Chand v Chand

[2022] NZHC 303

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-99

[2022] NZHC 303

IN THE MATTER

of an interlocutory application for an injunction

BETWEEN

SATISH CHAND

Plaintiff/Applicant

AND

RAKESH CHAND

First Defendant/First Respondent

AND

SHREE SANATAN DHARAM PRATINIDHI SABHA MANUKAU BRANCH INCORPORATED

Second Defendant/Second Respondent

Hearing:	25 February 2022
Appearances:	RP Chaudhry for the Plaintiff/Applicant LT Meys for the Defendants/Respondents
Judgment:	28 February 2022

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 28 February 2022 at 11.00am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:      Neilsons Lawyers, Auckland To:           R Chaudhry, Auckland

CHAND v CHAND [2022] NZHC 303 [28 February 2022]

Introduction

[1]    The applicant applies for an urgent interim injunction prohibiting a Special General Meeting (SGM) of the second respondent (the Society) from proceeding at 6.30pm today, 28 February 2022. This judgment is being delivered with urgency, having heard the (on notice) application last Friday afternoon, 25 February 2022.

[2]    The applicant and first respondent are members of the Society, which is an incorporated society.1 The applicant says that the objects of the Society are “to promote the interests of the Fiji Indian community through the Hindu religion as guides its role”. The first respondent is the acting President of the Society, though whether he has been validly appointed as such is in dispute.

[3]    It is not in dispute that the operation and management of the Society has been dysfunctional since around 2017, as a result of court proceedings in this Court, which were concluded in 2019, and then over a similar period of time, a Department of Internal Affairs investigation into the misuse of grant funds provided to the Society. That investigation ultimately led to the prosecution and, in 2018, conviction of five individuals connected with the Society, including the first respondent (then Vice President of the Society) and Pradeep Chand (the then President).

[4]    As a result of this dysfunction, the Society has not held an Annual General Meeting (AGM) since 2017. The Society’s Constitution provides that the Society is to be run by an Executive Committee, the members of which are to be elected at an AGM. The Constitution provides that if an AGM is not held in accordance with its provisions, the Executive Committee officials will be deemed to have vacated their positions. The applicant accordingly says that given an AGM has not been held since 2017, those purporting to make up the current Executive Committee are not in fact lawful holders of the offices concerned, and thus cannot have lawfully called the SGM scheduled for this evening. The applicant says that he and other members of the Society who support his position2 say the meeting ought not to proceed, given it will

1      The applicant says that he has been a member since 2010, whereas the first respondent’s affidavit says he became a member in late 2020 or early 2021. The Society’s Register of Members, which is to include the date of a member’s membership, was not produced in evidence.

2      It being apparent from the evidence that there are two “factions” within the Society, that of which the applicant is a part, and that of which the first respondent and others are a part.

set in motion decision-making for the Society that has no legitimate foundation. The applicant is also concerned at what appears to be the first respondent’s and/or the Executive Committee’s intention to sell two properties currently owned by the Society.

[5]    As noted, this judgment is being delivered under urgency. It is accordingly briefer and less detailed than would have ordinarily been the case. It is structured as follows:

(a)First, I summarise the key factual background.

(b)Second, I set out the key provisions from the Constitution relevant to matters to be determined on the application.

(c)Third, I summarise the applicant’s claim in the substantive proceeding and the relief sought on the present application.

(d)Fourth, I summarise the legal principles applicable to an application for an interim injunction, which are not in dispute.

(e)Finally, I set out my decision on the application and the reasons for reaching that decision.

[6]    In the interests of time and brevity, I have not separately summarised the parties’ submissions, which will be evident from the content of this judgment.

Key factual background

[7]    By way of preliminary observation, the affidavit evidence filed in support of and in opposition to the application is fairly generalised and high level, and contains much factual dispute (in the nature of a “he said/he said” trading of allegations). I cannot of course resolve disputed facts on the present application. The following is therefore what I can best discern to be the key factual background, but should not be taken as the “final word” on any factual matter.

