or Mr Fouad Hassan.
Name Acronym Persons associated that member society 1. Cyprus Turkish Islamic Community of Victoria Inc CTICV Mr Zafer Ismail 2. Australian (Nur) The Light Foundation Inc ALF Mr Sidki Guzel 3. Bediuzzaman Said Nursi Cultural Foundation Inc BSNCF Mr Mat Allday 4. Thomastown Turkish Education and Islamic Society Inc TTEIS Mr Durmus Oruc 5. United Muslim Migrants Association of Victoria Inc UNMAV Mr Amad Kazi 6. Islamic Society of Victoria Inc ISV Mr Tarek Khodr 7. Bosnia & Hercegovina Islamic Society Inc BHIS Mr Edin Dzelalagic 8. Elsedeaq Islamic Society Inc EIS Mr Faisal Shehata 9. Merhamet Muslim Welfare Association Victoria Inc MMWA Mr Senad Voloder 10. Keysborough Turkish Islamic & Cultural Centre Inc KTICC Mr Ali Nadir Yildiz 11. Islamic Society of Melbourne Eastern Region Inc ISOMER Mr Ebrahim Hoosen and then Mr Fouad Hassan
The application for orders that ICCV be wound up, or that member societies be bought out, is brought by ALF, BSNCF, TTEIS, and UNMAV in a cross-claim in this proceeding and those member societies are the second to fifth plaintiffs by cross-claim respectively. CTICV was the first plaintiff by cross-claim, but has discontinued its claim, although Mr Ismail gave evidence in support of the claim. The first to third defendants to the cross-claim are Mr Khodr, Mr Dzelalagic, Mr Shehata respectively, and the fifth to thirteenth defendants to the cross-claim are Mr Yildiz, ISV, BHIS, EIS, MMWA, ICCV, KTICC, Mr Hassan and ISOMER. Mr Voloder was the fourth defendant to the cross-claim, but the claim against him was discontinued. ICCV did not actively participate in the hearing of the application. There was no explanation given during the course of the trial for why CTICV or Mr Voloder ceased to be parties to the cross-claim.
The school is the East Preston Islamic College and is operated by a wholly owned subsidiary of ICCV, East Preston Islamic College Ltd (‘EPIC’). The land on which the school is situated is owned by ICCV. The school’s principal had for many years been Mr Ozyurek. The halal certification business is operated by the Halal Board of Australia Trust of which ICCV is the trustee. The trust is a discretionary trust and the beneficiaries include ICCV and each of its 11 member societies.
C. Some of the relevant events
C.1 The resolution of an earlier dispute
Prior to July 2020, ICCV had a five member board. Mr Guzel was the chair. Various persons had concerns about its governance and legal proceedings were issued. Those proceedings were resolved in July 2020 by the entry into of a Deed of Settlement. All the member societies of ICCV and some individuals were parties to that deed. The deed provided for the establishment of a new board of ICCV with each member society to nominate a director. The deed provided that the new board would be in place by 29 July 2020 and would continue until the 2022 annual general meeting, at which meeting a new board was to be elected in accordance with ICCV’s constitution.[1]
[1]It was common ground that the terms of this deed were binding notwithstanding that it provided for a governance structure that was inconsistent with ICCV’s constitution.
Unless the constitution were changed, this meant that after a period of approximately two years, the board would revert to being a board of five directors elected in the ordinary way. (As will appear later, an issue arose as to whether a member society – ISOMER – was able to change its appointed board member after the board had been established but before the 2022 annual general meeting.)
C.2 The three periods during which different groups had control of the board
The first meeting of the new ICCV board took place on 9 August 2020. The member societies in rows 1 to 10 in the table above nominated the persons in the fourth column as directors. There was a dispute within ISOMER over who it should nominate, or had nominated, to be on the board.[2] Accordingly, the new board initially proceeded with only 10 voting directors. Mr Khodr was elected chair. Mr Ismail was elected secretary. As noted above, and speaking broadly, a division developed between Mr Ismail, Mr Allday, Mr Guzel, Mr Oruc and Mr Kazi on the one hand (numbers 1 to 5 on the table), and Mr Khodr, Mr Dzelalagic, Mr Shehata, Mr Voloder and Mr Yildiz on the one hand (numbers 6 to 10 on the table). It is convenient to refer to these groups as ‘the Ismail-aligned directors’ and ‘the Khodr-aligned directors’ respectively. As chair, Mr Khodr had a casting vote. Accordingly, for so long as the board consisted of only 10 directors, the Khodr-aligned directors had control of the board.
[2]The details of this dispute were not relevant, but it seems that ISOMER’s ‘committee of management’ nominated Mr Hoosen, and its ‘trustees’ nominated another person, Mr Rashad Evans.
The dispute at ISOMER as to which person it had or would nominate as a director of ICCV was resolved and, on 18 November 2020, McDonald J of this Court ordered by consent that ICCV appoint Mr Hoosen a director as ISOMER’s nominee. There was then some uncertainty as to how that would be effected.[3] However, on 7 December 2020, Mr Hoosen was formally made a director. This meant that there were then 11 directors. Mr Hoosen tended to side with the Ismail-aligned directors. Accordingly, as from 7 December 2020, the Khodr-aligned directors lost control of the board, and the Ismail-aligned directors obtained control of the board. I will refer to the four-month period between 9 August 2020 and 7 December 2020 for which the Khodr-aligned directors had control as ‘the Aug-Dec 2020 Khodr period’.
[3]It is not clear how ICCV would have the power in the circumstances to appoint a person as a director.
