Singh v Singh

[2023] NSWSC 436

Supreme Court

New South Wales

Medium Neutral Citation:

Singh & Ors v Singh & Ors [2023] NSWSC 436

Hearing dates:

19 April 2023

Date of orders:

20 April 2023

Decision date:

20 April 2023

Jurisdiction:

Equity - Duty List

Before:

Kunc J

Decision:

Defendants’ motion dismissed with costs

Catchwords:

JUDGMENTS AND ORDERS – Dispute among members of incorporated association as to validity of elections – Parties agree on procedure for fresh elections – Agreement recorded in consent orders including procedure for independent chair of meeting to determine eligible members – Construction of orders – Whether determination by chair subject to requirement to afford natural justice or able to be vitiated as unreasonable

Cases Cited:

Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223

Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

Elston v Commonwealth (2014) 222 FCR 429; [2014] FCA 291

Goodrich v Kilmore Racing Club Inc [2021] VSC 767

Lee v The Showmen's Guild of Great Britain [1952] 2 QB 329

Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314

McClelland v Burning Palms Surf Life Saving (2002) 191 ALR 759; [2002] NSWSC 470

Morris v Victorian Farmers Federation [2022] VSC 407

Trindall v NSW Aboriginal Educational Consultative Group Inc [2023] NSWSC 85

Category:

Procedural rulings

Parties:

Balbir Singh (First Plaintiff)
Maninder Chugh (Second Plaintiff)
Gurbain Singh (Third Plaintiff)
Manmohan Kaur Sian (Fourth Plaintiff)
Harmeet Singh (Fifth Plaintiff)
Uppinder Bhatia (Sixth Plaintiff)
Gurvinder Chawla (Seventh Plaintiff)
Mandeep Oberai (Eighth Plaintiff)
Surinder Kaur (Ninth Plaintiff)
Tarlochan Singh (Tenth Plaintiff)
Surjit Kaur Sahota (Eleventh Plaintiff)
Col Mohinder Singh (Twelfth Plaintiff)
Navdeep Sahota (Thirteenth Plaintiff)
Paramjit Kaur Singh (Fourteenth Plaintiff)
Amarjit Bhatia (Fifteenth Plaintiff)
Onkar Singh (Sixteenth Plaintiff)
Jasvir Kaur Bhatti (Seventeenth Plaintiff)
Rakhbir Singh (First Defendant)
Manjit Singh Sidhu (Second Defendant)
Kanwar Nagra (Third Defendant)
Avinder Gill (Fourth Defendant)
Nicky Kaur Garegwal-Poole (Fifth Defendant)
Gagandeep Singh (Sixth Defendant)
Jagdeep Singh (Seventh Defendant)
Avtar Singh (Eighth Defendant)
Sukkhpreet Singh Benipal (Ninth Defendant)
Raminder Singh (Tenth Defendant)
Mohinder Singh Mokha (Eleventh Defendant)
Jasbir Singh (Twelfth Defendant)
Harjinder Singh (Thirteenth Defendant)
Gurdeep Singh Makkar (Fourteenth Defendant)
Sukhdev Singh (Fifteenth Defendant)
Ratadeep Singh (Sixteenth Defendant)

Representation:

Counsel:

T Dixon (Plaintiffs)
P E King (Defendants)

Solicitors:

Maksisi Lawyers (Plaintiffs)
Cedric Spencer Lawyers (Defendants)

File Number(s):

2022/131071

Publication restriction:

None

EX TEMPORE JUDGMENT (REVISED)

Summary

1. The affairs of the North Shore Sikh Association of Sydney Incorporated (the Association) have been in deadlock for more than 12 months. The plaintiffs and defendants are the active members of the two factions that are in dispute. No point has been taken before me about the lack of any representative order having been made in relation to the other members of the Association.

2. The source of the deadlock is that purported elections for the governing bodies of the Association (the board of trustees and an executive committee (also referred to as the management committee)) were held on 19 and 26 February 2022. Each faction was successful at one of those meetings and each now seeks competing declarations of the validity of the meeting at which that faction succeeded and the invalidity of the meeting at which it failed.

