- Australian Federation of Islamic Councils Inc v United Muslims of New South Wales Inc

Supreme Court of NSW|2024-08-15|Before: Black J

Solicitors: Abbas Jacobs (Plaintiffs) Attia Lawyers (Defendants) File Number(s): 2024/291410

Judgment AS TO SUBSTANTIVE ISSUES - ex tempore (Revised 21 August 2024)

Background facts, constitutional provisions and affidavit evidence

Turning now to the matters in issue in the proceedings, I ordered Points of Claim ("POC") and Points of Defence ("POD") and a significant number of the matters in issue are resolved by the position taken in those documents. It is common ground (POC [1], POD [1]ff) that the League is governed by a Constitution adopted in March 2009, which is in evidence, and that the objects of the League are set out in cl 4 of that Constitution to which I have been taken. It is common ground that cl 11.3 of the Constitution makes provision for a body called the "Shuraa Council" which is to comprise seven financial members, who appoint persons to it to particular offices including the office of Chairman. It is common ground that the Constitution permits the appointment of alternate members who can fill a vacancy in the Shuraa Council at a meeting of the Shuraa Council. Clause 11.16 in turn sets out functions and duties of the Shuraa Council, and decisions of the Council are final and binding upon the League and its members.
Importantly, it is common ground that a quorum of a meeting of the Council is formed by five members, which may include alternate members but must include the Chairman or his representative. I read the reference to "representative" in that clause as a person appointed by the Chairman as his representative; it is not apparent to me that it can have any other possible meaning.
It is common ground that the Shuraa Council has the power to dissolve the Executive Committee and Executive Board or the League under cl 17.3 if, in the opinion of the Shuraa Council, that Executive Board and Executive Committee have failed to carry out their functions and duties in accordance with the objects enshrined in cl 4 of the Constitution.
It is common ground that several members of the League were appointed to the Shuraa Council at the 2023 annual general meeting of the League, and these included Mr Khan, and that, on or about 6 March 2023, Mr Khan was appointed as Chair of the Shuraa Council. There is a dispute, which becomes important for the resolution of these proceedings, as to whether Mr Khan was subsequently removed as Chair of the Shuraa Council at a meeting on 8 July 2024.
The POC and POD in turn addressed provisions in the Constitution of the League which establish a school conducted on the same premises as are occupied by the League. It is apparent, both from the POC and POD and from the evidence to which I have been taken, that there are issues as to the extent of the League's control over the school; those issues are contentious among its members; and the Commonwealth Department of Education has required the League and the school to address issues in that regard in order to retain continued funding for the school.
The POC and POD in turn plead events at a meeting of the Shuraa Council on 8 July 2024, and, importantly, the Plaintiffs contend and the Defendants deny that there was no constitutional power to remove the Chair from that meeting, if in fact he was removed, or to remove him from office, if in fact that occurred. The Plaintiffs also contend that, from the moment he was removed from, or possibly left, that meeting, the Shuraa Council did not satisfy its quorum requirements, and that meeting was no longer effective. Issues also arise as to subsequent meetings that purported to be meetings of the Shuraa Council on 18 July and 20 July 2024 and the question of the validity of those meetings depends in part upon whether Mr Khan had been removed as Chair of the Shuraa Council, in which case those meetings were plainly invalid, or whether those meetings comprised the Shuraa Council in its proper form, by contrast with an alternate Shuraa Council which had been established under the purported chairmanship of Dr Gaffar, one of the Defendants.
Each of the parties relied on numerous affidavits in the proceedings. The Plaintiffs read the affidavits dated 8 and 12 August 2024 of Mr Khan, and I note that Mr Khan's second affidavit addressed an issue as to the circumstances in which he had left the meeting that took place on 8 July 2024 and whether he had sought to appoint Mr Ud Dean as his representative at the time that he left that meeting. The Plaintiffs also read affidavits dated 12 August 2024 of Mr Jang, Mr Ali, Mr Ud Dean, Mr Afzal, Mr Manzoor. As I noted above, none of those witnesses were cross-examined, although there were significant differences between their evidence and the evidence of witnesses called by the Defendants, so there would be real difficulty in resolving factual disputes between the witnesses by the preference of the evidence of one witness for that of another, if it were not possible to determine the matters in dispute by reference largely to documentary evidence. In the event, the documentary evidence is sufficient to determine the matters in dispute in the proceedings.
The Defendants in turn rely on an affidavit dated 14 August 2024 of Mr Yasin, which, consistent with other evidence led in the proceedings, frequently leads evidence by way of assertion, for example, as to a challenge as to the notice given of a purported Shuraa Council meeting on 18 July 2024. Mr Yasin also refers to a purported meeting of the Shuraa Council on 20 July 2024 where he gives more direct evidence that he did not receive an agenda or notice of that meeting. The Defendants also read the affidavit dated 14 August 2024 of Mr Illiyas, who is currently the President of the Executive Committee of the League, a separate constitutional body within the League to the Shuraa Council, and who gives evidence, inter alia, of events preceding and at the meeting on 8 July 2024. An affidavit of Dr Gaffar dated 13 August 2024 in turn addresses events at significant length, but often in an inadmissible way, by reference to Mr Gaffer's perception as to how the League should operate, irrespective of the constitutional basis on which it was established. The Defendants in turn read affidavit evidence of Mr Khan, Mr Dean and Mr Manzoor dated 14 August 2024 in reply, but the parties paid little attention to that reply evidence in submissions.