The Ismail-aligned directors then retained control until 24 October 2022. On that day, which was almost two years after Mr Hoosen was appointed, ICCV’s 2022 annual general meeting took place. At that meeting, as anticipated by the July 2020 Deed of Settlement, the board was reduced in size to five directors in accordance with ICCV’s constitution. The member societies elected Mr Khodr, Mr Dzelalagic, Mr Shehata, Mr Voloder and Mr Yildiz – the Khodr-aligned directors – as directors. Accordingly, the Khodr-aligned directors regained control of the board. The Khodr-aligned directors are still the directors of ICCV. I will refer to the 7 December 2020 to 24 October 2022 period for which the Ismail-aligned directors had control as ‘the Dec 2020-Oct 2022 Ismail period’, and the period since 24 October 2022 as ‘the current Khodr period’.
I should say that the persons who gave evidence emphasised that there were no formal groupings or agreements to vote as a group, but that, instead, people voted the way they did because they shared similar views on the issues that arose.
C.3 Issues that arose during the Aug-Dec 2020 Khodr period
During the Aug-Dec 2020 Khodr period, among other things:
(a) On 9 August 2020, the ICCV board appointed Mr Khodr as chair and Mr Ismail as secretary. The ICCV board also appointed Mr Khodr, Mr Ismail, Mr Kazi, Mr Yildiz and Mr Allday to the board of EPIC. This board included two of the Khodr-aligned directors and three of the Ismail-aligned directors, although those groupings had not yet emerged;
(b) On 15 August 2020, the ICCV board engaged a consultant, Mr Moustafa Fahour, to investigate the affairs of ICCV and gave him the powers of a chief executive officer of both ICCV and EPIC. The meeting minutes recorded a number of objections to his appointment. Mr Fahour then engaged, with the board’s approval, some accountants, Findex (Aust) Pty Ltd trading as Crowe Australasia (‘Crowe’), to perform a forensic investigation including into the distributions made to member societies over the previous three financial years. At this time, ICCV was in a dire financial position. The board arranged (with EPIC’s agreement) for the return of a large donation that had previously been made by ICCV to EPIC and resolved to use that money instead to repay some or all of ICCV’s debts and to distribute the remainder to each of the member societies. Mr Fahour also engaged Crowe to prepare a report into the financial affairs of EPIC;
(c) On 21 September 2020, the ICCV board resolved to distribute amounts to each of its member societies that had been adjusted having regard to the distributions to each that had been made over the prior three-year period. The Khodr-aligned directors were content with the three-year investigation into past distributions that had been performed and for adjustments to the new distributions to be limited to any disparity that occurred in that period. The Ismail-aligned directors contended that the investigation into historic disparities in distributions should be extended back to 2009 and the new distributions adjusted accordingly. The Crowe report indicated that ISV, the member society associated with Mr Khodr, had received $95,000 over the previous three years, whereas other member societies had received at least $140,000 over the same period. Accordingly, the distribution made to ISV to ‘bring it in line with other societies’ was substantially higher than the payments made to the other member societies at that time. The email communicating the decision to the member societies offered them the opportunity to present to the board any years prior to the ‘audited period’ if they felt they were underpaid and that it would be ‘reviewed’;
(d) Also in September 2020, Mr Fahour arranged for ICCV to employ Mr Arben Ali Melellari, who was also his niece’s husband, as a ‘junior auditor’ in the halal certification business;
(e) On 2 October 2020, Mr Khodr, in his capacity as chairperson of EPIC, but without first consulting the EPIC board, wrote to Mr Ozyurek, the principal of the school, and raised a concern about some terms of his most recent contract extension that appeared to give Mr Ozyurek certain rights that had not been specifically endorsed by the EPIC board. On 14 October 2020, Mr Ozyurek offered to resign, but only if there were ‘full’ mutual releases;
(f) On 6-8 October 2020, at the request of Mr Khodr and Mr Fahour PricewaterhouseCoopers International Limited (‘PwC’) put on a Food Safety Management Systems course (‘the food accreditation course’). The course was paid for by ICCV. Mr Khodr and Mr Fahour attended the course, along with some other persons not associated with ICCV but known to Mr Khodr. The other persons who attended later reimbursed ICCV for their share of the cost of the food accreditation course, but did so after Mr Ismail raised a concern that it was improper that ICCV should pay for others, including people associated with Mr Khodr, to attend;
(g) On 14 October 2020, Mr Khodr, in his capacity as chairman of EPIC, called, or purported to call, a general meeting of EPIC to be held on 5 November 2020 for the purpose of appointing a ‘new permanent board’ of EPIC to replace what he described as ‘the interim board’. The validity of the means by which this meeting was called was disputed and the meeting was adjourned to a date to be determined. Legal advice was obtained. On 10 November 2020, Mr Khodr advised that the general meeting of EPIC would proceed on 13 November 2020;
(h) Also on 10 November 2020, Mr Khodr advised that an ICCV board meeting would be held, or continued, on 12 November 2020. The ‘EPIC General Meeting’ was to be the first agenda item discussed. The Ismail-aligned directors said that this was insufficient notice and that they could not attend;
(i) On 12 November 2020, an ICCV board meeting took place. Only the Khodr-aligned directors attended. The ICCV board resolved to authorise Mr Khodr to attend the general meeting of EPIC and to vote on behalf of ICCV at that meeting. The ICCV board also resolved that its directors could not ‘go directly to’ ICCV’s accountants ‘requesting matters beyond the inspection of records of the company as per the corporations act’, without a board resolution. ICCV’s accountants were, at the time, AccountingHQ;
(j) On 13 November 2020, there was a general meeting of EPIC. Mr Khodr, pursuant to the authority referred to above, voted to appoint a new board to EPIC consisting of the Khodr-aligned directors (but not Mr Hoosen). Mr Kazi, Mr Ismail and Mr Allday, all Ismail-aligned directors, were not reappointed. Accordingly, as from 13 November 2020, the Khodr-aligned directors had control of EPIC as well as ICCV;[4]
[4]The EPIC company search records that the change in directorships took place instead on 12 November 2020. This is of no consequence.
