Sengthong v Lao Buddhist Society of NSW Incorporated

[2016] NSWSC 1408

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Sengthong v Lao Buddhist Society of NSW Incorporated [2016] NSWSC 1408

Hearing dates:

19-22 September 2016

Date of orders:

14 October 2016

Decision date:

05 October 2016

Jurisdiction:

Equity

Before:

Lindsay J

Decision:

(1) The parties are to be allowed an opportunity to bring in Short Minutes of Orders giving effect to these reasons for judgment and dealing with ancillary questions, if any.

 

(2) An order is to be made, under section 6 of the Charitable Trusts Act 1993 NSW, that leave be granted for maintenance of these proceedings.

 

(3) The plaintiff’s application for an order that the first defendant be wound-up is to be dismissed.

 (4) Orders are to be made for the appointment of a receiver and manager of the property and undertaking of the first defendant pending the conduct of a court-supervised election of a management committee for the first defendant.

Catchwords:

CHURCHES AND RELIGIOUS ORGANISATIONS – Constitution, management and powers – Management Committee – Nature and extent of Honorary President’s right of veto

 

ASSOCATIONS AND CLUBS – Jurisdiction of the Courts – Interference in internal management - Application for winding up dismissed - Appointment of receiver and manager to conduct a court-supervised election – Court’s jurisdiction to appoint receiver

CHARITIES – Jurisdiction of the Court under Charitable Trusts Act – Charitable trust proceedings – Religious charitable institution – Receipt of public donations - Leave to maintain proceedings granted under section 6

Legislation Cited:

Associations Incorporation Act 2009 NSW
Associations Incorporation Act 1984
Associations Incorporation Regulation 2016 NSW
Charitable Trusts Act 1993 NSW
Civil Procedure Act 2005 NSW
Corporations Act 2001 Cth
Supreme Court Act 1970 NSW
Uniform Civil Procedure Rules 2005 NSW
New South Wales Act 1823 (Imp), The Third Charter of Justice, the Australian Courts Act 1828 (Imp)
Electoral Act 1907

Cases Cited:

Ahmed v Chowdhury [2012] NSWSC 1452
Atalar v Nami (Bryson J, unrep, 10 November 1988) BC 8801346
Baxter v West (1858) 28 LJ Ch 169
Bond Brewing Holdings Ltd v National Australia Bank Ltd [1991] VicRp 31; (1990) 1 ACSR 445
Cameron v Hogan [1934] HCA 24; [1934] 51 CLR 358
Charrington & Co Ltd v Camp [1902] 1 Ch 386
Clarke v Australian Labour Party (SA Branch) [1999] SASC 365; (1999) 74 SASR 109
Clydesdale v McManus and Anor (1934) 36 WALR 89
Coleman v Liberal Party of Australia, NSW Division (No. 2) [2007] NSWSC 736; 212 FLR 271
Commonwealth of Australia v ABC 2 Group Pty Limited [2008] NSWSC 1383; 69 ACSR 228
Co-operative Farmers' & Graziers' Direct Meat Supply Ltd v Smart [1977] VicRp 47; [1977] VR 386
Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547
Estate Polykarpou; Re a charity [2016] NSWSC 409
Hopkins v Worcester and Birmingham Canal Proprietors (1868) LR 6 Eq 437
John v John [1898] 2 Ch 537
John v Rees [1970] Ch 345
Kabir Ahmed and Ors v Ayubur Rahman Chowdury and Ors [No. 2] [2011] NSWSC 954
Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc. [2015] NSWSC 638
Lamerand v Lamerand (No 1) (1960) 80 WN (NSW) 198
Lemm v Federal Commissioner of Taxation (1942) 66 CLR 399
Marshall v Charteris [1920] 1 Ch 520
McLean v McKinlay and Ors [2004] WASC 2
Mitchell v Simons (1862) 1 SCR (NSW) Eq 70
Moss Steamship Co Ltd v Whinney [1912] AC 254
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386
National Australia Bank Limited v Bond Brewing Holdings Limited (1990) 169 CLR 271
Owen v Homan [1853] EngR 883; (1853) 10 ER 752
Parker v Campden London Borough Council [1986] Ch 162
Radmanovich v Nedeljkovic (2001) 52 NSWLR 641
Rana v Survery (No 2) [2012] NSWSC 905; [2013] NSWCA 234
Re AAA; Report on a Protected Person’s Attainment of the Age of Majority [2016] NSWSC 805
Re Crompton & Co Ltd [1914] 1 Ch 967
Re Manchester & Milford Railway Co; Ex parte Cambrian Rail Co (1880) 14 Ch D 645
Re Newdigate Colliery Ltd [1912] 1 Ch 468
Roman Catholic Archbishop of Melbourne v Lawlor (19234) 51 CLR 1
Tate v Barry (1928) 28 SR (NSW) 380
The Sikh Association of Sydney and Ors v Cheema and Ors (McLelland CJ in Eq, unrep, 11 April 1996) BC 9601222
UTS v Gerrard [2001] NSWSC 368
Weinstock v Beck (2013) 251 CLR 396

Texts Cited:

Gino dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010) paragraphs [17.65]-[17.74]
Meagher Gummow & Lehane's "Equity: Doctrines and Remedies" 4th Edition at 908

Category:

Principal judgment

Parties:

Plaintiff: Phosy Sengthong
First Defendant: Lao Buddhist Society of NSW Incorporated ABN 971 965 324 51
Second Defendant: Thongsavanh Chanethathirath
Third Defendant: Attorney General for NSW

Representation:

Counsel:
Plaintiff: MK Condon SC and JG Simpkins
First Defendant: Submitting Appearance
Second Defendant: DR Stack
Third Defendant: H El Hage

  Solicitors:
Plaintiff: Thurlow Fisher Lawyers
First Defendant: VCD Lawyers (Submitting appearance)
Second Defendant: VCD Lawyers
Third Defendant: NSW Crown Solicitor

File Number(s):

2015/00206780

Judgment

INTRODUCTION

1. By a summons filed on 15 July 2015, the plaintiff (a member of the first defendant) applies for an order under section 63 of the Associations Incorporation Act 2009 NSW that the first defendant (an association governed by the Act) be wound-up on grounds, paraphrasing the section, that:

1. the Management Committee of the first defendant has acted in affairs of the first defendant in the interests of the Management Committee, or members of the Management Committee, rather than in accordance with the objects of the first defendant, or otherwise in a manner that is unfair or unjust to members of the first defendant (section 63(1)(f)); or

2. it is just and equitable that the first defendant be wound-up (section 63(1)(i)).

2. The summons, as filed, named the first defendant as the only defendant in the proceedings.

3. At a pre-trial directions hearing on 6 September 2016, the plaintiff foreshadowed a challenge to the retainer of the solicitor who had entered an appearance for the first defendant.

4. In order to accommodate that challenge in a manner designed to enable real questions in dispute between contending members of the first defendant to be determined, on 9 September 2016 I made an order that the Honorary President of the first defendant be joined as a second defendant, allowing him to assume the role of the plaintiff’s contradictor, and transforming the first defendant’s appearance in the proceedings into that of a submitting appearance.

5. Orders made on that occasion were made in exercise of the equitable jurisdiction of the Court discussed in Ahmed v Chowdhury [2012] NSWSC 1452 at [27]-[51], following the seminal judgment of Megarry J in John v Rees [1970] Ch 345 at 369-374. The object of the orders was both to provide a procedurally fair regime for the determination of questions in dispute, and to bind all members of the first defendant to the Court’s determination.

6. As foreshadowed at the directions hearing on 9 September 2016, on 13 September 2016 the plaintiff filed a notice of motion seeking such, if any, leave under section 6 of the Charitable Trusts Act 1993 NSW required to maintain the proceedings. That motion, returnable at the commencement of the hearing of the summons on 19 September 2016 led to joinder of the Attorney General of NSW (the State’s “protector of charities”) as a third defendant, and an order that the motion be heard together with the summons.

7. The plaintiff’s motion was filed, out of an abundance of caution, against the possibility that the Court might find that the proceedings constitute, in whole or part, “charitable trust proceedings” within the meaning of section 5 of the Charitable Trusts Act 1993, with a consequence that, by operation of section 6 of that Act, the proceedings could not, to that extent, be maintained without the authority of the Attorney General or a grant of leave by the Court.

8. The Attorney was represented throughout the hearing of the summons (and the motion), but confined her attention to the operation of the Charitable Trusts Act, leaving the adversarial contest to the plaintiff and the second defendant as representative members of the first defendant.

9. During the course of the parties’ opening addresses, I raised two further procedural questions which, here, require formal notice.

10. The first question was whether another defendant should be added to the proceedings; namely, Lao Community Advancement (NSW) Cooperative Limited, an entity commonly known amongst the membership of the first defendant as “LCAC”.

11. Under a deed of settlement made between the parties on 2 December 2013, in settlement of earlier proceedings (numbered 2011/00229904) in the Court, LCAC is licensor to the first defendant of land at Edensor Park, in the western suburbs of Sydney, upon and from which the first defendant conducts its principal activities.

12. There is some common membership between the two organisations, both of which represent the Lao Buddhist community. Members of the first defendant factionally aligned with, and supportive of, the plaintiff are actively involved in the conduct of the affairs of LCAC.

13. Historically, the first defendant may have developed, initially, as a “committee” of LCAC. LCAC was incorporated in May 1982. Although the first defendant was not incorporated until 1989, some of the evidence speaks of it coming into existence, as an unincorporated association, in about 1983.

14. The hearing of the present proceedings was conducted upon a common assumption that the deed of settlement between LCAC and the first plaintiff is binding upon both entities. On that basis, both the plaintiff and the second defendant were content for the proceedings to be determined without joinder of LCAC as a defendant.

15. In acquiescing in that position, I reminded the parties that, should there be a future challenge to the enforceability of the deed of settlement, an answer to any such challenge may well be that it is an abuse of the processes of the Court. LCAC is plainly aware of these proceedings, and acquiesces in their determination without its formal joinder in the proceedings. Senior counsel for the plaintiff appeared for LCAC in the proceedings settled, and he has a current retainer from LCAC in respect of other matters. He undertook to inform the Court in a timely manner should LCAC intend, against expectations, to challenge the validity of the deed of settlement. He expected no such challenge. None has been forthcoming.

16. The second question was whether it is open to the Court, on the hearing of the summons, to make orders affecting management of the affairs of the first defendant (essentially, orders for the conduct of a court-supervised election of a new Management Committee) falling short of an order that the first defendant be wound-up.

17. This question was identified with express reference to the terms of section 90(1) of the Civil Procedure Act 2005 NSW, and rule 36.1 of the Uniform Civil Procedure Rules 2005 NSW, which authorise and require the Court to give such judgment, or to make such order, as the nature of a case may require, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion.

18. Each of the plaintiff and the second defendant, by their respective counsel, expressly accepted that the Court has jurisdiction to make, and, upon an exercise of discretion in the current proceedings, can make, orders designed to regularise management of the affairs of the first defendant by the conduct of an election via the appointment of a receiver and manager.

19. The jurisdiction to make such orders was primarily located by counsel in sections 23 and 67 of the Supreme Court Act 1970 NSW, coupled with section 1322 of the Corporations Act 2001 Cth as rendered applicable, and modified, by section 96 of the Associations Incorporation Act 2009 and regulation 18 of the Associations Incorporation Regulation 2016 NSW.

20. The Attorney General expressly accepted that the jurisdiction of the Court conferred by those provisions, or otherwise existing, is not in any way qualified by the Charitable Trusts Act in the event that, should the proceedings attract the definition of “charitable trust proceedings”, a grant of authority or leave is made under section 6 of that Act. In particular, the Attorney accepted that the jurisdiction to appoint a receiver in charitable trust proceedings (found in section 7(1) and 7(2)(f)-(g) of the Act) does not operate to limit other powers of the Court. Section 7(1) is expressly to that effect.