[8]    The Society was incorporated in 2008. At least until 2017, the Society seems to have operated without significant issue. As noted, this changed in 2017, with court proceedings (the details of which were not addressed in the evidence) and the Department of Internal Affairs investigation and later prosecution. It is not necessary for the purpose of this judgment to say anything further about those events.

[9]    Pradeep Chand was at that time the Society’s President. The applicant says that in or around May 2020, Mr Chand “handed over” the running of the Society to the first respondent, on the understanding that the latter would “call for elections and regularise the affairs of the second defendant after the court proceedings from 2016 – 2019”. I interpolate to note that Mr Chand has not himself given evidence on these matters. The first respondent says that Mr Chand formally resigned in May 2020 and that at “a meeting” (not suggested to be an AGM), members then present agreed that he (that is, the first respondent) would be appointed as acting President. A document relating to that meeting (said in the first respondent’s affidavit to be minutes of that meeting, but which is more a summary of a process for his appointment) was produced in evidence, which seems to suggest six or so members were present and endorsed the first respondent’s appointment as acting President. The document also records that a “Patron” of the Society had communicated with other members about the first respondent’s appointment and “there were no complaints or suggestion from any members were received”.

[10]   It is not clear how the Executive Committee was made up from 2017 onwards, but it appears that various persons who made up the Committee in 2017 simply continued to fill those roles in the intervening years. To what extent there have been any changes in the roles over time is not clear, other than:

(a)the first respondent says that in May 2020, and with “the blessing of the Committee” he appointed Deo Chandra as acting Treasurer; and

(b)Bineshwar Pratap has sworn an affidavit in support of the application, stating that he continued to act as Treasurer after May 2020 until (it seems) the first respondent purported to appoint another person to that role in late 2021.

[11]   The first respondent says that upon taking up the role of acting President, he was concerned at the financial accounts (including that “false accounts” had been submitted to the Registrar of Societies, without having been approved by the Executive Committee),3 and was anxious to regularise the operation of the Society, with proper accounts and elections at an AGM.

[12]   For the remainder of 2020 and all of 2021, New Zealand, and Auckland in particular, was in and out of lockdowns at different levels. The first respondent says that he held regular Tuesday evening prayer meetings (as and when lockdowns permitted such meetings), which all members were free to attend, and at which general matters concerning the Society were discussed. Records of a few of such meetings were produced in evidence.

[13]   The first respondent says that once New Zealand came out of the most recent lockdown in late 2021, Neilsons Lawyers were engaged to act for the Society and Executive Committee, and an SGM was scheduled (see further below). Fox Accountants have also been engaged to prepare accounts for the period 2018 to 2021 (copies of draft such accounts were provided to the Court).

[14]   The theme from the applicant’s evidence, on the other hand, is that since May 2020, the first respondent has run the Society in the manner of a “dictatorship”, failed to call any AGM or SGM and:

[u]pon his appointment, the first defendant started to make decisions without consulting the members of the Executive Committee. He surrounded himself with his group of friends and decisions concerning the second defendant were often made at his garage rather than at the second defendant’s premises.

[15]   The applicant further says that the first defendant has also sought to exclude some members from attending the weekly prayer meetings, and disciplinary action is being taken against some members to exclude them from membership of the Society. The applicant’s concern is that the first respondent is seeking to “stack” the membership in advance of the forthcoming SGM and any later AGM, so that he can continue to run the Society as he wishes.

3      A matter disputed in the evidence filed in support of the application.

[16]   The applicant’s concerns about the manner in which the first respondent is running the Society are echoed in Mr Pratap’s affidavit.

[17]   The applicant also says that “late last year” he became aware that the first respondent was intending to sell properties belonging to the Society. The applicant considers this would be unlawful, both because the first respondent is not the duly elected President of the Society, and the Executive Committee is similarly not a properly elected committee. The applicant also says that the Constitution only refers to the Society acquiring property, and does not make reference to disposing of property in any event.

