Singh v Singh - [2008] NSWSC 386

No judgment structure available for this case.

CITATION: Singh v Singh; Flora trading as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386

HEARING DATE(S): 26/11/07, 27/11/07, 28/11/07, 29/11/07. 30/11/07

JUDGMENT DATE :
1 May 2008

JURISDICTION: Equity Division

JUDGMENT OF: Barrett J

DECISION: Short minutes and further submissions to be filed

CATCHWORDS: ASSOCIATIONS AND CLUBS - incorporated associations - tenure of office-bearers - where executive committee members hold office "until the next annual general meeting when they shall retire" - no annual general meeting held - where board of trustees to consist of specified number of members and all but one resign - whether that one can function alone - admission of new members - whether recommendation of executive committee required by rules was made - whether board of trustees admitted new members - general meetings - whether general meeting requested in accordance with rules - whether model rule about requisitioning of general meetings by members applied - whether general meeting convened in accordance with model rule - board of trustees and executive committee purportedly elected at general meeting not duly convened - EQUITY - equitable relief - declaratory relief - discretionary considerations - delay - laches - where proceedings not commenced until two years after new bodies purportedly elected - where those bodies operated during that period - TORTS - interference with contractual relations - whether contract existed - whether alleged wrongdoer had relevant knowledge of contract - whether breach of contract induced by him - whether he interfered indirectly with contractual performance

LEGISLATION CITED: Associations Incorporation Act 1984, ss 3, 19(3). 25, 26(1), 59, 61
Associations Incorporation Regulation 1999, model rules 20, 25
Corporations Acts 2001 (Cth), ss 236, 249G, 1322

CATEGORY: Principal judgment

CASES CITED: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26
Australian Capital Television Ltd v Minister for Transport and Communications (1989) 86 ALR 119
Brettingham-Moore v Christie, unreported, TASSC, Neasey J, 21 November 1969
Club Flotilla (Pacific Palms) Ltd v Isherwood (1987) 12 ACLR 387
D C Thomson & Co Ltd v Deakin [1952] Ch 646
Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691
Fedorovitch v St Aubins Pty Ltd [1999] NSWSC 506
Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473
Film Financial Consultants Ltd v Becker Group Ltd [2006] NSWSC 319
Foss v Harbottle (1843) Hare 461; 67 ER 189
Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424
Hillig v Darkinjung Pty Ltd [2008] NSWCA 75
Industrial Equity Ltd v Blackburn (1977) 2 ACLR 421
Industrial Equity Ltd v Blackburn [1977] HCA 59; (1977) 137 CLR 567
Massey (T/A Massey Bailey) v Wales [2003] NSWCA 212; (2003) 57 NSWLR 718
Morris v Kanssen [1946] AC 459
National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252
OBG Ltd v Allan [2007] UKHL 21; [2007] 2 WLR 920
Orica Investments Pty Ltd v McCartney [2007] NSWSC 645
Re Beckers Pty Ltd (1942) 59 WN (NSW) 206
Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477
Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883
Re Duomatic Ltd [1969] 2 Ch 365
Re Portuguese Consolidated Copper Mines Ltd (1880) 42 ChD 160
Re Sly, Spink & Co [1911] 2 Ch 430
Re Tedman Holdings Pty Ltd [1967] Qd R 561
Rivers v Bondi Junction-Waverley RSL Sub-branch Ltd (1986) 5 NSWLR 362
Royal British Bank v Turquand (1856) 6 El&Bl 327; 119 ER 886
Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486
The Faure Electric Accumulator Co Ltd v Phillipart (1888) 58 LT 525
Woolley v Dunford (1972) 3 SASR 243

PARTIES: (1) Shaun Jit Singh - First Plaintiff
Terlochan Singh - Second Plaintiff
Sukhdev Singh - Third Plaintiff
Balbir Singh - Fourth Plaintiff
Harmit Pal Singh - First Defendant
Sarwan Singh Khalah - Second Defendant
Pardeep Singh Gill - Third Defendant
Charan Singh - Fourth Defendant
Jaspal Singh - Fifth Defendant
Prabjeet Singh Anand - Sixth Defendant
Commonwealth Bank of Australia Limited - Seventh Defendant
North Shore Sikh Association of Sydney Incorporated - Eighth Defendant
(2) Davinder Singh Flora t/a Flora Constructions - Plaintiff
Budget Demolition & Excavation Pty Ltd - Defendant

FILE NUMBER(S): SC (1) 5651/05; (2) 6458/05

COUNSEL: (1) Mr A E Maroya - Plaintiffs
Mr D A Smallbone/Mr A K Singh - 1st to 6th and 8th Defendants
(2) Mr M K Rollinson - Plaintiff
Mr D A Smallbone/Mr A K Singh - Cross-defendants

SOLICITORS: (1) The People's Solicitors - Plaintiffs
Harish Prasad & Associates - 1st to 6th and 8th Defendants
(2) Newman & Associates - Plaintiff
Harish Prasad & Associates - cross-defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

THURSDAY 1 MAY 2008

5651/05 SHAUNJIT SINGH & 3 ORS v HARMIT PAL SINGH & 7 ORS
6458/05 DAVINDER SINGH FLORA t/as FLORA CONSTRUCTIONS v BUDGET DEMOLITION & EXCAVATION PTY LTD

JUDGMENT

Introduction

1 These proceedings involve the affairs of The North Shore Sikh Association of Sydney Incorporated, an association incorporated under the Associations Incorporation Act 1984. As its name implies, the Association is an association of persons of the Sikh religion based on Sydney’s North Shore. The Association has maintained a gurdwara (or temple) at Turramurra.

2 There have existed for some years divisions and differences between two factions within the Association. Before outlining the disputes, I should refer briefly to certain aspects of the Association’s rules concerning membership and governance. The rules take the form of a somewhat ineptly adapted company constitution in the old style, consisting of memorandum and articles. It is convenient to refer to the rules in this case as “the constitution”.

3 The constitution makes provision for two classes of members. There are “members” simpliciter and “Trustees”, an expression defined as follows:

“’Trustees’ shall mean 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.”

4 The “Trustees” are divided into “Founder Trustees” and “Ordinary Trustees”.

5 Provision is made for the appointment or election of two decision-making organs distinct from the “members” as a body and the “Trustees” as a body. These are the “Board of Trustees” and the “Executive Committee”. The relevant definitions within the constitution are:

“’the Board of trustees’ means the governing council of the Association, elected from the Founder Trustees and Ordinary Trustees; and referred to as ‘the Board’.”

“’Executive Committee’ means the managing committee of the Association.”

The earlier proceedings

6 In 2001, proceedings were commenced in this Division following actions directed towards the dismissal or suspension of the Executive Committee of the Association and the admission of some 47 persons to membership. This brief description comes from a judgment delivered by Burchett AJ on 5 October 2001 (Singh v Singh, No 3954 of 2001). Following delivery of that judgment, his Honour made certain interlocutory orders on 9 October 2001 to maintain the status quo until trial. In due course, the proceedings were settled and certain final relief was granted by consent on 2 November 2001. In particular, the court

(a) declared that the disputed applications for membership of the Association, to the extent that they needed to be considered by the Executive Committee or the Board of Trustees, had not to that point been validly considered by the Executive Committee or the Board of Trustees; and

(b) noted an agreement of the parties regarding nomination of certain persons for election to the Board of Trustees and the Executive Committee, the conduct of such elections on 7 November 2001 and consideration of the applications for membership of the Association by the Executive Committee and board of trustees so elected.

7 The agreement noted by the court contained an acknowledgment that the Executive Committee and Board of Trustees elected in the way I have described would “fulfil a caretaker role pending the calling of an annual general meeting in March 2002”.

The central issues in this case

8 Steps to implement this agreement were subsequently taken but dissension re-emerged and led to the present proceedings. The central issues now before the court are:

(a) whether the purported admission of 47 persons as members on 4 June 2003 was valid and effective; and

(b) whether a purported general meeting on 27 September 2003 was valid.

9 If these questions are answered in the affirmative, the defendants (among others) will be seen to hold office within the Association. If the questions are answered in the negative, the defendants (and others) will be seen not to have been entitled to act as office holders. There is also a cross-claim. The cross-claimant is the Association itself, set in motion by the defendants’ faction. By the cross-claim, the defendants, through the Association, call into question the status and authority of the first plaintiff (Shaunjit Singh) within the Association and seek to establish that the plaintiffs have no authority to function as officers of the Association.

10 Three possible outcomes are possible. The first is that the plaintiffs are found to be the officers of the Association. The second is that the defendants are found to be the officers of the Association. The third possibility is that none of them is capable of acting as an officer of the Association.

The parties and the meeting of November 2001

11 So that the events I am about to describe may be better understood, I set out the names of the plaintiffs and the natural person defendants (the Association itself is also a defendant).

Plaintiffs: Shaunjit Singh
Terlochan Singh
Sukhdev Singh
Balbir Singh

12 A convenient point from which to begin a consideration of relevant events after the compromise of 2 November 2001 is the annual general meeting of the Association held on 7 November 2001. On that day, a Board of Trustees and an Executive Committee were elected in conformity with the agreement noted by the court. I do not understand anyone to seek to impugn the validity of these elections or to contend that the persons purportedly elected were not elected. I proceed, therefore, on the premise that a duly elected Board of Trustees and a duly elected Executive Committee were in office immediately after 7 November 2001.

The position of Harmit Pal Singh after November 2001

13 There is one question, however, about the precise constitution of the new Executive Committee. Harmit Pal Singh, the first defendant, was not among the persons who, according to the agreement noted by the court on 2 November 2001, were to be nominated for election to the Executive Committee. The defendants contend, however, that he was nevertheless a member of the Executive Committee because of article 42 of the constitution (to which more detailed reference will be made later), the effect of which, read in conjunction with article 43, is to make the “Outgoing Honorary President” a member of the Executive Committee. Harmit Pal Singh was, it is said, the Honorary President at the time of the 2001 proceedings, the agreement noted by the court on 2 November 2001 and the elections on 7 November 2001 in conformity with that agreement. It follows, the defendants say, that, after the new committee had been elected in conformity with the agreement, Harmit Pal Singh was a member of the Executive Committee because of his status as “Outgoing Honorary President”.

14 Harmit Pal Singh, having been a defendant in the 2001 proceedings, was a party to the agreement noted by the court. It is clear from the terms of the agreement that the parties to it intended persons elected in accordance with the procedures laid down by the agreement to be the members of the Executive Committee (and the Board of Trustees) to the exclusion of any other persons. Thus, the agreement recorded in paragraph (7):

elected at the elections

15 And at paragraph (8):

elected at the elections

16 By becoming a party to the agreement, Harmit Pal Singh accepted that each body would be constituted wholly and solely by the envisaged election. He must be taken to have accepted that any right he would otherwise have to participate as “Outgoing Honorary President” would be foregone by him. It is significant that he did not, it appears, attempt in any way to assert his membership of the Executive Committee at any time between the election of 7 November 2001 and the controversial general meeting of 27 September 2003 at which a new committee which included him was supposedly elected. The matter was thus not raised until these proceedings made it convenient for it to be raised.