Applicable principles

I first refer to the applicable principles, before turning to the terms of the Constitution of the League, which are of some significance to the matter. First, ordinary principles of construction are applied in construing a Constitution of an incorporated body such as the League, although caution will be exercised in drawing inferences from surrounding circumstances or having regard to extraneous materials, where a constitution is a statutory contract that is a public document and may be relied on by third parties: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1; [2006] FCAFC 144 at [55]-[56], [124], [239]-[243]; Echunga Football Club Inc v Hills Football League Inc (2014) 121 SASR 449; [2014] SASC 201 at [18]-[21]; Australian Federation of Islamic Councils Inc v United Muslims of New South Wales Inc [2021] NSWCA 311 at [64]; Re Baikal Sports Club Inc [2024] NSWSC 5 at [18], on which I have drawn for this summary.
Second, there is a significant body of authority which recognises that, where significant matters are to be raised at a general meeting of an incorporated body, fair notice needs to be given to members of those matters. The relevant decisions include the decision of Young J in Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACSR 345 at 348 and the several decisions reviewed by the Supreme Court of Tasmania in Esposito v The Wilderness Society Inc [2010] TASSC 21. I recognise that those principles do not apply, at least in their full form, to meetings of directors, as I noted in my decision in Keneally (as administrator of Australian Blue Mountain International Cultural and Tourist Group Pty Ltd) [2015] NSWSC 937 at [72]. Here, the Shuraa Council does not have the character of a board of directors and seems to me to be more in the nature of an oversight body of the League. I would not, in those circumstances, read down the notice requirements so that they do not apply to the proceedings of the Shuraa Council. Third, and importantly, it is well-established that powers of suspension that are conferred by the constitution of an incorporated body are to be construed narrowly and strictly in accordance with the terms of that body's constitution: Kabbara v Australian National Sports Club Inc [2020] NSWSC 497 at [39].
Turning now to the terms of the League's Constitution, it is plain enough that, as Mr Robertson who appears for the Plaintiffs points out, that Constitution adopts a form that is unusual by the standards of incorporated bodies generally, reflecting a recognition of the role of the League within its community. The preamble refers to the relevance of Quran, and cl 4, to which I referred above, identifies a wide range of specific objects of the League, within the broader context of the promotion of the understanding of Islam among its members, the general Muslim community and Australian society. Those objects include religious objects and an educational object, which is relevant to the League's involvement with the school. Clauses 11 and following refer to the operation of the Shuraa Council, which is to be comprised of seven financial members of the League, including a Chairman (also known as the "Ameer") who has a long term of appointment, of some nine years, a Deputy Chair who has a seven-year term of appointment, and other persons holding offices and other members. Clause 11.21 provides for the manner in which decisions of the Shuraa Council shall be made and cl 11.22 provides that such a decision is final and binding on the League and its members.
As I noted above, cl 11.23 provides that any five members of the Shuraa Council which must include the Chairman (Ameer) or his representative shall constitute a quorum for a properly convened meeting of the Shuraa Council, and cl 11.24 provides that, if a quorum is not present, the meeting stands adjourned until such time as a quorum is present. Clause 11.35 provides that the Shuraa Council has power to discipline its members who in the opinion of the majority of the members are not fit to continue as a member of the Council or have acted in a manner that has brought disrepute to the Council or the League or have acted against the objects of the League and cl 11.37 provides that, as and when required, the Shuraa Council may determine that the Chairman shall stand aside in cases where he is "deemed to have conflict of interest".
Two things should be noted about those clauses. The first is that they each require an opinion to have been formed, namely that the relevant member has conducted himself in a particular way and, in the case of the Chairman, that he is deemed to have "conflict of interest". Second, as a matter of the ordinary incidents of Australian law, the formation of that opinion, in a manner that is prejudicial to the person to whom the opinion is directed, will be subject to requirements of procedural fairness. Third, obviously enough, the exercise of those powers requires that the relevant opinion in fact has been formed after complying with those obligations of procedural fairness.
Clause 17.3 of the Constitution in turn provides that the Shuraa Council of the League has power to dissolve the Executive Board and Executive Committee if, in the opinion of the Shuraa Council, the Executive Board and Executive Committee have failed to carry out the function and duties of the League in accordance with its objects as enshrined in its Constitution. Again, that clause requires that a particular opinion has been formed, and an obligation of procedural fairness would attach to the process by which that opinion was formed. Appendix 4 in turn refers to the principles of consultation reflected in the concept of "Sunnats of Mashwarah", which govern the operations of the Shuraa Council and relevantly require that the Ameer present the meeting agenda that has to be discussed and request the opinions of others present.