[18]   On 18 November 2021, the applicant’s solicitors wrote to the first respondent, raising the applicant’s concerns at the legality of the first respondent’s appointment, and steps said to be being taken by him as acting President (including using donations to pay for legal fees in connection with disciplinary action against another member, and a proposed sale of the Society’s properties). The letter suggested a way forward, namely:

…a round table meeting of the 2017 elected executive and trustees to map forward the way for the Sabha to have a Special General Meeting to regularise the affairs of the Sabha and make the necessary appointments to take the Sabha to its next AGM as per relevant and applicable constitutional stipulation.

[19]   Neilsons Lawyers responded on 26 November 2021, confirming they act for the Society. They said that the Executive Committee had been working hard in difficult times to keep the Society operating and that:

[t]he current executive committee is working to bring the organisation back on track with an AGM and an election scheduled to take place on 21 February 2022 at 6.30pm. Notice of that will shortly be served on members.

(emphasis added)

[20]   The letter rejected the suggestion that the first respondent’s appointment was invalid, and advised that “there is not expected to be any sale or purchase of properties by the Society until after the AGM. Accordingly, there is no decision for your clients to challenge.” The letter also invited the applicant to view the Society’s Register of Members, and to nominate a time and place to do so. I interpolate to note that there is

no evidence that the applicant took up this invitation. The letter also stated that the Register will be available for viewing at the AGM. The letter concluded that given those matters, there was no need for the suggested “round table”.

[21]   Further correspondence between the solicitors ensued, but no resolution was reached. By letter dated 10 January 2022, the applicant’s solicitors raised concerns at the first respondent recruiting members and accepting membership dues, said to be in breach of the Constitution, given the first respondent’s appointment was not lawful. The letter advised that decisions purporting to be taken on behalf of the Society would be challenged in court proceedings.

[22]   By an undated letter to members of the Society (but said by the applicant to have been received by him on 27 January 2022), Neilsons enclosed a notice of an SGM (the Notice), stating in their letter that elections would be held at that meeting. The letter set out the process for voting at the meeting by proxy, and for including any additional motions to be discussed at the meeting which were not already included in the agenda. Neilsons’ letter concluded that:

An independent former Government official will be invited to oversee the SGM and steps will be taken to ensure it is conducted in an orderly fashion.

[23]   Contrary to the impression given in the Neilsons covering letter, the Notice does not, on its face, suggest elections will actually be held at the SGM. Rather, one item on the agenda is “Date for AGM and elections to be called”. A further agenda item is “Approval for independent officer to run elections to ensure transparency”. I interpolate to observe that election of persons to the roles which make up the Executive Committee could not be conducted at an SGM in any event, the Constitution providing that such elections are to be conducted at an AGM (see [39] below). The Constitution also provides that the Secretary is to give notice no less than four weeks from the date of the AGM that “nominations are open for the election of the Officers of the Sabha”, which the Notice does not do. The Constitution also provides that nomination forms are to be obtained from the Secretary and submitted to the Secretary at least seven days before the AGM, information also not provided in the Notice.

[24]   The copy of the Notice attached to the applicant’s affidavit is signed by Mr Chandra, as acting Secretary, and is dated 27 January 2022. Somewhat curiously, the copy of the Notice attached to the first respondent’s affidavit (said by the first respondent to have been sent to all members) is dated 25 January 2022 and is recorded as “Signed on behalf of the Acting President and Secretary, and by the following members”, followed by the signatures of 22 persons (including the first respondent and Mr Chandra). There is no explanation in the evidence for the difference between the two versions of the Notice, and this was not addressed in either party’s submissions.

[25]   The first respondent also attaches to his affidavit a copy of what he says is a “true copy of the Society’s current register of its members” (with personal details redacted for privacy) including members who have paid their dues”. However, the document annexed does not, on its face at least, resemble a register of members. Rather, it appears to be a newly created document, headed “SGM 2022 Letter Update”, listing 30 names, and with columns for “name”, “signed”, “remarks”4 and “emailed”.5 Rather than the formal Register of Members, it seems more akin to a record of who has signed the Notice referred to above (at least that copy attached to the first respondent’s affidavit), whether they were at an unspecified prayer meeting, and whether they have been “emailed” (presumably a copy of the Notice).