3. As matters stand, there are rival governing bodies of the Association, each asserting their legitimacy over the other. By their amended cross-summons the defendant cross-claimants also seek this order:

“3. Orders that, in the event that there has not been a valid Annual General Meeting of the Association in 2022 then:

a. An independent referee be appointed to verify the names of the members of the Association entitled to vote at an Annual General Meeting of the Association;

b. Within 4 weeks of the making of these Orders, the independent referee certify the names of the members of the Association entitled to vote at an Annual General Meeting of the Association;

c. The Association hold an Annual General Meeting within 11 weeks of the making of these Orders;

d. Within 2 weeks of the certification referred to in paragraph 3(b) above, the Registrar issue a notice to the members of the Association certified by the independent referee, convening the Annual General Meeting of the Association on the date 4 weeks after the date of the notice;

e. The Annual General Meeting of the Association convened pursuant to paragraph 3(c) above, to be held at such place as is ordered by the Court;

f. The Annual General Meeting of the Association convened pursuant to paragraph 3(c) above) be chaired by such person as is ordered by the Court;

g. The returning officer for the Annual General Meeting of the Association convened pursuant to paragraph 3(c) above) be such person as is ordered by the Court.

4. The parties engaged in a court-annexed mediation over two days – 24 November 2022 and 2 February 2023. It was unsuccessful. However, to their credit, the parties continued to negotiate through their solicitors. After what it was accepted was not an easy process, the parties reached agreement as to how a meeting for the conduct of fresh elections would be held this Saturday, 22 April 2023 (the Meeting) with a specially appointed independent chair, Mr M McCulloch of Senior Counsel.

5. The parties' agreement was given effect by the making of consent orders by Richmond J sitting as Duty Judge on 7 March 2023 (the Orders). The Orders, the meaning and effect of which is the subject of these reasons, are reproduced in Schedule A to these reasons. I have emphasised those parts that are relevant to the matters decided by these reasons.

6. Unfortunately, the parties have fallen into dispute about the implementation of the Orders. By notice of motion filed on 12 April 2023 (the Motion), the defendant applicants seek these orders:

“1. Pursuant to liberty to apply under Order 15 of the Honourable Richmond J dated 7 March 2023, direct that this matter be relisted before Richmond J or such other Judge as the Court shall determine with a measure of expedition.

2. Declaration that in respect of the six issues referred to in the affidavit of Dr Cedric Spencer accompanying this notice of motion the Court determines the issues according to law.

3. Alternatively the Court give an advisory opinion to the parties with respect to the said six issues or as the Court shall determine in relation to questions of law and procedure in respect of the Annual General Meeting of the North Shore Sikh Association of Sydney Incorporated to be held on 22 April 2023 or as soon thereafter as the Chair shall determine.

4. Directions as to the determination of the issues identified in the affidavit of Dr Cedric Spencer accompanying this notice of motion.

5. Further or other orders.

6. Costs.”

7. Those proposed orders were supplanted by draft short minutes of order propounded by the defendants and expressed in the form of declarations. Because of the conclusions to which I have come, nothing further needs to be said about the form of relief.

8. In the course of the hearing before me, the dispute was reduced to two issues, to which I will refer as the Franchise Issue and the Membership Issue. In considering those issues I have borne in mind two fundamental matters. First, neither party was seeking to amend or add to the Orders. Second, the Orders are the result of a contract between the parties that, subject to the Court's overriding discretion whether or not to make orders, was to be given effect by the Court making the Orders as it did.

9. For the reasons which follow, the Court's conclusions may be summarised as:

The Franchise Issue

1. This issue is whether members of the Association, who are not trustees, (trustees being members who have donated or loaned at least $2,000 to the Association) are entitled to vote for members of the board of trustees. The Court has concluded they are entitled, because in the context of the Orders "Each member present at the AGM" in clause 2(h) of the Orders means a member of the Association identified pursuant to clause 6 of the Orders and is not confined to trustees.