21. A dialogue between bench and bar, and between counsel, resulted in an express acceptance:

1. by the plaintiff and the second defendant, that grounds exist for intervention by the Court in the affairs of the first defendant, and the Court should grant such relief as the nature of the case requires; and

2. by the Attorney General, that a grant of leave under section 6 of the Charitable Trusts Act is appropriate, as a means of facilitating a grant of such relief, against the probability that (to some extent at least) the proceedings attract characterisation as charitable trust proceedings.

22. I propose to grant leave under section 6 so as to remove any procedural impediment to a grant of relief that is broader than that which is, or may be, available under section 7 of the Charitable Trusts Act.

23. Implicit in the grant of such leave is acceptance of the Attorney’s submission that, at least insofar as the first defendant received donations from the public for the purposes of maintaining the temple and the Community Hall at the Temple property, and these proceedings concern administration of those funds, the proceedings constitute “charitable trust proceedings”: Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1 at 32; Lemm v Federal Commissioner of Taxation (1942) 66 CLR 399 at 411. It is not necessary, for the purpose of these proceedings, to explore the extent to which the first defendant, as a charitable institution, holds its assets on charitable trusts: Gino dal Pont, Law of Charity (Lexis Nexis Butterworths, Australia, 2010), paragraphs [17.65]-[17.74].

24. The plaintiff maintains his contention that the relief properly to be granted by the Court is an order that the first defendant be wound-up.

25. The second defendant contends that the application for a winding-up order should be dismissed, but that the Court can and should supervise the conduct of an election of a new Management Committee for the first defendant, following which orders can and should be made (if and as may be required) under section 1322 of the Corporations Act 2001 (as modified) to ensure that any “irregularities” in the conduct of the affairs of the first defendant are validated.

26. During the course of argument, I indicated that, should the Court travel this route, it would not act merely upon an undertaking to the Court (Exhibit 2D3), proffered by the putative Management Committee supported by the second defendant, to conduct an election (allowing a vote to all known supporters of the plaintiff’s putative Management Committee) on their own responsibility. Discord between the factions represented by the plaintiff and the second defendant has run too deep and too long for the Court not to insist that an election to be conducted under the supervision of the Court be conducted by an appointee of the Court, backed up by the ability of the Court to make “executive orders” (to use an expression of Young CJ in Eq, in Radmanovich v Nedeljkovic (2001) 52 NSWLR 641 at [214]; [2002] NSWSC 212) to facilitate the conduct of an orderly election.

27. With encouragement from the bench, the plaintiff and the second defendant are now substantially agreed upon the form of orders to be made for the conduct of a court-supervised election, via a receiver and manager, in the event that a determination is made to dismiss the plaintiff’s application for a winding up order.

28. A receiver and manager is an “officer of the court” in the sense that his or her appointment, discharge and discipline are within the control of the Court; the performance of his or her functions is subject to direction by the Court; and any interference with his or her performance of those functions may be dealt with as a contempt of court.

29. It is not necessary, here, to dwell upon the origins, or full implications, of characterisation of a receiver and manager as an officer of the Court. Reference can be made, in passing, to the observations made by a Young J in Glazier Holdings Pty Limited v Australian Mens Health Pty Limited (NSW Supreme Court, unreported, 30 April 1998) BC9801774 at 6 et seq, extracted by Warren J in Martyniuk v King [2000] VSC 319 at [38] in a judgment adopted by Barrett J in UTS v Gerrard [2001] NSWSC 368 at [68]. However, one distinctive feature of the appointment of a receiver and manager is worthy of particular notice: the Court may require that security be given for his or her due performance of the functions of a receiver and manager.

30. A receiver and manager, in a sense, acts as an external administrative arm of the Court (not being part of the Court itself), potentially dealing with a multitude of detail unable to be dealt with efficiently or fairly in a formal court setting.

31. The intervention of the Court, via the appointment of a receiver and manager, would allow all members of the first defendant to own the election process, not merely one faction. A receiver and manager would be required to act independently of the parties. That much is uncontroversial.

32. The parties also accept that it is both prudent, and appropriate, for the Court to determine questions about the proper construction of the constitution of the first defendant identified, during the course of the hearing, as a principal source of dissension within the membership of the first defendant about the powers of the first defendant’s Honorary President.

33. By this judgment, I take up the parties’ invitation that I determine those questions as an incident of a determination that the application for a winding-up order be dismissed; that a receiver and manager of the assets and undertaking of the first defendant be appointed for the purpose of conducting an election of a new Management Committee; and that a report be made to the Court by the receiver and manager as a preliminary to consideration of what, if any, remedial relief should be granted by reference to section 1322.

THE FACTUAL MATRIX

34. Lao Buddhist Society of NSW Incorporated (the first defendant) was incorporated in November 1989 (under the name Wat Lao Buddhist Society of New South Wales Incorporated) under the Associations Incorporation Act 1984 NSW, since repealed and replaced by the Associations Incorporation Act 2009. It changed its name in 1996.

35. Subject to qualifications not presently material, the 2009 Act applies to the first defendant as if registered under that Act, not the 1984 Act: Associations Incorporation Act 2009, Schedule 4 Part 2. A new regulation (the Associations Incorporation Regulation 2016) commenced operation on 1 September 2016.

36. No party has suggested that changes in the form of the Associations Incorporation legislation have a material effect on the outcome of the present proceedings, save that (at a later stage of the proceedings) attention may need to be given to the operation of section 1322 of the Corporations Act 2001 Cth, rendered applicable to the first defendant by reforms introduced by the 2009 Act.

37. Clause 2(i) of the first defendant’s constitution (incorporating amendments duly made in 2005) is in the following terms:

“2. AIMS AND OBJECTS

(i)   The aims and objects of Lao Buddhist Society of NSW Incorporated are set out hereunder: -

(a)   To establish a residence for the Lao Buddhist monks and the monks of other nationalities as well as a Buddhist Temple and Community Hall;

(b)   An educational institution for the training and ordination of Buddhist monks, novices and nuns and for the training of lay-people in Buddhist philosophy and practice;

(c)   To provide a place of public worship;

(d)   To carry out the Buddhist Teachings to all Buddhists and to others who want to learn about and practise Buddhism;

(e)   To organise and lead the congregation, worshipping and other traditional religious activities;

(f)   To organise religious instruction for children and youths so that they may be aware of ethical and moral values and so become better

citizens of Australia;

(g)   To render spiritual assistance and/or counselling to members or to any Buddhists in times of need;

(h)   To conduct training programs on Buddhist youth leadership and community service;

(i)   To teach Lao traditions and culture and to practise meditation;

(j)   To provide religious services for the Lao Buddhists and for Buddhists of other nationalities;

(k)   To be the spiritual body to guide, assist and care for Buddhists in general and aged Buddhists in particular;

(l)   To organise and/or sponsor public talks, forums and seminars on Buddhism and other related topics;

(m)   To publish journals, newsletters and books on Buddhist and other related subjects;

(n)   To promote and safeguard friendship between Lao Buddhist monks, Buddhists in general and people of other religions and their religious organisations.”

38. Despite dissension within the membership of the first defendant about management of its affairs, the evidence supports a finding that activities undertaken by, or in the name of, the first defendant (by a vibrant community committed to it) have conformed substantially to the aims and objects identified in its constitution.

39. Those activities have centred upon a property in Smithfield Road, Edensor Park.

40. On that property are located a Sim (temple), a Kuti (a residence for monks), a toilet block, a community hall and a memorial wall.

41. The property is publicly known as the Wat Phrayortkeo Lao Buddhist Temple. In common parlance, a reference to “the Temple” can generally be taken to be a reference to the property as a whole. A reference to “the temple” is a reference to the Sim, a place of worship.

42. The freehold of the property is owned by the New South Wales Land and Housing Corporation, subject to a lease (registered Lease Number 039096) in favour of LCAC.

43. The term of LCAC’s lease commenced on 1 July 1992. It expires on 30 June 2052. The lease presently has 36 years to run.

44. Despite dissension within the membership of the first defendant, the parties to the present proceedings unite in their acceptance of the binding character of the deed of settlement made by on behalf of LCAC and the first defendant on 2 December 2013.

45. That deed defines the terms upon which the first defendant is entitled to use the Temple. By the deed, LCAC granted the first defendant an exclusive licence to occupy the upper level of the monk’s residence and the temple, together with a non-exclusive licence to occupy the lower level of the monks’ residence and the common areas of the temple, and non-exclusive access to the Community Hall to enable the first defendant to hold at least 12 religious ceremonies per year.

46. Under the deed, the first defendant’s rights of licence are coterminous with the term of LCAC’s lease. That is, they extend to 30 June 2052.

47. By the deed, the first defendant undertook to expend $100,000, during 2014, towards the costs for the completion of the Community Hall, its ongoing maintenance and repair. That undertaking has been honoured.

48. By the deed, LCAC and the first defendant agreed to form a joint financial committee to supervise the application of funds generated from jointly agreed fundraising events and religious ceremonies.

49. Between 6-8 monks reside at the Temple. By and with their consent, the second defendant is their Abbot and, as such, under its constitution, he is the first defendant’s Honorary President. His is not an office subject to election by the general membership of the first defendant. By virtue of his monastic office, ex officio, he is a member of the Management Committee of the first defendant: Constitution, clauses 3(a), 4(a), 7(a), 9(a), 11(a)(i) and 12(a).

50. Approximately 100 people attend the Temple daily to worship according to the Buddhist faith.

51. Although factionalised members of the first defendant have held themselves out as constituting two distinct “Management Committees” of the first defendant since disputed elections in 2006, the “Management Committee” recognised and supported by the monks (including the second defendant as Abbott) has routinely and consistently maintained, and conducted the traditional Buddhist activities routinely conducted at, the Temple insofar as the property has been made available to the first defendant by LCAC. It has conducted the regular festivals at the Temple through which, with the assistance of monks resident at the Temple, the Buddhist community celebrates its cultural identity and raises revenue for maintenance of the Temple and Temple activities.

52. This “Management Committee” is known within the membership of the first defendant as “LBS 17” in an allusion to the fact that, in the year of schism suffered by the first defendant (2006), members of that committee were first purportedly elected on 17 December.

53. The “Management Committee” supported by the plaintiff, but not the second defendant or other monks living at the Temple, is known within the membership of the first defendant as “LBS 12”. That name is an allusion to the fact that its membership was first purportedly elected on 12 November in the year of schism, 2006.

54. The activities of LBS 12 have been constrained by a lack of support from the Abbott and the other monks resident at the Temple; a lack of regular access to the Temple; and, as time has passed, a smaller supporter network than that able to be sustained by LBS 17. Religious activities organised by LBS 12 have depended upon the provision of services by monks resident elsewhere than the Temple.

55. The schism within the membership of the first defendant had its origins in the sad reality that, in 2004-2005 or thereabouts, the then Lay President of the first defendant (now deceased) misappropriated $196,000 or thereabouts of the association’s money in circumstances in which some members of the first defendant attributed blame to LBS 12 supporters for a want of prudential oversight of the association’s finances.

56. The second defendant, believing that he was entitled to do so under clause 13 (f) of the Constitution of the first defendant, unilaterally and prospectively directed that the first defendant’s AGM scheduled for 12 November 2006 be adjourned to a date to be fixed so that concerns about the candidacy of particular individuals seeking election to the Management Committee could be the subject of informal negotiations within the membership of the first defendant.

57. Those members of the first defendant who became, as it were, the founding members and supporters of LBS 12 paid no heed to the second defendant’s determination. They purported to elect a Management Committee.

58. Those who became, as it were, the founding members and supporters of LBS 17, in their turn, paid no heed to what happened on 12 November 2006. They proceeded, on 17 December 2006, to elect a Management Committee.

59. Each “Management Committee” (LBS 12 and LBS 17) has continued, with biennial elections supported by factional adherents, since that time.