17 I proceed, therefore, on the footing that the Board of Trustees and the Executive Committee in office immediately after 7 November 2001 were as contemplated by the short minutes of 2 November 2001, each having been duly and regularly elected:

Board of Trustees: R S Punia
Shaunjit Singh
Sukhdeep Singh Rangi (or S S Rangi)
Nana Sidhu
Ajit Kalra

18 It will thus be seen that, of the eleven members of the Executive Committee, five made up the total membership of the Board of Trustees.

The meeting of 8 December 2002

19 The matter of the disputed applications for membership of the Association came before a meeting of the Board of Trustees on 8 December 2002. According to the minutes in evidence, those present were “P Punia” (that is, R S Punia – known as “Pebbles” - who is recorded as chairman), “S S Rangi”, “N Sidhu” (Nana Sidhu) and “A Kalra” (Ajit Kalra). Recorded as in attendance “by invitation” are:

“Executive Committee: Balbir Kaur, Terlochan Singh, Pradeep Singh, Daljit Bahia, Jaspal Singh.”

20 A number of motions are recorded as having been proposed and seconded at the meeting, without any record of their having been carried so as to become resolutions. There are, however, resolutions and associated commentary as follows:

“Resolved that Shaun Jit Singh liaised with the Executive Committee and the accountants for a meeting.

Resolved that a vote be taken in view of membership issue. This is subject to Executive Committee meeting with the Accountants to scrutinise any discrepancies.

In favour to the above resolution: Daljit Bahia, Pradeep S Gill, SS Rangi, P Punia, N Sidhu, S Singh & A Kalra

Not in favour: Telochan Singh, Balbir Kaur

Resolved that any costs incurred subsequent to the first meeting with the Accountants will be borne by the visiting parties.”

21 Two days after this meeting, Terlochan Singh, one of the persons who in fact took on the envisaged scrutinising role wrote to the secretary of the Association asking for certain documents “so that I could fulfil my responsibility entrusted to me on 8 December 2002 (along with the help of Mrs Balbir Singh) of scrutinising the applications for the new Trustees & for ordinary members”.

22 Terlochan Singh wrote several further letters repeating his requests. These were addressed variously to the secretary, to R S Punia and to Shaunjit Singh. In one such letter, dated 27 January 2003, Terlochan Singh said that he had visited the accountants, Sothertons, on 21 January 2003 and had noted six “discrepancies”, which he listed. These included:

“1. Receipts of payments for majority of the said members do not exist.

2. Majority of the receipts which were shown to me by the accountants are the donations to the Building Fund and not for membership …

3. The accountants informed us that 7 members out of your list of 47 have not paid full membership/trusteeship fee. They have only made part payment.

4. The accountants have also informed us that about $15,000 worth of cheques have been dishonoured, the names of drawer are unknown. Under these circumstances you do not know as to who has paid and who has not paid.”

The meeting of 8 February 2003

23 On 8 February 2003 there was a meeting which, according to the typewritten minutes, was a meeting of the Board of Trustees. Those typewritten minutes, with handwritten interlineations, record as follows:

“The minutes of 8 December 2002 were read and signed but 2 dissenting members Terlochan Singh & Balbir Kaur noted against passing the forty seven members and since being to the Accountants (Messrs Sothertons Chartered Accountants) have raised certain issues, validity of membership (lack of certain documents).

With such issue not being resolved, it was resolved that after submission of accounts, the Trust Board members may not be able to proceed further and therefore will intend to resign subject to legal opinion.

This process is after handling [sic] all documents/findings to the issuer of “The Short Minutes’.”

24 This typewritten version is unsigned. But there exist what purport to be handwritten minutes of the same meeting which appear to carry nine signatures (there being nine persons recorded as present). The handwritten minutes record the following:

“Chairman: Purpose that we seek legal opinion in regards to membership issues. This is in line to recommendations made by Terlochan Singh that there must be clear transparencies, and further to establish remedies available to the Board of Trustees esp for missing application forms, missing receipt books, absence of signature etc.

S.S. Rangi: Raised concerns whether the discrepancies can be fixed before AGM. He too informed all present that similar absence of applications have occurred in the past.

Sukhdev Sh: Informed all present that per the directives an AGM must be convened by March 2003. He further seek information about other members in application.

D. Bahia: Tendered his resignation to S.S. Rangi in writing from being a member of the exec committee.

The minutes of 8/12/02, were read and signed but the 2 dissenting members TC/BK voted against passing the 47 members & since being to the Accountants have raised certain issues, validity of membership (lack of certain documents).

With such issues not being resolved, we feel that after submission of Acc’s in March the Board Members are unable to proceed further and therefore will intend to resign there after.

This process is after handing over all documents/findings to the issuer of ‘The Short Minutes’.”

25 There is a footnote, below the signatures and itself apparently signed by two persons as follows:

“The step up members who had given $1,000 earlier their application forms at that time will be with sec/treasurer as such the payment receipt number can prove the payment/receipts.”

The meeting of 4 June 2003

26 A further meeting was held on 4 June 2003. Handwritten minutes are in evidence. Shown as present are “SSR” (S S Rangi), “AK” (Ajit Kalra), “NS” (Nana Sidhu), “SS” (Shaunjit Singh) and “RSP” (R S Punia). The minutes do not describe the meeting as a meeting of the Board of Trustees, but since the five persons shown as present were the five members of that body, it may be accepted that it was a meeting of the Board of Trustees. The following resolution was recorded:

“After discussion resolved:

· Committee to write seeking refund of legal fees

· Approve disputed members

· Provide accountants with list of trustees who have loaned monies

· Resolved to hold AGM Sunday 5th of July

· Send notice of AGM to members

· Send acceptance letters to disputed members”

27 The handwritten minutes carry five signatures.

28 Also on 4 June 2003, S S Rangi wrote to the 47 applicants informing them that their applications had been found to be in order and saying:

“On behalf of the Trust Board and the North Shore Sikh Association, I am pleased to advise you that you have now become a Trustee/Ordinary Member of the North Shore Sikh Association of Sydney Inc, and I extend a warm welcome to you.”

29 The letters were sent on a prepared form. One of “Trustee” and “Ordinary” was struck through in each case. In some, perhaps all, cases, the letter was signed not only by S S Rangi but also by four other persons.

Relevant provisions of the constitution

30 Against the factual background just outlined, I turn to the relevant provisions of the Association’s constitution. As I have said, there are two classes of members: “members” simpliciter and “Trustees”. Article 6 requires that every applicant for membership be proposed by one Trustee and seconded by another. The application must be in writing signed by the applicant, the proposer and the seconder. Article 7 requires that every application be considered by a meeting of “the Committee” (which can only mean the Executive Committee) which “shall thereupon determine upon the rejection; or recommendation of admission to the Board of Trustees of the applicant”. It is clear, I think, that “rejection” by the Executive Committee puts an end to an applicant’s prospects, subject only to the possibility that an appeal against rejection may be brought before the Board of Trustees. There is provision for a rejected applicant to initiate such an appeal.

31 It is desirable that article 7 be set out in full, together with article 8:

“7. At the meeting of the Committee after the receipt of any application for membership, such application shall be considered by the Committee who shall thereupon determine upon the rejection; or recommendation of admission to the Board of Trustees of the applicant. In no case shall the Committee be required to give any reason for the rejection of an applicant, but any such rejection, on appeal, shall be reviewed by the Board of Trustees whose decision will be final.

8. When an applicant has been accepted for membership the Board of Trustees shall forthwith send to the applicant written notice of his/her acceptance and a request for payment of his/here entrance fee and first annual subscription. Upon payment of his/her entrance fee and first annual subscription the applicant shall become a member of the Association, provided nevertheless that if such payment be not made within six calendar months after the date of the notice, the Committee may in its discretion cancel its acceptance of the applicant for membership of the Association.”

32 It is here made clear that the function of accepting a person for membership (which is, in my view, the same thing as admitting a person to membership) is a function of the Board of Trustees, but that membership entails not only such acceptance or admission but also payment of the entrance fee and first annual subscription. It is equally clear, in my opinion, that applications or nominations are to be dealt with in the first instance by the Executive Committee and that a person cannot be admitted to membership by the Board of Trustees unless the person’s admission has been recommended by the Executive Committee.

Further evidence about the meetings

33 It is now necessary to go into more detail about the meetings of 8 December 2002, 8 February 2003 and 4 June 2003.

34 According to the minutes of the meeting of 8 December 2002, the meeting was a “Trust Board Meeting” and the four persons recorded as “present” were four of the five members of the Board of Trustees. “By invitation” there were in attendance five other persons. Of the nine persons present or in attendance, all were members of the Executive Committee (which had a total membership of eleven) and four were also members of the Board of Trustees.

35 The minutes make it clear that persons recorded as in attendance “by invitation” played an active part in proceedings. The minutes record that motions were moved by Terlochan Singh and a motion was seconded by Balbir Kaur. Neither was a member of the Board of Trustees but each was a member of the Executive Committee. Voting on one proposed resolution is recorded. All nine persons are recorded as having voted. Curiously, Shaunjit Singh is recorded as having seconded two motions even though his name does not appear in the list of those present or those in attendance. The name “S Singh” has been removed from the list of those present, with the change being initialled by three persons. This must be Shaunjit Singh, as he is the only “S Singh” on the Board of Trustees (Sukhdev Singh, who was unquestionably absent, was a member of the Executive Committee only). It is Shaunjit Singh’s evidence, however, that he was present, and in the absence of any suggestion to the contrary (apart from the handwritten alteration), I accept that.

36 Because the eleven persons making up the Executive Committee included the five who made up the Board of Trustees – and, in addition, ten of those persons were physically present and fully participating – I am prepared to think that the meeting of 8 December 2002 was, in fact, a meeting of the Executive Committee.

37 The resolution recorded in the minutes as having been passed at the meeting of 8 December 2002 is equivocal as to its meaning. “Resolved that a vote be taken in view of membership issue” does not suggest that any decision to recommend (or, for that matter, to reject) admission of the applicants was taken. The following words – “This is subject to Executive Committee meeting with the Accountants to scrutinise any discrepancies” – are also of questionable meaning, if only because one cannot tell what “this” is.

38 Individuals present at the meeting gave evidence of what transpired. Shaunjit Singh’s version is summed up by his statement, “I voted in favour of scrutiny, not approval”. Terlochan Singh thought that the resolution was just to authorise him and Balbir Singh “to do the scrutiny of the documents”. Balbir Singh’s recollection or understanding was the same. P S Gill said that the resolution did not correctly record the decision made – which was, on his account, an unconditional decision to admit. Nana Sidhu’s account is that there was unconditional approval or, at least, approval in principle. According to S S Rangi there was approval in principle, subject to scrutiny. Ajit Kalra’s evidence is that there was approval in principle, but with all the applications being sent to Sotherton’s, the accountants.

39 Only two of these accounts (those of P S Gill and Nana Sidhu) could conceivably support a finding that the meeting of 8 December 2002 had, in terms of Article 6, recommended admission of the relevant applicants. In another two cases (S S Rangi and Ajit Kalra) there was “approval in principle” (a possibility also accepted by Nana Sidhu), but with a reservation or qualification about scrutiny or some form of attention to the documents by the accountants. In three cases (Shaunjit Singh, Terlochan Singh and Balbir Singh), the understanding or recollection is that the decision was no more than a decision to undertake a process of scrutiny. In two cases, the recollection is that there was “approval in principle” but subject to scrutiny – which can only mean that any approval would become operative only if the “scrutiny” was successfully completed.