(k) On 18 November 2020, this Court ordered by consent, in a proceeding brought by ISOMER against ICCV and others, that ICCV ‘forthwith’ appoint Mr Hoosen as the director nominated by ISOMER;
(l) On 26 November 2020, Crowe provided a report into the affairs of EPIC. It was critical of various elements of EPIC’s past management and of the circumstances in which Mr Ozyurek’s contract was extended in February 2020. At that time, Mr Ozyurek had been not only the principal of the school but also the chair of both ICCV and EPIC. The report suggested that he did not absent himself from the relevant discussions and votes, and that a signed 2020 employment contract appeared to include conditions more favourable to Mr Ozyurek than those approved in the board resolution. The report included a recommendation that this be further investigated and, if necessary, ‘appropriate corrective action’ be taken;
(m) On 2 December 2020, Mr Khodr circulated a proposed resolution for signing by all the member societies that provided that Mr Hoosen, as the nominee of ISOMER, be appointed a director of ICCV ‘pending its next Annual General Meeting’ (that is, its 2021 annual general meeting). As noted above, the Deed of Settlement anticipated that the relevant nominees would remain as directors until ICCV’s 2022 annual general meeting. Some of the Ismail-aligned directors doubted that there was any need for a resolution;
(n) On 3 December 2020, Mr Khodr wrote to Mr Ozyurek expressing some ‘serious concerns’ concerning the school’s ‘finance and governance arrangements’. On 8 December 2020, Mr Ozyurek resigned; and
(o) On 7 December 2020, Mr Hoosen became a director of ICCV. On his appointment, the Ismail-aligned directors obtained control of the ICCV board.
As the above summary shows, the central issues that arose during the Aug-Dec 2020 Khodr period relate to:
(a) The October 2020 food certification course. The applicants rely on the ‘use of ICCV funds to pay for attendance of related parties at food accreditation course’, and how Mr Khodr responded to their enquiries about this, as ground of oppression 1;
(b) The decision in September 2020 to consider only the prior three years when adjusting future distributions for past inequalities. The applicants rely on ‘unfair conduct in relation to distribution adjustments’, and the passing of a resolution restricting access to ICCV’s accountants, as ground of oppression 2;
(c) The process in November 2020 whereby some of the Ismail-aligned directors of EPIC were replaced with some of the Khodr-aligned directors. The applicants rely on their ‘exclusion’ from the EPIC board as ground of oppression 3. The conduct relied on includes what they assert were steps taken by Mr Khodr to remove Mr Ozyurek as principal of EPIC without being authorised by the board to do so; and
(d) The appointment of Mr Hoosen as ISOMER’s representative on the ICCV board in November - December 2020. The applicants rely on the ‘delay and attempted frustration of Mr Hoosen’s appointment’ as ground of oppression 4. This was not put as an ‘independent and standalone’ ground of oppression.
C.4 Issues that arose during the Dec 2020-Oct 2022 Ismail period
During the Dec 2020-Oct 2022 Ismail period:
(a) A further distribution was made to the member societies. This time, the amount that was paid to ISV, the member society associated with Mr Khodr, was reduced by $45,000 – effectively a reversal of the additional distribution that had been paid during the Aug-Dec 2020 Khodr period. The new board did not otherwise adjust for any unequal distributions made since 2009, as it had sought the old board to do;
(b) On 1 January 2021, Mr Khodr (who was still the chair) circulated 23 policies that Mr Fahour had arranged to be prepared for consideration at an ICCV board meeting scheduled for 5 January 2021 and included a Zoom link. This was to be the first board meeting that Mr Hoosen was to attend. The policies included a proposed donations policy that would permit the chairman (Mr Khodr) to make donations of up to $30,000[5] without first obtaining board approval. Mr Ismail contended that the board was not given sufficient time to consider these policies prior to their being considered at the board meeting, and raised concern at the level of the donation that could be made by the chairman without board approval. Mr Khodr said that the policies were only drafts and could be considered later if more time was required;
[5]Strictly, of up to $29,999.99.