60. Periodic attempts at reconciliation, including a formal mediation conducted by Keith Mason AC QC, came to nothing. Threats by the Secretary of the Department of Fair Trading (as the responsible Department of the NSW Government continues to be known colloquially), to cancel the registration of the first defendant under the Associations Incorporation Act, and ancillary warnings, finally led, with unhealthy procrastination, to the current proceedings.

61. Only during the course of the hearing of the summons did the plaintiff and the second defendant, each with the benefit of legal advice in a litigation setting, come to a mutual recognition that each of the disputed elections of 2006 was invalid and that curial intervention in the affairs of the first defendant is required.

62. It is not necessary, and it would not be helpful, to lay out in this judgment, in chapter and verse, the factual foundations for the parties’ mutual concession about the invalidity of the disputed elections. I am satisfied that the concession is well founded. I propose to act upon it. It serves nobody’s interests to say more.

63. An incorporated voluntary association, bound by law to be managed by a single management committee, cannot, without legal error, reasonably be expected, or allowed, to elect, and to sustain over a decade, competing committees, each claiming a right to manage the association (if need be) to the exclusion of the other and to the exclusion, incidentally, of members of the association who adhere to that other.

64. By their persistence in a mutual failure to bring constitutional order to management of the first defendant, the competing management committees, represented in these proceedings by the plaintiff and the second defendant respectively, have exposed the association to a risk of deregistration despite the fact that, one way or another, the governing purpose of the association (the service of a faithful Buddhist community) has been continuously advanced and the community has evidently flourished.

65. The parties’ failure to resolve differences between competing factions within the membership of the first defendant is, in large part, a product of a culturally conditioned forebearance which, although commendable in the abstract, needs to recognise its practical limits in governance of an incorporated association and, incidentally, in the management of property. In a micro, no less than in a macro, sense, order and good government may be prerequisites of peace.

66. If the first defendant is to continue in “business” (to use a word not wholly apt for a religious body) there needs to be a firm resolution of the identity of those in control of its management. Without that, the property of the association is at risk and those who deal with it (be they members of, or strangers to, the association) may be unable to rely upon dealings with those who hold themselves out as entitled to represent it.

67. As I heard her evidence, the plaintiff’s principal witness implicitly acknowledged that she may have acted wrongly in her failure (as the first defendant’s then Public Officer) to prevent the misappropriation that rent the membership of the first defendant apart more than a decade ago. The second defendant, for his part, deposed expressly to his willingness, as spiritual leader of the Temple community, to serve the whole community, and to abide the Court’s determination about the nature and scope of his powers, under the Constitution, as Abbott. Each witness gave evidence in a dignified, respectful manner, confident of the propriety of the case advanced. No-one took a backward step.

68. The bona fides of no party, or witness, presently before the Court is under challenge. Differences as to the nature of relief to be granted by the Court remain; but debate on that question has been, and can be, had without attribution of bad faith to any person.

69. A systemic difficulty with the maintenance of goodwill between members of the first defendant actively engaged in management of the association’s affairs has been imprecision in the language of the Constitution’s definition of the powers of the Abbott vis-a-vis the first defendant’s Management Committee. To that topic I must now turn.

THE MEMBERSHIP AND MANAGEMENT OF THE FIRST DEFENDANT UNDER THE CONSTITUTION

Membership of the First Defendant

70. Membership of the first defendant is open to:

1. all Buddhist monks, novices and nuns who have accepted an invitation (made at the instigation, or subject to approval, of the Abbott and the monastic community of the first defendant) to join that monastic community: Constitution, clauses 4(a) and 5(a).

2. Buddhist lay persons of Lao and other ethnic backgrounds who have sincerely gone to the Buddha (teacher), the Dhamma (his Teaching) and the Sangha (the monks and nuns) for refuge and wish to participate in the activities of the first defendant: Constitution, clause 4(b).

71. Clause 3(a) of the Constitution defines “Buddhist” to mean “a person who has sincerely gone for refuge and thereby accepts the ideals of the Buddha, the Dhamma and the Sangha”. The same provision defines “Sangha” to mean “fully ordained Buddhist monks, as well as novices and nuns who have taken the ten (10) precepts and are training for higher ordination. Buddhist monks, nuns and novices are those who have left home for the homeless life and to pursue a monastic life.”

72. Under the Constitution, the monastic community of the first defendant is, essentially, self-governing: Constitution, clauses 3(a), 4(a), 5(a), 7(a), 9(a), 11(a)(i)-(ii) and 12(a).

73. Although the Constitution provides a procedure for nomination of a person for lay membership of the first defendant, and for approval or rejection of such a nomination by the Management Committee (clause 5(b)-(e)), clause 4(b) of the Constitution speaks in terms of a sincere Buddhist lay person being “automatically eligible” for membership of the first defendant.

74. The Constitution requires the first defendant to maintain a register of members: clauses 4(c) and 5(e).

75. Membership of the first defendant is not lightly lost. A person ceases to be a member if he or she dies, resigns his or her membership or is expelled: clause 8.

76. The Constitution provides for a nominal “annual membership fee” to be paid by lay members (clauses 5(d) and 9(b)-(c)), but there is nothing in the terms of the Constitution to the effect that a failure to pay an annual fee carries the consequence of a loss of membership. Clause 12, which governs the election of Management Committee members, does not include a requirement that candidates standing for election, or members seeking to cast a vote, be “financial”. Payment of membership fees is not expressed to be a condition precedent to eligibility for election or a right to vote.

77. Clause 12(b), which expressly deals with eligibility to run for the offices of Lay President, Secretary or Treasurer of the first defendant, is consistent with a right to candidacy residing in “any Buddhist (one who has sincerely gone for refuge to the Buddha, the Dhamma and the Sangha)” irrespective of whether he or she is, or ever has been, a member of the first defendant.

The Management Committee of the First Defendant

78. The Management Committee comprises: the Honorary President (the Abbott); the Assistant to the Honorary President, appointed from the Sangha; a Lay President; two Lay Vice-Presidents; a Lay Secretary; a Lay Treasurer; and four general lay members: Constitution clause 11(a).

79. Where no person holds the office of Lay Secretary, references in the Constitution of the first defendant to the Lay Secretary are to be taken as references to the association’s Public Officer: Clause 3(a). The Public Officer is not a member, but an appointee, of the Management Committee: Clause 25.

80. References in the Constitution to “the President”, a “Vice President”, “the Secretary” and “the Treasurer” are to be taken as references to the “Lay President”, a “Lay Vice President”, the “Lay Secretary” and the “Lay Treasurer” respectively: Constitution, clause 3(a).

81. Each lay Management Committee member is elected biennially at an annual general meeting of the first defendant and serves a term that expires at the conclusion of the second AGM following his or her election: Constitution, clauses 11(b) and 12(h).

82. The election of lay members of the Management Committee is governed by clauses 12(b)-(f) of the Constitution. Prima facie, candidates for election to the offices of Lay President, Secretary and Treasurer are required to submit an “application” to the Management Committee at least 14 days before the date of the AGM at which an election is scheduled to take place: Constitution, clause 12(b). If no applications for those offices are received by the Management Committee within the prescribed time, the Management Committee is required to submit names of possible candidates to the AGM: clause 12(c). Nominations for general Management Committee members are called from the floor of the AGM: clause 12(e). An election of the Management Committee is conducted by a show of hands of members of the first defendant present at the AGM: clauses 12(d) and (f).

83. No person can hold more than one office in the Management Committee at any one time (Constitution, clause 11(e)), and no person can be elected as Lay President, Lay Vice President, Lay Secretary or Lay Treasurer for more than two consecutive terms (clause 11(d)).

84. On its face, the Constitution imposes no limit on the length of service of the monastic members of the Management Committee, each of whom is chosen by the members of the Sangha (Constitution, clauses 11(a)(ii) and 12(a)). The evidence does not traverse the internal workings of the Sangha.

85. The Abbott, as Honorary President of the first defendant, is entitled to give an opening address at all AGMs: Constitution, clause 17(a). However, one of the lay office holders generally chairs the business of an AGM: clauses 17(b)-(d). The Constitution does not contemplate the Abbott, or any other monastic member of the first defendant, doing so by virtue of their office. By consensus they might do so, but not by right.

86. One or another of the lay office holders also generally chairs meetings of the Management Committee: Constitution, clauses 13(g)-(i). The Constitution does not contemplate the Abbott, or his Assistant, doing so by virtue of their office. Again, by consensus they might do so, but not by right.

87. The Management Committee is required to meet monthly: Constitution, clause 13(a). A quorum is six members of the Committee: clause 13(b).

88. The Lay President may at any time (and the Lay Secretary on the requisition of any two members of the Management Committee may) summon a meeting of the Management Committee: Constitution, clause 13(a). Ordinarily, one would expect the Lay President to summon a meeting in consultation with members of the Management Committee. However, the Constitution caters for the contingency that the Honorary President and his Assistant (or any two members of the Management Committee) might requisition such a meeting.

89. Clause 13(c) of the Constitution provides that questions arising at any meeting of the Management Committee are decided by a majority of votes of those present, and a determination by a majority of the members of the Management Committee present is for all purposes a determination of the Management Committee.

90. In the case of an equality of votes on a question for decision at a Management Committee meeting, the Honorary President and the Lay President are entitled to exercise a joint second or casting vote: Constitution, clause 13(d).

91. The critical, controversial provision of the Constitution, found under the heading “Proceedings of the Management Committee” to clause 13, is clause 13(f). It is in the following terms:

“The Honorary President shall have the right to veto any decision of the Management Committee should he consider such decision contrary to the best interests of the Buddha Sanana, the Aims and Objects or the harmonious conduct of the Lao Buddhist Society of NSW Incorporated and the Honorary President shall then return the decision to the Management Committee for reconsideration.”

92. The proper construction of clause 13(f) is to be determined upon a reading of the Constitution as a whole.

Management of the First Defendant, and Clause 13(f) of the Constitution

93. Critical to the proper construction of clause 13(f), in that general context, are clauses 10(a) and (b) of the Constitution.

93. Clause 10(a) provides that “Lao Buddhist Society of NSW Incorporated shall be an autonomous body and the sole responsibility for the administration of its affairs rests with the members and the Management Committee”.

94. Clause 10(b) provides that “[the] Management of Lao Buddhist Society of NSW Incorporated shall be vested in the Management Committee.”

95. Provisions of the Constitution dealing with the calling or conduct of a “general meeting” of the members of the first defendant are intermingled with those relating to the association’s “annual general meeting”, rather than dealt with separately under a distinct heading: Constitution, clauses 3(a), 17(e), 17(f), 17(h), 17(k), 18 and 19.

96. At a general meeting of members of the first defendant, whatever its character, each member present has one vote (clauses 17(h) and 17(k)); members are not entitled to vote by proxy (clause 17(k)); and, semble, 50 members are required for a quorum (clause 17(f)).

97. The Constitution provides for a meeting of the Management Committee to be requisitioned by Committee members (clause 13(a)), but it makes no provision for a general meeting of members of the first defendant to be requisitioned. This is consistent with an assumption that, subject to an AGM, most of the formal business of the first defendant is to be transacted by, or through the medium of, the Management Committee.

98. Clauses 10(a) and (b) of the Constitution differ in the language they deploy to the extent that the former speaks of “the administration” of “the affairs” of the first defendant and the latter speaks of “the management of” the first defendant.

99. The field of operation of the two expressions is substantially the same. However, deployment of a subtle change in language in two provisions of the Constitution sharing such close proximity appears to be deliberate, as do the references to “autonomy” and “sole responsibility” in clause 10(a).

100. The self-governing character of the monastic community of the Temple for which the Constitution provides, and the primacy of place attributed to the Abbott as Honorary President, are counterbalanced: by clause 10(a)’s characterisation of the first defendant as an autonomous body and allocation of “sole responsibility for the administration of its affairs” to its members and the Management Committee; and by clause 10(b)’s vesting of “management” of the association in the Management Committee.

