Black Hill Residents Group Incorporated v Marist Youth Care Limited - [2020] NSWLEC 82 - NSWLEC 2019 case summary — Zoe

NSWNSWLEC

Black Hill Residents Group Incorporated v Marist Youth Care Limited

[2020] NSWLEC 82

Land and Environment Court (NSW)|2019-12-18|Before: Pain J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2019-12-18

Before

Pain J

Catchwords

[2007] SADC 125 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
[1981] HCA 26 Darley Australia Pty Ltd v Walfertan Processors Pty Ltd (2012) 188 LGERA 26
[2012] NSWCA 48 GPT Re Ltd v Belmorgan Property Development Pty Ltd (2008) NSWLR 72
Massey v Cooney (2003) 57 NSWLR 718

Source

Original judgment source is linked above.

Catchwords

[2007] SADC 125 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297[1981] HCA 26 Darley Australia Pty Ltd v Walfertan Processors Pty Ltd (2012) 188 LGERA 26[2012] NSWCA 48 GPT Re Ltd v Belmorgan Property Development Pty Ltd (2008) NSWLR 72Massey v Cooney (2003) 57 NSWLR 718[2003] NSWCA 212 McEvoy v Body Corporate for No 9 Port Douglas Road (2013) LT(A)R 326[2013] QCA 168 Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60[2007] NSWCA 137 Minister Administering the Crown Lands Act 1989 v New South Wales Aboriginal Land Council (2018) 231 LGERA 145[2001] NSWLEC 5 Owners of Strata Plan 57164 v Yau (2017) 96 NSWLR 587[2017] NSWCA 341 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355[1998] HCA 28 Qube Holdings Ltd v Residents Against Intermodal Development Moorebank Inc (2017) 96 NSWLR 80[2017] NSWCA 250 Residents Against Intermodal Development Moorebank Incorporated v Minister for Planning (2017) 228 LGERA 15[2017] NSWLEC 115 Roden v Bandora Holdings Pty Ltd (2015) 213 LGERA 103

Judgment (35 paragraphs)

[1]

[4]

Judgment

Black Hill Residents Group Incorporated (BHRG Inc) has commenced civil enforcement proceedings alleging that an activity being carried out at a location in the Newcastle region by the First Respondent Marist Youth Care Limited (Marist) requires development consent under the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) which Marist does not have constituting a breach of the EPA Act. The Minister for Families, Communities and Disability Services (Minister) is joined as I understand because he has contracted with Marist for the provision of the activity being the operation of a transitional group home.
BHRG Inc was registered as an incorporated association on 13 February 2019. These proceedings were commenced on 22 May 2019. At the commencement of the substantive hearing of BHRG Inc's summons on 18 December 2019 Marist pressed its notice of motion dated 17 December 2019 filed in court with leave seeking an order that the proceedings should be dismissed as incompetently commenced. As the issue raised by Marist's notice of motion had significant implications for the parties the hearing in relation to the summons was adjourned to enable the hearing of Marist's notice of motion. Marist's notice of motion is the subject of this judgment. BHRG Inc was represented by a solicitor and barrister at earlier stages of the proceedings. On 25 November 2019 its then solicitor filed a notice of ceasing to act. I made an order on 13 December 2019 that Mr Fairbairn could appear as BHRG Inc's agent in these proceedings.
At issue is the operation of the Associations Incorporation Act 2009 (NSW) (AI Act), the Associations Incorporation Regulation 2016 (NSW) (AI Regulation) and the "Model constitution" in Sch 1 of the AI Regulation (Model Constitution). BHRG Inc adopted the Model Constitution at the time of registration.
No party raised the issue of whether this Court has jurisdiction to determine the issues raised by Marist's notice of motion. The Court is not referred to in the AI Act and the AI Act is not referred to in the Land and Environment Court Act 1979 (NSW) (LEC Act) in the provisions specifying the Court's jurisdiction. Section 104 of the AI Act provides for review of the Secretary's decisions in various matters by the NSW Civil and Administrative Tribunal and the Secretary's decision to appoint an administrator under ss 54 or 55 can be reviewed in the Supreme Court of NSW (Supreme Court). All the cases referred to by the parties were decided in the Supreme Court but for Residents Against Intermodal Development Moorebank Incorporated v Minister for Planning (2017) 228 LGERA 15; [2017] NSWLEC 115 (RAID), a decision of this Court.
In RAID the standing of the applicant incorporated association RAID Moorebank Inc to appeal in the Court under s 98(1) of the EPA Act against the determination of the Minister for Planning to grant consent to the construction of an intermodal terminal was in issue. Preston CJ held at [96] that the broad definition of "person" within the EPA Act to include "an unincorporated group of persons" encompassed the former unincorporated association, RAID Moorebank. As RAID Moorebank an unincorporated body made submissions under s 79(5) by way of objection to the development application, it became an "objector" with a right of appeal under s 98(1) of the EPA Act. The Court accepted the regularity of both the application for registration and the determination of that application, as accepted and granted by the Secretary (the Commissioner of Fair Trading), at [110]. Upon registration, the right of RAID Moorebank to appeal under s 98(1) of the EPA Act became the right of the applicant incorporated association RAID Moorebank Inc, by operation of s 8(2) and cl 2(1)(b) of Sch 2 of the AI Act. The rights and liabilities of the former unincorporated body become the rights and liabilities of the incorporated association (at [120]). The issue was presumably considered as ancillary to the exercise of the Court's jurisdiction in that there is no discussion of that question no doubt because no party raised it. On appeal in Qube Holdings Ltd v Residents Against Intermodal Development Moorebank Inc (2017) 96 NSWLR 80; [2017] NSWCA 250 no issue of jurisdiction was identified.
I consider I can determine the issue identified in Marist's notice of motion as ancillary to the jurisdiction the Court has to manage the matters before it: LEC Act s 16(1A). Authorities outlined by Pearlman J in NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403; [2001] NSWLEC 5 at [26]-[28] confirm the scope of the ancillary power. Further under s 22 of the LEC Act the Court should determine as far as possible all matters in controversy between the parties so that these may be completely and finally determined and multiplicity of proceedings avoided. Under s 23 the Court has power to make orders of such kinds as the Court thinks appropriate. The Court of Appeal in GPT Re Ltd v Belmorgan Property Development Pty Ltd (2008) NSWLR 72; [2008] NSWCA 256 at [88] confirmed the width of these powers.
There are limits on the Court's power to respond to all the issues before it. BHRG Inc relies on s 1322 of the Corporations Act 2001 (Cth) which is called up by s 96 of the AI Act and reg 18 of the AI Regulation. Section 1322(4)(a) allows a specified court to make an order that proceedings are not invalid. I consider below in [127] that I do not have jurisdiction to make an order under that section of the Corporations Act.
The capacity of BHRG Inc to commence these proceedings arises from the exercise of the open standing provisions in s 9.45 of the EPA Act. No challenge is made to the registration of BHRG Inc and it continues as a legal entity until its registration is cancelled, whether voluntarily or involuntarily by the Secretary as provided for in the AI Act. At issue is the management of the affairs of BHRG Inc to be determined in the context of the AI Act and related instruments.