The purported removal of Mr Khan as Chair of the Shuraa Council

Turning now to the relevant documentary evidence, it is apparent that, at least from 24 March 2023, the League has been in discussion with the Commonwealth Department of Education in respect of concerns as to its influence over the operation of the school, and steps that were required to be taken to address that matter, as a condition of continuing Commonwealth funding of the school. Those issues appear to have given rise to dispute amongst members of the League and, in particular, among members of the Executive Committee on the one hand and the Shuraa Council on the other.
Correspondence took place, in the period immediately prior to a Shuraa Council meeting on 8 July 2024, as to the basis on which members of the Executive Committee and Executive Board would join a Shuraa Council meeting on that date and it appears to have been agreed that they could do so in order to present as to the position in respect of a suggested constitution, or at least issues as to consultation in respect of that constitution, which was intended to address the Commonwealth Department of Education's concerns as to the control of the school.
A significant contest then arises as to events at the meeting on 8 July 2024 which are recorded in minutes found in the evidence (Ex D1,117ff). At about 8pm on that date, some 17 members of the Executive Committee and Executive Board members joined the meeting, and there was then discussion initiated by Mr Khan as Chair, of issues as to the Constitution and, from about 8.25pm, the President of the League, Mr Illiyas, in turn addressed the meeting. Mr Illiyas then raised concerns as to the process and procedure of a previous investigation committee and as to "another matter", and insisted that those "conflicted" in respect of the investigation committee must leave the room. It must immediately be noted that this was an unusual, and it seems to me unsustainable, concept of a "conflict". The reference to those who were "conflicted" was, it seems, to those against whom allegations were to be made by Mr Illiyas. It is not apparent to me how, consistent with Australian law, a person would be "conflicted" and excluded from a meeting because an allegation is made against him or against her, which he or she may otherwise take the opportunity to answer. To the contrary, that person has not a disability, namely a conflict, but instead a right to be afforded procedural fairness in respect of the allegations that are made against him or her. The President then expanded upon his concerns, and it appears that Mr Khan and two other persons were persuaded to leave the room on the basis that they were "conflicted" because allegations were being advanced against them. The meeting then continued in Mr Khan's absence.
It is put by the Plaintiffs, and denied by the Defendants, that at this point Mr Khan had appointed another person to act as his representative as Chair, after he left the room. That would be consistent with the constitutional provisions to which I have referred above. However, the Defendants' position, and plainly the basis on which the meeting was conducted, was that instead Dr Gaffar would become the Chair of that meeting, apparently because there was some expectation that the Deputy Chair would do so which finds no basis in the League's Constitution of the League.
That was the manner in which the meeting continued and, at that point, a significant number of further allegations were made against Mr Khan and others, to which Mr Attia, who appears for the Defendants, gives significant weight in submissions. Discussions continued and, at the conclusion of the meeting, resolutions passed were that Mr Khan and Mr Jang be stood down from the Shuraa Council indefinitely based on a number of serious allegations raised against them in matters relating to the Council and their involvement in the investigation committee; that the allegations against those two persons would be objectively investigated by the Shuraa Council, and a final determination would be made based on those findings; and that Dr Gaffar was now the Chair of the Shuraa Council, assuming this position from his previous position as Deputy Chair by virtue of the provisions of the League's Constitution.