101. The Constitution plainly requires the Management Committee to be answerable to the members of the first defendant generally. A majority of the members of the Management Committee are lay members: Constitution, clause 11(a). They are elected by the members of the first defendant: clauses 12(b)-(f). The Management Committee is required to present a report and audited financial statement to each AGM: clauses 10(d) and 16(c).

102. Although the Abbott, as Honorary President, has a “right of veto” referable to “decisions” of the Management Committee (clause 13(f)) and a right of precedence in giving an opening address at AGMs (clause 17(a)), he does not chair either a meeting of the Management Committee or an AGM. As a member of the Management Committee, and as a member of the first defendant, he has a deliberative vote at Committee meetings and at an AGM; but an entitlement to a “second or casting vote” in each forum is expressed to be that of the Honorary President and the Lay President jointly: clauses 13(d) and 17(j).

103. The Abbott and, through him, members of the monastic community who are members of the first defendant exercise spiritual leadership of the community they serve, not limited to members of the first defendant.

104. However, in a finely balanced division of power and responsibility, the Constitution attributes precedence in decision making on secular questions to the lay membership of the Management Committee and, one might reasonably infer, the membership of the first defendant generally.

105. Following immediately upon clause 10(a), significance attaches to clause 10(b)’s vesting of “management” of the first defendant in the Management Committee. “Management” is vested in the Committee, not in the Abbott as Honorary President, although he is a member of the Committee and has both a deliberative vote and a “joint” second or casting vote on questions decided by the Committee.

106. Although clause 13(f) confers upon the Honorary President a “right of veto” that right is qualified in a number of respects.

107. First, the “right of veto” depends for its operation on identification of a “decision” of the Management Committee.

108. Secondly, if it is to be exercised, the “right of veto” must, I infer, be exercised within a reasonable time of the decision the subject of a “veto”. Such a right cannot be left, at large, without introducing into clause 13(f), or other provisions relating to management of the affairs of the first defendant, an element of arbitrariness and uncertainty foreign to a regular system of management.

109. Thirdly, if and when the “right” is exercised, the question for decision returns to the Management Committee for reconsideration.

110. Fourthly, the content of the “right” is circumscribed by the fact that the Honorary President is but one of 11 members of the Management Committee, with only one deliberative vote and no more than a “joint” second or casting vote. The “right of veto” cannot rise is so high as to render limitations on the Honorary President’s voting powers otiose.

111. Fifthly, clause 13(f) does not extend, in its terms, to a right to “veto” a decision made by the Management Committee upon reconsideration of a decision after an exercise by the Honorary President of his right of veto.

112. Sixthly, placed as it is in a clause headed “Management” and headlined by clauses 10(a) and (b), clause 13(f) must be confined in its operation to decisions of the Management Committee relating to “management” of the first defendant.

113. It does not, in my opinion, extend to decisions made by the Management Committee relating to the convening of a general meeting or an AGM of the first defendant or to an election of lay members of the Management Committee. Other, specific provisions of the Constitution expressly govern nominations for membership of the first defendant (clause 5), the disciplining of lay members of the first defendant (clause 7), the setting of membership fees of lay members (clause 9), the election of Management Committee members (clause 13), and the calling and conduct of general meetings and AGMs of the first defendant (clauses 16, 17 and 18).

114. Subject to one apparent exception, the secular business of the association rests in the hands of others than the Honorary President, and monastic members of the association, as such. With Buddhist festival days apparently in mind, clause 20(b) provides that “all moneys” recovered by the first defendant must be received and counted by the Lay Treasurer (or a substitute) “in the presence of a monk” of the association.

115. The Constitution effects a balance between spiritual and secular dimensions, overlapping as they may be in a charitable institution governed by a religious purpose, and tradition, in service of a community larger than the membership of the particular institution.

116. Understood in these terms, the “right of veto” for which clause 13(f) provides is not a right to override decisions of the Management Committee or to withhold any power of management from the Management Committee. It is, rather, in the character of a right to be heard as the spiritual leader of a charitable, religious body; a right to counsel; a right to warn; an opportunity to persuade.

117. The Constitution requires members of the Management Committee, sincerely, to take into account a perspective offered by the Honorary President as the spiritual leader of both the monastic members of the first defendant, and all who worship at the Temple; but, ultimately, subject to the general law insofar as property of the association is held on charitable trusts, “management” of the first defendant vests in the Management Committee (and “sole responsibility for administration” of the association’s “affairs” rests with its members and the Management Committee), not the Honorary President alone.

118. Even if not directly engaged, in a case such as the present, the law relating to charitable trusts informs decision making, and can play a stabilising role, not only (but in part) because the Attorney General, as the State’s protector of charities, keeps a weather eye on proceedings, with an entitlement to intervene if, and as, necessary. The law governing charitable trusts serves as a reminder that property dedicated to a charitable purpose is not in the private ownership of any person, but is held for a purpose.

119. Those involved, or asserting an entitlement to be involved, in management of the affairs of a charitable institution (as is the first defendant) must remain mindful that, should any attempt be made to divert trust property from the charitable purpose(s) to which it is dedicated, a regulatory intervention designed to protect the trust may, incidentally, displace them from any management role whatsoever.

120. The first defendant, as an organisational vehicle of a religious community, comprising monastic and lay members, bound by a faith tradition to work in harmony, is not to be understood, or judged, as a commercial, political or purely social enterprise. It serves a larger community, not merely its formal membership.

121. It is, unexceptionally, likely, in practice, to have a fluid, fluctuating active membership. Nevertheless, stability, co-operation and respect for others are prerequisites for ongoing success

122. This is no mere platitude. The financial viability of the first defendant depends upon constructive engagement with the public, particularly in the conduct of regular festivals as both a celebration of Buddhist culture and as a means of fundraising.

THE PLAINTIFF’S APPLICATION FOR A WINDING UP ORDER

124. Introduction. The plaintiff’s application for an order the first defendant be wound-up is grounded upon sections 63(1)(f) and (i) of the Associations Incorporation Act 2009.

125. The winding up of an association governed by the Act is dealt with in Part 6 of the Act, entitled “External administration and winding up”; more particularly, in Division 3 of that Part, entitled “Winding up”, comprising sections 61A-66 inclusive.

126. Part 7 of the Act (sections 72-84), not engaged in these proceedings, deals with cancellation of an association’s registration, a means of denying corporate status to an association (section 81). Cancellation may be “voluntary” (section 72); voluntary but at the direction of “the Secretary” (section 73); or “involuntary”, upon a determination by the Secretary (section 76).

127. Part 6 adopts material provisions of the Corporations Act 2001 Cth, with modifications, and attributes a primary role in its operation to the “Secretary”, a senior officer of the NSW government department responsible for administration of the Associations Incorporation Act. That senior officer is generally the Commissioner for Fair Trading: section 4(1).

128. The Secretary plays a role in administration of the Associations Incorporation Act analogous to that played by the Australian Securities and Industry Commission (ASIC) in administration of the Corporations Act 2001 Cth and cognate legislation.

129. Division 1 of Part 6, entitled “External Administration on Grounds of Insolvency”, comprises section 54. It provides for the appointment of an administrator to an association if the Secretary is of the opinion that the association is, or is likely to become, insolvent.

130. Division 2 of Part 6, entitled “External Administration on Grounds other than Insolvency”, comprises sections 55-61. It provides for the Secretary to appoint an administrator to administer an association’s affairs if: (a) the association has persistently failed to comply with the requirements of the Act or associated regulations; and (b) having regard to those circumstances, the Secretary is satisfied that it is in the interests of the association’s members or creditors for an administrator to be appointed (section 55). On the appointment of an administrator for an association, the committee members and the public officer of the association cease to hold office and the administrator assumes their functions: section 56.

131. Before revoking the appointment of an administrator of an association under Division 2 of Part 6, in the event that administration of its affairs is to be returned to its membership, the Secretary must ensure that a new committee and public officer have been empowered to administer the association. This may be done by an election in accordance with the association’s constitution, at a meeting convened by the administrator in accordance with the constitution (section 57(5)(b)), or by appointments made by the Secretary directly (section 57)(5)(c)).

132. Division 3 of Part 6 (sections 61A-66) provides for an association to be wound-up administratively, voluntarily or by order of the Court.

133. Section 61A provides for an association to be wound-up on a certificate of the Secretary (that is, administratively) if the association ceases operations; the association ceases to have five or more members; the association’s committee has not been able to form a quorum for two months; or the Secretary is satisfied that there is a significant public interest in winding-up the association, or that not winding-up the association may place public funds at risk.

134. Section 62 provides that an association may be wound-up voluntarily if it so resolves by a special resolution of its members.

135. Section 63 is in the following terms:

“63 Winding up by Supreme Court

(1) The Supreme Court may order the winding up of an association if:

(a) the association has by special resolution resolved that it be wound up by the Court, or

(b) the association does not commence its operations within one year after the date of its registration under this Act or suspends its operations for a whole year, or

(c) the association is insolvent, or

(d) the association has conducted its affairs (including its affairs as trustee of any trust) so as to provide pecuniary gain for its members, or

(e) the association has engaged in activities inconsistent with its objects, or

(f) the committee of the association has acted in affairs of the association in the interests of the committee or the committee members rather than in accordance with its objects, or in any other manner whatever that appears to the Court to be unfair or unjust to the association’s members, or

(g) the association would, if not registered under this Act, not be eligible to be so registered, or

(h) the Secretary has, pursuant to section 73, directed the association to apply for cancellation of its registration and the association has failed to do so within the time fixed by the direction, or

(i) the Court is of the opinion that it is just and equitable that the association be wound up.

(2) An application to the Supreme Court for the winding up of an association may be made by the association, by a member or creditor of the association or by the Secretary.”

136. The terms of section 63 are reminiscent of both section 232 and section 461(1) of the Corporations Act 2001, especially the latter.

137. Section 63(1)(f) combines elements found in sections 461(1)(e) and (f), the latter of which uses the word “oppression”. That word is generally more readily associated with section 232.

138. Section 63(1)(i) is, in terms, an exact fit with the language of section 461(1)(k).

139. Section 63(1)(g) calls attention to the objects of the Associations Incorporation Act 2009. They rather be found in section 3, which describes them as being: (a) to establish a scheme for the registration of associations that are constituted for the purpose of engaging in small-scale, non-profit and non-commercial activities; and (b) to make provision with respect to the corporate governance and financial accountability of associations registered under that scheme. The requirements for eligibility for registration conform to those objects.

140. Although the plaintiff relies upon both section 63(1)(f) and (i) to ground his application for a winding-up order, his submissions have been primarily directed to section 63(1)(i). I turn attention, first, to section 63(1)(f).

141. Associations Incorporation Act, Section 63(1)(f). Section 63(1)(f) involves three limbs, the first two of which might be viewed as one composite limb and the last of which takes colour from what goes before.

142. The terms of the legislation cannot, and should not, be confined by judicial gloss in the guise of construction. Nevertheless, upon consideration of section 63(1)(f) in the factual setting of the current proceedings, it appears to require conduct tainted by self-dealing, improper purpose or the like, something wholly absent from the facts of this case.

143. The plaintiff relies, specifically, on the third limb of section 63(1)(f) with an added element. He contends that LBS 17 has managed the affairs of the first defendant “in a way that is oppressive, unfair and unjust to the Association’s members.” That translates into a contention that the affairs of the Association have been conducted in such an “oppressive manner” that it is unfair or unjust to the Association’s members.

144. Insofar as the third limb of section 63(1)(f) uses the expression “in any other manner whatever”, it takes colour from the first two limbs. Conduct “oppressive” of members of an association may fall within that description but the concept of “oppression” is so broad as to counsel caution in its application to an association governed by the Act.

145. The concept of “oppressive conduct of affairs” implicitly pays homage to section 232 of the Corporations Act 2001, which section appears, in that Act, under that heading.