[5]

Associations Incorporation Act 2009 (NSW)

Relevant sections of the AI Act provide: Part 1 Preliminary … 3 Objects of Act The objects of this Act are - (a) to establish a scheme for the registration of associations that are constituted for the purpose of engaging in small-scale, non-profit and non-commercial activities, including - (i) associations that are currently unincorporated (which become bodies corporate when they are registered), and (ii) associations that are currently incorporated under other legislation (which retain their corporate status following registration), and (b) to make provision with respect to the corporate governance and financial accountability of associations registered under that scheme. 4 Definitions (1) In this Act - committee, in relation to an association, means the governing body of the association, however described. committee member, in relation to an association, means a person who is elected or appointed under the association's constitution as a committee member of the association. … model constitution means the model constitution prescribed by the regulations. … public officer, in relation to an association, means the person who is appointed as the association's public officer, and, until he or she is replaced by a person so appointed, includes the person who is nominated as the association's public officer in the association's application for registration. … Part 2 Registration of associations Division 1 Registration 6 Application for registration (1) An application for registration of an association may be made to the Secretary on behalf of - (a) 5 or more individuals, or (b) an unincorporated body having 5 or more members, or … (2) Such an application must be authorised - (a) in the case of an application made on behalf of 5 or more individuals, by each of the individuals, and (b) in the case of an application made on behalf of an unincorporated body, by a special resolution passed by the members of the body, and (3) An application - (a) must be in the approved form, and (b) must specify the association's proposed name and the address that is to be the association's first official address, and (c) must include a statement of the association's objects, and (d) must annex a copy of the association's proposed constitution (or a statement that the association's proposed constitution adopts all the provisions of the model constitution without modification), and (e) must identify the person who is to be the association's first public officer, and … (h) must include any information required by the regulations, and (i) must be accompanied by the fee prescribed by the regulations. … (5) An association's proposed constitution must address each of the matters referred to in Schedule 1. … Part 3 Basic features of associations Division 1 Association powers 19 Legal capacity and powers (1) An association has the legal capacity and powers of an individual both in and outside New South Wales. (2) An association's legal capacity to do something is not affected by the fact that the association's interests are not, or would not be, served by doing it. … Division 2 Assumptions people dealing with associations are entitled to make 23 Entitlement to make assumptions (1) A person is entitled to make the assumptions in section 24 in relation to dealings with an association, and the association is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. (2) A person is entitled to make the assumptions in section 24 in relation to dealings with another person who has, or purports to have, directly or indirectly acquired property from an association, and the association and the other person are not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. (3) The assumptions may be made even if anyone purporting to act on behalf of the association acts fraudulently, or forges a document, in connection with the dealings. (4) A person is not entitled to make an assumption in section 24 if at the time of the dealings they knew or suspected that the assumption was incorrect. 24 Assumptions that may be made (1) A person may assume that the association's constitution has been complied with. (2) A person may assume that anyone who appears, from information provided by the association that is available to the public from the Register of Incorporated Associations, to be the association's public officer - (a) has been duly appointed, and (b) has authority to exercise the functions customarily exercised by the public officer of a similar association. (3) A person may assume that anyone who appears, from information provided by the association, to be a committee member of the association - (a) has been duly appointed, and (b) has authority to exercise the functions customarily exercised by a committee member of a similar association. (4) A person may assume that anyone who is held out by the association to be an agent of the association - (a) has been duly appointed, and (b) has authority to exercise the functions customarily exercised or performed by an agent of a similar association. (5) A person may assume that persons acting on behalf of the association properly perform their duties to the association. (6) A person may assume that a document has been duly executed by the association if the document appears to have been signed in accordance with section 22 (1). (7) A person may assume that a document has been duly executed by the association if - (a) the association's common seal appears to have been fixed to the document in accordance with section 22 (2), and (b) the fixing of the common seal appears to have been witnessed in accordance with that subsection. (8) A person may assume that anyone who has, or may be assumed to have, the authority to issue a document or a certified copy of a document on behalf of the association also has authority to warrant that the document is genuine or is a true copy. (9) Without limiting the generality of this section, the assumptions that may be made under this section apply for the purposes of this section. Division 3 General … 26 Nature of association (1) Subject to this Act, an association's constitution binds the association and its members to the same extent as if it were a contract between them under which they each agree to observe its provisions. (2) Subject to this Act, a member of an association (including a committee member and the public officer) is not, merely because of being such a member, liable in relation to - osts, charges and expenses of the winding up of the association. (3) Subject to this Act, membership of an association does not confer on a member any right, title or interest, whether legal or equitable, in the association's assets. … Part 4 Management of associations Division 1 Committee members - general 28 Committee to be established (1) An association must establish a committee to manage its affairs. (2) The committee must include 3 or more members, each of whom is aged 18 years or more and at least 3 of whom are ordinarily resident in Australia. (3) The committee may exercise such of the association's powers as are not required by this Act or its constitution to be exercised by the association in general meeting. (4) A committee member's acts are valid despite any defect in his or her appointment. ... 