40 According to the minutes, scrutiny was to be undertaken in a meeting which the Executive Committee was to have with the accountants. The preponderance of the evidence seems to show an intention that Terlochan Singh and Balbir Singh would liaise with the accountants. The subsequent correspondence shows that they in fact undertook such a task.

41 I turn now to the meeting of 8 February 2003. According to the typewritten minutes, that too was a “Trust Board Meeting”, with four members of The Board of Trustees (who were also members of the Executive Committee) recorded as “present” and five members of the Executive Committee recorded as in attendance “by invitation”. Again, it is possible to regard the meeting as a meeting of the Executive Committee, given the identities of those physically there. But both the typewritten minutes and the handwritten minutes make it clear that the “Trust Board Members” (or “Board Members”) had formed an opinion that they were not able (or might not be able) “to proceed further”. The reference here is, clearly enough, a reference to proceeding with the disputed applications for membership. According to each set of minutes, it had been recognised that there were outstanding and unresolved “issues” regarding the disputed applications. Sukhdev Singh says in his affidavit that these “issues” were reported by R S Punia to be missing application forms, missing receipt books and absence of signatures.

42 On no view of matters can the meeting of 8 February 2003 be taken to have resolved to recommend the admission of any person as a member or actually to admit anyone to membership. Nor did it resolve to reject. Rather, the impression is that the process that had been set in train at the earlier meeting (whatever its precise nature may have been) was continuing but was in danger of breaking down. The evidence about the meeting of 8 February 2003 reinforces the conclusion that there had been no decision at the meeting of 8 December 2002 to recommend admission. Had that been the case, there would have been no need for the matter to be revisited at a further meeting, as it was on 8 February 2003.

43 The third meeting is the meeting of 4 June 2003. The plaintiffs maintain that this meeting was invalid and of no effect. They contend that no notice of the meeting was given and that the first plaintiff, Shaunjit Singh, was not present. This is so, the plaintiffs say, even though the handwritten minutes carry five signatures. There is a question whether any of them is the signature of Shaunjit Singh. It is appropriate to move at once to a consideration of this factual matter.

Was Shaunjit Singh present at the meeting of 4 June 2003?

44 Shaunjit Singh gave evidence that he was not present at any meeting on 4 June 2003 and was not given notice of any such meeting. He also testified that he did not sign any of the letters notifying persons of their admission to membership. There appear on other documents in evidence (specifically, those at pages 147, 158, 221 and 246 of Exhibit 10) signatures which Shaunjit Singh accepts to be his. He explained that his full name is “Shaunjit Singh Thiara” and that his signature is “Shaun Thiara”, without either “Jit” or “Singh”. This is borne out by the several examples of signatures on documents in evidence that he accepts to be his.

45 Nana Sidhu gave evidence that Shaunjit Singh was at the meeting of 4 June 2003. He said that all five members of the Board of Trustees signed the minutes and the letters to the persons admitted to membership. He was “absolutely certain” about this. However, he was not familiar with Shaunjit Singh’s signature and could not identify it on the minutes or on the letters to the persons allegedly admitted to membership.

46 S S Rangi’s evidence on this matter was to the same effect. He was certain that Shaunjit Singh was at the meeting and that he signed the minutes. However, he could not identify Shaunjit Singh’s signature on the minutes because he was not familiar with it.

47 Ajit Kalra gave the same evidence. When asked whether Shaunjit Singh was present at the meeting of 4 June 2003, he replied:

“100 per cent certain and all the five members signed it.”

48 The fifth person said to have been present at the meeting, R S Punia, did not give evidence. There was evidence of attempts to obtain an affidavit and to subpoena him. However, no subpoena was served, as it appears that he is working in Hong Kong and is likely to be there for some time.

49 The position is thus that, of the four persons who were recorded in the minutes as present at the meeting of 4 June 2003 and gave evidence, three say that Shaunjit Singh was present while he himself says that he was not present. The three also say that he signed the minutes. He says that he did not.

50 Looking at the handwritten minutes of 4 June 2003 and having regard to identification of signatures by witnesses, it is possible to isolate with a fair degree of certainty the signatures of S S Rangi, Ajit Kalra, R S Punia and Nana Sidhu.

51 That leaves one signature unaccounted for. It is the bottom-most signature slightly to the left of centre of the page. On the letters notifying persons of their admission to membership, the four identifiable signatures I have mentioned can again be seen and one signature is again left unaccounted for. It is, in each case, the first signature following the typewritten “Chairman, Trust Board” beneath the signature of S S Rangi. The fifth signature in this case does not appear to resemble the fifth (and unaccounted for) signature on the handwritten minutes. On the letters, the fifth signature could be “S Singh”. It is indecipherable on the minutes.

52 It is clear that neither of the signatures in question is the signature “Shaun Thiara” which the evidence sufficiently shows is the usual signature of Shaunjit Singh. Nor does the handwriting appear, in either case, to resemble that in which the several “Shaun Thiara” signatures are written.

53 I find therefore, that Shaunjit Singh did not sign the handwritten minutes of the meeting of 4 June 2003 or the several letters informing persons of their admission to membership.

54 This necessarily casts doubt over the evidence of Nana Sidhu, S S Rangi and Ajit Kalra on this aspect. Each was firm and definite in stating that Shaunjit Singh signed the minutes. Nana Sidhu was “absolutely certain”.

S S Rangi was certain. Ajit Kalra was “100 per cent certain” that all five members signed. Yet the documentary evidence shows that Shaunjit Singh did not sign. It must follow that the same certainty of each as to Shaunjit Singh’s presence at the meeting is, to say the least, questionable. Given that, I do not feel an actual persuasion that Shaunjit Singh was present. It must be remembered that there were a number of relevant meetings and that recollections were recorded in affidavits sworn years after the event. By the time the participants gave oral evidence, almost four and a half years had passed.

55 I therefore record my findings that Shaunjit Singh was not present at the meeting of 4 June 2003, did not sign the minutes of that meeting and did not sign the letters to the applicants for membership; nor was he given notice of the meeting.

Unanimous assent in any event?

56 I have not so far mentioned the provisions of the rules about proceedings of the Board of Trustees. They are surprisingly sparse. While there are detailed specifications (articles 55 to 67) about meetings and proceedings of the Executive Committee, the only relevant reference to such matters in relation to the Board of Trustees is in article 54 which requires the Board of Trustees to keep minutes, including minutes of all proceedings at all its meetings. Minutes are required to be signed by the chairperson of the meeting in question or of the next meeting.

57 I mention this matter because of the possibility that the letters to the several applicants for membership might, of themselves, warrant a finding that the Board of Trustees had resolved to admit them to membership. Unanimous and concerted action by the members of a body may have the same effect as a decision regularly made in accordance with applicable provisions; Re Duomatic Ltd [1969] 2 Ch 365. But, on the findings I have made, there was not unanimous and concerted action by the members of the Board of Trustees. One of its members, Shaunjit Singh, did not participate.

Absence of Executive Committee recommendation

58 In any event, there was never any recommendation by the Executive Committee that the applicants in question be admitted to membership. This is an important point. Even if the meetings of 8 December 2002 and 8 February 2003 can be regarded as meetings of the Executive Committee, there is no evidence that either meeting reached a decision to recommend the admission of the several applicants for membership. The minutes of the meeting of 8 December 2002 record a resolution “that a vote be taken in view of membership issue” (whatever that may mean), but this was “subject to” a stated qualification. And of the seven persons present who gave evidence, only two gave an account that could conceivably ground a finding that the meeting had recommended admission of the applicants. In those circumstances, a finding to that effect cannot be made. The strong preponderance of the evidence is that there was a decision to undertake a process of scrutiny, albeit perhaps in the context of a general expression of approval in principle. This cannot be regarded as a recommendation to admit to membership.

59 Similarly and as I have already said, on no view of matters did the meeting of 8 February 2003 resolve to recommend the admission of anyone as a member (or actually to admit anyone to membership).

60 The essential element of a recommendation by the Executive Committee was thus lacking when the meeting of 4 June 2003 proceeded to business. That meeting, if a meeting of the Board of Trustees, was therefore not competent to admit the relevant persons to membership.

61 In expressing this conclusion, I do not overlook the power of the Board of Trustees to “over-rule any Committee decision which may not be in the best interest of the Association” (article 67). It cannot be suggested that the Board of Trustees somehow overruled the non-decision of the Executive Committee on the matter of recommendation. Apart from anything else, there is no evidence that any member of the Board of Trustees turned his mind to that matter; nor is any “overruling” decision referred to in the evidence or the minutes of any meeting of the Board of Trustees.

Tenure of the Executive Committee elected in November 2001

62 I turn now to another matter. I have assumed, to this point, that the eleven persons mentioned at paragraph [17] above were in office as members of the Executive Committee when the meetings just discussed took place (I have found that Harmit Pal Singh was not so in office). I pause at this point to test that assumption and to deal with a matter which seems to be fatal to any conclusion that the Executive Committee functioned after 31 March 2002 (or, perhaps, 31 December 2002).

63 I begin by observing that the only overlap between Board of Trustees and Executive Committee envisaged by the constitution is that provided for in articles 18, 44 and 45:

“18. The Convenor and the Financial Controller shall also be the Honorary Secretary and Honorary Treasurer of the Association.

…

44. At the first general meeting of the Association and at the annual general meeting of the Association in each calendar year thereafter the office-bearers and other members of the Committee shall be elected from among the members (except the Honorary Secretary and the Honorary Treasurer) and such office-bearers and other members of the Committee shall hold office until the next annual general meeting when they shall retire but they shall be eligible for re-election.

45. The Honorary Secretary and the Honorary Treasurer shall be the Convenor and the Financial Controller respectively from the Board of Trustees.”

64 The Convenor and the Financial Controller are two of the four officers who, along with three other elected Trustees, make up the Board of Trustees. This is provided for in article 18 to which it will be necessary to return.

65 The Convenor and the Financial Controller (who are members of the Board of Trustees) are, by virtue of those offices, the Honorary Secretary and the Honorary Treasurer who, in turn and by virtue of article 44, are members of the Executive Committee.

66 Article 44 makes provision for periodic reconstitution of the Executive Committee. It sets a limit to the term of office: “shall hold office until the next annual general meeting when they shall retire”. Excepted from this, however, are the Honorary Secretary and the Honorary Treasurer.

67 Article 24 requires that an annual general meeting of the Association “be held in March and in accordance with the provisions of the Act”. The last part of this provision imports s 26(1) of the Associations Incorporation Act 1984 (which is “the Act”, as defined by the constitution):

“Subject to subsection (2), an incorporated association shall, at least once in each calendar year and within the period of 6 months after the expiration of each financial year of the association, convene an annual general meeting of its members.”