(c) On 4 January 2021, Mr Ismail sought information from Mr Khodr about various items of expenditure. He enquired as to: a monetary payment to consultants Mr Alex Kaar and Rimas Services; payments made to the forensic accountants Crowe; payments and reimbursements made to Mr Fahour (and he asked for a copy of his ‘expense sheet’); payments made to PwC for the food accreditation course; and payments made to lawyers. On 5 January 2021, Mr Khodr responded to Mr Ismail’s 4 January 2021 email and provided answers to many or most of the questions asked;
(d) What then happened on 5 January 2021 is most unedifying. As noted above, on 1 January 2021, Mr Khodr (as chair) had circulated a Zoom link for the 5 January 2021 ICCV board meeting. For reasons that are not clear, Mr Ismail (as secretary) later circulated a different Zoom link. Both were for a meeting at the same time. The Ismail-aligned directors joined one meeting using the link that Mr Ismail had circulated, and the Khodr-aligned directors joined another meeting using the link that Mr Khodr had circulated. It must have been clear to all what had happened. Unfortunately, the Khodr-aligned directors did not leave their meeting and join the Ismail-aligned directors and the Ismail-aligned directors did not leave their meeting and join the Khodr-aligned meeting;
(e) The Deed of Settlement provided that five of the 11 directors formed a quorum. Mr Hoosen joined using the link that Mr Ismail had circulated. Accordingly, there was no quorum at the meeting of the Khodr-aligned directors, but there was a quorum at the meeting of the Ismail-aligned directors. The Ismail-aligned directors proceeded to conduct a directors’ meeting in the absence of the Khodr-aligned directors. The minutes record the Khodr-aligned directors as absent without apologies, that Mr Kazi was elected chair, and that the board:
(i) resolved not to renew Mr Fahour’s engagement beyond 18 February 2021 and ‘to consider a General Manager or a CEO at a later date if it sees fit’; and
(ii) resolved to call a general meeting of EPIC to appoint all the ICCV directors to the board of EPIC;
(f) On 6 January 2021, Mr Fahour resigned from his role with ICCV. He remained with EPIC until he resigned from his position with EPIC a few months later;
(g) On 7 January 2021, Mr Ismail, in his capacity as secretary of ICCV, called, or purported to call, a general meeting of EPIC to be held on 1 February 2021 for the purpose of adding the remaining directors of ICCV to the board of EPIC;
(h) On 26 January 2021, Mr Khodr deleted Mr Fahour’s ICCV email account;
(i) Events took a turn on 31 January 2021. On that day, Mr Hassan, the secretary of ISOMER, wrote to Mr Khodr (who was still the chairperson of ICCV) and informed him that, following a committee of management meeting held earlier that day, Mr Hoosen was no longer the ‘member representative’ of ISOMER, that he should be ‘removed from the board of ICCV’, that ICCV ‘are not to accept any votes or decisions from’ Mr Hoosen, and that a replacement would be nominated ‘in due course’. Without Mr Hoosen’s support, the control of ICCV would shift back to the Khodr-aligned directors;
(j) There was then a dispute as to whether Mr Hoosen should be able to attend and to vote at ICCV board meetings:
(i) The Khodr-aligned directors contended that since ISOMER had withdrawn its nomination of Mr Hoosen as its representative on the ICCV board, he should not be permitted to attend or to vote; but
(ii) Mr Ismail disputed the validity of the ISOMER meeting at which that decision was made and contended that, in any event, under the July 2020 Deed of Settlement, the appointment of Mr Hoosen took effect until Mr Hoosen was removed in accordance with ICCV’s constitution, ISOMER was unable simply to replace him with another nominee, and accordingly Mr Hoosen remained able to attend and to vote at ICCV board meetings;
(k) On 1 February 2021, Mr Ismail sought to conduct a general meeting of EPIC in accordance with the notice he had circulated on 7 January 2021. Shortly before the meeting, the Khodr-aligned directors (who still controlled EPIC) contended, through their lawyers Russell Kennedy, that the general meeting was not validly called and any actions taken there would be invalid;
(l) The 1 February 2021 general meeting (or purported general meeting) of EPIC was chaotic. Mr Khodr was still the chair of EPIC. Russell Kennedy had prepared a script for Mr Khodr to follow contending that the general meeting had not been validly called. Minutes of this meeting prepared by the Khodr-aligned directors aligned with the script and recorded that ICCV was not present and therefore could not vote on resolutions, and that as a result all resolutions seeking to change the EPIC board had failed. Alternate minutes prepared by the Ismail-aligned directors recorded that all resolutions had passed, including a resolution appointing Mr Hoosen as Vice-Chairman of EPIC. It seems that the Ismail-aligned directors had their way in that the ASIC database records that on 1 February 2021 each of the Ismail-aligned directors, including Mr Hoosen, were appointed directors of EPIC;
(m) The next night, on 2 February 2021, there was a meeting of the ICCV board. It was by Zoom. Perhaps unsurprisingly, that meeting too was chaotic. Mr Hoosen attended. The Khodr-aligned directors objected to his doing so on the grounds that ISOMER had sought to revoke his appointment as its representative. The Ismail-aligned directors insisted that Mr Hoosen remained a director until such time as he was removed and so had the right to attend. The Ismail-aligned directors had obtained some legal advice that supported this position (or at least that this position was arguable). Mr Ismail, as the meeting ‘host’ on Zoom (but not the chair), had the practical ability to place people in virtual waiting rooms or to mute them and in that way to prevent them from participating in the meeting. He used this ability. This did not resolve the issues that had arisen. The minutes later prepared by Mr Ismail state that: ‘The majority at the meeting, had formed the view that it was impossible to proceed with the meeting given the conduct of the Chair [Mr Khodr] and the Vice-Chair [Mr Dzelalagic].’ Mr Ismail then started, and Mr Allday chaired, a new Zoom meeting to which only the Ismail-aligned directors were invited. At that new meeting, the Ismail-aligned directors resolved to distribute $45,000 to each member society except for ISV (the member society associated with Mr Khodr) on the basis that ISV had received an additional $45,000 in the earlier distribution that had taken account of the prior three years’ distributions;