The Membership Issue

1. This issue is whether the decision of the appointed chair of the meeting, Mr M McCulloch SC, made pursuant to the mechanism specified in clause 6 of the Orders, not to accept certain persons as eligible to be nominated for office, or vote at the Meeting, may be vitiated for failure to afford natural justice to the excluded persons or as unreasonable in the Wednesbury sense (see Associated Provincial Picture House Ltd v Wednesbury Corporation [1948] 1 KB 223). The Court answers this question "no". The exclusion of any implied obligation to afford natural justice or to imply a term to allow challenge for unreasonableness is a question of the construction of the contract of the parties as evidenced in the Orders. The process laid down in clause 6 (which Mr King accepted had been followed literally) is precise and, by necessary implication, that precision excludes both any obligation to afford natural justice beyond compliance with the terms of the clause, and any right of challenge for unreasonableness. In any event, if natural justice had been required, the defendants had expressly waived that entitlement on the issue about which they now complain. Furthermore, having considered Mr McCulloch SC's reasons, the Court does not accept that his decision was unreasonable in the Wednesbury sense.

10. Mr P E King of Counsel appeared for the applicant defendants. Mr T Dixon of Counsel appeared for the respondent plaintiffs. I have carefully considered and gratefully acknowledge their written submissions as developed in argument yesterday. The urgency with which these reasons have been required means that, without discourtesy to the industry of counsel, I shall confine myself to dispositive matters.

Franchise Issue – legal principles

11. As the product of a contract, contractual principles of interpretation apply to construe the Orders. I respectfully apply and adopt this summary by the plurality of the High Court in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7:

“35. Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.”

12. To this may be added the decision of the NSW Court of Appeal in Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295, to the effect that the existence of ambiguity is not a prerequisite to the surrounding circumstances known to both parties being able to be taken into account when construing a contract.

13. In this case relevant surrounding circumstances include:

1. The Orders are the product of close negotiation between legally represented parties.

2. The parties, and especially their lawyers, may be assumed to have a close knowledge of the Association's Memorandum and Articles of Association (the Constitution) and of the issues in dispute between the parties.

3. The issues in dispute included the identity of who was a valid member of the Association, and the scope and interaction of the powers of the board of trustees and the executive committee.

4. As appears from the recitals to the Orders, the object of the parties was for an election to restore constitutional order to the Association to take place, "as soon as is reasonably possible," that they sought to "avoid or minimise any further conflict or confrontations between the parties", and that the Election (as defined) “will be overseen by an independent person” (Mr McCulloch SC – significantly, in my view, a senior lawyer) appointed "for the purposes of calling, supervising and controlling all aspects of the Election" (Clause 4 of the Orders; emphasis added).

14. In making the observation in [13(4)] above, I am not to be taken as suggesting that Mr McCulloch SC could act otherwise than in accordance with the Orders (properly construed) and so much of the Constitution not expressly or by necessarily implication modified by the Orders.

Franchise Issue – consideration

15. It was common ground that the Orders modified the Constitution. The question was, to what degree? The answer is to the extent the Constitution was not modified by an express modification or by necessary implication: see, for example, clause 4 of the Orders expressly referring to modification of the Constitution by the Orders, and clause 7 of the Orders implicitly acknowledging the continuing application of "the Constitution and applicable legislation".

16. "Election" as defined in clause 1 of the Orders referred to the election of both the executive committee and the board of trustees. This was to be done as one agenda item (not two) at the Meeting (see clause 3 of the Order). Clause 1 of the Orders does not refer to an annual general meeting but the combined effect of clauses 1 and 2 supports the obvious conclusion (which I draw) that the meeting referred to in clause 1 is the meeting described as the AGM, notice of which was to be given in accordance with clause 2 of the Orders.

17. What I have just set out is a clear departure from the Constitution because clause 16 of the Articles of Association provides:

“16. The Trustees (Founder and Ordinary) at the first annual general meeting of the Association and thereafter annually shall elect the Board of Trustees who shall be the governing council of the Association, and the Board shall be elected at a properly constituted general meeting of the Trustees.”

18. The Meeting is, by the terms of the Orders, quite different from "a properly constituted general meeting of the trustees.” It follows that who is eligible to stand for election and vote at the Meeting is to be determined primarily by reference to the Orders because the meeting is an event not otherwise provided for in the Constitution and is the product of the Orders.

19. Mr Dixon's basal submission was that "members" wheresoever appearing in the Orders, and especially in clauses 5 and 6, meant a member, whether or not a trustee. He contended that it was clear from the terms of the Orders and the context of the dispute that constitutional legitimacy was to be conferred on both the newly-elected bodies (the board of trustees and the management committee) by being the product of a universal franchise (i.e. not divided between members and trustees). This was achieved by the members being able to nominate another member to serve on the board and the management committee (clause 5(a) of the Orders) and then vote for any number of those candidates (clause 5(h) of the Orders).