146. Section 232 is similar to section 63(1)(f), but care needs to be taken not to apply section 63(1)(f) as if it incorporates the particular elements of section 232, or to apply learning on section 232 as if directly applicable to section 63(1)(f) without modification. Section 232 speaks to the prerequisites for the making of an order under section 233 of the Corporations Act. That section empowers the Court to make a broad range of orders (not limited to a winding-up order) affecting the constitution, membership and future operation of a corporation. Section 232 speaks to both actual or proposed conduct, not merely past events. It also turns upon a finding that such conduct is either contrary to the interests of members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members, whether in that capacity or in any other capacity.

147. The current proceedings are not a Corporations Act “oppression suit”, in form or substance.

148. There is no basis for a finding of fact that LBS 12 and LBS 17, jointly or severally, have managed, or purported to manage, the affairs of the first defendant in a manner that involves self-dealing, a pursuit of objects foreign to those of the first defendant, or conduct that is oppressive of any member of the first defendant. Nor have they done so vis-à-vis any member of the public, or any other person, who wishes to enjoy the facilities of the Temple.

149. The mere fact that two factions of the first defendant’s membership have held themselves out as entitled to manage the association’s affairs, in the context that those affairs have been largely conducted by one faction (LBS 17) with the blessing of the monastic community resident at the Temple, is not enough to persuade me that section 63(1)(f) has a factual foundation for its operation.

150. Associations Incorporation Act, Section 63(1)(i). The plaintiff’s principal case focuses on section 63(1)(i) and, more explicitly, the substantial body of case law that surrounds the “just and equitable” ground for winding-up a corporation.

151. By analogy with section 461(1)(k), section 63(1)(i) provides a broad ground for the winding-up of an association. As Gordon J observed in Australian Securities and Investments Commission v Active Super Pty Limited (No. 2) [2013] FCA 234; 93 ACSR 189 at [19], the classes of conduct which justify a winding-up order on the just and equitable ground are not closed, and each application depends upon the circumstances of the case.

136. The Court can make a winding up order under section 461(1)(k), and, I accept, under section 63(1)(i), by reason of, inter alia, a lack of confidence in the conduct and management of an association’s affairs, or if an association has not carried on its business candidly and in a straightforward manner with the public, or failed to comply with regulatory requirements relating to financial records and reports: In the matter of DJG Securities Pty Limited [2013] NSWSC 588 at [13] per Black J.

137. A winding-up order can be made under section 461(1)(k), and, I accept, under section 63(1)(i), in circumstances in which management of an association is deadlocked or paralysed by a loss of mutual trust and confidence between the members of the association. With adaptation to an association rather than a company, the classic observations found in Ebrahimi v Westbourne Galleries Limited [1973] AC 360 at 379-380 have resonance; but cannot be applied without reference to the particular association under consideration: Gregor v British-Israel-World Federation (NSW) [2002] NSWSC 12; 41 ACSR 641 at [135]-[160].

138. Section 63(1)(i), like section 461(1)(k), invests in the Court a broad statutory discretion enabling it to take into account “equitable” considerations. An exercise of that discretion requires an appreciation of the nature of the particular association under consideration.

139. Section 63(1)(i) requires an exercise of judgement, in all the circumstances of the particular case, recognising, inter alia, the fact-specific character of judicial precedents; the facts relied upon in support of an application for a winding-up order; and alternative remedies available to address problems identified in management of the particular association sought to be wound-up.

140. At the heart of the current proceedings is a dispute, not so much between or about the general membership of the first defendant, but about problems lingering from disputed elections that have given rise to competing claims to management of the association.

141. Criticism of the respective accounting records of LBS 12 and LBS 17 needs to be assessed in that light. Nobody suggests that the Temple community is beyond reconciliation or financially, or otherwise, unviable. That said, the accounts of LBS 12 and LBS 17 presented to the Court as evidence in these proceedings (in particular, in each case, for the year ended 30 June 2015) are less than complete, and not altogether encouraging. The draft accounts for the year ending [30] June 2016 presented to the Court by the LBS 17 (Exhibit 2D1) are more promising insofar as they record a modest profit; but they are not beyond controversy, particularly insofar as they appear to claim the Temple as an asset of the first defendant without apparent reference to LCAC’s interest in the property.

142. If the first defendant is to remain viable, the regulatory accounting regime for which the Associations Incorporation Act 2009 provides (for a “Tier 2 association” such as the first defendant) needs to be fully re-engaged as soon as practicable, and the first defendant needs to stem dissipation of available resources on substantial legal fees associated with ongoing litigation.

143. The first defendant’s best assets, and its best sources of income, are probably “off balance sheet” in the sense that the association’s financial viability depends heavily upon its ability to sustain a pattern of donations from the Buddhist community, and the public (including government instrumentalities), associated with the 12 or more festivals routinely held each year within a Buddhist community. In a very real sense, the first defendant depends upon the generosity of others to survive, to thrive. It cannot have been assisted, and it will not in the future be assisted, by perpetuation of rival management regimes.

144. From time to time, in presentation of the plaintiff’s case, there has been a hint of an attempt by those associated with the plaintiff (disclaimed when identified) to have the first defendant wound-up so that the members of the Buddhist community in control of LCAC can take over the Temple. Even in a religious, charitable institution politics is no stranger.

145. In my judgement, an order that the first defendant be wound-up would not be just or equitable, and it is not presently necessary, to treat problems at hand. As the first defendant’s management problems all appear to stem from disputed elections (conducted in the shadow of an extraordinary event, the misappropriation of a substantial sum by a senior office bearer, now deceased), so the Court should provide a mechanism to allow the membership of the association an opportunity to have a management committee elected in a court-supervised election according, so far as may be practicable, to the terms of the Constitution.

146. An order for the winding-up of the first defendant would operate to disrupt religious and community activities at the Temple, to displace the monastic residents around whom the Buddhist community structures activities, and potentially to deprive members of the first defendant of the benefit of capital expenditure made by the association at the Temple.

147. The negative effects of a winding-up order would not be ameliorated by the existence of a process (for which clause 29 of the Constitution provides) for “surplus property” of the first defendant “subject to any trust affecting the property or part of it, [to] vest in an association in accordance with” (under the current legislative regime) section 65 of the Associations Incorporation Act 2009.

148. Section 65 is in the following terms:

“65 Distribution of surplus property

(1) In this section, a reference to the surplus property of an association is a reference to that property of the association remaining after satisfaction of the debts and liabilities of the association and the costs, charges and expenses of the winding up of the association.

(2) In a winding up of an association, the surplus property of the association is to be distributed in accordance with a special resolution of the association.

(3) Any such distribution of surplus property:

(a) must be approved by the Secretary, and

(b) is not to be made to or for the benefit of:

(i) any member or former member of the association, or

(ii) any person to be held on trust for any member or former member of the association,

unless the member or former member is an association (whether incorporated or unincorporated) whose constitution, at the time of the distribution, prohibits the distribution of property to its members, and

(c) is subject to any trust affecting that property or any part of it.

(4) Surplus property or any part of it that consists of property supplied by a government department or public authority, including any unexpended portion of a grant, must be returned to the department or authority that supplied it or to a body nominated by the department or authority.

(5) A person aggrieved by the operation of this section in relation to an association’s surplus property may apply to the Supreme Court for an order as to its disposal.

(6) The Supreme Court may deal with such an application by making such orders as it thinks fit with respect to the disposal of the association’s surplus property.”

165. In circumstances in which there remain grounds for optimism about the conduct of a supervised election for a new Management Committee, the conduct of such an election appears to have greater proportionality to the problems at hand than would a winding-up order. A fresh election is more likely, in my assessment, to lead to harmony in the conduct of the Temple’s affairs than an order for the winding-up of the first defendant and a consequential, ongoing dispute about the disposition of “surplus property”.

166. In declining to order that the first defendant be wound-up, the Court is entitled to draw some (albeit not much) comfort from the fact that, although plainly concerned to coax the association back into a regular form of management, the Secretary has taken no more drastic step towards de-registration than to threaten it.

167. As has been earlier noted, all parties to the present proceedings acknowledge that the Court has jurisdiction, through the medium of a receiver and manager, to supervise an election for a newly constituted Management Committee.

168. The plaintiff and the second defendant, in particular, have substantially agreed upon draft orders designed to be adopted, or adapted, by the Court upon an exercise of that jurisdiction.

169. It is to the question of a receivership order, as an alternative to winding-up order, that attention must now turn. An exposition of the nature of the Court’s jurisdiction is necessary to explain how an election might be supervised by the Court via a receiver and manager.

THE JURISDICTION TO APPOINT A RECEIVER AND MANAGER OF THE FIRST DEFENDANT AS A VEHICLE FOR A COURT-SUPERVISED ELECTION

170. The parties are agreed that, in addition to the Court’s inherent equitable jurisdiction, sections 23 and 67 of the Supreme Court Act 1970 NSW provide a jurisdictional foundation for the appointment of a receiver and manager (for convenience, hereafter, referred to simply as a receiver) for the primary purpose of resolving a dispute about the management of property within an organisation, including an association governed by the Associations Incorporation Act 2009, whilst at the same time preserving the organisation’s property.

171. The Associations Incorporation Act 2009 does not, in terms, contemplate such an appointment. It empowers the Secretary to appoint an administrator and, through an administrative process, to supervise an election in particular circumstances: sections 55, 57(1) and 57(5)-(7). It does not, however, operate as a code or otherwise to the exclusion of the Court’s general jurisdiction over property or in the appointment of a receiver and manager of property.

172. The jurisdiction to appoint a receiver, equitable in origin, is able to be moulded to the needs of the situation in the context of enabling the management of a charitable organisation to be returned to constitutional order: Attorney General v Schonfeld [1980] 1 WLR 1182 at 1186-1188 per Megarry VC.

173. An exposition of the Court’s equitable jurisdiction, in the context of a need to restore a charitable organisation to sound management, can be found in Kerr and Hunter on Receivers and Administrators (Thomson Reuters, London, 19th ed, 2010), paragraph [2-122], in a chapter entitled “In what cases a receiver will be appointed”. Omitting footnotes and with emphasis added, the text’s statement of the law (based largely upon Attorney General v Schonfield) is in the following terms:

“2-122 Charities. The principles relating to the preservation of property pending litigation apply as much to charities as to other bodies, where there is either:

(a)   such dispute between the known officials themselves that they cannot carry on the business of their organisation in a proper manner; or

(b)   that their identity is for any reason in dispute, so that it is not known for certain who is entitled to act on behalf of the body they should be managing.

In such cases, the court will interfere by the appointment of a receiver and, if required, a manager, pending the resolution of such disputes, or the ascertainment of the identity of the proper officials, to enable the business of the organisation to be properly conducted in the meantime.

Any appointment will be framed so as to last the shortest possible time. Thus, where such an appointment was sought in proceedings commenced by originating summons for the determination of the exact trusts affecting the charity and the precise identity of the trustees thereof, it was made only after the substantive hearing of the originating summons, or further order in the meantime….”

174. The Court’s equitable jurisdiction is supplemented by the Supreme Court Act 1970, section 67, in the following terms:

“67 Receiver

The Court may, at any stage of proceedings, on terms, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient so to do.”

175. It is not, in my opinion, necessary to resort to the Supreme Court Act, section 23; but, as the parties have referred to it, I set it out here for completeness:

“23 Jurisdiction generally

The Court shall have all jurisdiction which may be necessary for the administration of justice in New South Wales.”

176. Section 23 was intended by the NSW Parliament to be a plenary grant of jurisdiction incorporating, and rising above, the grants of authority conferred on the Court (by reference to English law and institutions) by the New South Wales Act 1823 (Imp), the Third Charter of Justice, the Australian Courts Act 1828 (Imp) and ancillary jurisdiction: Re AAA; Report on a Protected Person’s Attainment of the Age of Majority [2016] NSWSC 805 at [22]-[27]; Estate Polykarpou; Re a charity [2016] NSWSC 409 at [186]-[187].

