Solicitors:
Hall Lawyers (respondent/plaintiff)
McArdle Legal (applicants/defendants)
File Number(s): 2018/182429
[2]
Judgment
The defendants, Bilambil Community Preschool & Oosh Incorporated (the Association) and Chris Burns, move the Court by notice of motion filed on 20 July 2018 for an order against the plaintiff, Daniah Bandiera, under rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), or alternatively the inherent jurisdiction of the Court, that the proceedings be dismissed. The ground for the application is that Ms Bandiera has no standing or alternatively that the claim is not justiciable.
Bandiera v Bilambil Community Preschool & Oosh Incorporated [2018] NSWSC 1903 | Case summary | Zoe
The Association is an association registered under the Associations Incorporation Act 2009 (NSW).
The Association runs a pre-school and childcare centre (the Centre) at Bilambil in northern New South Wales.
In essence, in early 2018 Ms Bandiera registered her two children to attend the Centre operated by the Association.
A dispute arose between Ms Bandiera and the person who was then the manager of the Centre, Ms Kelly Carlson, out of a number of requests made by Ms Bandiera for information and out of a difference as to the appropriate way that Ms Bandiera should communicate with the Association. The Association took the somewhat precipitous step of terminating Ms Bandiera's children's entitlement to attend the Centre.
On 12 June 2018, Ms Bandiera filed her summons, which seeks the following relief:
1. A declaration pursuant to Section 75 of the Supreme Court Act 1970 (NSW) that the appointment of the Second Defendant as:
a. Committee Member of the First Defendant;
b. President of the Management Committee of the First Defendant
are invalid and contrary to the Articles of Association of the First Defendant.
2. A declaration pursuant to Section 75 of the Supreme Court Act 1970 (NSW) that the Articles of Association of the First Defendant lodged with the Office of Fair Trading on 14 May 2015, have always been and continue to be the Articles of Association for the First Defendant for the purposes of the Associations Incorporation Act 2009 (NSW).
3. An order pursuant to Section 249G of the Corporations Act 2001 (Cth) and Section 95 of the Associations Incorporation Act 2009 (NSW), that the First Defendant call a meeting of members in the manner prescribed by these Orders.
4. An Order pursuant to Section 1319 of the Corporations Act 2001 (Cth) and Section 95 of the Associations Incorporation Act 2009 (NSW), that the meeting of members referred to in Order 1 herein be held in accordance with the Articles of Association of the First Defendant lodged with the Office of Fair Trading on 14 May 2015 save for the following modifications:
a. There being no public officer acting, that the Plaintiff cause the giving of the Notice of Meeting in terms of Clause 27 of the Articles of Association;
b. That the Financial Statement or report referred to in Clause 25 of the Articles of Association be provided to the Plaintiff for distribution of members with the Notice of Meeting referred to in paragraph (a) herein.
5. An Order pursuant to Section 1319 of the Corporations Act 2001 (Cth) that the First Defendant by its management committee provides all necessary cooperation to the Plaintiff so as to give effect to these Orders.
6. An Order pursuant to Section 1319 of the Corporations Act 2001 (Cth) that for the purpose of holding the meeting referred to herein, the First Defendant remove from its website and any other publication all references to the purported Articles of Association dated February 2018 and replace all such references with the Articles of Association lodged with the Office of Fair Trading on 15 May 2015.
7. The First and Second Defendant pay the Plaintiff's costs of and incidental to the Summons.
8. Such further or other Order as the Court considers necessary.
For the reasons that follow, I propose to dismiss the claim made by the defendants in the notice of motion, as I do not accept that Ms Bandiera's claim is so unarguable as to justify its summary dismissal. The test was put generally by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at 57: "Ordinarily, a party is not to be denied the opportunity to place his or her case before the Court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way". Their Honours cited Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, per Dixon J, and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130, per Barwick CJ.
The Association's application for an order that Ms Bandiera's summons be dismissed summarily pursuant to rule 13.4 of the UCPR was based primarily on the submission that it was clear on the evidence that Ms Bandiera had not validly been made a member of the Association. Her claim should be dismissed because the relief sought was only available to a person who was a member of the Association.
The Association's argument depended on the effect of s 4 of the Associations Incorporation Act, which has the effect that the constitution of an association means "the Constitution that is recorded in the Register of Incorporated Associations in relation to the Association".
As I understand it, there was ultimately no disagreement between the parties as to the relevant term of the Constitution of the Association, which is clause 3. (There were in fact a number of versions of the Constitution in evidence with slightly different wording of cl 3. I understand from the parties' submissions that the differences are immaterial).