Several things should be said about these resolutions. The first is that it is not apparent that the resolution that Messrs Khan and Jang be stood down from the Shuraa Council is sustainable on any basis. First, if the Defendants are correct that Mr Khan had not in fact appointed a representative to act as Chair in his absence, then the quorum for the Shuraa Council was not satisfied for the whole of the discussion that took place after Mr Khan's withdrawal from the meeting, because that quorum required the presence of Mr Khan, who had not resigned as Chair and had not then been removed as Chair. Second, the process which was adopted was wholly inconsistent with both notice requirements and procedural fairness requirements to which I have referred above. There was no notice that such a proposal would be raised at the meeting to allow persons attending fair notice of the matters that they were to be asked to address. Second, no procedural fairness was afforded to Mr Khan in respect of the allegations; to the contrary, he was invited to remove himself from the meeting, preventing him from having any opportunity to answer the allegations.
Third, the resolutions have the remarkable feature that the decision to stand down Mr Khan from the Shuraa Council comes first and the investigation of whether there is a basis for it would come second. That is not consistent with the terms of the Constitution which, so far as it includes disciplinary provisions extending to Mr Khan as Chair, provides that the Shuraa Council may determine that he stand aside where he is deemed to have "conflict of interest". The Shuraa Council here does not reach that decision, because it is apparent that the resolution it had passed contemplates a further investigation, before any decision as to the rights or wrongs of the allegations against Mr Khan is made. Second, if, contrary to that view, the Shuraa Council had made that decision, it was made without affording procedural fairness to Mr Khan. Further, for the reasons noted above, at least on the basis of the Defendants' position, and the manner on which that meeting was conducted, it was made while the meeting was inquorate, because Mr Khan was absent from it. Further, so far as the resolution contemplates that Dr Gaffar would become the Chair of the Shuraa Council, by virtue of the provisions of the League's Constitution of the League, no such provision has been identified and it is not apparent that any such provision exists.
For these reasons, I am comfortably satisfied that the resolutions recorded at the conclusion of the minutes of the Shuraa Council meeting were void and that Mr Khan remains the Chair of the Shuraa Council.

Further meetings of the Shuraa Council

Issues also arise in respect of subsequent meetings of the Shuraa Council on 18 July and 20 July 2024, by which time the parties had fallen into dispute. At the meeting on 18 July 2024, a Shuraa Council of which Mr Khan acted as Chair referred to what was described as a "mutiny" by the President and Shuraa members, presumably not extending to all members of the Shuraa Council. The Shuraa Council then unanimously resolved to stand down its secretary due to an investigation regarding certain matters, but, consistent with the process adopted by its opponents, also did not afford procedural fairness to the secretary before doing so. The Shuraa Council then went on to vote to dissolve the Executive Board and Executive Committee, on the basis that they had failed to carry out their functions and duties in accordance with the objectives of the League.
I recognise that Mr Attia, who appears for the individual Defendants, contends that adequate notice was not given of that meeting, and it is not apparent that any formal notice was given of the resolutions that were to be put, which were of a significant nature. There is also a question as to which persons receive notice of that meeting, but the state of the evidence is such that it is not possible to reach a conclusion as to that matter. At a further meeting of the Shuraa Council, again chaired by Mr Khan, on 20 July 2024, allegations were addressed against Mr Gaffar, who was stood down from the Deputy Ameer's position. It will be no surprise, by this time, that he too was not afforded procedural fairness before that step was taken.