177. The Court’s jurisdiction is informed, but not constrained, by arrangements for the separate administration of justice in 19th century England before enactment of the Judicature Acts of 1873 and 1875 (UK). Jurisdictional constraints embedded in England’s fractured, pre-Judicature Act system of court administration have never really constrained the administration of justice in NSW except by local choice. Section 23 of the Supreme Court Act confirms that to be so. It is, sometimes, viewed as a source of “inherent” jurisdiction.

178. In the present context, section 23 reinforces the jurisdictional foundations of the Court and draws attention to the possibility that the Court may call in aid a variety of powers in the service of supervising the return to constitutional government of a voluntary association, or the like, the decision-making processes of which have broken down.

179. In Kabir Ahmed and Ors v Ayubur Rahman Chowdury and Ors[No. 2] [2011] NSWSC 954 Slattery J employed rule 20.14 of the Uniform Civil Procedure Rules 2005 NSW to appoint a referee to report to the Court on questions relating to the membership and eligibility for membership of an association (governed by the Associations Incorporation Act 2009) unable, through disharmony, to convene an annual general meeting at which a new executive council of the association could be elected.

180. In the circumstances of this case, as it presently appears, it is enough to work through the medium of a receiver. Examples of that being done, or specifically contemplated, as routine business can be found in NSW caselaw. However, there is a dearth of reported judgments available to be cited as examples, a fact which I take to be confirmation of the routine character of the jurisdiction, not an invitation to controversy.

181. In Atalar v Nami (Bryson J, unreported, 10 November 1988) BC 8801346 steps were taken towards the appointment of a receiver of the property of an unincorporated voluntary association, stayed upon terms designed to allow members of the association to elect a new committee of management in the meantime.

182. In The Sikh Association of Sydney and Ors v Cheema and Ors (McLelland CJ in Eq, unreported, 11 April 1996) BC 9601222 supplementary orders were made by the then Chief Judge in Equity, to give effect to orders earlier made by Hodgson J in the same proceedings. Hodgson J had appointed two persons, one from each of two factions of a religious voluntary association, as receivers and managers of a temple until further order, with full power to manage the affairs of the association until the appointment of a new committee according to a detailed procedure for the election of an interim committee of the association, and for ascertaining the membership of the association, with a view to holding a valid annual general meeting which itself would elect a new committee.

183. An examination of the Court’s file (No. 1406 of 1995) confirms that the association the subject of the judgments of Justices Hodgson and McLelland was an association incorporated under the Associations Incorporation Act 1984 NSW. The case was factually similar to the current proceedings. A principal difference is that, since enactment of the Associations Incorporation Act 2009 NSW, an association governed by such legislation can attract the operation of the Corporations Act 2001 Cth, section 1322.

184. The judgment of Hodgson J is wholly unreported, as befits treatment of a purely factual dispute, the very routine nature of which is, in the present proceedings, a mark of its authority in the absence of a reported, local case directly in point. McLelland CJ in Eq’s supplementary orders provide a concrete example of the jurisdiction of the Court to make “executive orders”, as may be required, to give better effect to orders for the conduct of an election via a receivership order.

185. I adopt, as a convenient statement of the law applicable to the current proceedings, paragraphs [23]-[38] of the judgment of Johnson J in McLean v McKinlay and Ors [2004] WASC 2. I do so, noting that the reference in paragraph [23] to section 25(9) of the Supreme Court Act 1935 WA may be read as a reference to section 67 of the Supreme Court Act 1970 NSW. The case concerned an association registered under WA’s version of the Associations Incorporation Act 2009 NSW. The fact that it concerned a political party, rather than a religious association, is of no particular moment save that both types of association were the subject of the High Court’s cautionary comments about justiciability in Cameron v Hogan (1934) 51 CLR 358 at 370-371.

186. Johnson J wrote as follows:

“23. I turn now to consider the legal principles relevant to an application to appoint a receiver. Section 25(9) of the Supreme Court Act 1935 provides that a receiver may be appointed by an interlocutory order of the Court or a Judge in all cases in which it shall appear to the Court or a Judge to be just or convenient that such order should be made; and any such order may be made either unconditionally or upon such terms and conditions as the Court or Judge shall think just. It can be seen that the jurisdiction is quite general and, in its terms, unlimited. Indeed, it has been held that the sub-section enlarges rather than limits the power of the Court at common law to appoint receivers: Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547 at 552. However, the words "just or convenient" do not confer an arbitrary or unregulated discretion on the court: Harris v Beauchamp Bros [1894] 1 QB 801 at 809. The power to appoint a receiver is to be exercised judicially and with due regard to authorities which are binding on the court: Parker v Campden London Borough Council [1986] Ch 162 per Donaldson MR, at 173 and 179.

24. It should also be emphasised that the appointment of a receiver is a remedy to be exercised with the utmost care and caution: National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386, at 539 and 541 ("Bond"). As the Full Court observed (at 539):

"The appointment of a receiver which is to be, so to speak, at the expense of the defendant's possession and without his consent is a step never to be taken without proper consideration of the defendant's position: Owen v Homan [1853] EngR 883; (1853) 10 ER 752."

25. The Full Court also considered the approach taken in the United States of America where the power has been described in various authorities as a drastic, harsh and dangerous one which should be exercised with care and caution and that the appointment of a receiver is an extraordinary and drastic remedy to be exercised with utmost care and caution and only where the Court is satisfied there is imminent danger of loss if it is not exercised: Bond at 541. However, in my view, the Court in Bond did not adopt that test as being of general application. Indeed, the effect of the American authorities is stated in 65 American Jurisprudence 2d to be in the following, less stringent terms (Bond at 541 - 542):

"A court in exercising its discretion to appoint or refuse a receiver must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, the ends of justice, the rights of all the parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies. This discretion is to be exercised with great caution and circumspection, after full consideration of the facts of a particular case and the interests of all parties concerned, for a reason strongly appealing to the judge to whom the application is made."

26. The Full Court in Bond, while clearly adopting the requirement for the exercise of great caution and circumspection because of the serious nature of the remedy, did not extend the requirement for exceptional circumstances to other than ex parte applications for the relief. The Full Court's reasons are also coloured by the circumstances then under consideration: an ex parte application by a creditor for the appointment of a receiver to a group of companies "in a very large way of business" (at 540). As the Court observed (at 551):

"But we do not think that it was or is a correct exercise of the power to appoint receivers and managers to enable a creditor or creditors, in hostile proceedings, to have an administrator appointed to manage the affairs, business and property of the debtor company on the ground that the company is financially embarrassed."

27. The rationale behind the Court's approach is best understood from the following extract from the judgment (at 539 - 540):

"Where a receiver is sought, not merely of a particular asset of the defendant, but of all his assets, particular caution is required and where, as in the present case, the receiver is to possess himself of and to manage the assets and undertaking of a collection of companies which, whether they are solvent or not, are in a very large way of business, very great circumspection is required. Of course in a strong enough case the court might, without warning to a trading company, divest it of control of its undertaking and assets. But it must always be borne in mind that the appointment of a receiver in such a case authorises an irresistible invasion and that even if the army of occupation is withdrawn after only a short time things may never be the same again. Rights of property and the company's privacy are violated. Only the most pressing need can warrant such an invasion without notice."

28. It is apparent from the facts to which I have already referred that the situation confronting the Court in Bond was very different from the situation here being considered. In my view, the proper approach to the appointment of a receiver is best described by the extract from 65 American Jurisprudence 2d as reproduced by the Full Court in Bond (at 541 – 542) and referred to above.

29. In determining whether it is appropriate to appoint a receiver in any set of circumstances, it is necessary to consider the role which the receiver is to play. The role of a receiver is to take possession of the property as the Court's officer with the duty of dealing with it fairly in the interests of all the parties to the proceedings: Re Newdigate Colliery Ltd [1912] 1 Ch 468 at 478. The receiver's responsibility is to the Court. He or she is not the agent of, or the trustee for, any of the parties, nor subject to their control: Co-operative Farmers' & Graziers' Direct Meat Supply Ltd v Smart [1977] VicRp 47; [1977] VR 386, at 391. It must be appreciated that his or her position is quite different from that of receivers appointed pursuant to contractual arrangements or pursuant to other statutory provisions: Seaman’s Civil Procedure 51.0.3.

30. There is certainly precedent for appointing receivers to partnerships: Tate v Barry (1928) 28 SR (NSW) 380, at 382 - 383, Long Innes J citing Baxter v West (1858) 28 LJ Ch 169; Lamerand v Lamerand (No 1) (1960) 80 WN (NSW) 198 per Jacobs, at 198; Mitchell v Simons (1862) 1 SCR (NSW) Eq 70, at 73. These authorities support the appointment of a receiver where there is a partnership. That partnership has been dissolved, or will be dissolved, by court order or otherwise, and, in particular, where there are allegations of improper conduct. The role of a receiver in such circumstances is to take possession of the property which is in dispute between the parties so that it may be preserved for the benefit of the party found to be entitled to it on the hearing of the action.

31. There is also a well-established jurisdiction to appoint a receiver upon default in payment of principal or interest under a mortgage: Hopkins v Worcester and Birmingham Canal Proprietors (1868) LR 6 Eq 437; Re Crompton & Co Ltd [1914] 1 Ch 967. The jurisdiction is also exercised on the application of a debenture holder to appoint a receiver of the assets and undertakings of a company: see, for example, Moss Steamship Co Ltd v Whinney [1912] AC 254. A receiver is often appointed to enable a judgment creditor to obtain the benefit of a judgment at law. There is also jurisdiction to appoint a receiver to protect the assets in a deceased estate pending a grant of probate or letters of administration: Re Oakes [1917] 1 Ch 230. A receiver and manager may be appointed on the application of a landlord to preserve licences to which he is entitled upon reversion: Charrington & Co Ltd v Camp [1902] 1 Ch 386, at 389 - 390.

32 Usually equity will not intervene by the appointment of a receiver in an action between two parties, each claiming under a legal title. The parties will be left to their remedies at law. But a receiver may be appointed in a very clear case where jeopardy is established. In John v John [1898] 2 Ch 537, an action of ejectment, the rents of the property were in jeopardy and the Court held that to be sufficient justification for the appointment of a receiver pending the determination of the ejectment proceedings. However, it is not in every case of competing claims of legal title that a receiver will be appointed. In Marshall v Charteris [1920] 1 Ch 520 the Court distinguished John v John because of the fact that a third party was in possession.

33 I am not aware of any authority which addresses the appointment of a receiver to a political party. Indeed, for some time the law considered that disputes between members of political parties, being voluntary associations, were not justiciable. In Cameron v Hogan [1934] HCA 24; (1934) 51 CLR 358 the High Court held that the executive of a branch of the Australian Labor Party, a voluntary association, by passing an unauthorised resolution for the exclusion of a member of the association or by failing to observe the rules governing the association's affairs commits no breach of contract actionable either at common law or in equity, unless the member complaining has under the rules some civil right of a proprietary nature. However, more recent single judge decisions distinguish Cameron v Hogan on the basis that the statutory recognition of a political party under the State and Commonwealth Electoral Acts, including, as it does, an entitlement to the provision of public moneys, takes the Party beyond the ambit of a mere voluntary association. In Clarke v Australian Labour Party (SA Branch) [1999] SASC 365; (1999) 74 SASR 109 the plaintiffs sought injunctive and declaratory relief in relation to, inter alia, a constitutional amendment with retrospective effect. The first defendant was an unincorporated association. Mulligan J, relying on the effect of the relevant electoral legislation, held that, whilst the rules of the party do not contemplate the establishment of legal relations inter se, and consequently should not be treated as amounting to an enforceable contract, the statutory recognition of the party took the party beyond the ambit of a mere voluntary association. Accordingly, the dispute regarding the interpretation and application of the Constitution was held to be justiciable: see 133, 139 and 138 - 140. In this case, the sixth defendant is both a body incorporated for "political purposes" under s 4(1)(e) of the Associations Incorporation Act 1987 and a political party registered under s 62H of the Electoral Act 1907. In my view, there is no impediment to the Court appointing a receiver to a political party if the circumstances warrant it.