[26]   There is accordingly no clear evidence before the Court of how many members the Society presently has. The document described in the preceding paragraph is, however, said by the first respondent to be (or perhaps more accurately, represent?) an extract from the Register of Members, and I proceed on the basis that the membership is around 30. There is nothing before me to conclude otherwise.

[27]The following points are also relevant to note:

(a)The applicant leases property from the Society, and is said by the first respondent to be in arrears of payments due under that lease. I do not know if that is an accepted or disputed matter.

4      Which records whether each person listed was “present at prayer meeting at Sabha”.

5      For all persons, this column is marked “yes”.

(b)Caveats have been registered against the Society’s two properties by Pradeep Chand (the former President referred to at [9] above) and their removal is the subject of separate litigation before this Court.6 Without removal of those caveats, the properties cannot be sold.

(c)An affidavit by Mr Chandra, who says he is the acting Treasurer and Secretary to the Society, was filed in support of the opposition to the application. Mr Chandra’s affidavit is broadly supportive of the matters addressed in the first respondent’s affidavit.

(d)A further affidavit was filed in support of the opposition to the application, affirmed by 11 persons who say they are current members of the Society.7 That affidavit says:

We understand that Satish Chand and Mr Pratap allege that there have been no Society meetings and Bobby Chand operate the Society like a dictator. That is ridiculous because every Tuesday (other than during Covid lockdowns) the Society has a meeting where all members are welcome and they have a chance to discuss the current issues.

We support the actions of the Acting President and other Committee members in calling the general meeting scheduled for Monday and the agenda we received. The Society needs to go through those agenda items urgently and take action to ensure unity, to restore its reputation and maintain financial stability.

(e)An affidavit was filed in response on behalf of the applicant, sworn by Davendra Prasad, who says he is the Vice President of the Society.  Mr Prasad says that the contents of Mr Chandra’s affidavit are “totally wrong”, including the suggestion that Mr Chand was forced to resign as President in May 2020, and that there was anything wrong with the Society’s accounts at that time. As I noted earlier, however, it is simply not possible nor appropriate to resolve factual conflicts on the present application.

6      Chand v Shree Sanatan Dharam Pratinidhi Sabha Manukau Branch Inc, CIV-2022-404-25.    Mr Chand’s application to sustain the caveats will be heard on 3 May 2022.

7 All of the names appear on the document discussed at [25] above.

Key provisions from the Constitution

[28]   The Constitution is not happily drafted, a point acknowledged by both parties. I was advised that it was “cut and paste” from a constitution for a similar society in Fiji, which seems to have led to some of the difficulties in the drafting. For example, and as will be seen from the content of the key provisions of the Constitution set out below, aspects of the Constitution relevant to the present dispute revolve around there being “branches” of the Society. There are, however, no branches of the Society in this case. Other key provisions concern “trustees” of the Society. There is no evidence before me confirming whether there are currently any trustees of the Society, or if so, who they are.

[29]   Turning to the content of the Constitution itself, cl 6 concerns membership, with cl 6.1 providing:

Membership is open to any individuals or groups interested in or supporting the Sanatan Dharma. Ordinary membership is open to all persons who have an interest in furthering the objects of the Sabha, and who pay the annual subscription.

[30]   Clause 6.5 provides that “the membership criteria shall be established by the trustees from time to time and all membership shall be subject to and at the discretion of the Executive Committee”. I interpolate to observe that that discretion must be exercised for a proper purpose, and in accordance with the aims and objects of the Constitution. For example, the discretion to refuse membership could not be exercised for capricious reasons. As the Court of Appeal observed in Stratford Racing Club  Inc v Adlam, “[f]or a committee to reject membership applications because they feared they might lose control of their club would be to act for an improper purpose or, arguably, in bad faith.8

[31]   Clause 6 also provides for a disciplinary process, to sanction and potentially expel a person from membership of the Society when the Executive Committee considers that member is acting “in any way prejudicial to the interests of the Sabha or its members”.

8      Stratford Racing Club Inc v Adlam [2008] NZCA 92 at [58].

[32]   Clause 7 addresses the officers of the Society stated, to comprise President, Vice President, Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, Patron and Vice Patrons. Clause 7.2 provides that the Executive Committee is not to include the Patron or “two Vice Patrons”.