The orders sought

I now return to the orders which are sought by the Plaintiffs in their Amended Originating Process. It is now common ground that the orders sought in paragraphs 1 and 2 can properly be made, by way of declarations as to the validity of an annual general meeting convened on 5 March 2023 and the Shuraa Council meeting on 6 March 2023 at which persons including Mr Khan were appointed to office bearing positions within the Shuraa Council. I am satisfied that, as events have developed and given the focus of this matter by both parties in submissions, a further declaration should also be made recording my finding above that the removal of Mr Khan at the Shuraa Council meeting on 8 July 2024 was invalid, and the meeting was inquorate from the point at which he withdrew from that meeting.
The Plaintiffs also seek a declaration that the Shuraa Council's decision on 18 July 2024 to dissolve the existing Executive Board and Executive Committee of the League was a valid exercise of the Council's powers granted by cl 17.3 of the Constitution and resulted in the dissolution of those bodies at that time. I will assume, without deciding, that that decision was within the scope of the constitutional power exercised in cl 17.3 of the League's Constitution. I am not persuaded, in the circumstances as they stand, that I should make a declaration that it was "valid", which raises issues as to propriety as well as issues as to constitutional power, where there are plainly a range of issues in dispute as to the propriety of both parties' actions at the relevant time, and the manner in which these proceedings have been brought and conducted has the consequence that those issues have not been determined. For the reasons that I will note below, I am also not satisfied that it would be a proper, or at least a desirable, exercise of the Court's powers to advance the process of each faction removing the other's members from positions within the League, by an order of the Court in that regard.
The fourth order sought by the Plaintiffs is that the League is not bound by any decisions or actions of any members of the Executive Committee or Executive Board so dissolved after 18 July 2024. It will immediately be apparent why that order cannot be made. Plainly, it is possible or likely that the Executive Committee or the Executive Board have taken steps which will affect third parties after 18 July 2024; those steps are not identified; the third parties affected by them are not identified and they have not been given any opportunity to be heard. The Court would not make an order that would, even on its face, prevent those third parties asserting that they were entitled to rely upon steps taken by persons who had been held out by the League as being members of the Executive Committee or Executive Board during the relevant period.
The Plaintiffs seek similar declarations in respect of the Shuraa Council's decision on 20 July 2024 to form an interim Executive Board, and as to the membership of that board, but that also raises a wider question of propriety, beyond the question of constitutional validity, and a question why the Court should make such an order where to do so would likely advance the divisions between the relevant parties.
Next, the Plaintiffs seek a mandatory order that the affairs of the League be managed by the interim Executive Board until the next annual general meeting of the board. I would not make that order, as a matter of discretion, even if I have made the prior orders on which it is based. I would not do so, because the Court could not be satisfied that, as matters stand, either faction can be left to manage the affairs of the League in the interests of all its members including members of the other faction. Here, it seems to me, as I noted in the course of submissions, that the Court might readily be persuaded to appoint a receiver to the League, who would take the management of its affairs out of the control of both competing factions, and who could investigate whether there is any mechanism by which proper governance could be returned to the League or whether the League should be wound up on the just and equitable ground, if that were not possible. However, neither party seeks that relief, and I made clear that I would not order that relief where neither party sought it.
The consequence will be that the matters will be returned to events as they stood prior to 8 July 2024, so far as Mr Khan will be entitled to resume the Chairmanship of the Shuraa Council and the parties will presumably remain at loggerheads, unless and until either one of them brings an application to the Court to appoint a receiver who might address the position in which the League now finds itself. That is plainly not a desirable result, but it seems to me to be preferable to exercising the Court's powers so as to advance the interests of one faction over another, where each seeks to exclude the members of the other from the management of the League.