That clause materially provides:
3. Nomination for membership
(1) A nomination of a person for membership of the association:
(a) must be made by a member of the association in writing in the form set out in Appendix 1 to this constitution, and
(b) must be lodged with the secretary of the association.
(2) As soon as practicable after receiving a nomination for membership, the secretary must refer the nomination to the committee which is to determine whether to approve or to reject the nomination.
(3) As soon as practicable after the committee makes that determination, the secretary must:
(a) notify the nominee, in writing, that the committee approved or rejected the nomination (whichever is applicable), and
(b) if the committee approved the nomination, request the nominee to pay (within the period of 28 days after receipt by the nominee of the notification) the sum payable under this constitution by a member as entrance fee and annual subscription.
(4) The secretary must, on payment by the nominee of the amounts referred to in subclause (3)(b) within the period referred to in that provision, enter or cause to be entered the nominee's name in the register of members and, on the name being so entered, the nominee becomes a member of the association.
Clause 7 provides that the public officer of the Association must establish and maintain a register of members of the Association specifying the name and address of each person who is a member of the Association together with the date on which the person became a member.
Appendix 1 to the Constitution is a pro forma for application for membership of the Association.
The prescribed form required information concerning the name and address of the applicant and the relationship between the applicant and the child who had been admitted to the Centre. It contained the statement: "In the event of my admission as a member, I agree to be bound by the Constitution of the Association for the time being in force". It was required to be signed and dated by the applicant. Further, members of the Association were required to sign and date the form in order to nominate and second the applicant for membership.
It was common ground that Ms Bandiera did not make an application for membership of the Association in the form prescribed by the Constitution.
Instead, Ms Bandiera relied upon the enrolment agreements that she made with the Association for her daughter Sienna on 15 November 2017 and her son Jax on 17 February 2018. On those pro forma agreements, Ms Bandiera ticked boxes that contained the following statements:
I agree to abide by and be bound by the Constitution, Rules, By-laws, Regulations and Policies of [the Association] (copies available from the preschool).
I understand a $100 annual enrolment fee is to be paid of which $10 joins me as a member of the [Association].
On 19 February 2018, according to the minutes of the meeting, a meeting of the Management Committee of the Association occurred. The minutes recorded, in a manner that would permit an inference that it was agreed to by all of the members of the Management Committee who were present:
All parents are Association Members and needed to be voted into committee. Kelly proposes new members, all those in favour say I (sic), Jenna accepts and Crispian seconds.
Ms Bandiera submitted that the effect of this statement was that it recorded that the Management Committee had resolved that all parents who had enrolled their children at the Centre and paid the required $100 were to be members of the Association en masse, and for that purpose Jenna Warne and Crispian Eaton had effectively nominated and seconded the applications.
Ms Bandiera relied upon clause 1(3) of the Constitution, which provides that the provisions of the Interpretation Act 1987 (NSW) apply to the Constitution. Section 80 (1) of that Act provides: "If a form is prescribed by, or approved under, and Act or statutory rule, strict compliance with the form is not necessary but substantial compliance is sufficient".
Ms Bandiera submitted an application for membership of the Association by email on 5 April 2018. The attached application was not actually included in the evidence.
While Ms Bandiera's application may suggest that she understood that she was required to make a special application for membership under the Constitution of the Association, Ms Bandiera relied upon a response on behalf of the Association on the same day that referred her to the Preschool Families Handbook at page 5. That page dealt with the Association, and included the statement: "$10.00 of your preschool enrolment fee joined you as a member of the Association. This gives you the right to vote at the annual general meeting and general meetings".
The Association responded by submitting that Ms Bandiera could not be a member of the Association because her name had not been entered into the register of members, as was required by clause 3(4) of the Constitution.
However, one of the witnesses who gave evidence for the Association, Jenipa Alhene Jacobsen, gave evidence in the following terms concerning the register of members relied upon by the Association:
A photocopy of the Register of Committee Members from 2010 to date (but not reflecting changes made on 28 June 2018) is at pages 2-10 of Exhibit JJ1. This register was maintained by Kelly Carlson and returned to the First Defendant on 24 July 2018. To the best of my knowledge and belief, this Register also effectively doubles as the Register of Members as generally if a person wanted to be a member of the First Defendant that person also wanted to serve as a member of the Management Committee.
While it is true that Ms Bandiera's name is not included in the exhibited register, the evidence is obviously most unclear as to whether the supposed register was a properly maintained register of members. It was not described as a register of members, as opposed to a register of committee members. Ms Jacobsen's statements that it "effectively doubles" as the register of members, as "generally" persons who want to be a member also want to be a member of the Management Committee gives positive reason to think that the document may be an incomplete register of members.