29 Register of committee members (1) An association must keep a register of committee members in accordance with this section. Maximum penalty - 1 penalty unit. (2) The register must contain the following particulars in relation to each committee member - (a) the committee member's name, date of birth and residential address, (b) the date on which the committee member takes office, (c) the date on which the committee member vacates office, (d) such other particulars as may be prescribed by the regulations. (3) The register must be kept in New South Wales - (a) at the main premises of the association, or (b) if the association has no premises, at the association's official address. (4) Any change in the committee's membership must be recorded in the register within one month after the change occurs. (5) The register must, at all reasonable hours, be kept available for inspection, free of charge, by any person. 30 Committee meetings (1) An association's committee meetings may be held as and when the association's constitution requires. (2) If the association's constitution so provides, a committee meeting may be held at 2 or more venues using any technology that gives each of the committee members a reasonable opportunity to participate. (3) In any legal proceedings, a committee meeting held in accordance with subsection (2), or part of such a meeting, is not to be declared invalid on the ground that one or more committee members did not have a reasonable opportunity to participate unless the court is satisfied that - (a) substantial injustice has been, or may be, caused, and (b) the injustice cannot be remedied by any other order available to the court. 30A Duty of committee members It is the duty of each committee member to carry out his or her functions for the benefit, so far as practicable, of the association and with due care and diligence. 30B Personal liability of committee members A matter or thing done or omitted to be done by a committee member, or by a person acting under the direction of a committee member, does not, if the matter or thing was done or omitted to be done in good faith for the purpose of exercising the committee member's functions under this Act, subject the committee member or person so acting personally to any action, liability, claim or demand. Division 1A Committee members - offences ... Division 2 Public officer and authorised signatories 34 Public officer (1) An association's committee must appoint a public officer. Maximum penalty - 1 penalty unit. (2) The public officer must be a person who is aged 18 years or more and is ordinarily resident in New South Wales. (3) The position of public officer may, but need not be, held by a committee member. (4) The public officer's acts are valid despite any defect in his or her appointment. (5) The first public officer of an association is the person nominated as public officer in the application for registration of the association. (6) Within 28 days after taking office as an association's public officer (other than its first public officer), a person must notify the Secretary, in the approved form, of - (a) the person's full name and date of birth, and (b) an address within New South Wales - (i) at which the person can generally be found, and (ii) at which documents can be served on the association by post, and (c) the fact that the person has taken office as public officer. Maximum penalty - 1 penalty unit. … Division 3 General 37 General meetings (1) An association's committee must ensure that the association's first annual general meeting is held within 18 months after its registration under this Act. Maximum penalty - 1 penalty unit. (2) An association's committee must ensure that annual general meetings are held - (a) within 6 months after the close of the association's financial year, or (b) within such further time as may be allowed by the Secretary or prescribed by the regulations. Maximum penalty - 1 penalty unit. (3) If the association's constitution so provides, a general meeting may be held at 2 or more venues using any technology that gives each of the association's members a reasonable opportunity to participate. (4) In any legal proceedings, a general meeting held in accordance with subsection (3), or part of such a meeting, is not to be declared invalid on the ground that one or more of the association's members did not have a reasonable opportunity to participate unless the court is satisfied that - (a) substantial injustice has been, or may be, caused, and (b) the injustice cannot be remedied by any other order available to the court. 38 Voting generally (1) A resolution is passed by an association as an ordinary resolution - (a) at a general meeting of the association, or (b) in a postal or electronic ballot conducted by the association, if it is supported by more than half of the votes cast by members of the association who, under the association's constitution, are entitled to vote on the proposed resolution. (2) A postal or electronic ballot referred to in subsection (1) (b) may only be conducted in relation to resolutions of a kind that the association's constitution permits to be voted on by means of a postal or electronic ballot and, if conducted, must be conducted in accordance with the regulations. … Part 9 Application of Corporations legislation … 96 Applying the Corporations legislation to associations (1) The regulations may declare any matter relating to associations to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to any excluded Corporations legislation provision or provisions (with such modifications as may be specified in the declaration). (2) Without limiting subsection (1), any such regulations - (a) may specify modifications to the definitions and other interpretative provisions of the Corporations legislation relevant to any excluded Corporations legislation provision that is the subject of the declaration, and (b) may specify that a reference to ASIC in any excluded Corporations legislation provision that is the subject of the declaration is to be read as a reference to another person, and (c) may identify any excluded Corporations legislation provision to which the declaration relates by reference to that provision as in force at a particular time, and (d) may specify a New South Wales court (other than the Supreme Court) to exercise any function conferred on a court or the Supreme Court by any excluded Corporations legislation provision to which the declaration relates. (3) Words and expressions used in this section and also in Part 3 of the Corporations (Ancillary Provisions) Act 2001 have the same meanings as they have in that Part. (4) In this section, excluded Corporations legislation provision means any provision of the Corporations legislation that does not apply to associations as a law of the Commonwealth.