Costs

Plainly, the Plaintiffs have had some limited success, so far as they will have obtained relief that is uncontentious as to the meetings on 5 March 2023 and 6 March 2023, and relief that was not sought, at least in terms, as to the invalidity of the removal of Mr Khan as Chairman of the Shuraa Council. In these circumstances, I am not satisfied that there is any basis for an order for costs in favour of either party, because I am not satisfied that either party has had substantial success in the proceedings, when measured against the extent of its failure. I will, however, hear the parties as to costs, if they seek to be heard, by allowing an opportunity for written submissions.

The League's role in the proceedings

It remains to note, as I noted at the commencement of this judgment, that Mr Attia or his firm initially purported to represent the League in these proceedings, relying on a meeting which they accept was inquorate which passed a resolution indicating its support for their doing so. It is not apparent to me that that action had any constitutional validity, so as to bind the League or provide a proper basis for the League to pay the costs of Mr Attia or his firm in respect of the proceedings. There is a significant body of case law which addresses the position where solicitors accept instructions to represent a corporate body in proceedings, where they are not properly retained to do so. It seems to me that, in in the exercise of the Court's inherent jurisdiction to regulate its officers, namely solicitors, I should order that Mr Attia serve, and provide to my Associate, an affidavit indicating the extent of any payment that he or his firm have received from the League, and any obligations that the League may have to him or his firm to make such payment, so that the Court may take proper steps, at least in respect of Mr Attia as its officer, and potentially in respect of the League, if it emerges that assets of the League are to be applied without authority to the payment of Mr Attia's firm's costs of the proceedings. I will hear Mr Attia as to the timing of that process and I will relist the matter for that issue to be addressed.
I direct that:
The parties submit agreed orders to give effect to this judgment, and as to costs, by 4pm on Monday, 19 August 2024, and, if there is disagreement between the parties as to the orders to be made, their respective draft orders and submissions as to the differences between them. I have allowed a relatively limited period for the preparation of those orders, given the urgency of the matter.
Mr Attia, for himself and his firm, serve and send to the Associate to Black J, by noon on 19 August 2024, an affidavit setting out the amount of any payments which have been received by his firm from the First Defendant, The Muslim League of NSW Inc, in respect of these proceedings, and whether any further payments are to be made by the League to his firm, or would be accepted by his firm if made by the League, in respect of the appearance of the League in these proceedings.

Judgment as to PAYMENT OF SOLICITOR'S COSTS BY THE LEAGUE - ex tempore (Revised 20 August 2024)

As I noted above, an issue arose at the hearing as to whether the League could properly pay the costs and disbursements of Mr Attia and his firm, Attia Lawyers and Consultants, in respect of any purported engagement by the League of that firm to represent it in these proceedings. Mr Attia has rightly recognised, in the course of submissions today, first, that his costs agreement is with the Second to Ninth Defendants, the individual Defendants, and not with the League and, second, that he could not act for the League and does not act for the League, because it is the subject of these proceedings and does not have an interest in a contest as to its control between two competing groups of its members.
Mr Attia, in response to an invitation from the Court to confirm his position by affidavit, indicated that he had not received any money to date from the League. He also indicated that he did not expect to receive any money from the League in relation to the current proceedings. That latter confirmation fell somewhat short, because it did not address what Mr Attia would have done if, contrary to his identified expectation, he did receive money from the League, notwithstanding it did not have authority to make a payment to him without a relevant approval. In the event, Mr Attia has now fairly clarified that matter by offering an undertaking to the Court, for himself and his firm, that if he were to receive payment from the League, he would not accept that payment and would reimburse it to the League. That seems to me to be sufficient, and the Plaintiffs have accepted that it is sufficient, to address any concern that Mr Attia would be wrongly paid by the League in respect of his role for individual Defendants in the proceedings.
I therefore note the undertaking of Mr Attia, for himself and his firm, that if he were to receive payment from the League in respect of any aspect of these proceedings, he would not accept that payment and would reimburse it to the League.