20. Mr King submitted that to permit non-trustee members to vote for the board of trustees would subvert the Constitution. The difficulty with this submission is that it assumes the answer to the question at hand: do the Orders properly construed modify the Constitution in this respect for the Meeting?

21. In my respectful opinion, Mr King's best point was to draw attention to Annexure A referred to in clause 6 of the Orders. This was the agreed list of members as at February 2014 which was divided in terms between founder trustees and ordinary trustees (a distinction derived from the Constitution) and ordinary members. This, he submitted, when read with the Constitution, made it clear that the Orders did not supplant the respective franchises for the two governing bodies such that ordinary members could not vote for the board of trustees. He submitted that Mr Dixon's argument asked too much of the reference to "member" in clause 5(h).

22. In my respectful view, the division of members in Annexure A is at best equivocal and does not detract from the result supported by the text and context of the Orders. This is to accept Mr Dixon's submissions. My reasons for doing so are:

1. There is no doubt trustees are members. "Trustees" are defined in the Articles of Association as “those members who have donated or contributed interest free loans of not less than two thousand dollars ($2,000.00) each for the use of the Association.”

2. The natural and ordinary meaning of "members" in the Order is members as such under the Constitution.

3. Those who negotiated the Orders must be taken to have been familiar with the constitutional distinction between ordinary members and trustees. They could have expressly observed that distinction if they had wanted to make that distinction.

4. "Election" is defined in clause 1 of the Orders as electing the office bearers of the Association "including the Executive Committee and the Trust Board of the Association" (emphasis added).

5. Clause 5 governs the procedure "for nominations and the Election" with members able to nominate another member for either governing body under clause 5(a) of the Orders (noting that as a matter of fact only trustees have been nominated for the board of trustees).

6. Annexure A is described in clause 6 as "the list of members" being "the persons eligible to vote in the Election", which is consistent with clause 5(h) referring to each member without distinction between members and members who are trustees.

7. The purpose and context of the Orders supports the constructional choice in favour of "member" meaning "member as such" for the reason identified by Mr Dixon which I have set out in [19] above: to confer constitutional legitimacy on both governing bodies by being the product of a universal franchise, not least when one of the issues between the parties is how those two bodies relate to each other.

Membership Issue – facts

23. The facts, being events and correspondence in relation to what I shall refer to as the Decision (reproduced in Schedule B to these reasons), were self-evident and therefore uncontroversial. The Court finds them to be as set out in [24] to [45] below.

24. The Orders were made by Richmond J on Tuesday, 7 March 2023 and entered on the same day. These required the Meeting to be held on Saturday, 22 April 2023.

25. A dispute arose about implementation of the Orders which delayed Mr McCulloch SC being informed of his appointment under the Orders. This was resolved by consent orders made by Lindsay J sitting as Duty Judge on Friday, 17 March 2023, including that Mr McCulloch SC be provided with the relevant materials “forthwith”. Mr McCulloch SC was sent those materials by email that same day at 1:36pm.

26. At 4:26pm on 17 March 2023, Mr McCulloch SC responded to the parties, including:

“Pursuant to order 6 of the orders made by the Honourable Justice Richmond on 7 March 2023 I am prepared to determine whether there are any Further Eligible Persons as defined in those orders. I note there is no requirement for me to provide any reasons for so determining and I do not propose to do other than identify those persons, if any, who I have determined are Further Eligible Persons.

I note that the last day for mailing notice of the AGM is Saturday 25 March 2023. With this in mind and to allow notice of the AGM to be mailed by 5pm on Friday 24 March 2023;

a) I invite one representative of each of the parties to supply me and the other party with a list containing the names of any persons who it is contended are Further Eligible Persons in addition to those who comprise the 2014 list of members by 5pm on Monday 20 March 2023;

b) Written submissions not exceeding two pages together with supporting materials as set out in order 6 are to be emailed to me by 5pm on Tuesday 21 March 2023; and

c) I will notify my decision to the solicitors for the respective parties and the representative, if any, who provide the [list] of names, if that representative is other than the solicitor for the respective parties by 5pm on Wednesday 22 March 2023.”