(n) On 24 February 2021, ISOMER nominated Mr Hassan as its replacement nominee director. Mr Hassan was likely to support the Khodr-aligned directors. The Ismail-aligned directors (including Mr Hoosen) continued to assert that ISOMER could not change its nominee director and that Mr Hoosen continued to be a director of ICCV. Mr Hoosen continued to attempt to attend meetings of the ICCV board. The board meetings were conducted by Zoom, and Mr Ismail, as the meeting host, continued to mute attendants or to place them in the virtual ‘waiting room’. This led to further disputes;
(o) On 2 June 2021, Mr Ismail asserted that Mr Yildiz and Mr Shehata, both Khodr-aligned directors, were to be taken, in accordance with ICCV’s constitution and legal advice he had obtained, as having vacated their offices due to their failure to attend three directors’ meetings in a row without having given an apology. According to ASIC’s records, Mr Shehata and Mr Yildiz ceased to be directors of ICCV on 2 July 2021;
(p) On 29 June 2021, ISOMER expelled Mr Hoosen as a member of ISOMER;
(q) Mr Ismail called an ICCV board meeting for 7 July 2021. He did not invite Mr Yildiz or Mr Shehata or Mr Hassan but did invite Mr Hoosen. Mr Khodr, Mr Voloder and Mr Dzelalagic said they would not attend for reasons including that Mr Yildiz and Mr Shehata had been excluded and that Mr Hoosen had been included. The meeting went ahead with only the Ismail-aligned directors in attendance. The ICCV board resolved that it had no confidence in Mr Khodr as chair and also resolved to call a general meeting of EPIC to remove the Khodr-aligned directors from its board. (It will be recalled that, at a contentious meeting held on 1 February 2021, the Ismail-aligned directors ensured that they were added to the EPIC board so that EPIC had the same directors as ICCV. This was after the Khodr-aligned directors had, on 13 November 2020, arranged for the appointment of only themselves as directors of EPIC. The Ismail-aligned directors had, it seems, lost their conviction that the EPIC board should include representatives from each of ICCV’s member societies);
(r) Mr Ismail then contended that Mr Khodr, Mr Voloder and Mr Dzelalagic, too, had vacated their offices by failing to attend directors’ meetings. On 19 July 2021, he wrote to the member societies associated with Mr Voloder, Mr Dzelalagic and Mr Khodr, asserted that those directors had vacated their offices, and invited them to nominate a replacement. According to the ASIC records, Mr Khodr, Mr Dzelalagic and Mr Voloder ceased to be directors of ICCV on 19 July 2021. Those member societies did not accept that their nominees had vacated their offices, but, to be safe, and perhaps unsurprisingly, re-nominated the same people;
(s) On 3 August 2021, the Khodr-aligned directors were removed as directors of EPIC;
(t) On 17 August 2021, the new chair of ICCV, Mr Allday, wrote back to the member societies associated with Mr Khodr, Mr Dzelalagic and Mr Voloder stating that ICCV was not prepared to accept their renomination of those persons as directors on the grounds that to do so would be ‘inconsistent with the purpose of’ the relevant clause of its constitution. That decision was later affirmed in a resolution passed by the Ismail-aligned directors;
(u) On 10 November 2021, the member societies associated with Mr Khodr, Mr Dzelalagic, Mr Shehata and Mr Voloder commenced this proceeding in which they sought an order that Mr Khodr, Mr Dzelalagic, Mr Shehata and Mr Voloder be reinstated at directors and office bearers of ICCV forthwith. It seems that Mr Khodr, Mr Dzelalagic, Mr Shehata and Mr Voloder thereafter did not seek to interfere with the running of ICCV by the Ismail-aligned directors, and the Ismail-aligned directors ran ICCV and EPIC for the following 14 months essentially unhindered until the 2022 annual general meeting of ICCV was held on 24 October 2022;
(v) ICCV’s 2021 annual general meeting was held on 29 June 2022. A resolution that the financial statements be accepted was defeated because ISOMER and the member societies associated with the Khodr-aligned directors voted against it;
(w) On 8 August 2022, the ICCV board (consisting of the Ismail-aligned directors) approved an ex gratia payment of $100,000 plus GST to Mr Ismail in reward for the work he had done for the company following Mr Fahour’s resignation; and
(x) At the 24 October 2022, ICCV annual general meeting, the board of 11 provided for in the Deed of Settlement was replaced by a board of five as provided for in the ICCV constitution. The Khodr-aligned directors were elected. The claim for their reinstatement, that gave rise to this proceeding, was not then pursued.
As the above summary shows, the central issues that arose during the Dec 2020-Oct 2022 Ismail period relate to:
(a) Whether Mr Khodr failed to consult or to inform the board about significant decisions and expenditure that had taken place during the Aug–Dec 2020 Khodr period. The applicants rely on this as ground of oppression 5. This was not put as an ‘independent and standalone’ ground of oppression;
(b) The deletion of Mr Fahour’s emails in January 2021. The applicants contended, in substance, that this was a deliberate and wrongful step that amounted to the destruction of company documents and was designed to prevent Mr Fahour’s emails from being made available for review. They rely on this as ground of oppression 6;
(c) The attempts made by the Khodr-aligned directors to prevent their losing control of EPIC and their refusal to accept that the Ismail-aligned directors had been validly appointed following the February 2021 EPIC general meeting. The applicants rely on this as ground of oppression 7;
(d) The Khodr-aligned directors’ demands that Mr Hoosen not participate in directors’ meetings after ISOMER had purported to revoke his appointment as its nominee in January–February 2021, and refusing to participate in, or disrupting, meetings at which Mr Hoosen was present. The applicants rely on this as ground of oppression 8; and
(e) The decision to vote against the acceptance of the 2021 financial statements in June 2022. The applicants said that this was ‘unreasonable’, and rely on this as ground of oppression 9. This was not put as an ‘independent and standalone’ ground of oppression.