[6]

Associations Incorporation Regulation 2016 (NSW)

The AI Regulation provides in part as follows: Part 4 Miscellaneous 11 Model constitution The model constitution set out in Schedule 1 is prescribed as the model constitution for the purposes of the Act. 12 Register of committee members - prescribed particulars For the purposes of section 29 (2) (d) of the Act, the following particulars are prescribed: (a) the name of each member of the committee of the incorporated association who holds the position (if any) of president, vice-president, secretary or treasurer of the incorporated association, (b) the date on which the member was elected or appointed to the position, (c) the date on which the member ceased to hold the position. … 14 Keeping of accounts and minutes of proceedings (1) An association must - (a) keep each record and minute required to be kept under section 50 of the Act, in written or electronic form, and (b) keep each record for a period of not less than 5 years after it was made. (2) If records and minutes are kept in electronic form, they must be convertible into hard copy. Hard copy must be made available within a reasonable time to a person who is entitled to inspect the records. … 18 Application of Corporations legislation to associations For the purposes of section 96 (1) of the Act, any matter relating to associations is declared to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 in relation to section 1322 (1)-(3A) and (4)-(6) of the Corporations Act 2001 of the Commonwealth, subject to the following modifications: (a) references to "this Act" are to be read as including references to the Associations Incorporation Act 2009, (b) a reference to a "corporation" is to be read as a reference to an association, (c) a reference to a meeting in section 1322 (3) is to be read as including a reference to a vote conducted by a postal or electronic ballot, (d) the reference in section 1322 (3) to "a person entitled to attend the meeting" is to be read as including a reference to a person entitled to vote in a postal or electronic ballot, (e) the reference in section 1322 (4) (b) to a register kept by ASIC under the Corporations Act 2001 of the Commonwealth is to be read as a reference to a register kept under the Associations Incorporation Act 2009.