The parties' submissions as to orders

The Plaintiffs submitted proposed orders which gave effect to paragraphs 1 and 2 of the relief claimed in the Amended Originating Process, which were common ground, and also sought a declaration that no resolution was validly passed by the Shuraa Council on 8 July 2024. That declaration extended beyond any relief they had sought and beyond the finding that I had reached in my substantive judgment, namely that the removal of Mr Khan at the Shuraa Council meeting on 8 July 2024 was invalid and that meeting was inquorate from the point at which he withdrew from the meeting. I will make a declaration limited to that effect.
After I allowed to the parties an opportunity for further consultation as to the form of orders, which apparently did not occur, Mr Attia sent a further communication to the Court attaching correspondence between the parties, which it is neither necessary nor appropriate that I address and submitted draft orders which included two additional orders. The first additional order sought by the Defendants identified the persons who held a position on the Executive Board and Executive Committee as at 8 July 2024 and sought an order that they had not been removed from their elected positions. The Defendants did not seek relief of that character at the hearing and I reached no such finding, where I did not determine the validity or invalidity of the Shuraa Council's steps taken after 8 July 2024 to remove the Executive Board and Executive Committee. The second additional order sought by the Defendants was that, from 8 July 2024, the League was not bound by decisions purportedly made in the name of either the Shuraa Council or the Executive Committee or Executive Board, other than with notice to all the members of the Shuraa Council and the members of the Executive Board and Executive Committee that the Defendants contend are still in office. I will not make such an order. First, it was not sought at the hearing; second, I did not reach any determination which would have that result; and, third, the League may well be bound by such decisions, so far as they affect the interests of third parties, irrespective of the validity or invalidity of the purported removal of those persons from office by the Shuraa Council.