68 Article 23(2) states that the financial year of the Association is the year from 1 January to 31 December.

69 The evidence leaves no doubt that at least one whole calendar year passed without any general meeting of the Association taking place. I refer to the year 1 January 2002 to 31 December 2002. There was thus no compliance with article 24 in March 2002. Nor was there compliance with s 26(1) of the Act (imported by article 24) in respect of the 2002 calendar year. It follows that no member of the Executive Committee actually stepped down at an annual general meeting held in March 2002 or in the calendar year 2002.

70 For reasons which emerge from cases such as Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883, Morris v Kanssen [1946] AC 459 and Club Flotilla (Pacific Palms) Ltd v Isherwood (1987) 12 ACLR 387 and were discussed by me in Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 at [35] to [40], no member of the Executive Committee who was subject to retirement under article 44 remained in office after 31 December 2002 or, perhaps, 31 March 2002, being respectively the end of the calendar year and the end of the month within that year in which an annual general meeting was required to be held. Under a provision such as article 44 limiting tenure to the next annual general meeting and compelling retirement at that meeting (“shall hold office until the next annual general meeting when they shall retire”), office holders are taken to have vacated office on the last day on which the annual general meeting could have been held; and it makes no difference that no meeting was in fact held.

71 Preserved in office, however, were the Honorary Secretary and the Honorary Treasurer being, respectively, the Convenor and the Financial Controller and members of the Board of Trustees. This is because they were expressly excepted from the operation of article 44. As from 31 December 2002 at the latest (and perhaps from 31 March 2002), the Honorary Secretary and the Honorary Treasurer were the only members of the Executive Committee who continued in office. Their powers were, however, limited by a combination of articles 58 and 59:

“58. The quorum necessary for the transaction of the business of the Committee shall be five or such greater number as may be fixed by the Committee.

59. The continuing members of the Committee may act notwithstanding any vacancy in the Committee, and elected member may appoint an alternate Committee member in absence of elected member, but if and so long as their number is reduced below the number fixed by or pursuant to these regulations as the necessary quorum of the Committee, the continuing member or members may act for the purpose of increasing the number of members of the Committee to that number or of summoning a general meeting of the Association, but for no other purpose.”

72 The Honorary Secretary was R S Punia. It is not clear who was Honorary Treasurer. It seems likely that there was none. The meeting of the Board of Trustees held on 5 December 2001 shortly after settlement of the earlier court proceedings appears, from the minutes in evidence, to have appointed S S Rangi as Chairman and R S Punia as “Secretary” which, in the context, I to regard as an appointment as Convenor so that he might automatically be, at Executive Committee level, the Honorary Secretary. But there is no record of appointment of anyone to be Financial Controller (and therefore Honorary Treasurer).

73 At all events, I proceed on the basis that, from either 1 April 2002 or 1 January 2003, the only members of the Executive Committee in office were

R S Punia and perhaps one other whom I cannot identify. The powers of R S Punia (and, if applicable, the other person) were limited to those in article 59.

74 There was reference in the course of submissions to article 65 which says that all acts of the Executive Committee or of any person acting as a member of it are valid notwithstanding that it is afterwards discovered that there was a defect in the appointment of a member of the Executive Committee or that the members or some of them were disqualified. As the case of Morris v Kanssen (above) shows, however, such a provision cannot have the effect of validating acts of a supposed board of directors which has ceased to exist. The provision does not override substantive provisions relating to tenure. It therefore cannot ground any conclusion that persons capable of acting as a functioning Executive Committee remained after the deadline imposed by article 24.

Tenure of the Board of Trustees elected in November 2001

75 R S Punia resigned from the Board of Trustees on 15 July 2003. He wrote a long letter describing succinctly but graphically the intractable divisions that had led him to do so. On or about 22 August 2003, three other members of the Board of Trustees also resigned, being S S Rangi, Ajit Kalra and Nana Sidhu. That left Shaunjit Singh as the sole remaining person elected to the Board of Trustees at the annual general meeting of 7 November 2001.

76 R S Punia was Honorary Secretary by virtue of being Convenor. Both positions were vacated when he resigned from the Board of Trustees on 15 July 2003. He thereafter held no position within the Association (except, of course, his membership).

77 Ajit Kalra resigned as Public Officer and from the Board of Trustees on or before 22 August 2003. At the same time, S S Rangi resigned as Chairman and from the Board of Trustees, while Nana Sidhu resigned as a member of the Board of Trustees without mentioning any other office. Had he been the Financial Controller and therefore the Honorary Treasurer (and there is no suggestion that he was), those positions would have been vacated by his resignation.

78 It is necessary, at this point, to consider the position occupied by Shaunjit Singh after these resignations. He maintains that he was appointed “Secretary/Convenor” and “Treasurer/Controller” on 17 August 2003. He said as much in a letter he wrote on 18 August 2003 to the Department of Fair Trading. He appears to have made a similar statement to the “Executive Committee” on 9 September 2003 (minutes of a meeting of that date are in evidence). In a paragraph of one of his affidavits ruled inadmissible, he refers to a meeting of the Board of Trustees on 17 August 2003 at which the appointments were made. He says that S S Rangi, Ajit Kalra and Nana Sidhu were present at the meeting with him. Affidavits of S S Rangi and Nana Sidhu say in very clear terms that no meeting of the Board of Trustees was held on or about 17 August 2003. Ajit Kalra’s affidavit is silent on the matter. None of the four was cross-examined about it.

79 With the relevant paragraph of Shaunjit Singh’s affidavit not forming part of the evidence before me, I have no basis (apart from the letter to the Department of Fair Trading) on which to find either that a meeting of the Board of Trustees occurred on or about 17 August 2003 or that any such meeting resolved to appoint Shaunjit Singh to the positions concerned.

80 S S Rangi’s attitude to the matter appears from a letter he wrote to Shaunjit Singh on 1 September 2003, that is, after all remaining members of the Board of Trustees other than Shaunjit Singh had resigned:

“Please note that the ‘Independent’ committee of five members was constituted by the Short Minutes dated 02/11/2001 by the Supreme Court of NSW and with four out of these five independent members having resigned their positions, the decisions – such as assuming the significantly important offices of the Association – made by the fifth member on his own do not have value. I hope that you realise the implications of and refrain from making any such decisions as a single remaining member.

In view of the requirement to run the daily affairs of the Association and also the representations of Group ‘A’, I have advised Mr Jim Samphier of the Community Justice Department that you may be given the duties of the Treasurer of the Association with one signatory each from Groups ‘A’ and ‘B’ respectively, to operate the Bank Account. I am enclosing a copy of the fax message sent to Jim Samphier.”

81 This letter makes it clear that, as far as S S Rangi was concerned, Shaunjit Singh had never been appointed Treasurer – or, more correctly, I suppose, had never been appointed Financial Controller so that he automatically became Honorary Treasurer. The letter also shows that S S Rangi, acting alone, had told Mr Samphier that Shaunjit Singh “may be given the duties of the Treasurer of the Association” – as if that were something in Mr Samphier’s gift.

82 If Shaunjit Singh had been appointed Convenor and Financial Controller by at a meeting of the Board of Trustees held on or about 17 August 2003 attended by S S Rangi, it is inconceivable that S S Rangi would have written a letter in these terms some two weeks later. The preponderance of the evidence is very strongly against any conclusion that Shaunjit Singh was appointed on 17 August 2003 as he alleges – even assuming that the Board of Trustees itself, rather than a general meeting of the Trustee members of the Association, had power to make appointments to particular offices on the Board of Trustees. That assumption is, in any event, unsound at least in relation to appointment as Convenor. Article 68(1) says that the “Convenor/Secretary” is to be “appointed by the Trustees”. The power of appointment thus resides with the Trustee members of the Association, not with the Board of Trustees.

83 I find that Shaunjit Singh was not appointed as Convenor or Financial Controller on or about 17 August 1003.

84 After the other four members of the Board of Trustees had resigned (as they had by 22 August 2003), Shaunjit Singh was the only person remaining who had been elected to the Board of Trustees on 7 November 2001. It is necessary to decide what powers, if any, accrued to him or remained with him in those circumstances.

85 There is no provision of the constitution concerning the Board of Trustees to the same effect as article 59 in relation to the Executive Committee (see paragraph [71] above). In the case of the Board of Trustees, the constitution itself therefore does not deal with the situation where a body which is to have several members comes to have one only.

86 At this point, it is necessary to turn to the Associations Incorporation Act. That Act contains various provisions concerning the “committee” of an incorporated association. The expression “committee” is defined in s 3 as meaning, in relation to an association, “the body which governs or has the management of the association”. Under the constitution of the association with which I am here concerned, the Board of Trustees is “the governing council of the Association” (see the definition quoted at paragraph [5] above). Article 51 says that the “business of the Association shall be managed by the Committee”, that is the Executive Committee, and goes on to refer to particular things that the Executive Committee may do. The powers of the Executive Committee under article 51 are subject to such regulations or provisions as may be prescribed by the Association at an extraordinary general meeting. There is then a proviso:

“provided that any rule regulation or by-law of the Association made by the Committee may be disallowed by the Board of Trustees.”

87 Article 52 then vests certain powers and functions in the Board of Trustees. It is clear enough that these specific provisions detract from the general power of management of the business vested by article 51 in the Executive Committee. Among the specific powers given to the Board of Trustees are the powers to borrow and give security, to deal with property, “to authorise payment of moneys for the purposes of the Association” and, by article 53, to determine the way in which cheques are to be drawn.

88 Article 67, as already noted, says that the Board of Trustees “being the governing body of the Association may over-rule any Committee decision which may not be in the best interest of the Association”.

89 The Board of Trustees, being “the governing council of the Association” (according to the definition) or “the governing body of the Association” (article 67), is thus given certain specific powers with respect to property and money of the Association, as well as a certain degree of control or oversight over the Executive Committee and, ultimately, a power to overrule the Executive Committee. It follows, in my view, that the Board of Trustees is, in terms of the definition of “committee” in the Associations Incorporation Act, “the body which governs … the association”. It is therefore the (or a) “committee” as defined.

90 The next point to note is that the Association’s constitution says nothing about a reduction in the number of members of the Board of Trustees. As I have said, there is no equivalent, in relation to that body, of article 59 in relation to the Executive Committee. Nor is there anything about the quorum for a meeting of the Board of Trustees. This brings to the fore s 19(3) of the Act (in which the reference to “the model rules” is a reference to the model rules in the Associations Incorporation Regulation 1999):

“Where in relation to any matter the model rules make provision but the rules of an incorporated association do not make provision, the provision of the model rules shall, in relation to that matter, be deemed to be included in the rules of the incorporated association.”

91 The constitution proceeds on the implied footing that the Board of Trustees will function through meetings. This is a reflection of the principle recognised in the rhetorical question about a board of directors posed arguendo by Fry LJ in Re Portuguese Consolidated Copper Mines Ltd (1880) 42 ChD 160 at 167: “Must they not meet in order to think?” Article 54, which applies alike to the Board of Trustees and the Executive Committee, makes provision for minutes to be made of meetings.

92 Rule 20(5) of the model rules says that any three members of the committee constitute a quorum for the transaction of business at a meeting of the committee. Model rule 20(6) says that “[n]o business is to be transacted by the committee unless a quorum is present”. These provisions apply, by virtue of s 19(3) of the Act, in relation to the Board of Trustees of the Association. It follows that, after 22 August 2003, Shaunjit Singh, as sole remaining member of the Board of Trustees, was not capable of transacting any business at a meeting of trustees – indeed, on ordinary principles, he was not capable of constituting a “meeting”. He was therefore incapable of functioning as a one-person Board of Trustees.