34 The appointment of a receiver may be an inadequate remedy if it is necessary that the business or entity should continue to trade or operate. In such a case the appointment must be of a receiver and manager: Re Manchester & Milford Railway Co; Ex parte Cambrian Rail Co (1880) 14 Ch D 645, at 653 and 658.

35 In determining whether it is appropriate to appoint a receiver/manager in this case, it is also necessary to consider the nature of the remedy. The jurisdiction rests upon the principle that the applicant's legal remedy to protect his or her right is inadequate and that equity should intervene by the special remedy of a receiver: Bond Brewing Holdings Ltd v National Australia Bank Ltd [1991] VicRp 31; (1990) 1 ACSR 445, at 461 - 462. The appointment is made at the instance of a party to an action to take possession of and get in the property which is the subject matter of the action or the title to which, or control of which, is in dispute between the parties. The receiver is to hold the property so that it may be preserved for the benefit of the party found entitled, or, ultimately, distributed among the parties in accordance with their entitlements: Meagher Gummow & Lehane's "Equity: Doctrines and Remedies" 4th Edition at 908.

36 The appointment of a receiver is necessarily an interim measure. In short, the object of the appointment of a receiver is to protect something which may turn out to belong to another: Clydesdale v McManus and Anor (1934) 36 WALR 89 per Northmore CJ, at 90. As the authors of Meagher, Gummow & Lehane observed at 923:

"... one may talk loosely of a receiver of a company, but unless that means receiver of the property (or some of it) of a company the phrase is not only loose but meaningless."

37 However, the protection of property, although a necessary part of the remedy, need not be the primary motivation for the appointment of a receiver. The case of Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382 is an example of the appointment of a receiver/manager for the primary purpose of resolving a dispute within an organisation, whilst at the same time preserving the organisation's property. The case, which was an action by minority shareholders for a court-appointed receiver under the Companies Act 1961, illustrates the convenience of the remedy pending the resolution of disputes between shareholders. As Street J observed at 383:

"The receiver and manager is appointed as an officer of the Court to undertake in that capacity the management of the business of the company as well, of course, as undertaking the care of the company’s assets."

38 In my view, providing there is property to be preserved, this type of equitable relief is available despite the fact that it is primarily being sought to resolve conflicts which seriously prejudice the operation of the organisation.”

187. This is not an exhaustive statement of the principles governing the appointment of a receiver in a case concerning a dispute about management of a voluntary association. That that is so can be illustrated by a Johnson J’s reference, in [2004] WASC 2 at [39]-[41], to “two further principles” of significance to the outcome of the proceedings then before the court. The first was that, generally speaking, a court will not appoint a receiver where there is a grave risk of injury to the interests of other parties. The second was that an appointment of a receiver will not be made on a disputed claim where the effect of the appointment would be to prejudge the outcome of the principal proceedings before the court (in that case, a dispute about which of two forms of constitution governed a political party and, hence, any election process proposed to be supervised by a receiver).

188. Neither of those “two principles” has operative significance in the current proceedings. The general statement of the law, as extracted in this judgment, is sufficient for present purposes.

189. McLean v McKinley was favourably mentioned by Barrett J in Commonwealth of Australia v ABC 2 Group Pty Limited [2008] NSWSC 1383; 69 ACSR 228 (a corporations case), and without criticism by Palmer J in Coleman v Liberal Party of Australia, NSW Division (No. 2) [2007] NSWSC 736; 212 FLR 271 (a case involving a disputed political party pre-selection). It is cited with approval in PW Young, C Croft and M L Smith, On Equity (Law Book Co, Sydney, 2009), paragraph [16.610].

190. In Commonwealth of Australia v ABC 2 Group Pty at [25] Barrett J cited McLean v McKinley in support of a broad statement of principle about the width of the Court’s jurisdiction:

“[25] … The court may appoint a receiver in a wide range of circumstances; indeed, whenever the interests of justice warrant it. Appointments are most often made to protect the subject matter of legal proceedings pending determination of those proceedings by the court. But the jurisdiction is wider than that. There are instances in cross-border insolvency cases where the local court has appointed a receiver to act in aid of a foreign liquidator or trustee in bankruptcy: see for example Dick v McIntosh [2001] FCA 1008. A receiver may be appointed to hold property affected by a lien pending a judicial sale. Receivers have been appointed in a number of cases to collect the assets of an unregistered managed investment scheme and to apply them in winding up the scheme. There is reference in the Western Australian case of McLean v McKinley [2004] WASC 2 to the possibility of appointing a receiver of the assets of an incorporated association pending election of a governing body capable of acting and taking the affairs of the association in hand.”

191. Although the appointment of a receiver for the purpose of resolving a management dispute within an association is described as “interlocutory”, a primary purpose of such a characterisation is to emphasise that such an appointment is generally limited in time and governed by a purpose the achievement of which is subject to review.

192. Where an appointment is made after a contested hearing, as if on a final basis, the absence of an undertaking as to damages is not an obstacle to an appointment being made: UTS v Gerrard [2001] NSWSC 368 at [70] and Commonwealth of Australia v ABC 2 Group Pty Limited at [28]-[32] and [39], in each case per Barrett J. That conclusion was reached by Barrett J, and I accept it as correct, taking into account observations of the High Court in National Australia Bank Limited v Bond Brewing Holdings Limited (1990) 169 CLR 271 at 277 (refusing an application for special leave to appeal from the judgment of the Full Court of the Supreme Court of Victoria reported at [1991] 1 VR 386) and Cardile v LED Buildings Pty Limited (1999) 198 CLR 380 at 395 n. 55.

193. There is no necessity for an undertaking as to damages in the current proceedings. Nor would there be any utility in requiring one. There has been a full contest, conducted as a final hearing. Each of the parties active in that contest (the plaintiff and the second defendant) is a representative party. Together they represent the whole of the membership of the first defendant. In the absence of any suggestion that LCAC has an interest in the outcome of the proceedings, there are no third party interests likely to be materially affected by the appointment of a receiver for the limited purpose of conducting a court-supervised election. The party principally pressing for an election under the supervision of the Court (the second defendant) is a monastic; a fair inference is that he, personally, lacks property sufficient to support a meaningful undertaking. Insistence upon an undertaking as to damages might frustrate the processes of the Court, either by precluding the appointment of a receiver by its unavailability or, if an undertaking were to be given, by encouraging recalcitrant members of the first defendant to make mischief in the conduct of the election process in the hope of magnifying the risk borne by whoever may have provided the required undertaking. Given the nature of the first defendant, confirmed by the terms of its constitution, no member of the association has a personal interest in its property. The appointment of a receiver, in the current proceedings, serves a public interest purpose rather than a private, property interest.

194. I am satisfied that there is ample jurisdiction for the Court to appoint a receiver of the property of the first defendant with directions designed to facilitate the determination of any disputes about membership of the association, and the conduct of a court-supervised election of a new management committee by the receiver via a report to the Court, upon the adoption of which the Court may entertain questions about whether any orders under section 1322 of the Corporations Act 2001 Cth (adopted and modified by section 96 of the Associations Incorporation Act 2009 and clause 18 of the Associations Incorporation Regulation 2016 NSW) are necessary or desirable. Cf, Khan v Khan; Re Islamic Association Western Suburbs Sydney Inc. [2015] NSWSC 638 at [82] et seq per Black J; Rana v Survery (No 2) [2012] NSWSC 905 at [38] per Pembroke J (affirmed as Rana v Survery [2013] NSWCA 234); Weinstock v Beck (2013) 251 CLR 396 at [10] and [39]-[40].

DRAFT ORDERS FOR THE APPOINTMENT OF A RECEIVER AND MANAGER AUTHORISED TO CONDUCT AN ELECTION UNDER THE SUPERVISION OF THE COURT

195. After collaboration between counsel, followed by consultation with the bench at the end of final submissions, draft orders to the following effect emerged as those sought by the second defendant and, as a matter of form, acquiesced in by the plaintiff:

(1) Order that, pursuant to sections 23 and 67 of the Supreme Court Act 1970 NSW, … (“the Receiver”) be appointed, without security, as receiver and manager of the assets and undertaking of the first defendant (“the Society”), commencing on the date of this order and continuing until further order of the Court.

(2)   Order that the Receiver have power to:

(a)   convene an annual general meeting (“the Meeting”) of the members of the Society, to be held as soon as may be practicable, for the purpose of:

(i)   presenting the annual report and financial statement for the financial year ending 30 June 2016; and

(ii)   electing persons to the positions of the management committee of the Society, identified in subclauses 11 (a) (iii) to (vii) of the Society’s Constitution;

(b)   issue a notice (“the Notice”) of the Meeting to all members of the Society at least 14 days before the date fixed for the holding of the Meeting, which specifies:

(i)   the place of the Meeting;

(ii)   the date of the Meeting;

(iii)   the time of the Meeting; and

(iv)   the nature of the business to be transacted at the Meeting;

(c)   approve or reject any nomination for membership of the Society received at any time by the Receiver, in accordance with clause 5 (c) of the Society’s Constitution;

(d)   notify the nominee of that approval and request the nominee to pay within the period of 28 days after receipt by the nominee of the notification the sum payable under the Society’s Constitution as entrance fee and annual subscription, in accordance with clause 5 (d) of the Society’s Constitution;

(e)   preside as chairperson at the Meeting;

(f)   exercise all the rights of the chairperson at the Meeting, as provided for under the Society’s Constitution; and

(g)   without limiting the terms of order 2(f) of these orders, determine who is eligible to vote as a member of the Society at the Meeting.

(3)   Order that the Notice be issued to:

(a)   all persons identified in the membership list of the Society, which appears at pages 1065 to 1116 of the Court Book; and

(b)   all persons otherwise approved as members of the Society.

(4)   Order that, for the purpose of order 2 of these orders, the Receiver has all of the rights and powers:

(a)   of the Society;

(b)   of a member of the Society;

(c)   of any and all members of the management committee of the Society;

(d)   necessary to manage any and all of the assets and undertaking of the Society in such manner as the Receiver considers appropriate, consistent with the objectives of the Society; and

(e)   as may be reasonably incidental to the pursuit of any of the matters identified in order 2 or the exercise of any the powers otherwise conferred by these orders.

(5)   Note that these orders are not intended to prevent or limit in any way:

(a)   the functioning of the Wat Phrayortkeo Lao Buddhist Temple (“the Temple”) as a place for members of the Society and members of the public to gather together to practise their Buddhist faith; and

(b)   the second defendant and other monks at the Temple from:

(i)   undertaking, performing and providing religious services at and from the Temple; and

(ii)   otherwise fulfilling their religious duties and obligations as Buddhist monks at and from the Temple.

(6)   Order that, within seven days of the convening of the Meeting, the Receiver provide to the Court and the legal representatives of the plaintiff and the second defendant, a written report which:

(a)   summarises the events at the Meeting;

(b)   identifies those persons who were elected to the management committee of the Society at the Meeting; and

(c)   records any other resolution of the members of the Society at the Meeting.

(7)   Order that the reasonable costs and expenses properly incurred by the Receiver in the performance of his/her duties and the exercise of his/her powers and any matters arising from, relating to, incidental to and in connection with the performance of his/her duties and the exercise of his/her powers under these orders be paid from the assets of the society.

(8)   Order that liberty be reserved to all parties and the Receiver to apply to the Court to vary or discharge these orders or for directions generally.

196. Lest it be overlooked, I notice that, by draft Order 1, the parties invite the Court to appoint a receiver without requiring the provision of security for the performance of his or her functions. Whether this is appropriate may depend on the identity and qualifications of the proposed appointee.

197. In order to clarify the relationship between draft Orders 1, 2 and 4 and to ensure that there is no gap in management functions relating to the first defendant, I suggest that:

1. in Order 2, the words “be directed” be substituted for “have power”; and

2. in Order 4, the introductory words “for the purpose of Order 2 of these orders” be omitted.