C.5 Issues that arose during the current Khodr period
During the current Khodr period (that is, since 24 October 2022):
(a) On 28 October 2022, ICCV elected the Khodr-aligned directors and Mr Hassan to EPIC’s board;
(b) On 10 November 2022, ICCV distributed $45,000 to ISV (the member society associated with Mr Khodr). As noted above, during the Aug-Dec 2020 Khodr period the board had approved an additional payment of this amount, and during the Dec 2020-Oct 2022 Ismail period the board adjusted distributions to reverse this. Accordingly, this payment had the effect of reinstating the additional distribution, made to remedy inequality assessed by reference to the previous three years as calculated by Crowe, made to ISV some two years earlier;
(c) On 26 January 2023, EPIC failed to pay teacher salaries that were due that day. This led to negative publicity for the school. The teachers were paid some four days later;
(d) On 2 February 2023, EPIC stood down the school principal, Mr Neil Hasankolli for alleged ‘serious misconduct’, and then, on 20 February 2023, stood down the temporary principal (who was previously the vice-principal) Ms Masiha Rayan. These actions led to some resignations by other teachers at the school and, again, some negative publicity for the school;
(e) On 13 February 2023, the Victorian Registration and Qualifications Authority wrote to EPIC stating that it had found ‘critical non-compliance with the governance and not-for-profit minimum standards’ at the school;
(f) On 2 March 2023, Mr Dzelalagic in his capacity as chair of EPIC, and the then acting principal, wrote to the EPIC school community about the negative publicity that the school had been receiving and stated that the current board’s ‘management of the school commenced on 7 February 2023.’ This was, at the very least, misleading. It may be that full control of the school’s bank accounts was not obtained until then, but significant management actions had been taken since the new board took control on 28 October 2022 including, for example, dismissing the principal and vice-principal;
(g) In March 2023, the ICCV board decided to conduct an ‘independent review’ of the halal certification business by people including a Mr Taoufik Elidrissi. The general manager, Mr Muhammed Koyu, resisted cooperating with Mr Elidrissi because he took the view that Mr Elidrissi was a potential competitor to the halal certification business and therefore not an appropriate person to undertake the review. The ICCV board dismissed Mr Koyu for failing to follow its directions that he cooperate with the review;
(h) In June 2023, ICCV lost its accreditation to certify halal products for the Saudi Arabian market. This followed a decision by the board not to pay a substantial sum to a law firm based in Saudi Arabia. Ultimately, Mr Dzelalagic and Mr Elidrissi went to Saudi Arabia and spoke to the relevant persons there. They managed to regain certification. In doing so, they had to pay the relevant legal representative a considerable (but slightly lesser) sum, and also incurred considerable travel and accommodation costs;
(i) In July 2023, EPIC appointed Mr Guy Cassarchis as the new principal. Mr Cassarchis gave evidence that since his appointment no teachers had been terminated, EPIC was hiring new teachers and staff morale had improved. His evidence, supported by Mr Khodr, was to the effect that the school was putting a difficult time behind it and was on the improve;
(j) On 7 February 2024, ICCV resolved to allocate $50,000 to each member society; and
(k) ICCV’s 2023 annual general meeting was held on 5 March 2024. It should have been held within 60 days of the end of the 2023 financial year (that is, by the end of August 2023). Mr Khodr said that the delay was due to ICCV’s changing accountants and having difficulty obtaining proper financials. Audited accounts have still not been prepared.
As the above summary shows, the central issues that arose during the current Khodr period relate to:
(a) The failure by ICCV to authorise the payment of EPIC’s staff due on 25 January 2023. The applicants also contend that the Khodr-aligned directors then falsely sought to blame the Ismail-aligned directors for the failure to make that payment. They rely on this as ground of oppression 10;
(b) The decision in March 2023 to have the review of the ICCV halal certification business conducted by Mr Elidrissi. The applicants contend that Mr Elidrissi is ‘associated with a competitor of ICCV’s halal certification business’, and rely on this as ground of oppression 11. This was not put as an ‘independent and standalone’ ground of oppression;
(c) A series of requests for information by the Ismail-aligned directors about the standing down and termination of EPIC’s principal, the review of the halal certification business and the standing down of Mr Koyu, the loss of accreditation to certify products for the Saudi Arabian market, the impact of these matters, and the financial positions of ICCV and EPIC. The applicants contend that they made requests that have not properly been responded to. They rely on this as ground of oppression 12;
(d) The failure to make distributions or to provide information about ICCV’s intentions in that regard or generally in relation to the activities and affairs of ICCV and EPIC. The applicants rely on this as ground of oppression 13, although the failure to make distributions, of itself, is not put as an ‘independent and standalone’ ground of oppression;
(e) The failure to provide audited financial statements for the 2023 financial year. The applicants rely on this as ground of oppression 14; and
(f) Whether there has been an ‘irretrievable breakdown’ in the relationships between the member societies that has prevented and will continue to prevent ICCV from ‘fulfilling its constitutional purposes’. The applicants rely on this as ground of oppression 15.
The above is, inevitably, not a complete summary of the issues that arose.
D. The initiation and development of this proceeding
This proceeding was commenced on 10 November 2021. This was during the Dec 2020-Oct 2022 Ismail period. The plaintiffs were ISV, BHIS, EIS, and MMWA, which are the member societies associated with Mr Khodr, Mr Dzelalagic, Mr Shehata and Mr Voloder. They sought orders that those persons be reinstated as directors of ICCV, that board meetings take place in person rather than by Zoom and, alternatively, for an order that they be bought out by the other member societies. The defendants were Mr Ismail, Mr Allday, Mr Guzel, Mr Oruc, Mr Kazi and Mr Hoosen, and CTICV, BSNCF, ALF, TTEIS, and UNMAV (the member societies associated with the Ismail-aligned directors).