Principles and the parties' submissions as to costs

The Plaintiffs sought an order that the Second and Ninth Defendants pay their costs of the proceedings. The relevant principles are well established, although the parties did not address them, and I have drawn on them in my judgment in Re Heartland Group Pty Ltd [2024] NSWSC 1029 at [4]ff for the summary that appears below. The Court has power to make an order for costs under s 98(1) of the Civil Procedure Act 2005 (NSW) ("CPA") and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). Section 98 of the CPA confers a discretionary power to determine costs on the Court and requires that that discretion be exercised judicially: Ballam v Ferro (No 2) [2022] NSWSC 1358 at [54]. Rule 42.1 of the UCPR in turn provides that: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
A successful party in proceedings has a "reasonable expectation" of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [134]. In Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121], Hodgson JA (with whom Mason P agreed) observed that: "… underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs."
That observation was cited, with apparent approval, by the Court of Appeal in Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98] and, in Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [7]-[14], McColl JA summarised the applicable principles as follows: "Section 98 of the [CPA]confers a wide discretion on the court with respect to costs. The general rule is that court costs follow the event unless the court makes some other order pursuant to the discretion conferred by [UCPR] r 42.1. As Beazley JA explained in Baker v Towle [(2008) 39 Fam LR 323; [2008] NSWCA 73 at [11] (Mathews AJA agreeing)], in most litigation, UCPR r 42.1 "operates in a straightforward way, 'the event' being readily identifiable as a judgment for the plaintiff or the defendant on the claim. In that sense, 'the event' to which the rule refers is the result of the proceedings, so that the party who succeeds on the claim before the court is awarded costs, unless the court, pursuant to the discretion conferred by r 42.1, makes 'some other order'". Underlying both the general rule that costs follow the event, and qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs."
The case law also recognises that "[t]he disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires": Gray v Richards [No 2] (2014) 252 CLR 601; [2014] HCA 47 at [2].
In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], the Court of Appeal noted that, where there are multiple issues in a case, the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. However, the Court also there pointed to several circumstances in which a different approach might be justified, and noted that: "Whether an order contrary to the general rule of costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the Court, which powers should be liberally construed."
In Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5], the Court of Appeal noted that: "There is no issue as to the relevant principles. The discretion under [CPA], s 98 is ordinarily exercised by requiring that costs follow the event: [UCPR], r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action … But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least unless a particular issue or group of issues is clearly dominant or separable … And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff …" [citations omitted]
Where there is a mixed outcome in proceedings, any question of apportionment is recognised as being very much a matter of discretion, the exercise of which "will often depend upon matters of impression and evaluation": Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272; [1993] FCA 259.
In support of their claim for costs, the Plaintiffs refer to the conclusions I had reached in my substantive judgment, which they contend "restored the Shuraa Council to its original form prior to the factional division caused by the actions of the Second and Ninth Defendant [sic]". They submit that: "Accordingly, the Second and Ninth Defendant [sic] were the immediate cause of the current proceedings. The Plaintiffs were successful in the proceedings by restoring the Shuraa Council and had to incur costs in doing so."
The Plaintiffs then submit that the Second and Ninth Defendants should pay the costs of the proceedings. While it is not apparent why the Plaintiffs now contend that, of the several Defendants to the proceedings, only the Second and Ninth of them should pay the costs of the proceedings, I proceed on the basis that that is the order they seek.
The individual Defendants, by their solicitor Mr Attia, indicate that they seek no order for costs in their favour. Mr Attia, in submissions, pointed to the circumstances of urgency in which the proceedings had been commenced, where bank accounts of the League had been frozen. Mr Attia sought to make additional submissions as to the merit of the matters which were determined by the judgment, which I disregard. He submits that each party has had a measure of success with respect to the relief claimed in the Plaintiffs' application. He also submits that: "The outcomes of this Court can be presented to the Members as definitive proof that whilst the ousting of the Chairman on 8 July 2024 was invalid, the faction that attempted to expel [Sh]uraa [C]ouncil members, dissolved the Executive Committee and freeze the [League's] bank accounts were in the wrong."
I should point out that I reached no such determination in my judgment. I found that the removal of Mr Khan as Chair of the Shuraa Council was invalid; I did not determine the validity of subsequent steps in respect of the dissolution of the Executive Committee; and I recognised that the appropriate relief may well be the appointment of receivers to the League for specified purposes, which the parties did not seek. Mr Attia also speculates as to the possible outcome of an application for relief that the Defendants did not make and I also need not address. I need not address these submissions further, where the Defendants accept that it is appropriate that there be no order as to costs.
It seems to me that the Plaintiffs' submissions do not provide any basis for the order that they seek as to costs. As I noted above, they obtained two orders which were not controversial and were not contested and a third order which they did not seek, as to the invalidity of the removal of Mr Khan as Chairman of the Shuraa Council, once that matter emerged as a significant issue in dispute in the hearing. They did not obtain the balance of the orders they sought. It does not seem to me that this can fairly be characterised as an event in favour of the Plaintiffs so as to support a conclusion that costs should follow the event in their favour, or that it has the result that an order for costs in their favour would be a just result. I also do not accept the Plaintiffs' submission that the Second and Ninth Defendants, or indeed the Second to Ninth Defendants, were the "immediate cause" of the current proceeding, which arose from the wider breakdown of corporate governance in the League and the development of factions within its membership, each of which sought to take steps adverse to the other. I will make no order as to the costs of the proceedings.

Orders and costs

I have previously noted the undertaking of Mr Attia, for himself and his firm, that if he were to receive payment from the League in respect of any aspect of these proceedings, he would not accept that payment and would reimburse it to the League. I now make the following additional orders: 1 By consent, declare that the Annual General Meeting convened on 5 March 2023 was a validly convened meeting of The Muslim League of NSW Inc ABN 66 613 774 252 (League) and that the following persons were validly elected to the Shuraa Council of the League at that time: a. Nizam Ud Dean b. Sheikh Jang c. Mohammed Afzal d. Nazeel Khan e. Dr Abdul Gaffar f. Mahamad Ajewal Ali g. Mohammed Yasin 2 By consent, declare that, at the Shuraa Council meeting on 6 March 2023, the following persons were validly appointed to the following office-bearing positions: a. Nazeel Khan - Chairman b. Dr Abdul Gaffar - Deputy Chairman c. Mohammed Yasin - Secretary
Declare that the removal of Mr Khan at the Shuraa Council meeting on 8 July 2024 was invalid and that meeting was inquorate from the point at which he withdrew from that meeting.
There be no order as to the costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2024

(2008) 39 Fam LR 323

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Cases Cited (25)