[33]   Clause 7.3 provides that the legal adviser and auditors of the Society will be nominated at the first meeting of the Executive Committee after the election.

[34]   Clause 7.4 provides that “[w]ork done legally and constitutionally by the Executive Committee would be accepted by the Sabha at the AGM”.

[35]   Clause 8 provides that Executive Committee members will hold office for a two-year term.

[36]Clause 9 states that the Society’s financial year is 1 January to 31 December.

[37]   Clause 10 of the Constitution is of key relevance to the present application and is accordingly set out in full:

10.0General Meeting of the Sabha

10.1Annual General Meeting

A General Meeting of the members of  the  Sabha  shall  be  held  before  31st March of every year at a date to be fixed by the Executives unless determined otherwise.

10.2      The Annual General Meeting of the Sabha on a vote by two thirds of the members present will have powers to amend any part of the constitution in accordance with its aims and objectives and may make recommendations to the trustees board for acceptance, if the Sabha deems proper, add new sections to the constitution so that the AGM may be properly conducted.

10.3      The Annual General Meeting (AGM) of the Sabha shall be held within a month after the end of the financial year and not later then 31st March of each year.

10.4      Any Annual General Meeting not held on the due date because of unforeseen circumstances shall be held no later than two months from the date when it was to have been held. All the officials shall be deemed to have vacated their positions if the meeting is not held as stipulated above and in such a case, the Sabha shall be run and organised by the trustees. The trustees shall reconstitute and reconvene the Annual General Meeting of the Sabha within two months of taking over its control. Should the trustees fail to act as

required, then 50% of all financial branches may convene the Sabha’s AGM and elect its officials.

[38]   The implications of there being no branches of the Society can be seen from the final mechanism for an AGM to be convened, in the event it has not been convened by either the Executive Committee or the trustees.

[39]Clause 11 deals with elections. Clause 11.1 provides:

Procedure: The Secretary or his/her assistant shall no less than four weeks from the date of the Annual General Meeting, advertise through the local media and/or word of mouth that nominations are open for the election of the Officers of the Sabha. All interested and eligible parties than shall get the nomination forms from the Secretary and shall submit the nominations with the Secretary at least seven days prior to the AGM.

[40]   Clause 12.1 deals with motions to be considered at an AGM or SGM, providing as follows:

For any motion to be considered at the Annual General Meeting or a Special General Meeting it shall be mandatory that the motion be in writing with the name address and signature of the mover and the seconder together with the written consent of the branch and sent to the Secretary no later than thirty days prior to the Annual General Meeting or a Special General Meeting.

[41]   Clause 14 provides that a quorum for an AGM or SGM is one third of all financial members, plus fifty percent of Executive Committee members.

[42]   Clause 17.4 provides that should the role of President become vacant during the incumbent’s term, “the National Executive Committee shall appoint one of the Vice Presidents to act as the President until the next election or any other Executive member”.

[43]   Clause 19.1 provides that the Executive Committee shall appoint a Board of Trustees of up to 10 members. Clause 19.4 provides that subject to matters such as bankruptcy, imprisonment or resignation, appointment as a trustee will be for life.

[44]Finally, cl 24.1 and 24.2 provide as follows:

24.1      The Sabha may alter or replace these Rules at a Sabha Meeting by a resolution passed by a two-thirds majority of those Members present and voting.

24.2      At least 14 days before the General Meeting at which any Rule change is to be considered the Secretary shall give to all Members written notice of the proposed motion, the reasons for the proposal, and any recommendations the Committee has.

Legal principles applicable to application for interim relief

[45]The legal principles are not in dispute and may be briefly stated.

[46]   There are three stages to the consideration of an application for an interlocutory or interim injunction:9

(a)first, the applicant must establish there is a serious question to be tried, or that its claim is not vexatious or frivolous;

(b)second, the balance of convenience must be considered; and

(c)finally, an assessment of the overall justice of the position is required as a check.

[47]   When assessing whether there is a serious question to be tried, the Court must consider:10

(a)what each of the parties claims the facts to be;

(b)what the issues are between the parties on these facts;

(c)the law applicable to those issues; and

(d)whether there is a tenable resolution of the issues of fact and law on which the plaintiff may be able to succeed at trial.