As noted above, before those claims could be determined, the Dec 2020-Oct 2022 Ismail period came to an end and the current Khodr period commenced. The plaintiffs then had control of ICCV and their claims that they were oppressed were discontinued. The costs of that aspect of the proceeding were reserved and are to be determined by me.
In the meantime, however, on 25 July 2022, the member societies associated with the Ismail-aligned directors (now out of control of the board) filed a counterclaim. In that counterclaim, which has since been amended and is described instead as a cross-claim, ALF, BSNCF, TTEIS and UNMAV (member societies associated with the Ismail-aligned directors) seek an order that ISV, BHIS, EIS, MMWA, KTICC and ISOMER (member societies associated with Khodr-aligned directors) buy them out, alternatively that they buy them out, or that ICCV be wound up. Mr Khodr, Mr Dzelalagic, Mr Shehata, Mr Voloder and Mr Yildiz (the Khodr-aligned directors) are also defendants to the cross-claim,[6] as is ICCV. It is this cross-claim that I have to decide.
[6]Although no relief is sought against them personally.
The member society associated with Mr Ismail, CTICV, has discontinued its cross-claim and so is not a party to the proceeding, save that it was a party at the time that the initial claim was discontinued and so it is interested in the application for costs of that claim.
So, in summary, when the Ismail-aligned directors controlled the board, the Khodr-aligned directors alleged that ICCV was being run oppressively by the Ismail-aligned directors and sought orders that they be bought out or that ICCV be wound up and the Ismail-aligned directors resisted those allegations and the grant of that relief, and then when the Khodr-aligned directors controlled the board, the Ismail-aligned directors alleged that ICCV was being run oppressively by the Khodr-aligned directors and sought orders for buy outs or that ICCV be wound up and the Khodr-aligned directors resisted those allegations and the grant of that relief.
E. What must be established to obtain relief?
The Court’s powers to order a buy-out of shares or to wind up a company are contained in ss 233 and 461(1)(k) of the Corporations Act 2001 (Cth).
The power to make an order under s 233 of the Corporations Act 2001 (Cth) is conditional on the Court’s being satisfied that the conduct of the company’s affairs has been ‘contrary to the interests of the members as a whole’ or ‘oppressive to, unfairly prejudicial to, or unfairly discriminatory against’ a member or members of the company.[7] The phrase ‘contrary to the interests of the members as a whole’ is to be assessed objectively having regard to how ‘reasonable directors’ would act in attending to the affairs of the company.[8] The phrase ‘oppressive to, unfairly prejudicial to, or unfairly discriminatory against’ a member, is a compound expression that directs attention to whether there has been ‘commercial unfairness’ or conduct that is ‘so unfair that reasonable directors who consider the matter would not have thought the conduct of decision fair’.[9] It is not necessary that the oppressive conduct be ongoing.[10] Further, it has been observed, and I accept, that, ordinarily, shareholders are entitled to have the affairs of a company conducted ‘in the way laid down by the company’s constitution’ and that ‘proceedings of the directors shall be carried out in a normal and orthodox manner’ including that directors should be able freely to express their views at board meetings and to have those views considered.[11]
[7]Corporations Act 2001 (Cth) s 232.
[8]Re Skytraders Pty Ltd [2022] VSC 416, [37] (Button J).
[9]In the Matter of Munja Bakehouse Pty Ltd [2024] NSWSC 6, [56]-[58] (Black J). His Honour cited, with approval, from Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152, [39] (Austin J), and also referred to Munstermann v Rayward [2017] NSWSC 133, [22] (Stevenson J).
[10]Although this may affect the question of relief: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 [182] (Gummow, Hayne, Heydon and Kiefel JJ), cited in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 [39(a)] (Austin J).
[11]Re H R Harmer [1959] 1 WLR 62, 87([Romer LJ).
A breakdown in the relationships between members that prevents a company from functioning properly may lead to a conclusion that the company’s affairs are being conducted contrary to the interest of the members as a whole or in an oppressive fashion without the Court having to attribute blame to one side or the other.[12]
[12]Re Dawning Investments Pty Ltd (2022) 68 VR 226, 240 [34] (Hetyey AsJ).
The power to wind up a company under s 461(1)(k) of the Corporations Act 2001 (Cth) is conditional on the Court’s being satisfied that it is ‘just and equitable’ that the company be wound up. That is the only requirement. The power to wind up a company under s 461(1)(k) somewhat overlaps with the power to do the same thing under s 233 of the Corporations Act 2001 (Cth): it will often be just and equitable to wind up a company if the affairs of that company have been conducted in a way that is contrary to the interests of the members as a whole, or that oppresses some of its members. Section 461(1)(k) would also allow, however, the winding up of a company in circumstances where, for example, there is a deadlock in the management of the company or where there is a failure in the ‘substratum’ of a company as may occur if, for example, ‘irreconcilable differences’ emerge in a company intended by the members to operate as some form of quasi-partnership or on the basis of relationships of mutual confidence.[13] A company may be wound up on this ground if it has become dysfunctional,[14] or unable to achieve its constitutional purposes.[15] A solvent company, though, will not lightly be wound up.[16] It is not necessary that the applicant be without fault, and the presence of fault on both sides might in fact demonstrate the appropriateness of such an order.[17]
[13]See, eg: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, 379-80 (Lord Wilberforce); Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, 687 [89] (Spigelman CJ); Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343, 360 [97]–[98], 364 [119] (Barrett J); Re Catombal Investments Pty Ltd [2012] NSWSC 775, [19] (Brereton J); In the matter of Munja Bakehouse Pty Ltd [2024] NSWSC 6, [20], [45] (Black J).