Ms Bandiera also relied upon an argument based upon ss 23 and 24 of the Acts Incorporation Act, which entitled persons dealing with associations to make certain assumptions, that she was entitled to assume that the Association had complied with its Constitution: see s 23(1) and s 24(1).
Finally, Ms Bandiera relied upon certain communications between her and the Association in which the Association had treated her as being a valid member of the Association to support the argument that, even if she had not technically become a valid member of the Association, the Association was bound by a conventional estoppel arising out of the fact that its actions had led Ms Bandiera to act upon the belief, which was shared by the Association, that Ms Bandiera was a member of the Association.
There may be questions concerning the circumstances in which a person who claims to be a member of an association can enforce a right against the association that conflicts with its constitution by relying upon the assumption in s 24(1) of the Associations Incorporation Act, or upon a conventional estoppel. Initially, the person will be an outsider dealing with the association, but it may be that the constitution must prevail whenever the person asserts a right qua member. This issue was not explored in submissions, and any doubt that arises provides a reason against summary dismissal of Ms Bandiera's claim, rather than its dismissal.
Accordingly, the Association's claim that Ms Bandiera's proceedings should be summarily dismissed must fail.
As I explained to counsel for the parties at the hearing of the notice of motion on 6 December 2018, given the nature of the parties and the issues in these proceedings, if the Court declined to dismiss Ms Bandiera's claims summarily, it would take appropriate steps to ensure that these proceedings continue on a proper footing, if they cannot be resolved.
If this matter proceeds, it will be necessary for the matter to proceed on pleadings. The factual substratum out of which Ms Bandiera's claim arises is too complicated to make it appropriate for the matter to be dealt with solely upon the basis of the claims for relief made in the summons. The summons does not sufficiently identify the issues of fact that will arise.
Even the issue of whether Ms Bandiera has standing to seek the relief that she claims on the basis that she is a member of the Association is not sufficiently defined by the terms of the summons.
It is also appropriate to make some observations about the individual orders sought in the summons.
As to order 1, I was informed by counsel during the hearing that Chris Burns has resigned, and if that is so the declaration sought in order 1 is likely to be superfluous. In other contexts, there may be a reason for a plaintiff nonetheless to seek a declaration that a person in the position of Chris Burns had been in validly appointed. However, given the nature of the Association's business, and the terms of the underlying dispute, it is unlikely that any good will be served by the parties litigating this issue.
I was also informed by counsel that there is no longer any dispute between the parties concerning the document which is the correct Constitution of the Association. Apparently, Ms Carlson to whom I have referred above took steps to put in place a constitution for the Association dated February 2018. Those steps were unauthorised and Ms Carlson's employment by the Association has been terminated. The Association has taken necessary steps to ensure that the February 2018 Constitution is not effective.
In those circumstances, the dispute that underlies prayers 2 and 6 of the summons may have been resolved. In any event, there does not seem to be any good reason why the parties cannot take the steps necessary to agree on the document that is the operative Constitution of the Association, and take any additional steps necessary to ensure that it becomes effective, and that the correct Constitution is placed on the Association's website.
I observed to counsel for the parties during the hearing that prayer 3, which seeks an order from the Court requiring the Association to call a meeting of members, does not specify the business that is to be conducted at that meeting. It is most unlikely that the Court will entertain an application that it order a meeting of the members of the Association to be convened unless Ms Bandiera first specifies the business that she says should be conducted at the meeting, so that any order made by the Court will have some practical effect, and the Court will have a means of determining whether it is appropriate to make the order.
Prayers 4 and 5 of the summons are mainly practical and procedural matters connected with the convening and conduct of the meeting, so do not require further consideration.
It also emerged during the hearing that there is potentially a serious question as to how the persons who are valid members of the Association may be identified. The matters that cloud the question of whether Ms Bandiera is a member may also apply to some or all of the other persons who understand that they are members. Indeed, in par 12 of her 6 June 2018 affidavit, Ms Bandiera gives evidence of events that occurred at an annual general meeting of the Association on 28 June 2018, when the solicitor who acts for the Association informed Ms Bandiera's solicitor that there were very few members of the Association, and perhaps as few as six or seven. It appears that the Association may suffer generally from constitutional difficulties concerning the validity of its membership.
This is a significant matter, because if during these proceedings the Court comes to doubt the practicality of clearly identifying the members of the Association, that will be an impediment to the Court making an order against the Association that it convened a meeting of its members.
It would first be necessary for the Court to be able to resolve the issue of how the members are to be identified. That may or may not be a difficult question. At present, the summons does not claim any relief that may be necessary before the Court could be satisfied that the identity of the members of the Association can be determined.