93 I digress at this point to question another assumption made to this point, namely, that the Board of Trustees of five members elected on 7 November 2001 was a competent Board of Trustees capable of functioning under the constitution. Article 18 is as follows:

94 The words “shall consist of” make it clear that seven persons are required in order that a Board of Trustees may exist. Article 50 specifies circumstances in which the office of a member of the Board of Trustees may become vacant. There is, however, no provision for filling casual vacancies on the Board of Trustees. The only provision under which a person can become a member of the Board of Trustees is article 16 which provides for election of a Board of Trustees annually “at a properly constituted general meeting of the Trustees”.

95 Where a constitution states that a board “shall consist of” a certain number (or a certain minimum number) of members, a body of persons fewer in number than the required number do not constitute the board at all. This is made clear by cases such as The Faure Electric Accumulator Co Ltd v Phillipart (1888) 58 LT 525 and Re Sly, Spink & Co [1911] 2 Ch 430.

96 In the present case, however, the compromise agreement noted by the court in the 2001 proceedings expressly contemplated the election of up to five persons as members of the Board of Trustees and those five were elected. Furthermore and as already noted, the agreement contemplated that the Board of Trustees would function (see paragraphs [14} and [15] above).

97 But even if there was a consensus that a Board of Trustees of five rather than seven might function, there was certainly no consensus that a “board” of one would function. One person cannot be a “board” or a “governing council” or a “governing body”. A plurality of persons is clearly required. The concepts reflected by the expressions used contemplate oligarchy or government by a few, not monarchy (government by one).

98 After 22 August 2003, there was no Board of Trustees consisting of either the seven members required by article 18 or the five members envisaged by the consensus of 2001. It follows that, from 22 August 2003, not only was Shaunjit Singh incapable of functioning as a one-person Board of Trustees (see paragraph [92] above) but also there was no Board of Trustees at all.

99 I should add that a conclusion corresponding with that at paragraph [70] above is not available in relation to the Board of Trustees. This is because there is no provision concerning the Board of Trustees similar to article 44. Article 16 says that the Board of Trustees is to be elected “annually” but neither that nor any other article sets a limit to the tenure of a member (by words such as “shall hold office until” found in article 44).

The meeting of 27 September 2003

100 Against this background, I come to the purported general meeting of 27 September 2003. The plaintiffs’ complaints in relation to it stem from the simple proposition stated by Young J in Fedorovitch v St Aubins Pty Ltd [1999] NSWSC 506 at [28]:

“Company meetings cannot just be held, they have to be convened and unless a meeting is convened by the appropriate people it is not in law a meeting of the company.”

101 When the purported meeting of 27 September 2003 and the events leading up to it occurred, there had been no Executive Committee in office since either 31 March 2002 or 31 December 2002; and there had been no Board of Trustees capable of functioning since 22 August 2003. The Association was in the grip of management and administrative paralysis. There was no “governing council” (or “governing body”) and no “managing committee”.

102 An assessment of the purported meeting of 27 September 2003 might usefully begin with a brief examination of a document in evidence which purports to be minutes of that meeting. The document refers to persons present as “List attached”, but there is no list attached. It is therefore not possible to say who was present, apart from those referred to in the minutes as having done or said something at the meeting. But even from this source it is not possible to say with any degree of confidence whether any of the persons supposedly admitted as members on 14 June 2003 were present at the meeting. The likelihood is that some were present.

103 But the plaintiffs’ attack on the 27 September 2003 meeting comes from a different direction. They say that the meeting was not convened in such a way as to cause it in truth to be a general meeting of the Association capable of functioning as such.

The requests, the petition and the abortive meeting

104 The plaintiffs refer, in the first place, to article 25 of the constitution which is in the following terms:

“Any member of the Committee may approach the President and/or Secretary whenever he/she thinks fit to request them to convene an extraordinary general meeting on behalf of 1/3rd of Committee members and extraordinary general meetings shall be convened on such requisition or in default may be convened by such requisitionists as provided by the Act.”

105 Article 26 requires that at least 21 days notice of an extraordinary general meeting be given.

106 On 7 February 2003, certain persons, including some who purported to be members of the Executive Committee, wrote to “Secretary/Convenor” of the Association requesting that a special general meeting be convened for certain purposes, including election of an Executive Committee and Board of Trustees. On 6 May 2003, four persons, all of whom purported to be members of the Executive Committee, wrote to “Mr S Rangi and/or Mr Pebbles Punia”, as “President and/or Secretary” of the Association, requesting that a general meeting be held for like purposes.

107 On 9 June 2003, the meeting of the Board of Trustees already noted was held. That meeting resolved that an annual general meeting be held on 5 July 2003. A notice of meeting was issued accordingly. The notified business included election of a Board of Trustees and election of an Executive Committee. On 30 June 2003, however, a notice signed by all members of the Board of Trustees stated that the annual general meeting scheduled to be held on 5 July 2003 “has been deferred until further notice”.

108 A number of members gathered at the temple on 5 July 2003 expecting to attend an annual general meeting. An announcement was made that the meeting had been postponed. There are varying accounts of how the announcement came to be made and of other things said and done on that occasion but it is not necessary to go into these matters. The important point is that the meeting of members that the Board of Trustees had taken steps to convene did not proceed to business on 5 July 2003 or at all.

109 A little over a month later, on or about 7 August 2003, a request for a general meeting was initiated by two persons, being Jaspal Singh and Pradeep Singh (that is, P S Gill). Both had been members of the Executive Committee (see paragraph [17] above). They directed their request to Harmit Pal Singh, describing him as “Ex-President and Honorary member of the current NSSA committee”. The two requesting persons said in their letter of 7 August 2003 that there were then only five Executive Committee members in office and that they were acting as two of those five. They pointed out that there had been no elections for the Board of Trustees and the Executive Committee for the last three years. They said that the community and Association members “desperately need the AGM to be held at the earliest – so that proper management be elected to [indecipherable] all matters of association”. Their concern, clearly enough, was to create a forum for electing persons to the Board of Trustees and the Executive Committee.

110 At that point, Harmit Pal Singh (the person to whom this letter was addressed) was not a member of the Board of Trustees or of the Executive Committee. A request under article 25 was required to be addressed to “the President and/or Secretary”. Article 42 shows that the “Honorary President” and “Honorary Secretary” are two of the five “office bearers of the Management Committee of the Association”. I am satisfied that it is these two office bearers to whom article 42 refers. The reference is not, in any direct sense, a reference to officials of the Board of Trustees referred to in article 17. But, as has been noted above, the Chairman of the Board of Trustees is ex officio the Honorary President and the Convenor of the Board of Trustees is ex officio the Honorary Secretary.

111 The fact that Harmit Pal Singh was not a member of the Executive Committee (or the Board of Trustees) means that he could not possibly have been the President or the Secretary. He was not a proper recipient of a request under article 25. A request directed to him was not a request in conformity with that article.

112 A petition bearing some fifty signatures was also addressed to Harmit Pal Singh. He says that he received this on or about 8 August 2003. It described him as “Ex-President”. The petitioners asked him to hold a general meeting of the Association to elect a Board of Trustees and Executive Committee. The petitioners said that they understood there to be no president or secretary at that time. They asked and “nominated” Harmit Pal Singh to “take over as the Acting Secretary of the Association to conduct the General Meeting and the elections”.

113 On 27 August 2003, another document was generated apparently by reference to article 25. It was addressed to Harmit Pal Singh and asked that a general meeting be convened. The three signatories were P S Gill, Daljit Singh Bahiya (presumably Daljit Bahia) and Jaspal Singh. They said that they were members of the Committee, but Daljit Singh Bahiya wrote under this name “Signed as a Trustee”. He says in his affidavit that he resigned as a member of the Executive Committee on 8 February 2003. He was never a member of the Board of Trustees. When he said he signed “as a Trustee”, he can only have meant to indicate that he was a Trustee member of the Association, a status irrelevant for the purposes of article 25. The two other signatories to the document of 27 August 2003 were also the signatories to the document of 7 August 2003.

114 All three documents – the request of 7 August 2003, the petition of 8 August 2003 and the request of 27 August 2003 – show that there was a strong desire within the community (or, at least, part of it) for a general meeting to be held so that elections could be conducted. That is not surprising in light of the fact that the bodies elected on 7 November 2001 – almost two years earlier – had been seen as playing a caretaker role only. But none of those documents was capable, under article 25, of forming the foundation for a duly requisitioned meeting. None of the persons making a request was a member of the Executive Committee at that time: see paragraph [73] above. None of the documents had any significance in relation to the processes provided for in the constitution.

Did model rule 25 apply?

115 It was submitted on behalf of the defendants that the constitution is not the only source of a power to request or requisition a meeting of members. It was submitted that regard could be had, via s 19(3) of the Associations Interpretation Act (see paragraphs [90] above), to the provisions of the model rules in the Associations Incorporation Regulation 1999 concerning requisitioning of meetings of members.

116 Rule 25 of the model rules is as follows:

Special general meetings—calling of

117 It will be observed that subrules (2) to (5) of rule 25 are concerned with actions by the members of an incorporated association directed towards bringing about a meeting of members. Article 25 of the Association’s constitution, by contrast, envisages action by members of the Executive Committee to create a meeting. The constitution contains no provision under which members as such may requisition a meeting or cause a meeting to be convened. The matter of requisitioning and convening of general meetings by members of the Association, as distinct from members of the Executive Committee, is therefore, in terms of s 19(3) of the Associations Incorporation Act, a matter in relation to which the model rules make provision but the rules of the Association do not make provision. Subrules (2) to (5) of model rule 25 are therefore deemed by s 19(3) to be included in the constitution of the Association.

The notice of meeting was not authorised by article 25

118 Harmit Pal Singh issued a notice of meeting dated 29 August 2003, describing himself as “Ex-President”. He gave evidence that he sent the notice to all members of the Association. He referred in the notice to a requisition by three members of the Executive Committee but, as I have found, there was then no Executive Committee in existence. The notice contained a paragraph as follows:

“In view of the recent resignation of the Convener/Secretary and the Chairman and four of the five Members of the Trust Board (the independent Board formed per the Court Short Minutes) of the Association and in view of there being no one elected to the position of the President of the present Executive Committee of the Sikh Association, a default has occurred under Clause 25 of the Articles of Association referred to above.”

119 The notice went on to say:

“Under the above noted circumstances, the requisitionists are empowered to convene an Extraordinary General Meeting of the Sikh Association by the said Clause 25 of the Articles of Association of the Sikh Association and as such, the requisitionists have requested me to issue notice of Extraordinary General Meeting on their behalf.”

120 Harmit Pal Singh thus did not purport to act for himself, or in any official capacity, in calling the meeting. Rather, he purported to act as the agent of the “[t]hree members of the Executive Committee” who had “requisitioned an Extraordinary General Meeting under Clause 25 of the Articles of Association”. But, as I have said, there was never any requisition complying with article 25. Nor were any of the initiators, at that time, members of the Executive Committee. The “default” position contemplated by article 25 therefore never arose.