198. In order to clarify the relationship between draft orders 2(a)(ii) and 6, the words “subject to confirmation by the Court upon receipt of a report from the Receiver in accordance with order 6” should be added at the end of order 2(a)(ii).

199. Clarification is required as to the meaning of the reference to “the annual report” in draft order 2(a)(i). The “annual reports” for the years 2013, 2014 and 2015 published by LBS 17 (placed before the Court in their original, colour format, as part of Exhibit 2D9) go beyond what might be appropriate for publication by a receiver unless all parties acquiesce in such a publication. Care needs to be taken to ensure that the receiver’s independence, and his or her primary focus upon the conduct of an election, is not undermined by promotional material that might be seen, rightly or wrongly, as factionally partisan. If the plaintiff and the second defendant, as representatives of the first defendant’s membership, agree upon the form and content of an “annual report”, I anticipate no practical difficulty with its publication, subject to the approval of the Receiver. If they do not agree, prudence dictates that a conservative approach be taken to what can, or should, be published in the name of the first defendant.

200. In reproducing the plaintiff and second defendant’s draft orders I have inserted in draft order 8 the expression “all parties”, in lieu of an earlier reference to “the parties”, so as to draw to attention a need to recognise that the Attorney General has, or may have, an ongoing role to play in the proceedings.

201. The Attorney remains a party. There is a factual foundation for a finding that at least some of the first defendant’s assets are impressed with a charitable trust. As the State’s protector of charities, the Attorney has a continuing interest, and duty, to maintain an oversight of the proceedings even though, wisely, she has left the adversarial contest to the plaintiff and the second defendant, maintaining for herself a “watching brief”. She should be kept apprised of developments in the proceedings, and the Court’s reservation of liberty to apply should extend to her no less than to other parties to the proceedings and the Receiver.

202. In draft Order 6 the reference to “the plaintiff and the second defendant” should be amended to read “the plaintiff, the second defendant and the third defendant”.

203. I leave to one side as technically irrelevant the fact that agencies of the State Government other than the Attorney General (namely, the NSW Land and Housing Corporation, as lessor to LCAC, and the Secretary, as a public officer responsible for administration of the Associations Incorporation Act) have, or may have, a regulatory interest in the outcome of the proceedings. In the absence of a particular controversy directly involving those agencies, there is no need for their formal engagement in these proceedings. Joinder of the Attorney in the proceedings is a sufficient means of ensuring that public interest considerations remain to the fore.

204. As foreshadowed during the course of the hearing, I propose to allow the parties an opportunity to nominate a receiver (hopefully agreed between the plaintiff and the second defendant) and make such, if any, further submissions they seek to make in the light of these published reasons for judgment.

205. If and to the extent that there can be agreement between the plaintiff and the second defendant as to how the process of an election, and ancillary business, is to be conducted, the parties’ drafting of orders proposed to be made by the Court will carry substantial weight.

206. All parties are mindful of a need, in the ordinary course, for there to be an annual general meeting of the first defendant before the end of this year: Associations Incorporation Act 2009, section 37(2)(a).

207. They should be mindful, also, of a need for each of the presently competing management committees to co-operate with the receiver in the preparation of an annual report and financial statements, and generally.

208. Prima facie, orders, ancillary to the appointment of a Receiver, should be made to the following effect:

1. ORDER that the first defendant, by itself, its servants and agents (including those persons who claim to be members of a management committee of the first defendant) forthwith deliver up to the Receiver all books and records of the first defendant.

2. ORDER that the plaintiff cause to be delivered up to the Receiver forthwith all books and records of the putative management committee known as LBS 12 in his possession, custody or control.

3. ORDER that the second defendant cause to be delivered up to the Receiver forthwith all books and records of the putative management committee known as LBS 17 in his possession, custody or control.

4. ORDER, subject to further order, that no member of the first defendant (by self, servants or agents), without the leave of the Court, hold himself or herself out to the membership of the first defendant or the public as presently entitled to occupy, or to exercise the powers of, the office of a lay member of the Management Committee of the first defendant.

5. ORDER that no person provisionally elected to membership of the Management Committee of the first defendant in an election conducted by the Receiver pursuant to these orders shall become, or exercise the powers of, a member of the Management Committee unless and until, upon receipt of a report from the Receiver or otherwise, the Court confirms his or her election.

209. Questions that may require additional submissions are:

1. whether, having regard to clause 11(d) of the Constitution of the first defendant, there should be any restriction on the eligibility of members of the first defendant to stand for election to the newly constituted Management Committee.

2. whether, having regard to clauses in 11(b) and 12(h) of the Constitution and the need to transition the first defendant to management under a single management committee, the term of office of the newly elected committee can, or should, be something less than two years.

210. I am presently minded to answer each of these questions in the negative, allowing the membership of the first defendant to move as quickly as possible to norms established by the Constitution, and recognising that clause 11(d) does not fit neatly into the first defendant’s recent history of two competing “Management Committees” of contestable origins.

211. I am not minded, expressly, to limit the duration of the Receiver’s appointment at this stage of the proceedings. I am minded, rather, to fix a time for a directions hearing – a time calculated to allow the Receiver to perform his or her functions in an orderly way and, at the same time, to remind all concerned of a need for expedition in completion of the receivership phase of the first defendant’s management. This approach is more likely to lead to an orderly outcome, under the control of the Court, than the imposition of a false deadline on the duration of the receivership phase.

CONCLUSION

212. I invite the parties to bring in short minutes designed to give effect to these reasons for judgment, subject to whatever (if any) further submissions may be necessary, or appropriate, about the form, or content, of the orders to be made or about the future course of the proceedings.

213. I propose to reserve all questions of costs pending completion of the proposed election process.

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ADDENDUM  (14 October 2016)

214. Following publication of the Court’s reasons for judgment as [2016] NSWSC 1408 on 5 October 2016, the proceedings were the subject of further hearings (to settle the Court’s orders) on 7, 13 and 14 October 2016.

215. On 14 October 2016, LCAC appeared by senior counsel (also appearing for the plaintiff) who produced to the Court a written statement by the President of LCAC to the effect that LCAC concedes that the Deed of Settlement made between LCAC and the first defendant on 2 December 2013 is valid and binding, and has not been rescinded or terminated.

216. The Court then made orders, set out below:

ORDERS OF THE COURT:

1. ORDER that Aaron Yeung (“the Receiver”) of Suite 5, Level 1, 325 Pitt Street, Sydney, NSW, 2000 be appointed, without security, as receiver and manager of the assets and undertaking of the First Defendant (“the Society”) until further order of the Court. 

2. ORDER that the Receiver be directed:

1. to convene an annual general meeting (“the Meeting”) of the members of the Society for the purpose of:

1. presenting a financial statement for the Society for the financial year ending 30 June 2016; and

2. electing persons to the positions on the management committee of the Society identified in sub-clauses 11 (a) (iii) to (vii) of the Society’s Constitution, subject to confirmation by the Court upon receipt of a report from the Receiver in accordance with the order in paragraph 11 below;

2. to issue, no earlier than 14 days from the date of these orders,  a notice (“the Notice”) of the Meeting to all members of the Society at least 14 days before the date fixed for the holding of the Meeting, which specifies:

1. the place of the Meeting;

2. the date of the Meeting;

3. the time of the Meeting; and

4. the nature of the business to be transacted at the Meeting;

3. to receive, and promptly approve or reject, any nomination for membership of the Society received at any time during his appointment as receiver and manager of the Society, in accordance with clause 5 (c) of the Society’s Constitution;

4. to notify the nominee of that approval and request the nominee to pay within the period of 28 days after receipt by the nominee of the notification the sum payable under the Society’s Constitution as entrance fee and annual subscription, in accordance with clause 5 (d) of the Society’s Constitution;

5. preside as chairperson at the Meeting;

6. exercise all of the rights of the chairperson of the Meeting, as provided for under the Society’s Constitution; and

7. without limiting the terms of the order in sub-paragraph 2 (f) above, determine who is eligible to vote as a member of the Society at the Meeting.

3. ORDER that the Notice be issued to:

1. all persons identified in the membership list of the Society, which appears at pages 1065 to 1116 of the Court Book; and

2. all persons otherwise approved as members of the Society.

4. ORDER that the Receiver has all of the rights and powers:

1. of the Society;

2. of a member of the Society;

3. of any and all of the members of the management committee of the Society;

4. necessary to manage any and all of the assets and undertakings of the Society in such manner as the Receiver considers appropriate, consistent with the objectives of the Society; and

5. as may be reasonably incidental to the pursuit of any of the matters identified in paragraph 2 above, or the exercise of any of the powers otherwise conferred by these orders.

5. ORDER that the Society, by itself, its servants and agents (including those persons who claim to be members of a management committee of the Society) forthwith deliver up to the Receiver all books and records of the Society.

6. ORDER that the Plaintiff cause to be delivered up to the Receiver forthwith all books and records of the putative management committee known as LBS 12 in his possession, custody or control, excluding any document in respect of which a claim for legal professional privilege is made.

7. ORDER that the Second Defendant cause to be delivered up to the Receiver forthwith all books and records of the putative management committee known as LBS 17 in his possession, custody or control, excluding any document in respect of which a claim for legal professional privilege is made.

8. ORDER, subject to further order, that no member of the Society (by self, servants or agents), without the leave of the Court, hold himself or herself out to the membership of the Society or to the public as presently entitled to occupy, or to exercise the powers of, the office of a lay member of the Management Committee of the Society.

9. ORDER that no person provisionally elected to membership of the Management Committee of the Society in an election conducted by the Receiver pursuant to these orders shall become, or exercise the powers of, a member of the Management Committee unless and until, upon receipt of a report from the Receiver or otherwise, the Court confirms his or her election.

10. NOTE THAT these orders are not intended to prevent or limit in any way:

1. the functioning of the Wat Phrayortkeo Lao Buddhist Temple (“the Temple”) as a place for members of the Society and members of the public to gather together to practise their Buddhist faith; and

2. the Second Defendant and the other monks at the Temple from:

1. undertaking, performing and providing religious services at and from the Temple; and

2. otherwise fulfilling their religious duties and obligations as Buddhist monks at and from the Temple.

11. ORDER that within fifteen (15) days of the convening of the Meeting, the Receiver provide to the Court and to the legal representatives of the Plaintiff, the Second Defendant and the Third Defendant, a written report which:

1. summarises the events at the Meeting;

2. identifies those persons who were elected to the management committee of the Society at the Meeting; and

3. records any other resolution of the members of the Society at the Meeting.

12. ORDER that the reasonable costs and expenses properly incurred by the Receiver in the performance of his/her duties and the exercise of his/her powers and any matters arising from, relating to, incidental to and in connection with the performance of his/her duties and the exercise of his powers under these orders be paid from the assets of the Society.

13. ORDER, subject to further order, that:

1. the amount of remuneration to be allowed to the Receiver is to be calculated at a rate not exceeding $165.00 per hour inclusive of GST; and

2. the total amount of remuneration to be allowed to the Receiver is not to exceed $5,000.00 inclusive of GST, without the leave of the Court.

14. ORDER that the Society indemnify the Receiver in respect of all actions, suits, proceedings, claims and demands taken or made against the Receiver in the course of or arising out of the proper performance or exercise of his powers and duties under these Orders.

15. ORDER that liberty be reserved to all parties and the Receiver to apply to the Court to vary or discharge these orders or for directions generally.

16. ORDER that, under section 6 of the Charitable Trusts Act, 1993 (NSW), leave be granted for maintenance of these proceedings.

17. ORDER that the Plaintiff’s application for an order that the Society be wound-up is dismissed.

18. ORDER that all questions of costs be reserved pending completion of the proposed election process.

19. DIRECT that the matter be listed for directions on 9 December 2016 at 9.30 am.

20. ORDER that these orders be entered forthwith.

Amendments

14 October 2016 - Date of orders added,

Addendum added.

Decision last updated: 14 October 2016