27. On Monday, 20 March 2023 the parties each sent Mr McCulloch SC their lists of proposed Further Eligible Persons.

28. On Tuesday, 21 March 2023 at 5:22pm the plaintiffs emailed their two page written submissions to Mr McCulloch SC and the defendants.

29. On Wednesday, 22 March 2023 at 8:57am Dr Spencer, the defendants’ solicitor, emailed Mr Maksisi, the plaintiffs’ solicitor, including (emphases in original):

“There are a number of misleading and rebuttable statements made in your 2-page submissions to Mr McCulloch SC. I have decided that it is unnecessary for me to address them as Mr McCulloch SC has been appointed to conduct the AGM and not to determine that your client has provided a sworn affidavit stating that their AGM on 26 February 2022 did not occur at the Temple on the day and it was not adjourned to another day. In addition, the sworn affidavit also suggests that your clients have been manufacturing NSSAS documents lodged with NSW Office of Fair Trading for several years. I shall leave that for another forum as it is in our cross-claim.”

30. On 22 March 2023 at 10:16am, Dr Spencer emailed Mr McCulloch SC (and others including Mr Maksisi), including (emphasis added):

“Thirdly, his email below suggests that I should be submitting my response to his 2-page submission sent to you. To illustrate, there are a number of misleading and rebuttable statements made in his 2-page submission to you. However, I have decided that it is unnecessary for me to address them as you have been appointed to conduct the AGM and not to determine that his clients have provided a sworn affidavit stating that their AGM on 26 February 2022 did not occur at the Temple on the day and it was not adjourned to another day. In addition, the sworn affidavit also suggests that his clients have been manufacturing NSSAS documents lodged with NSW Office of Fair Trading for several years. Merely saying that his clients do not recognise our receipts is insufficient to prove fraud. Nonetheless, I shall leave that for another forum as it is in our cross-claim and there is no scope for response from either parties.”

31. On 22 March 2023 at 5:51pm, Mr McCulloch SC emailed the parties with his determination of the Further Eligible Persons and saying (presciently) “contrary to my earlier email, in the event that there is further litigation between the parties I will set out in summary form my reasons for accepting or rejecting any proposed Further Eligible [Person]”.

32. Mr McCulloch SC’s determination was in three sections:

1. A list of 16 out of the 44 persons proposed by the plaintiffs who had been found to be eligible.

2. A list of 28 of the 44 persons proposed by the plaintiffs who had been found not eligible, with two or three sentences of reasons in relation to each.

3. The Decision finding that none of the 198 people proposed by the defendants were eligible.

33. Notices of the Meeting were sent out on 24 March 2023.

34. The solicitors for the parties then turned their attention to other matters in preparation for the Meeting.

35. The dispute to which I have referred as the Franchise Issue arose in email correspondence between Mr Maksisi and Dr Spencer on Wednesday, 29 March 2023.

36. After further correspondence, the parties put their respective positions on the Franchise Issue to Mr McCulloch SC by email on the morning of Friday, 31 March 2023.

37. At 2:57pm on 31 March 2023, Mr McCulloch SC sent an email to the parties, including:

“Order 5 of the orders made by the Honourable Justice Richmond on 7 March 2023 deals with the issue most recently raised by Dr Spencer and contested by Mr Maksisi. It is not necessary for me to set out the Order in this email. The Order is unambiguous. I am bound to follow that Order. It was not varied by the orders made by the Honourable Justice Lindsay on 17 March 2023. It is no part of my role to determine the dispute set out [i]n the emails under reply beyond the contents of this email.”

38. Dr Spencer responded that he would have to seek instructions about the parties’ disagreement on the Franchise Issue.

39. At 4:26pm on 31 March 2023, Mr McCulloch SC responded to the parties:

“Dear Dr Spencer,

Thank you for your email. [W]hilst I am reluctant to send the parties down the route of further litigation, it seems to me, given what I have said in my most recent email that you may have to approach Justice Richmond or take such steps as you consider appropriate after the AGM and the ballot. That said, the wording of Order 5 does seem clear to me.”

40. The following Thursday, 6 April 2023, Dr Spencer emailed Mr McCulloch SC and the parties in response to the latter’s email in the previous paragraph:

“I am responding to this email below [referring to Mr McCulloch SC’s email reproduced in the preceding paragraph].