Was it authorised by model rule 25?

121 It is, however, necessary to consider whether the steps taken were such as to justify a conclusion that the meeting convened by Harmit Pal Singh was convened consistently with subrules (2) to (5) of model rule 25.

122 The several documents I have described as the petition were signed by some fifty persons. A rough comparison of the names on those documents with the register of members suggests that perhaps a dozen or more of the signatories were members of the Association. In addition, the two persons who signed the request of 7 August 2003 (one also signed the petition) were members. As of 8 August 2003, therefore, it may be that Harmit Pal Singh had received written requests from at least 5 per cent of the members asking that he convene a general meeting in order that there might be an election of both a Board of Trustees and an Executive Committee. Furthermore, the petitioners had asked and “nominated” him to “take over as the Acting Secretary” for this purpose. There was, of course, no secretary in office at that time. R S Punia, although he had continued as Honorary Secretary after the bulk of the Executive Committee ceased to hold office on 31 December 2002 or 31 March 2003, had resigned on 15 July 2003.

123 Harmit Pal Singh took it upon himself to convene a general meeting. While he said in the notice of meeting that he was doing so by reference to the request of 27 August 2003, his actions may have been consistent also with the petition of 8 August 2003. And as he made clear both by what he said in the notice and the actions he actually took, he had chosen to act as if he were the secretary, that being something else that the petitioners of 8 August 2003 had asked him to do. He might therefore be regarded, in terms of paragraph (d) of the definition of “officer” in the Associations Incorporation Act, as “a person acting in” the position of secretary, even though “not validly appointed to occupy or duly authorised to act in the position”. There is recognition here of a concept of de facto officer which might translate to recognition of a concept of de facto secretary when it comes to construing rule 25 of the model rules.

124 It might be argued on the facts, therefore, that the petition of 8 August 2003 and the request of 27 August 2003 together made up a requisition of members satisfying the requirements with respect to requisitions laid down by rules 25(2) and 25(3) of the model rules made applicable to the Association by s 19(3) in the way I have described.

125 It might be said on the facts also that no committee of the Association convened a special general meeting to be held within the period referred to in model rule 25(4), or at all. For reasons that have been discussed, there was no committee of the Association competent to act in any way at that point. It can therefore be argued that it was open to any one or more of the requisitionists to convene a meeting under model rule 25(4).

126 Harmit Pal Singh in fact undertook the convening of the meeting. But as he made clear in the notice of meeting, he did so at the request of the three persons by whom the request of 27 August 2003 had been delivered. He purported to act as the agent of each of them for that purpose. It may be noted in this connection that one of the three (Jaspal Singh) was also a signatory to the petition of 8 August 2003. He appears as No 16 in the list of signatures. In those circumstances, the convening effected by the notice signed and despatched by Harmit Pal Singh on 27 September 2003 might be said to be a convening in accordance with model rule 25(5) which was deemed to form part of the Association’s constitution.

127 I do not consider this analysis based on the applicability of the model rule to be supportable. The fact is that Harmit Pal Singh did not proceed by reference to model rule 25(5). On the contrary, he made it clear in the notice of meeting he issued that he was convening on behalf of the persons who had supposedly acted under article 25 of the Association’s constitution to request the convening of a meeting. It is plain that he did not in any way turn his mind to the criteria prescribed by model rule 25. He saw the foundation for his action as the request of 27 August 2003 the action of the persons who signed that request. On the face of the notice of meeting (and on the evidence in these proceedings), he did not intend to act in a way that model rule 25 made available.

128 A particular corporate action cannot be sustained by the existence of some power that the human instrumentality taking the action did not intend to exercise. The principle was stated by Hutley JA in Industrial Equity Ltd v Blackburn (1977) 2 ACLR 421 at 422 in a passage about dividends not called into question on the subsequent appeal to the High Court (Industrial Equity Ltd v Blackburn [1977] HCA 59; (1977) 137 CLR 567):

“An interim dividend, based as it is upon the estimate formed by the directors, cannot, in my opinion, be made without the directors actually applying their minds to the question of declaring an interim dividend. Where, as in this company, the declarations of dividends both final and interim are made by the board, the board cannot simply fall back upon powers which they did not intend to exercise to sustain what they have done. It is inherent in their declaration of any dividend that they apply their minds to the facts which would justify the dividend, and they cannot seek refuge in the existence of powers which they did not intend to exercise.”

129 It is thus made clear that a corporate decision maker cannot, as it were, unwittingly exercise an available power. In order to exercise a particular power, the decision maker must have in mind and actively assess the circumstances necessary for its exercise – not some quite different circumstances that will allow the exercise of some other power producing the same result. In this case, Harmit Pal Singh can be seen to have given attention solely to the conditions relevant to direct convening under article 25 of the Association’s constitution. The notice he issued shows that he had no intention of proceeding by reference to the quite different conditions potentially leading to the same result laid down by model rule 25. Nor is there anything to indicate that he turned his mind to the applicability of model rule 25 or the existence of circumstances that would have warranted action under the model rule, including the existence of the petition of 8 August 2003, whether its signatories were or included members of the Association and whether the number of member signatories was sufficient for the purposes of the model rule.

The 23 September 2003 meeting was not duly convened

130 The processes by which the purported meeting of 27 September 2003 was convened were not those authorised and required by the constitution. The gathering on that day was not a duly convened general meeting of the Association capable of functioning as such.

131 Had this been a company governed by the Corporations Act 2001 (Cth), a meeting of members might have been convened by order of the court under s 249G, it being “impractable to call the meeting in any other way”. Inability to obtain a quorum of directors in order that the board might convene a meeting was a basis on which the court so acted in Re Beckers Pty Ltd (1942) 59 WN (NSW) 206. An order was made in Re Tedman Holdings Pty Ltd [1967] Qd R 561 where all directors had died. But Parliament has not seen fit to make any similarly facilitating provision in relation to incorporated associations. Nor, it might be noted in passing, is there any equivalent, for such associations, of the Corporations Act’s s 1322 (allowing the court to cure certain irregularities and validate certain irregular procedures) or s 236 (permitting a member to bring a statutory derivative action on behalf of the body corporate).

132 There is no reason to think, however, that the Associations Incorporation Act aims to displace the principle that, where the governing body does not exist or cannot function, the members themselves may act in its place. This is a reflection of the default or reserve powers of the members: see generally Massey (T/A Massey Bailey) v Wales [2003] NSWCA 212; (2003) 57 NSWLR 718. The difficulty is, however, that the members can act only through a duly convened meeting of members or through the concerted action of all of them, whether within or outside a meeting. The last proposition comes from the cases referred to by Bowen CJ in Eq in Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477 at 484:

“If all the shareholders of a company are present together in a meeting, and signify their assent to a transaction which is within the powers of the company, their decision will be effective, as if a resolution to that effect had been passed at a properly constituted meeting. This may be so, not withstanding that those at the meeting thought they were conducting a directors' meeting and the necessary formalities required for the calling of a

159 I refer, in this last connection, to a letter of 12 June 2003 addressed to the “Secretary/Convenor” of the Association and signed by Sukhdev Singh, Balbir Singh and Terlochan Singh, three of the four plaintiffs. The letter contained the following statements:

“Your tenure expired in March 2002.”

“We believe that the current Board of Trustees and Management Committee are not properly constituted.”

“Since you are now aware that there are serious defects in the appointment of the Board of Trustees and the Management Committee, any decisions made by the Board of Trustees and Management Committee will be defective and will not be valid.”

160 Terlochan Singh accepted in cross-examination that everything he had done since 12 June 2003 in the name of the committee was done by him believing that the committee on which he was purporting to act was no longer in office. He said that the committee of which he was thereafter a member was a “co-opted committee”, whatever that means.

161 Sukhdev Singh said in cross-examination that he accepted the position stated in the 13 June 2003 letter. He also said, however, that “we” – it is not clear who – were unable to perform any of the acts of a committee “but we took steps to protect the assets of the community”.

162 Balbir Singh gave confusing answers in cross-examination on this matter. She seemed to say in one breath that the purpose of the letter was to make it clear that the Board of Trustees and Executive committee should not have functioned after 31 March 2002; and in the next breath that those bodies had to continue to function until replaced by newly elected bodies.

163 All three signatories appear to have accepted in June 2003 that the Board of Trustees and Executive Committee were then no longer in office. They nevertheless continued to assert a right to run the Association. They referred in vague terms to “fiduciary duty”. But they took no steps to implement the obvious and proper solution of bringing the members together in a meeting so that governance could be put back on to a proper footing. They preferred merely to be part of a de facto administration they acknowledged to be irregular. The interests of the members as a whole were served by the events set in train by the defendants which culminated in the meeting of 27 September 2003 at which members could (and did) express their wishes and exercise their voting rights, albeit in a context not complying with the constitution. These attitudes and actions of three of the plaintiffs are highly relevant to the exercise of the discretion that needs to be exercised in this case.

164 The court in the exercise of its discretion will not grant the declaratory relief outlined in items (c) to (j) of paragraph [140] above. The remainder of the plaintiffs’ claims for declaratory relief concern items (a) and (b). That matter directly affects the 47 applicants for membership. All the discretionary considerations just mentioned are again relevant. And there is the added but no less significant point that none of the persons whose membership status was under attack was made a party or given an opportunity to be heard, unless by coincidence included among the seven natural person defendants. The court will, in the exercise of its discretion, not grant the declaratory relief in items (a) and (b).

Outcome on all claims except the Association’s tort claim

165 I pause to repeat and summarise my decisions on the claims for relief with which I have so far dealt:

1. The court will not grant the declaratory relief sought by the plaintiffs as outlined at items (a) to (j) of paragraph [140] above.

2. The court will not grant the declaratory relief sought by the plaintiffs as outlined at item (k) of paragraph [140] above.

3. The court will not make an award of damages to the Association and against the defendants upon the application made by the plaintiffs as referred to in paragraph [142] above.

4. The court will make an order to the effect that the first plaintiff (Shaunjit Singh) account to the Association for, and transfer to the Association, money of the Association held or controlled by him.

5. The court will grant the declaratory and injunctive relief sought by the Association and outlined at items (b) to (e) of paragraph [149] above.

6. The court will make the orders outlined at items (f) and (g) of paragraph [149] above.

The Association’s tort claim – factual background

166 I proceed now to the Association’s claim based on the allegation that the cross-defendants (plaintiffs) wrongfully interfered with the Association’s contractual relations, noting once again that the cross-defendants (plaintiffs) do not seek to say that the cross-claim is brought without due authority or that it is not a cross-claim of the Association.

167 I must begin with some further factual matters.

168 I have already referred to the decision of 8 April 2005 to accept a tender for building work submitted by Flora Constructions. That, it appears, is a business name under which Davinder Singh Flora (or D S Flora) carries on business as a building contractor. The contract document dated 8 April 2005 is in evidence. It is signed by D S Flora as builder and on behalf of the Association by six persons. The signatures of the six signatories for the Association are in five cases accompanied by designations appearing after them: “Chairman”, “Secretary”, “Public Officer”, “President” and “Vice-Chairman”. D S Flora started work immediately after the document was signed.