9      NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].

10     Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 133.

Summary of applicant’s claim and application for interim relief

[48]   The underlying proceeding is brought pursuant to s 23A of the Incorporated Societies Act 1908 (the Act). I say more about that statutory provision below.11 The statement of claim recites the factual background from the applicant/plaintiff’s perspective, and the relevant provisions of the Constitution.

[49]The claim then pleads four causes of action:

(a)The first is for breach of cl 17.4 of the Constitution, in relation to the first respondent/defendant’s appointment as acting President, which is said to have been outside the terms of the Constitution.

(b)The second is for breach of cl 10 of the Constitution, in terms of the failure to call an AGM since 2018.

(c)The third pleads breach of cl 11 of the Constitution, in terms of the “current Secretary and his assistant” not having the constitutional authority to call an AGM.

(d)The fourth cause of action is for breach of cl 4.9 of the Constitution, alleging that there is no constitutional power to sell property that has been acquired by the Society.

[50]The statement of claim seeks the following relief:

(a)a declaration that the defendants do not have the constitutional authority to make decisions on behalf of the Society;

(b)a declaration that “the affairs of the second defendant, to make it compliant with its own constitution, would need to be made in accordance with s 23A of the Incorporated Societies Act 1908 in the circumstances as it thinks proper”;

11     At [62] to [64].

(c)an injunction restraining the first defendant from discharging any duties in relation to any matters concerning the Society pending any further order of the Court;

(d)an injunction restraining the defendants from disposing of any of the Society’s properties; and

(e)an order that the Court:

… appoints a person it deems fit to undertake the duties required of the second defendant’s Executive Committee and to call for membership renewals, finalise the membership register, deposit any fees received into the second defendant’s bank account on or before the cut-off date, draw up a list of members eligible to participate in the SGM, to issue a notice of SGM and to chair the SGM of the second defendant to oversee the election of its office bearers.

[51]   The application for interim relief seeks similar declarations and injunctions, including in particular that the second defendant be restrained from calling any meetings of the Society pending further order of the Court. Given the truncated time in which the application  was  heard  and  is  being  determined,  by  minute  dated  21 February 2022, I directed that the focus of the hearing on Friday was to be whether there should be an order prohibiting the SGM from proceeding this evening. The parties’ submissions were accordingly directed to that issue.

Discussion

[52]   By way of preliminary comment, it is well established that decision-making of an incorporated society may be amenable to review by way of an application for judicial review. This Court regularly considers applications for review based on the argument that powers purporting to be exercised by those operating an incorporated society are ultra vires the society’s constitution and are thus unlawful. It is also not uncommon for interim relief to be sought to restrain the exercise of powers said to be being exercised ultra vires and thus unlawfully.

[53]   It is also well established, however, that the Court will exercise restraint in intervening in the internal affairs of an incorporated society.12 Part of this reluctance is that “members who consider their club or society is breaching the rules have a remedy under the law of contract”.13 But where the alleged conduct affects all members of an incorporated society, and the allegation is of one of ultra vires and thus unlawfulness, one can readily see the matter being “quintessentially the stuff of judicial review”.14 Whether the underlying claim in this case is pursued in contract or judicial review is, however, unlikely to affect the overall outcome.15

[54]   In this context, I have concluded that it is not appropriate to grant the application, at least insofar as it seeks to restrain the conduct of the SGM later today. I have reached this conclusion for the following reasons.

[55]   First, I am satisfied that there is a serious question to be tried that the first respondent has not been validly appointed as acting President, and that more generally, the current Executive Committee is not a validly appointed Committee. This is because the Constitution provides that all Executive Committee office holders are deemed to have vacated their office in the circumstances described in cl 10.4, which would have taken effect as of 31 May 2018 (being the point at which the Society fell into default in holding a timely AGM).16 It follows that from that point onwards, including in May 2020, there was no validly elected Executive Committee to appoint the first respondent as acting President, or indeed to take any other steps in relation to the Society. Moreover, the precise basis upon which the Executive Committee purported to appoint the first respondent as acting President is somewhat opaque in any event (see the discussion above at [9]).