I understand that you prefer the Court to decide on the questions of law and meeting procedures I have raised.

Accordingly, I now have instructions to approach the Court pursuant to liberty to apply upon 3 days’ notice.”

41. The Easter long weekend then intervened.

42. The motion was e-filed on the afternoon of Wednesday, 12 March 2023. It raised both the Franchise Issue and the Membership Issue. The Court was not taken to any correspondence between the parties about the latter issue from the time of the Decision being delivered on 22 March 2023 and the e-filing of the motion on 12 April 2023.

43. On Friday, 14 April 2023, Dr Spencer emailed my Associate attaching the motion and including:

“We act for the defendants.

Pursuant to liberty to apply upon 3 days’ notice under Order 15 of the Hon. Richmond J dated 7 March 2023, the defendants are seeking that this matter be relisted on either 17, 18, 19 or 20 April.

This notice of motion seeks declaration from the Court or give an advisory opinion to the parties with respect to questions of law and procedure in respect of the Annual General Meeting (AGM) of the North Shore Sikh Association of Sydney Incorporated to be held on 22 April 2023 or as soon thereafter as the Chair shall determine.

The defendants are seeking an urgent listing for the matter, or directions to set a timetable and/or interlocutory orders in respect of the AGM to be held on 22 April 2023, until the substantive arguments could be heard by the Court.  

The defendants would be most grateful if this matter could be heard by a Duty Judge with a measure of expedition.”

44. I listed the motion for directions on the following Monday, 17 April 2023. At that time, I made directions for the final hearing to take place before me on Wednesday, 19 April 2023.

45. At the directions hearing, I also raised with the parties whether Mr McCulloch SC should be joined or might otherwise wish to be heard. On 18 April 2023, my Associate received this email from Mr McCulloch SC:

“I have been made aware of the observations of His Honour at this morning’s directions hearing in this matter.

My appointment was by way of order of the Court and I will abide by any further determination or order of the Court.

I otherwise do not wish to be heard in respect of any other matters agitated by either party to these proceedings, in respect of which I have not taken any role to date other than to discharge the functions of Chair of the AGM.”

Membership Issue – legal principles

46. Mr King made two attacks on the Decision:

1. His clients had been denied natural justice by not being able to respond to the serious allegations against them that he submitted had apparently been accepted by Mr McCulloch SC; and

2. The decision was unreasonable in the Wednesbury sense noting, for example, that it had the effect of excluding some of the defendants who had previously been office bearers in the Association for some time.

47. It was not entirely clear to what extent the two complaints were independent of each other, or whether if the principles of natural justice did not apply then that also disposed of the question of unreasonableness. I shall treat them as independent. Furthermore, I should record that I understood Mr King to be referring to Wednesbury unreasonableness as meaning that no person in Mr McCulloch SC’s position acting reasonably could have made the Decision.

48. In my respectful opinion, two similar, but not identical, contractual principles are applicable, noting that clause 6 of the Orders sets out how Mr McCulloch SC was to "determine" the “Further Eligible Persons”.

49. First, there is a ready analogy where parties agree on a valuation mechanism. The classic exposition of this is by McHugh JA (as his Honour then was) in Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 335-6 (emphasis added):

“In my opinion the question whether a valuation is binding upon the parties depends in the first instance upon the terms of the contract, express or implied. This was pointed out by Sir David Cairns in the Court of Appeal in Baber v Kenwood Manufacturing Co Ltd. A valuation obtained by fraud or collusion can usually be disregarded even in an action at law. For in a case of fraud or collusion the correct conclusion to be drawn will almost certainly be that there has been no valuation in accordance with the terms of the contract. As Sir David Cairns pointed out, it is easy to imply a term that a valuation must be made honestly and impartially. It will be difficult, and usually impossible, however, to imply a term that a valuation can be set aside on the ground of the valuer's mistake or because the valuation is unreason­able. The terms of the contract usually provide, as the lease in the present case does, that the decision of the valuer is final and binding on the parties. By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision. It is now settled that an action for damages for negligence will lie against a valuer to whom the parties have referred the question of valuation if one of them suffers loss as the result of his negligent valuation: Sutcliffe v Thackrah [1974] AC 727; Arenson v Arenson [1977] AC 405. But as between the parties to the main agreement the valuation can stand even though it was made negligently. While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistaken application of the principles of valuation may still be made in accordance with the terms of the agreement. In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.”