169 Five days after the contract document was signed, Shaunjit Singh wrote to D S Flora. The letter is dated 13 April 2004 but it is obvious that it should have been dated 13 April 2005. Shaunjit Singh said that he was aware that D S Flora had been at the Turramurra site on 9 April with machinery; also that it was “being alleged that you are the so called contractor of some of the building work of the Turramurra Gurudwara given to you by few unauthorised and self styles [sic] people”. Shaunjit Singh then said that he considered it his “duty to warn you of the serious consequences as a result of you taking up this work without the consent and approval of the duly authorised Board of Trustees” of the Association. The letter went on to refer to a building committee “duly authorised by the Board of Trustees” (presumably, Shaunjit Singh alone) which had received advice that the plans to which D S Flora was working “have more than 30 serious errors”. He also told D S Flora that “we have not issued any fundraising appeal”.

170 Shaunjit Singh wrote a further letter on 21 April 2005. It was addressed to the chief executive officer of the Master Builders Association. He purported to write as the Association’s “Secretary/Convenor” and “on behalf of the Board of Trustees and Management committee”. Shaunjit Singh said that D S Flora, a member of the Master Builders Association, was undertaking work at Turramurra without authority and that the building plans “have more than 30 structural and other serious errors”. He enclosed a copy of his letter of 13 April 2005 to D S Flora, noting that no payments would be made to him and that “we” would “make him liable for recovering the cost of the damages resulting out of his activity” at Turramurra. It appears that this letter was copied to D S Flora.

171 D S Flora wrote to Harmit Pal Singh on 26 April 2005 enclosing copies of Shaunjit Singh’s letters. He reaffirmed his commitment to the contract and concluded:

“I shall not assume any liability whatsoever should there be such liabilities arising as mentioned by the said Mr Shaunjit Singh.

Please sort this out at your own level and advise me urgently.”

172 From June 2005, the Association, under its new management, made attempts to obtain from the Commonwealth Bank funds standing to the credit of its account with the Seaforth branch. A letter of 9 June 2005 signed by Harmit Pal Singh and others enclosed a copy of minutes of a meeting of the Board of Trustees at which it had been resolved to request release of the funds. The meeting was held on the same day. As well as resolving to request release of funds, the meeting resolved that any two of three named persons be authorised to operate the bank account. Also enclosed with the letter to the bank was a copy of the building contract and other documents concerning the project. The letter concluded:

“It is hoped that the funds which are now required to make progress payments to the building contractor shall be released on an urgent and top priority basis.”

173 A follow-up letter was sent on 10 August 2005. On 10 September 2005, there was a joint meeting of the Board of Trustees and the Executive Committee noting that despite many attempts, the bank had not released any money and “funds over ½ million are lying frozen since 2003”. Shaunjit Singh confirms in one of his affidavits an understanding that “over $500,000 of the Association’s money” was in the Commonwealth Bank account.

174 By September 2005, D S Flora had stopped work and left the site. He had not been paid.

175 Shaunjit Singh had also been in correspondence with the Commonwealth Bank. By a letter dated 2 February 2005, he had sought recognition by the bank of himself, Sukhdev Singh and Pritam Singh as signatories on the Association’s accounts.

176 The bank wrote to Shaunjit Singh on 26 September 2005 referring to that request and by a like request from Harmit Pal Singh and others. The bank noted that court proceedings foreshadowed in a letter of 7 November 2003 from Shaunjit Singh had not eventuated. It also noted that P S Gill had been recorded in public records since 27 September 2003 as the Association’s public officer; also that failure to release funds to pay for the building work may cause serious harm to the Association. The bank gave notice that, unless restrained by court order, it proposed on 31 December 2005, to recognise named persons in the defendants’ camp as signatories. A corresponding letter of the same date was sent by the bank to P S Gill.

177 On 17 October 2005, Shaunjit Singh wrote to the bank at length denying the legitimacy of the signatories it proposed to recognise.

178 On 30 October 2005, Gzell J ordered that, until further order, the Commonwealth Bank be directed to recognise Shaunjit Singh and P S Gill as signatories on the Association’s bank accounts.

179 P S Gill gave evidence that on 31 October 2005, he had a conversation with Shaunjit Singh about payment of bills associated with the construction work. According to P S Gill, Shaunjit Singh said:

“Get the bills certified by G S Consulting and there will be no problem. We have to pay the bills.”

180 P S Gill says that Shaunjit Singh then gave him his telephone number and it was agreed that P S Gill would phone him.

181 Shaunjit Singh denies that this conversation occurred.

182 P S Gill says that he and Shaunjit Singh spoke a few days later and it was agreed that they would meet at the bank at Seaforth at 1.30pm on a particular day. Shaunjit Singh does not deny this arrangement. P S Gill’s evidence is that he went to the bank at 1.30pm on the relevant day and was told by the bank manager that Shaunjit Singh had been there “before lunch” and had said “there is no bill to pay”. P S Gill then telephoned Shaunjit Singh who said, “I talked to the Bank Head Office and they said the Bank don’t want us to pay. They’re not going to release the money”. Shaunjit Singh denies that this telephone conversation occurred. He does not deny having gone to the bank “before lunch” on the particular day.

183 On 21 November 2005, Shaunjit Singh wrote a letter to the manager of the Commonwealth Bank at Seaforth from which it is clear that the joint signing arrangement arising from the order of 30 October 2005 had proved unworkable.

184 Shaunjit Singh accepted in cross-examination that the purpose of his letter of 13 April 2005 to D S Flora was to seek to communicate to D S Flora reasons why he should not proceed to execute the building work. He also accepted that he engaged in correspondence with the Commonwealth Bank because he was trying to stop those funds being used to pay D S Flora. I quote from his cross-examination:

“Q. You were trying to stop those funds from being used to pay Mr Flora?
A. The funds belong to the association, yes.

Q. That is why you had written your letters to the Commonwealth Bank?
A. That is correct.

Q. That also is why, when the Commonwealth Bank ultimately threatened to pay Mr Flora, that you came to this Court and got an injunction from Justice Gzell?
A. That's correct.

185 Shaunjit Singh also said, however, that he did not see the contract between the Association and D S Flora until a copy was sent to him by the Commonwealth Bank with its letter of 26 September 2005.

186 Each of the other cross-defendants (plaintiffs) was cross-examined about the letters sent by Shaunjit Singh to D S Flora and the Master Builders Association. Terlochan Singh said that he had not seen either until it was shown to him in the witness box. Sukhdev Singh said that the content of each letter was discussed with him in advance by Shaunjit Singh and that he agreed in principle, although not as to the particular words. Balbir Singh said that she may have seen the letters in draft but does not recall doing so. Nor does she recall having approved a particular form of words. She approved generally of Shaunjit Singh’s actions. All three were aware of Shaunjit Singh’s approaches to the Commonwealth Bank and approved of them. But all of the actions – both those involving D S Flora and those involving the bank - were actions of Shaunjit Singh alone. It is not shown that he acted as agent of any of the other three.

187 I therefore approach the Association’s tort claim on the footing that it must be regarded as a claim maintainable, if at all, against Shaunjit Singh only.

Was there a contract between the Association and D S Flora?

188 The first question to be determined in this part of the case is whether there was in truth a contract between the Association and D S Flora. I have already referred to the contract document dated 8 August 2005 signed, on the one hand, by D S Flora and, on the other, by six persons from the Association, five of whom signed as “Chairman”, “Secretary”, “Public Officer”, “President” and “Vice-Chairman”.

189 The situation from 8 April 2005 was one in which the Association could not deny the existence of the contract with D S Flora and he in turn was entitled to look to the Association for contractual performance. Section 61 of the Associations Incorporation Act precludes argument by the Association, as against D S Flora, that non-compliance with the constitution means that there is no contract. And the common law “indoor management rule” or the rule in Royal British Bank v Turquand (1856) 6 El&Bl 327; 119 ER 886 applies.

190 It is relevant to note, in this latter connection, that the Associations Incorporation Act, while requiring lodgment with the Director-General of Fair Trading of an association’s rules and alterations of them, provides in s 60 that a person is not taken to have knowledge of the rules by reason only that the rules have been so lodged. Section 25 requires an association’s public officer to notify the Director-General of his or her name and address within 14 days after being appointed. Section 29 says that a document or proceeding requiring authentication by an incorporated association may be authenticated by the public officer and need not be authenticated under the common seal.

191 The public officer of an association is, from the point of view of the Act, what might be termed the “visible face” of the association. Responsibilities of various kinds are cast on the public officer. The public officer is the only officer whose name and address must be lodged so as to be discoverable on search of records kept by the Director-General (search is provided for by s 59). Under s 61, an association may not assert that the public officer whose name was last notified to the Director-General as public officer is not the public officer.

192 In the present case, it appears that the name of P S Gill had been notified to the Director-General on 27 September 2003 as the name of the Association’s public officer and that that position had continued at least up to 26 September 2005 (see paragraph [176] above). Sections 29 and 61 therefore operated in relation to P S Gill in April 2005.

193 When the contract document was signed, the Association was precluded, as against D S Flora, from asserting that P S Gill was not the public officer. A document authenticated by him (even though also signed by others) was authenticated by the Association. D S Flora must be taken to have dealt with the Association in good faith. He was therefore entitled to assume on 8 April 2005 that the making of the building contract by the Association had been properly and duly undertaken by it. One of the signatories was the person recorded as public officer. D S Flora was not bound to inquire whether acts of internal management and internal appointments had been regular. He was entitled to infer that the proper internal procedures had been followed.

194 The indoor management rule has an additional operation. It is referred to in the judgment of Gummow J in Australian Capital Television Ltd v Minister for Transport and Communications (1989) 86 ALR 119. His Honour said at 157:

Turquand's

195 The Association was, in relation to D S Flora, in a position where he had acquired contractual rights against it which it was in no position to disown. The Association, being so bound, was entitled to performance by D S Flora. It may therefore complain about any tortious interference with that entitlement. It follows that the Association can, in the context of its claim for damages for interference by the plaintiffs with its contractual relations, invoke the indoor management rule to meet an allegation by the plaintiffs that the contract is not binding because of internal irregularities.

Did Shaunjit Singh have sufficient knowledge of the contract?

196 The next question is one raised by the following passage in the judgment of Lindgren J (with whom Lockhart J and Tamberlin J agreed) in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43:

“In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it were a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have ‘sufficient knowledge of the contract’ is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights.”

197 This passage was approved by the Court of Appeal in Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473, by Rothman J in Film Financial Consultants Ltd v Becker Group Ltd [2006] NSWSC 319 and by White J in Orica Investments Pty Ltd v McCartney [2007] NSWSC 645. White J observed that, in OBG Ltd v Allan [2007] UKHL 21; [2007] 2 WLR 920 at [40]–[41], Lord Hoffmann approved the statement to the same effect by Lord Denning MR in Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 at 700-701.