[56]   It follows from the above that I am also satisfied that there is a serious question to be tried that the current Executive Committee does not have the constitutional power to call an SGM.

12     Middledorp v Avondale Jockey Club Incorporated [2020] NZCA 13 at [9].

13     Stratford Racing Club Inc v Adlam, above n 8 at [55].

14     Ibid, referring to allegations a society is acting unfairly and for an improper purpose.

15     Ibid.

16 31 May 2018 being two months after the AGM ought to have been held; see cl 10.4 of the Constitution at [37] above.

[57]   Despite the above, I am satisfied that the balance of convenience and interests of justice overall weigh in favour of declining to order that the SGM not proceed this evening.

[58]    I first take into account that the copy of the Notice attached to Mr Chandra’s affidavit is signed by 22 of what appears to be around 30 members of the Society. So well over half. An issue for determination going forward may be the proper interpretation of cl 10.4 of the Constitution, and how an AGM is to be called when the trustees have failed to act, and in the absence of there being any branches of the Society to act as the final “backstop” to calling the meeting. It may be arguable that properly interpreted (or by way of an implied term), at least 50 percent of all members (that is, rather than all branches) may call such a meeting. Whatever the position may be on the proper interpretation of cl 10.4 however, the evidence on the present application suggests that a significant number (and perhaps a clear majority) of the current members of the Society have either called the SGM themselves, or are supportive of it being called. This is further reinforced by the affidavit of members referred to at [27(d)] above.

[59]   Second, I am concerned at the delay in this proceeding being brought and relief sought. I am not so concerned at the delay from the point at which the applicant received notice of the SGM; as noted, he received the Notice on 27 January 2022, and the present proceedings and application were filed promptly a few days later. But the core of the applicant’s case is that the present Executive Committee and first respondent’s role as acting President are ultra vires the Constitution, given there has been no AGM held since 2017. But that suggested state of “unlawfulness” has existed since 31 May 2018, yet no steps have been taken until now to challenge any decision- making in the interim.   Indeed, on the applicant’s own case, from 31  May 2018,   Mr Pradeep’s role as President was invalid, as was Mr Pratap’s role as Treasurer. I do not understand the applicant to suggest as such. There is accordingly a sense in the applicant’s case that he (and others associated with him) have accepted a pragmatic approach to running the Society from May 2018 to May 2020, but now object to such an approach when it is not to their liking.

[60]   Third, and perhaps most importantly, for the reasons outlined earlier, the election of a new Executive Committee is not proposed to take place at the SGM this evening, and nor could it, given the election is to be held at an AGM (and after proper notice has been given that nominations for appointment are open). For completeness, I record that I would have granted the application had it been proposed that elections would be held at the meeting convened for this evening.

[61]   Fourth, and allied with the preceding points, it is in the interests of the Society more generally for its member to come together at the meeting this evening, to discuss those matters on the agenda and for a date to be set for an AGM. The meeting could not, for example, sign-off on the accounts, which is a matter for the AGM. But there would seem no downside to the financial status of the Society generally being discussed. Presumably the members present will vote on who should chair the meeting, and will also vote on a date for the AGM. That date could not be less than four weeks later, and under cl 10.4, ought to be held no later than two months following 31 March 2022. There is accordingly a reasonable amount of time for an AGM to be scheduled, and for those presently occupying the role of Executive Committee officers to take whatever steps are necessary to ensure the AGM proceeds in accordance with the terms of the Constitution.