50. Second, Mr King referred to the case of Morris v Victorian Farmers Federation [2022] VSC 407 in which Dixon J stated the relevant principles as (emphasis added):

“74. The jurisdiction of a domestic tribunal is founded on a contract, express or implied. The set of rules of the organisation contains the contract between the members and is justiciable in the court as any contract would be. If a member is expelled by a committee in breach of contract, the court will grant a declaration that their action is ultra vires. Parties are not, however, free to make any contract they like. There are important limitations imposed by public policy. The tribunal must, for instance, observe the principles of natural justice. They must give the member notice of the charge and a reasonable opportunity of meeting it. They also cannot oust the jurisdiction of the courts. While they can leave questions of law and fact to the domestic tribunal to decide, and they can make the tribunal the final arbiter on questions of fact, they cannot make it the final arbiter on questions of law.”

51. It will be observed that his Honour stated that the obligation of natural justice is imposed on the decision maker as a matter of public policy. For this proposition Dixon J referred to Lee v The Showmen's Guild of Great Britain [1952] 2 QB 329 at 341-2 (Lee), a case to which Mr King also referred. However, with respect to his Honour, while it may be accepted that parties are not "free to make any contract they like", they may expressly or impliedly agree to exclude the application of natural justice (as opposed, for example, to public policy preventing the parties from being able to agree to oust the jurisdiction of the Court).

52. In McClelland v Burning Palms Surf Life Saving (2002) 191 ALR 759; [2002] NSWSC 470, a case not apparently drawn to the attention of Dixon J, Campbell J (as his Honour then was), referring to Lee said:

“96.  There have been suggestions in some cases that, in relation to bodies which have no statutory basis but whose decisions can affect the rights of members or others, rules of natural justice are implied as a matter of public policy: Dawkins v Antrobus (1881) 17 Ch D 615 at 630–1 per Brett LJ; Lee v Showmen's Guild of Great Britain [1952] 2 QB 329; [1952] 1 All ER 1175 at QB 342 per Denning LJ; Bonsor v Musicians Union [1954] Ch 479; [1954] 1 All ER 822 at Ch 485–6 per Denning LJ; John v Rees [1970] Ch 345; [1969] 2 All ER 274 at Ch 399–400 per Megarry J; Edwards v Society of Graphical and Allied Trades [1971] 1 Ch 354; [1970] 1 All ER 905 at Ch 377 per Lord Denning MR, Ch 382 per Sachs LJ; Enderby Town Council Football Club Ltd v Football Association Ltd [1971] 1 Ch 591; [1971] 1 All ER 215 at Ch 606 per Lord Denning MR (recording a concession by counsel); Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 ; (1979) 25 ALR 1 at CLR 275–6 per Murphy J; Calvin v Carr [1977] 2 NSWLR 308 at 331–2 per Rath J. However the length of this list does not lead to a conclusion that it is correct to say that rules of natural justice are implied into the rules of such bodies as a matter of public policy, if by “public policy” one means the sort of legal provision out of which it is impossible to contract. Not all of these cases are ones which squarely face the question of whether the kind of public policy which is being talked about, is the kind of public policy which results in a provision of a contract being void or unenforceable. Any persuasiveness of the dictum of Megarry J in John v Rees is lessened by the fact that in Gaiman v National Association for Mental Health [1971] Ch 317 at 338 Megarry J deliberately refrained from deciding whether there was any rule of public policy which prevents the principles of natural justice from being ousted by an express term which excludes them. The persuasiveness of Lord Denning MR's remarks in Edwards is lessened by their being linked to a person's “right to work”, the juristic peculiarities of which have been pointed out by Megarry VC in McInnes v Onslow-Fane [1978] 1 WLR 1520 at 1528; [1978] 3 All ER 211, and further questioned in Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 at 260–1; 25 ALR 1 ; Hepples v FCT (1992) 173 CLR 492 at 502–3, 527 and 529; 104 ALR 616; and Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 at 346 .