198 On the evidence before me, Shaunjit Singh did not sight the contract document until he received the Commonwealth Bank’s letter of 26 September 2005. But in his letters of 13 and 21 April 2005 (to D S Flora and the Master Builders Association) he made it clear that he was aware that D S Flora had started construction work. While, in the former, he referred to an allegation that D S Flora was “the so called contractor of some construction work”, it simply must be the case that he was aware of the existence of a building contact and therefore of its essential characteristics, that is, that D S Flora would carry out construction work for the Association and that it would pay him accordingly. Shaunjit Singh must therefore be regarded as having had, from 13 April 2005, “sufficient knowledge of the contract” as referred to by Lindgren J, that is, sufficient knowledge to ground an intention to interfere with contractual rights.

Was there intentional interference?

199 The next element of the tort is that there be intentional interference with contractual relations or contractual rights. The interference must take the form of inducing a party to breach or interfering with performance.

200 The Association breached its contract with D S Flora in that it did not pay sums due to him. He then stopped work. It is unclear whether the contract still subsists and, at this point, I expressly refrain from any finding on that matter. But it is not suggested, as I understand it, that D S Flora did not have a good contractual basis for suspending the works.

201 To the extent that the tort claim advanced by the Association depends on a finding that D S Flora breached his contract with the Association, the claim is insupportable. D S Flora suspended the works. But he did so because he had not been paid sums due to him. The Association accepts that sums were due and unpaid. D S Flora was entitled to suspend the works. Suspension by him was not a breach of contract. Nor was the suspension in any way the product of Shaunjit Singh’s direct approaches by means of his letters of 13 and 21 April 2005.

202 The claim is, however, put on an alternative basis which makes it necessary to decide whether Shaunjit Singh, by acting as he did in relation to the Commonwealth Bank, procured the bank to breach its contract with the Association, it being the intention of Shaunjit Singh thereby to interfere with the performance by D S Flora of his primary obligation under the building contract, that is, the obligation to proceed with and complete the building work. This wrong is of the third kind identified by Evershed MR in D C Thomson & Co Ltd v Deakin [1952] Ch 646 at 681-682:

“Dealing first with individual contractors, it seems to me that the intervener, assuming in all cases that he knows of the contract and acts with the aim and object of procuring its breach to the damage of B, one of the contracting parties, will be liable not only (1) if he directly intervenes by persuading A to break it, but also (2) if he intervenes by the commission of some act wrongful in itself so as to prevent A from in fact performing his contract; and also (3) if he persuades a third party, for example, a servant of A, to do an act in itself wrongful or not legitimate (as committing a breach of a contract of service with A) so as to render, as was intended, impossible A's performance of his contract with B.”

203 The relevant kind of indirect interference was described by Wells J in Woolley v Dunford (1972) 3 SASR 243 at 267:

D. C. Thomson & Co. Ltd. v. Deakin

Torquay Hotel

J. T. Stratford & Son Ltd. v. Lindley

Was there an unlawful procuring of a breach of the bank contract?

204 It is necessary to consider whether Shaunjit Singh committed what is, for these purposes, an “unlawful act” by procuring a breach of contract by the Association’s bank so as to interfere with or render impossible due performance of the building contract by D S Flora – in that D S Flora was forced, in effect, to suspend the works because of unavailability of funds to the Association as a result of the bank’s breach of contract.

205 In deciding whether Shaunjit Singh procured a breach of contract by the Commonwealth Bank, it is first necessary to understand the contractual position occupied by a bank in relation to its customer. The primary contractual duty of a bank is to recognise and act upon cheques and other instructions conforming to the customer’s mandate. There also exists, however, a contractual duty of care on the part of the bank that may require it to make inquiry before simply acting in accordance with the mandate. This latter duty was referred to by Batt JA in National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252 (see, in particular, at [46]).

206 The evidence does not disclose the precise terms of the Commonwealth Bank’s mandate as at April 2005 when the building contract was made. It may be inferred, however, that it was not such as to allow officers of the Association elected or appointed on or after 27 September 2005 to operate the account. The letter to the bank dated 9 June 2005 signed by Harmit Pal Singh and others is the basis for this inference. It may also be inferred that the mandate was not such as to allow persons from the plaintiffs’ camp to operate the account. The basis for this inference is Shaunjit Singh’s letter of 2 February 2005 to the bank. The likelihood is that the mandate existing at April 2005 authorised operation of the account by some combination of the members of the Board of Trustees elected in November 2001 all of whom, except Shaunjit Singh, had resigned by the end of August 2003. Alternatively, the mandate may have been in the terms indicated in the second paragraph of the extract from S S Rangi’s letter of 1 September 2003 to Shaunjit Singh quoted at paragraph [80] above.

207 In those circumstances and being on notice of the competing claims of the two factions to be the legitimate representatives of the Association, the bank’s duty to make inquiry became predominant. It was under no duty to recognise demands for payment ostensibly made by either faction which, it appears, were in any event not consistent with the customer’s mandate. But even if the demands of one faction were consistent with the mandate, the duty to make inquiry and to refrain from paying in case of genuine uncertainty would have predominated.

208 The conclusion must therefore be that the bank did not commit a breach of contract when it refused on a continuing basis to release funds to the Association on the signatures of the persons nominated by the defendants’ faction. On the contrary, it performed its contractual duty by declining to pay and pursuing inquiries into the competing claims. The matter was brought to a head and, from the bank’s point of view, resolved by the order made by the court on 30 October 2005.

209 There are possible grounds for a finding that, after 30 October 2005, Shaunjit Singh obstructed the making of payments by the Association in connection with the building works. I refer to the evidence about his non-attendance at the Commonwealth Bank, Seaforth, at 1.30pm on a particular day. By then, however, D S Flora had stopped work on the project. Any such actions by Shaunjit Singh were therefore not causative of disruption of contractual performance.

210 In the result, Association’s claim for damages for interference with contractual relations fails.

Conclusion

211 I have said nothing to this point about a separate proceeding heard together with this present proceeding and eventually consolidated with it. That other proceeding, 6558/05, is between D S Flora as plaintiff and Budget Demolitions and Excavation Pty Ltd as defendant, with D S Flora also as cross-claimant and the present natural person defendants as cross-defendants. A number of the issues raised there will be determined by findings in this judgment. The best way towards determination of the remainder is for the parties involved to provide written submissions as to findings that should be made on the balance of the issues and the appropriate orders.

212 I shall make a direction for the filing of the submissions just mentioned and for the filing of short minutes of the orders necessary to dispose of the balance of the consolidated proceedings in conformity with these reasons. I shall also make directions concerning submissions on costs.

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Citations

Singh v Singh [2008] NSWSC 386

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CITATION:	Singh v Singh; Flora trading as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386
HEARING DATE(S):	26/11/07, 27/11/07, 28/11/07, 29/11/07. 30/11/07
JUDGMENT DATE :	1 May 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Short minutes and further submissions to be filed
CATCHWORDS:	ASSOCIATIONS AND CLUBS - incorporated associations - tenure of office-bearers - where executive committee members hold office "until the next annual general meeting when they shall retire" - no annual general meeting held - where board of trustees to consist of specified number of members and all but one resign - whether that one can function alone - admission of new members - whether recommendation of executive committee required by rules was made - whether board of trustees admitted new members - general meetings - whether general meeting requested in accordance with rules - whether model rule about requisitioning of general meetings by members applied - whether general meeting convened in accordance with model rule - board of trustees and executive committee purportedly elected at general meeting not duly convened - EQUITY - equitable relief - declaratory relief - discretionary considerations - delay - laches - where proceedings not commenced until two years after new bodies purportedly elected - where those bodies operated during that period - TORTS - interference with contractual relations - whether contract existed - whether alleged wrongdoer had relevant knowledge of contract - whether breach of contract induced by him - whether he interfered indirectly with contractual performance
LEGISLATION CITED:	Associations Incorporation Act 1984, ss 3, 19(3). 25, 26(1), 59, 61 Associations Incorporation Regulation 1999, model rules 20, 25 Corporations Acts 2001 (Cth), ss 236, 249G, 1322
CATEGORY:	Principal judgment
CASES CITED:	Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 Australian Capital Television Ltd v Minister for Transport and Communications (1989) 86 ALR 119 Brettingham-Moore v Christie, unreported, TASSC, Neasey J, 21 November 1969 Club Flotilla (Pacific Palms) Ltd v Isherwood (1987) 12 ACLR 387 D C Thomson & Co Ltd v Deakin [1952] Ch 646 Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 Fedorovitch v St Aubins Pty Ltd [1999] NSWSC 506 Fightvision Pty Ltd v Onisforou [1999] NSWCA 323; (1999) 47 NSWLR 473 Film Financial Consultants Ltd v Becker Group Ltd [2006] NSWSC 319 Foss v Harbottle (1843) Hare 461; 67 ER 189 Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 Hillig v Darkinjung Pty Ltd [2008] NSWCA 75 Industrial Equity Ltd v Blackburn (1977) 2 ACLR 421 Industrial Equity Ltd v Blackburn [1977] HCA 59; (1977) 137 CLR 567 Massey (T/A Massey Bailey) v Wales [2003] NSWCA 212; (2003) 57 NSWLR 718 Morris v Kanssen [1946] AC 459 National Australia Bank Ltd v Nemur Varity Pty Ltd (2002) 4 VR 252 OBG Ltd v Allan [2007] UKHL 21; [2007] 2 WLR 920 Orica Investments Pty Ltd v McCartney [2007] NSWSC 645 Re Beckers Pty Ltd (1942) 59 WN (NSW) 206 Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477 Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883 Re Duomatic Ltd [1969] 2 Ch 365 Re Portuguese Consolidated Copper Mines Ltd (1880) 42 ChD 160 Re Sly, Spink & Co [1911] 2 Ch 430 Re Tedman Holdings Pty Ltd [1967] Qd R 561 Rivers v Bondi Junction-Waverley RSL Sub-branch Ltd (1986) 5 NSWLR 362 Royal British Bank v Turquand (1856) 6 El&Bl 327; 119 ER 886 Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486 The Faure Electric Accumulator Co Ltd v Phillipart (1888) 58 LT 525 Woolley v Dunford (1972) 3 SASR 243
PARTIES:	(1) Shaun Jit Singh - First Plaintiff Terlochan Singh - Second Plaintiff Sukhdev Singh - Third Plaintiff Balbir Singh - Fourth Plaintiff Harmit Pal Singh - First Defendant Sarwan Singh Khalah - Second Defendant Pardeep Singh Gill - Third Defendant Charan Singh - Fourth Defendant Jaspal Singh - Fifth Defendant Prabjeet Singh Anand - Sixth Defendant Commonwealth Bank of Australia Limited - Seventh Defendant North Shore Sikh Association of Sydney Incorporated - Eighth Defendant (2) Davinder Singh Flora t/a Flora Constructions - Plaintiff Budget Demolition & Excavation Pty Ltd - Defendant
FILE NUMBER(S):	SC (1) 5651/05; (2) 6458/05
COUNSEL:	(1) Mr A E Maroya - Plaintiffs Mr D A Smallbone/Mr A K Singh - 1st to 6th and 8th Defendants (2) Mr M K Rollinson - Plaintiff Mr D A Smallbone/Mr A K Singh - Cross-defendants
SOLICITORS:	(1) The People's Solicitors - Plaintiffs Harish Prasad & Associates - 1st to 6th and 8th Defendants (2) Newman & Associates - Plaintiff Harish Prasad & Associates - cross-defendants