[7]

Model Constitution

The Model Constitution in Sch 1 of the AI Regulation provides: Part 1 Preliminary 1 Definitions … (2) In this constitution: (a) a reference to a function includes a reference to a power, authority and duty, and (b) a reference to the exercise of a function includes, if the function is a duty, a reference to the performance of the duty. (3) The provisions of the Interpretation Act 1987 apply to and in respect of this constitution in the same manner as those provisions would so apply if this constitution were an instrument made under the Act. Part 2 Membership 2 Membership generally (1) A person is eligible to be a member of the association if: (a) the person is a natural person, and (b) the person has applied and been approved for membership of the association in accordance with clause 3. (2) A person is taken to be a member of the association if: (a) the person is a natural person, and (b) the person was: (i) in the case of an unincorporated body that is registered as the association - a member of that unincorporated body immediately before the registration of the association, or …. (3) A person is taken to be a member of the association if the person was one of the individuals on whose behalf an application for registration of the association under section 6 (1) (a) of the Act was made. 3 Application for membership (1) An application by a person for membership of the association: (a) must be made in writing (including by email or other electronic means, if the committee so determines) in the form determined by the committee, and (b) must be lodged (including by electronic means, if the committee so determines) with the secretary of the association. (2) As soon as practicable after receiving an application for membership, the secretary must refer the application to the committee, which is to determine whether to approve or to reject the application. (3) As soon as practicable after the committee makes that determination, the secretary must: (a) notify the applicant in writing (including by email or other electronic means, if the committee so determines) that the committee approved or rejected the application (whichever is applicable), and (b) if the committee approved the application, request the applicant to pay (within the period of 28 days after receipt by the applicant 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 applicant of the amounts referred to in subclause (3) (b) within the period referred to in that provision, enter or cause to be entered the applicant's name in the register of members and, on the name being so entered, the applicant becomes a member of the association. ... 7 Register of members (1) The secretary must establish and maintain a register of members of the association (whether in written or electronic form) specifying the name and postal, residential or email address of each person who is a member of the association together with the date on which the person became a member. (2) The register of members must be kept in New South Wales: (a) at the main premises of the association, or (b) if the association has no premises, at the association's official address. (3) The register of members must be open for inspection, free of charge, by any member of the association at any reasonable hour. (4) A member of the association may obtain a copy of any part of the register on payment of a fee of not more than $1 for each page copied. (5) If a member requests that any information contained on the register about the member (other than the member's name) not be available for inspection, that information must not be made available for inspection. (6) A member must not use information about a person obtained from the register to contact or send material to the person, other than for: (a) the purposes of sending the person a newsletter, a notice in respect of a meeting or other event relating to the association or other material relating to the association, or (b) any other purpose necessary to comply with a requirement of the Act or the Regulation. (7) If the register of members is kept in electronic form: (a) it must be convertible into hard copy, and (b) the requirements in subclauses (2) and (3) apply as if a reference to the register of members is a reference to a current hard copy of the register of members. … Part 3 The committee 13 Powers of the committee Subject to the Act, the Regulation, this constitution and any resolution passed by the association in general meeting, the committee: (a) is to control and manage the affairs of the association, and (b) may exercise all the functions that may be exercised by the association, other than those functions that are required by this constitution to be exercised by a general meeting of members of the association, and (c) has power to perform all the acts and do all things that appear to the committee to be necessary or desirable for the proper management of the affairs of the association. 14 Composition and membership of committee (1) The committee is to consist of: (a) the office-bearers of the association, and (b) at least 3 ordinary committee members, each of whom is to be elected at the annual general meeting of the association under clause 15. (2) The total number of committee members is to be 7. (3) The office-bearers of the association are as follows: (a) the president, (b) the vice-president, (c) the treasurer, (d) the secretary. (4) A committee member may hold up to 2 offices (other than both the offices of president and vice-president). (5) There is no maximum number of consecutive terms for which a committee member may hold office. (6) Each member of the committee is, subject to this constitution, to hold office until immediately before the election of committee members at the annual general meeting next following the date of the member's election, and is eligible for re-election. 15 Election of committee members (1) Nominations of candidates for election as office-bearers of the association or as ordinary committee members: (a) must be made in writing, signed by 2 members of the association and accompanied by the written consent of the candidate (which may be endorsed on the form of the nomination), and (b) must be delivered to the secretary of the association at least 7 days before the date fixed for the holding of the annual general meeting at which the election is to take place. (2) If insufficient nominations are received to fill all vacancies on the committee, the candidates nominated are taken to be elected and further nominations are to be received at the annual general meeting. … 16 Secretary (1) The secretary of the association must, as soon as practicable after being appointed as secretary, lodge notice with the association of his or her address. (2) It is the duty of the secretary to keep minutes (whether in written or electronic form) of: (a) all appointments of office-bearers and members of the committee, and (b) the names of members of the committee present at a committee meeting or a general meeting, and (c) all proceedings at committee meetings and general meetings. (3) Minutes of proceedings at a meeting must be signed by the chairperson of the meeting or by the chairperson of the next succeeding meeting. (4) The signature of the chairperson may be transmitted by electronic means for the purposes of subclause (3). … 20 Committee meetings and quorum (1) The committee must meet at least 3 times in each period of 12 months at the place and time that the committee may determine. (2) Additional meetings of the committee may be convened by the president or by any member of the committee. (3) Oral or written notice of a meeting of the committee must be given by the secretary to each member of the committee at least 48 hours (or any other period that may be unanimously agreed on by the members of the committee) before the time appointed for the holding of the meeting. (4) Notice of a meeting given under subclause (3) must specify the general nature of the business to be transacted at the meeting and no business other than that business is to be transacted at the meeting, except business which the committee members present at the meeting unanimously agree to treat as urgent business. (5) Any 3 members of the committee constitute a quorum for the transaction of the business of a meeting of the committee. (6) No business is to be transacted by the committee unless a quorum is present and if, within half an hour of the time appointed for the meeting, a quorum is not present, the meeting is to stand adjourned to the same place and at the same hour of the same day in the following week. (7) If at the adjourned meeting a quorum is not present within half an hour of the time appointed for the meeting, the meeting is to be dissolved. (8) At a meeting of the committee: (a) the president or, in the president's absence, the vice-president is to preside, or (b) if the president and the vice-president are absent or unwilling to act, one of the remaining members of the committee chosen by the members present at the meeting is to preside. … 24 Voting and decisions … Part 4 General meetings 25 Annual general meetings - holding of (1) The association must hold its first annual general meeting within 18 months after its registration under the Act. (2) The association must hold its annual general meetings: (a) within 6 months after the close of the association's financial year, or (b) within any later time that may be allowed or prescribed under section 37(2)(b) of the Act. 26 Annual general meetings - calling of and business at (1) The annual general meeting of the association is, subject to the Act and to clause 25, to be convened on the date and at the place and time that the committee thinks fit. (2) In addition to any other business which may be transacted at an annual general meeting, the business of an annual general meeting is to include the following: (a) to confirm the minutes of the last preceding annual general meeting and of any special general meeting held since that meeting, (b) to receive from the committee reports on the activities of the association during the last preceding financial year, (c) to elect office-bearers of the association and ordinary committee members, (d) to receive and consider any financial statement or report required to be submitted to members under the Act. (3) An annual general meeting must be specified as that type of meeting in the notice convening it. … 29 Quorum for general meetings (1) No item of business is to be transacted at a general meeting unless a quorum of members entitled under this constitution to vote is present during the time the meeting is considering that item. (2) Five members present (being members entitled under this constitution to vote at a general meeting) constitute a quorum for the transaction of the business of a general meeting. (3) If within half an hour after the appointed time for the commencement of a general meeting a quorum is not present, the meeting: (a) if convened on the requisition of members - is to be dissolved, and (b) in any other case - is to stand adjourned to the same day in the following week at the same time and (unless another place is specified at the time of the adjournment by the person presiding at the meeting or communicated by written notice to members given before the day to which the meeting is adjourned) at the same place. (4) If at the adjourned meeting a quorum is not present within half an hour after the time appointed for the commencement of the meeting, the members present (being at least 3) are to constitute a quorum. ...