97. In Australia, the preferable view is that natural justice comes to operate in private clubs and associations by the rules of those private organisations being construed on the basis that fair procedures are intended, but recognising the possibility that express words or necessary implication in the rules could exclude natural justice in whole or part. The judgments in Dickason v Edwards support that view. Further, in Australian Workers’ Union v Bowen (No 2) (1948) 77 CLR 601 the statement of O'Connor J in Dickason v Edwards to that effect (set out in [84] above) was approved by Latham CJ at 617, and also by Dixon J (with whom Starke J agreed) at 631. Williams J (at 638) said:

But the principles of natural justice cannot override the express provisions of the rules, and it could not be “contrary to the essence of justice” for the executive council honestly and bona fide to exercise all its powers and duties under the rules.”

53. This approach, which imposes an obligation to afford natural justice as a matter of contractual interpretation, and therefore capable of contractual exclusion, has been followed or approved in numerous first instance decisions, most recently, for example, Trindall v NSW Aboriginal Educational Consultative Group Inc [2023] NSWSC 85 at [49] (Slattery J), Elston v Commonwealth (2014) 222 FCR 429; [2014] FCA 291 at [72], (Rangiah J), Goodrich v Kilmore Racing Club Inc [2021] VSC 767 at [35] (McDonald J).

Membership Issue – consideration

54. Mr King correctly, if I may respectfully say so, accepted that the procedure in clause 6(b) of the Orders had been literally followed. Having regard to the legal principles I have set out, there are two questions: whether any obligation to provide natural justice has been impliedly excluded by the Orders, or whether a term that the Decision can be challenged as unreasonable can be implied. The Court answers the first of these questions "yes" and the second "no" for essentially the same reasons.

55. Those reasons are:

1. The precision of the arrangements in clause 6.

2. The short time within which they were plainly intended to be enacted.

3. The fact that they dealt with an issue at the heart of the parties' dispute (eligibility to stand for office and vote at an AGM), where clearly the intention was to make Mr McCulloch SC the final arbiter for the very practical purpose of enabling the Meeting to proceed expeditiously in the way the parties contemplated.

56. Putting the matter colloquially, and for obvious reasons given the matters in dispute, the parties committed themselves to what might be called, without disrespect, a "sudden death" procedure. Each was to put their best foot forward in a single submission and Mr McCulloch SC was to determine the “Further Eligible Persons”.

57. Furthermore, if my conclusion concerning the exclusion of any obligation to provide natural justice is wrong, the applicants would still fail because any right of reply (assuming there was one) was, as Mr Dixon submitted, waived by Dr Spencer’s emails of 22 March 2023 extracted in [29] and [30] above. Mr King submitted, based on that correspondence and without evidence from Dr Spencer, that the waiver was based on a misapprehension by Dr Spencer. There was no suggestion Dr Spencer had subsequently sought a right of reply for his clients and was refused. As I have noted in [42] above, the Membership Issue was not mentioned again until it was raised in the Motion. In my view, especially given the tight time frame in which everyone (including Mr McCulloch SC) was working, the applicants cannot now say they were (assuming they were entitled to it) denied procedural fairness even if Dr Spencer’s decision not to reply was made in error.

56. In relation to the contention of Wednesbury unreasonableness, I have applied to the terms of the Orders the emphasised observation of McHugh JA reproduced in [49] above. If I am wrong in the conclusion I have reached that no term allowing the Decision to be challenged as unreasonable can be implied, then having considered the reasons set out in the Decision, I would not have concluded that it was unreasonable in the Wednesbury sense. Given the nature of the dispute between the parties extending to who was eligible to be nominated for office or to vote at the Meeting, Mr McCulloch SC was entitled to take the cumulative and global approach he did, in particular when he was satisfied on the evidence that at least some of the receipt books had been manufactured after the date of the entries purportedly recorded in them.

Delay

59. Mr Dixon submitted that on the question of discretion there had been disqualifying delay by the applicants in bringing on the Motion. The chronology appears in [31] to [43] above.

60. While I regard the question as finely balanced, it falls just on the side of the line that the delay, such as it was, between the date of the Decision and the filing of the Motion would not have disentitled the applicants from relief if they were otherwise entitled.

Conclusion

61. The Motion will be dismissed with costs.

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Schedule A (pdf)

Schedule B (pdf)

Decision last updated: 26 April 2023