Of course, if there is any real doubt about the identity of the members of the Association, the Association itself has a real, practical need to clarify the situation. Indeed, any persons who may be valid members of the Management Committee may have a duty to the Association to take steps reasonably necessary to resolve the matter.
As I have observed above, Ms Bandiera has not stipulated the business that she wishes the members of the Association to consider at the meeting that she wants the Court to order be convened. Consequently, the Court is not in a position to know what the real issues at any final hearing will be. If Ms Bandiera seeks to have her concerns dealt with by the members, then she will be at risk of not achieving her desired ends, if a majority of the members vote against the resolutions that she wants to have put to the meeting. For that reason, these proceedings could be of no ultimate utility to her.
On the other hand, Ms Bandiera's concerns seem to involve her claim that she has not been given information by the Association to which she has been entitled, the Association has not been prepared to communicate with her in an appropriate and convenient manner, the Association has asserted that she is not a member of the Association, and perhaps most significantly, the Association has terminated Ms Bandiera's children's right to attend the Centre.
If I apprehend the nature of Ms Bandiera's true concerns correctly, then the convening of a meeting of members of the Association may be of little help to her, and she may well need relief of the type that the Court can grant in relation to the affairs of a company incorporated under the Corporations Act 2001 (Cth) under sections 232 and 233 of that Act, in respect of what is often called oppressive conduct.
It is to be noted that, as the Association is an association registered under the Associations Incorporation Act, s 95 governs the aspects of the Corporations Act that may apply to the affairs of the Association. The comprehensive consideration of the effect of s 95 and related provisions is beyond the scope of these reasons, and is unnecessary. It is sufficient to note that s 249G of the Corporations Act, which empowers the Court to order a meeting of a company's members to be called if it is impracticable to call the meeting in any other way, is sought to be made relevant to these proceedings, in conjunction with s 95 of the Associations Incorporation Act, by prayer 4 of the summons. Section 249G of the Corporations Act is contained in Part 2G of that Act. Chapter 2G of the Corporations Act is not a part of that Act that is specifically declared by s 95(3)(a) of the Associations Incorporation Act to be applicable to associations registered under that Act. I do not suggest that that consideration is necessarily conclusive against the Court having a power to order a meeting of members of the Association in this case, but as was recognised by counsel for Ms Bandiera at the hearing, further consideration may need to be given to identify the Court's power to grant the relief sought in prayer 3 of the summons. That is an important issue, because as matters stand, prayer 3 is the primary relief sought by Ms Bandiera.
It may be noted that the provisions in the Corporations Act that govern the Court's power to grant relief in respect to oppressive conduct in relation to a corporation are contained in Chapter 2F of the Corporations Act, and that part of the Corporations Act is expressly not excluded in respect of associations that are registered under the Associations Incorporation Act.
Given that the Association has put in issue whether Ms Bandiera is a member, and as the argument depends in part on a claim that Ms Bandiera's name has not been entered in the register of members of the Association, Ms Bandiera's claim may be at risk if her standing to seek relief depends upon her being a member, and for some technical reason she is not a member, even if she is entitled to be registered as such: see Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; (216) 316 FLR 318; (2016) 117 ACSR 176.
I have considered these difficulties with the controversy raised by the present proceedings because of my view that there may be many complications that have not been given the consideration that is warranted.
I will make an order dismissing the claim in the Association's notice of motion that Ms Bandiera's claim be dismissed. I will not make any order for costs at this stage. The reason is that I propose to list this matter for further directions before me. I will cause my Associate to fix the date after consultation with the parties. I wish to hear from the parties as to why I should not order that this matter proceed on pleadings. If a statement of claim is to be filed, I will probably require that a draft statement of claim be served on the Association and delivered to my Associate before it is filed. While it is not a matter for the Court to take responsibility for the adequacy of the parties' pleadings, and although I have not been satisfied that the Association has demonstrated that Ms Bandiera's claim should summarily be dismissed, I have identified a number of real problems that must be dealt with properly if this matter is to go forward.
The parties should consider whether there is any reason why I should not order that a mediation take place for the purpose of attempting to resolve this dispute before the parties are forced to expend an inordinate amount on legal costs.
In my view it is clear that both Ms Bandiera and the Association have a mutual interest in exploring the extent that this dispute may be resolved consensually, having regard to the nature of the issues and the potential costs, and the risk that these proceedings may put in jeopardy the opportunity of the children concerned to continue to benefit from the operation of the Centre.
Accordingly, the only order I now make is that the Court dismisses the claim in par 1 of the notice of motion filed by the defendants on 20 July 2018. Otherwise, I reserve the costs of the notice of motion.
[3]
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: 31 December 2018