[8]

Associations Incorporation Act 1984 (NSW) (repealed)

It will be useful to refer to sections of the repealed Associations Incorporation Act 1984 (NSW) (AI Act 1984) which provided as follows: Part 2 Incorporation … 8 Authority to apply for incorporation (1) An association which is eligible to be incorporated under this Act may, by special resolution: (a) authorise a person (not being a person under 18 years of age) who is resident in the State to incorporate the association under this Act, (b) approve a statement of objects of the proposed incorporated association, and (c) approve rules of the proposed incorporated association which comply with section 11 or approve the adoption of the model rules as the rules of the proposed incorporated association. (2) For the purpose of forming themselves into an incorporated association, 5 or more persons together may, in respect of a proposed association which would be eligible to be incorporated under this Act: (a) authorise a person (not being a person under 18 years of age) who is resident in the State to incorporate the proposed association under this Act, (b) approve a statement of objects of the proposed incorporated association, (c) approve rules of the proposed incorporated association which comply with section 11 or approve the adoption of the model rules as the rules of the proposed incorporated association, and (d) nominate 2 or more of their number to be the first members of the committee of the proposed incorporated association. (3) A person authorised under subsection (1) or (2) to incorporate an association or proposed association may make application to the Director-General for the incorporation of the association or proposed association under this Act and may perform all such acts and do all such things as may be necessary for securing the incorporation of the association or proposed association under this Act, notwithstanding, in the case of an association referred to in subsection (1), anything to the contrary in the rules, if any, of the association. 9 Application for incorporation An application for the purposes of section 8 shall be in an approved form and: (a) shall state: (i) the proposed name of the incorporated association, being a name under which an association may be incorporated in accordance with section 12, (ii) the place where the principal place of administration of the incorporated association is proposed to be situated, (iii) the name and address in the State of the applicant, and (iv) (Repealed) (v) such other particulars as may be prescribed, (b) shall be accompanied by a copy of the statement of objects of the proposed incorporated association that has been approved as referred to in section 8, (c) shall be accompanied by a copy of the rules of the proposed incorporated association, being rules that comply with section 11 and which have been approved as referred to in section 8 or a statement that adoption of the model rules as the rules of the proposed incorporated association has been so approved, (d) (Repealed) (e) shall be accompanied by a statutory declaration made by the applicant declaring: (i) that the applicant is authorised in accordance with section 8 to apply for the incorporation of the association or proposed association under this Act, and (ii) that the particulars contained in the application are true, (iii) (Repealed) (f) shall be accompanied by such other documents as may be prescribed, and (g) shall be accompanied by the prescribed fee. … Part 4 Affairs of incorporated associations … 21 Committee of incorporated association (1) Unless the rules of an incorporated association otherwise provide, the first members of the committee of the incorporated association are: (a) in the case of an association incorporated pursuant to the application of a person authorised under section 8 (1) - the members of the committee of the association immediately before the association was incorporated, (b) in the case of an association incorporated pursuant to the application of a person authorised under section 8 (2) - the persons nominated pursuant to that subsection to be the first members of the committee, … (2) (Repealed) …