[14]See eg Haycraft v AF1 Services Pty Ltd [2023] FCA 774 (Stewart J).
[15]See eg Re Tivoli Freeholds Ltd [1972] VR 445 (Menhennitt J).
[16]Deputy Commissioner of Taxation v Casualife Furniture Pty Ltd (2004) 9 VR 549, 578 [487], 580 [493] (Hansen J); Exton v Extons Pty Ltd (2017) 53 VR 520, 545 [89] (Sifris J).
[17]Section 233 of the Corporations Act 2001 (Cth) provides only that the Court ‘may’ make an order under s 233 if the criteria are met. See: Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749, [278] (Rees J). See also Exton v Extons Pty Ltd (2017) 53 VR 520, [49]-[52], [69] (Sifris J), citing Vujnovich v Vujnovich [1988] 2 NZLR 129, 155 (Cooke P, Somers, Casey, Bisson and Gallen JJ), and Ananda v Tomar (No 6) 300 ALR 492, [586]-[589] (Dodds-Streeton J), quoting Austin J in Gregor v British-Israel World Federation (NSW) (2002) 41 ACSR 641, [137]-[141].
Also:
(a) The power to grant relief is expressed in wide terms, and the words used should be given their ordinary meanings and not be limited by examples given in other cases; and
(b) Even where the power to grant relief is enlivened, the Court retains a discretion as to whether to grant the relief sought. The exercise of that discretion will be informed by matters such as whether oppressive conduct is ongoing, whether the applicants are or are in part at fault, whether the company is solvent, and the consequences generally of the granting of relief.[18]
[18]See eg Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749, [279] (Rees J), and Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152, [44] (Austin J).
Finally, both sides said, from time to time, in justification of actions taken, that they acted on ‘legal advice’. I place little weight on that. The issue is not whether steps taken were technically legal, it is whether they were oppressive or contrary to the interest of the members as a whole. A majority vote that oppresses a minority might be ‘legal’ in the sense that it is in accordance with the rules of the company, but that does not make it proper. Also, for the most part the legal advice was not put in evidence and, where it was, the instructions were not in evidence. Where appropriate, I propose to treat an assertion that someone acted in accordance with legal advice as no more than an assertion that they were told that what they intended or wished to do was not illegal.
F. Should the applicants obtain the relief they seek?
F.1 Overview of conclusions – the claim for relief fails
I have identified above the grounds of oppression upon which the applicants rely. The applicants treated some of the grounds as ‘distinct’ and sufficient of themselves to entitle them to relief, and others they relied on only as context. It is necessary, of course, to analyse the grounds separately. Ultimately, however, all of the grounds are to be considered together in order to determine whether, in all the circumstances, the conduct of the company’s affairs has been ‘contrary to the interests of the members as a whole’ or ‘oppressive to, unfairly prejudicial to, or unfairly discriminatory against’ a member or members of the company in a way that justifies an order being made that one group purchase the shares of the other or that the company be wound up, or that it is otherwise ‘just and equitable’ that the company be wound up.
The applicants also focused on ICCV’s role as a not-for-profit organisation that was incorporated, according to its constitution, not just for the purpose of establishing Islamic schools and ‘the slaughtering of livestock in compliance with Islamic Sharia law’ but also for the purpose of promoting ‘Islamic Brotherhood and better understanding and awareness of Islam in the Muslim community’, becoming ‘a positive and contributing part of Islamic activities locally, nationally and internationally’, and maintaining and promoting ‘close contact and co-operation with and between all Muslim organisations’.[19] Although they did not contend that ICCV was akin to a quasi-partnership,[20] they submitted that it had become dysfunctional and unable to achieve the purposes for which it had been incorporated. They pointed out that it had been involved in litigation for many years and that its legal expenses over that time had exceeded $3 million.
[19]Constitution of Islamic Co-ordinating Council of Victoria, cls 1.3, 1.4, 1.12, 1.14 and 1.17.
[20]Cf Ebrahimi v Westbourne Galleries Ltd [1973] AC 360.
The amount of time, energy and money that has been spent on litigation by ICCV and its member societies is, obviously, of concern. In my view, however, that is a context in which the other issues may be considered, and a reason for which it might be concluded that there is too much dysfunction or distrust for the company to continue, but is not of itself a reason for winding up a company that continues to operate and that remains solvent. The majority of the legal costs incurred relate to the earlier litigation that was resolved by the entry into of the July 2020 Deed of Settlement because that settlement involved ICCV paying the legal costs incurred by its member societies on both sides of that litigation. This proceeding, although initiated by some of the respondents when they sought their reappointment as directors, has since been prosecuted by the applicants. It cannot be the case that members of a company can rely on the cost of defending claims they bring as a reason for which their claims should succeed. Further, ICCV itself has not actively participated in opposing the applicants’ claims and those claims have been opposed instead by some of the other member societies, and so it seems unlikely that ICCV’s assets are being spent, at the moment, on legal fees.
The evidence has revealed many occasions where individuals acted intolerantly and uncompromisingly towards each other. Much of the email correspondence, which I have not set out in these reasons (because of its volume), uses petty language that reveals the extent to which the Khodr-aligned directors have been irritated by the Ismail-aligned directors and the Ismail-aligned directors have been irritated by the Khodr-aligned directors. There have been occasions where ICCV has been dysfunctional, particularly when there was an unresolved dispute about whether Mr Hoosen was entitled to attend board meetings and different groups held different meetings and produced different minutes. However, that is not the full picture:
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