[62]   Fifth, absent a majority of members at the meeting scheduled for later this evening voting on a date for an AGM, it is not clear how such an AGM could ever be called and thus proper elections held. I am unpersuaded, at least on the present application, that the Court ought to step into this role and call a meeting and direct how it is to proceed. I am certainly not persuaded that that is the Court’s function under s 23A of the Act, and no submissions or authorities were provided to me in this regard. Commentary on s 23A (in the context of insolvency of an incorporated society) states that:17

Pursuant to ss 23A and 23B of the [Incorporated Societies Act 1908], a society has the power to enter into a compromise or arrangement with its creditors or members. The Act does not define “compromise” or “arrangement”. A compromise involves some adjustment of the rights of a party which in an insolvency context usually involves creditors accepting less than they are

17 Lynne Taylor and Grant Slevin (eds) The Law of Insolvency in New Zealand (online looseleaf, Thomson Reuters) at [33.42.2.1], citing, for the meaning of “arrangement”, the Australian decision in Re Opes Prime Stockbroking Ltd (No 2) [2009] FCA 813 at [29].

owed or extending the time in which payments from the debtor are due. An arrangement is broader and extends to “almost any arrangement otherwise legal which touches and concerns the rights and obligations of the company [society] or its members or creditors”.

[63]   Law of Societies in NZ states that applications under s 23A “appear to be rare” and that there is no guidance on the appropriate procedure in the Act or associated regulations.18

[64]   If s 23A of the Act provided the High Court with a broad power to step into the internal affairs of an incorporated society and call and oversee meetings such as an SGM or AGM, it is surprising there are no such examples of the Court exercising such a power, particularly given the number of disputes that come before the Court of a similar nature to that in this case.

[65]   Sixth, and in terms of irreparable harm, there is no suggestion that a decision to sell the Society’s properties will be made at this evening’s SGM, and indeed the evidence is that no such decision will be made until there has been an AGM and a new Executive Committee elected. Further, given caveats are currently registered against the properties, and that there is separate litigation underway to seek the removal of those caveats, it is likely that it will be some time before the properties could be sold in any event.

[66]   Seventh, decision-making by and steps taken by those presently acting as President and the Executive Committee are amenable to later challenge, whether that be by way of an action in judicial review or contract.

[67]   Finally, standing back, I do not see any urgent need for the Court to interfere in the internal workings of the Society, and certainly not to halt the convening of the meeting this evening. No elections will be conducted at the meeting. No decision to sell property will be made at the meeting. Whether the meeting will subsequently be viewed as a validly called SGM remains to be seen. And should any decisions be taken at the meeting adverse to the applicant’s interests, then the applicant will have the ability to later challenge those decisions.

18     Mark von Dadelszen Law of Societies in New Zealand (3rd ed, LexisNexis, Wellington, 2013) at [12.3.1].

[68]   Given this, I expect the respondents and their legal advisers will wish to take all steps necessary to ensure that the meeting is conducted fairly and transparently, and thus best able to withstand any later scrutiny by the Court in the event of a legal challenge.19 And, assuming the meeting is conducted in an open and transparent way, a date is set for an AGM, and appropriate steps are taken in the lead up to that AGM to ensure elections are held in compliance with the Constitution, the Society’s present state of “paralysis” will be unlocked.

Result and next steps

[69]   The application for interim relief is declined. The meeting scheduled for 6.30pm today may proceed.20

[70]   In terms of matters needing to be determined in the short term, there is the respondents’ application for an order restraining counsel for the applicant from continuing to act in that role. That ought to be heard promptly. The proceeding is accordingly to be listed in the Duty Judge list on either Wednesday or Thursday of this week, for timetabling that application through to a hearing. The applicant will also need to consider whether the underlying proceeding ought to continue as an application for judicial review, and this should also be considered at the next call of this matter. If it is to proceed by way of judicial review, the proceeding will then need to be listed in the next available judicial review list.

Costs

[71]   I encourage the parties to agree costs on the present application. Should that not prove possible:

(a)The respondents may file a memorandum on costs within 10 working days of this judgment.

19 For example, counsel for the respondents confirmed that arrangements were in hand for the former government official to oversee the conduct of the meeting, as referred to in Neilsons’ cover letter referred to at [22] above.

20 For the avoidance of doubt, this result would not prevent the applicant bringing  a further application for interim relief, for example, if a later decision were going to be made or step taken which the applicant said would cause irrevocable harm.

(b)The applicant may file a memorandum in response within a further five working days.

(c)No memorandum is to exceed three pages in length (excluding any schedules of cost calculations).

(d)I will thereafter determine costs on the papers.

Fitzgerald J