[9]

Corporations Act 2001 (Cth)

As provided for in s 96(1) of the AI Act and reg 18 of the AI Regulation, relevant sections of the Corporations Act provide: Part 1.2 - Interpretation … Division 7 - Interpretation of other expressions … 58AA Meaning of court and Court (1) Subject to subsection (2), in this Act: court means any court. Court means any of the following courts: (a) the Federal Court; (b) the Supreme Court of a State or Territory; (c) the Family Court of Australia; (d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act. (2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Act may, subject to Part 9.6A, be brought in any court. Note: The matters dealt with in Part 9.6A include the applicability of limits on the jurisdictional competence of courts. Chapter 9 - Miscellaneous … Part 9.5 - Powers of Courts … 1322 Irregularities (1) In this section, unless the contrary intention appears: (a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and (b) a reference to a procedural irregularity includes a reference to: (i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and (ii) a defect, irregularity or deficiency of notice or time. (2) A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. (3) A meeting held for the purposes of this Act, or a meeting notice of which is required to be given in accordance with the provisions of this Act, or any proceeding at such a meeting, is not invalidated only because of the accidental omission to give notice of the meeting or the non‑receipt by any person of notice of the meeting, unless the Court, on the application of the person concerned, a person entitled to attend the meeting or ASIC, declares proceedings at the meeting to be void. … (4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: (a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; (b) an order directing the rectification of any register kept by ASIC under this Act; (c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a); (d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; and may make such consequential or ancillary orders as the Court thinks fit. (5) An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence. (6) The Court must not make an order under this section unless it is satisfied: (a) in the case of an order referred to in paragraph (4)(a): (i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature; (ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or (iii) that it is just and equitable that the order be made; and (b) in the case of an order referred to in paragraph (4)(c) - that the person subject to the civil liability concerned acted honestly; and (c) in every case - that no substantial injustice has been or is likely to be caused to any person.

[10]

Mr Fairbairn

Two affidavits of Mr Fairbairn were read in the course of argument on 18 December 2019. Mr Fairbairn, BHRG Inc's agent, swore an affidavit dated 12 December 2019 stating that he sent a copy of r 7.7 of the Land and Environment Court Rules 2007 (NSW) (LEC Rules) to all BHRG Inc committee members. Following this, Mr Fairbairn telephoned each of the committee members and each said words to the following effect "yes, I have read your email". Mr Fairbairn has read r 7.7 and the duties it places on him if acting as an agent.
Mr Fairbairn annexed redacted copies of BHRG or BHRG Inc's minutes. The minutes of the "BHRG - General Meeting" for 7 February 2019 (Annexure "A") lists nine attendees (most names are redacted) and two absent members (names redacted). The redacted minutes stated inter alia: 4. Discussion regarding the Marist 180 Development at #10 Phoenix. a. Background by MB. … b. [redacted] presented research showing issues with planning laws, lack of enviro studies etc. … 6. Discussion re incorporating the association. a. Motion was raised to register as an Incorporated Association - Moved AF, second MB, passed unanimously. b. Motion raised for positions; i. Pres - AF, Vice Pres - [redacted], Secretary - MB, Treasurer [redacted], Committee - [redacted] BH and [redacted]. Moved MB, second [redacted], passed unanimously. c. [redacted] volunteered to apply for the registration. 7. Discussion re Legal action. a. All agreed that we should investigate. b. Some of the group agreed that the budget estimates are within what can be met from those in attendance and gave an undertaking as such, so are happy to proceed on the basis that many more members are likely to contribute also, but if not, the costs can be covered. c. Motion was raised to engage Grant Long of Long Legal to undertake the GIPA process on our behalf and represent BHRG in resulting legal action. Moved AF, Seconded [redacted], passed unanimously. …
A "Register of Committee Members" submitted to NSW Fair Trading (Fair Trading) with the application for registration was annexed to Mr Fairbairn's affidavit as part of Annexure A.
The copy of the minutes of the "BHRG Inc General Meeting" for 3 November 2019 before the Court (Annexure "B") does not appear to list attendees. Mr Fairbairn chaired the meeting. The redacted minutes stated as follows in relation to the Court proceedings: 22. Prep for court hearing - 18 thru 20 December. a. Adam and Phil will be representing BHRG Inc. Prop JW, MB. That AF represent with PC assisting/ reserve. All for.
Mr Fairbairn swore a second affidavit dated 15 December 2019. He stated that he has been involved with the then unincorporated BHRG since around 2014. The unincorporated group consisted of a regular group of around 30 residents who occasionally met in person and participated in an on-line community group. Since 2014, the unincorporated group has actively lobbied Newcastle City Council in relation to a range of issues. The members commenced looking at options to commence legal proceedings in relation to Marist in February 2019. A meeting to discuss this and registration as an incorporated association was held on 7 February 2019. A committee of six volunteers was formed. The minutes of the meeting are annexed to Mr Fairbairn's affidavit of 12 December 2019 at Annexure "A" referred to above in [15]. Mr Fairbairn's understanding was that the office-bearers and committee members needed to be submitted to Fair Trading with the application for registration and the register of members, annexed to his affidavit of 12 December 2019 at "A".
When members of the unincorporated BHRG decided to register as an incorporated association they adopted the standard Model Constitution. BHRG Inc was registered on 13 February 2019. Since then Mr Davis has stepped down as treasurer and Ms Barton now holds the roles of secretary and treasurer. BHRG Inc had not yet held an annual general meeting (AGM) at the time this affidavit was sworn.
The committee held a meeting with the total members group to report on legal matters on 15 May 2019. A redacted copy of the minutes headed "BHRG Inc - Ex - General Meeting" was annexed to the affidavit (Annexure "A"). Mr Fairbairn chaired the meeting. The minutes state inter alia: 8. Office bearers of un-incorporated BHRG was voted in January. Office bearers continue through into incorporated entity, next AGM is due in January. GJ moved to continue with current committee until the next AGM, 2nd PC, All for, carried. 9. To move forward, GJ raised, PC 2nd, [c]ontinue with current course of legal action. All for, carried.
Six attendees are listed. The "apologies" list appears blank. I note that Mr Fairbairn submitted orally that the list of attendees and absences in the minutes annexed to his affidavits were not blank but poorly copied whited-out/redacted versions of the minutes. It is not clear how many people attended the meeting.
By October 2019 BHRG Inc had spent a large amount on funds for legal representation. BHRG Inc was ordered to pay $40,000 as security for costs in October 2019. At the general meeting held on 3 November 2019 the members voted to continue the legal proceedings without Mr Long as solicitor. Minutes of that meeting were annexed to his earlier affidavit of 12 December 2019 at "B" referred to above in [17].
The committee met on 12 December 2019. A redacted copy of minutes headed "BHRG Inc - Committee Meeting" for 12 December 2019 lists six attendees (Annexure "B"). Mr Fairbairn chaired the meeting.
The redacted minutes state inter alia: 1. Update by AF, PC. - Wednesday court hearing, showed docs, provided recap. 2. Discussion re the acting agent for the BHRG. Discussed options, All provided their options. 3. Discussion re - Raise a motion to provide a resolution to satisfy the Courts requests that meets the point below taken from the Courts email of yesterday; "6. Records of resolutions including minutes relied upon as authorising Philip Clulow to act as agent for the Applicant in these proceedings." Motion raised by AF to provide a resolution as per point "6.." above Voted AF - For, PC - Against, JW - Against, GJ - Against, BH (via telecon) - Against, MB (via telecon) - Against Motion defeated
Mr Fairbairn stated that at the meeting on 12 December 2019 he told the committee members that to act as BHRG Inc's agent in the proceedings he must follow r 7.7 of the LEC Rules.
As BHRG Inc's president, Mr Fairbairn has primary carriage of the present legal proceedings including communication with Mr Long, former solicitor.
This evidence becomes relevant if I conclude that the proceedings were not competently commenced by BHRG Inc as at 17 May 2019. If not, the question arises of whether the general meeting of 3 November 2019 or the committee meeting of 12 December 2019 ratified the commencement of these proceedings.

[12]

Marist's submissions

Marist submitted that these proceedings should be dismissed as they are incompetent, subject to appropriate orders being made by the Court as to costs. Marist asserts that there is no evidence that these proceedings have been validly commenced because there is no evidence of: 1. a valid appointment of a BHRG Inc committee at an AGM; or 2. a validly elected committee ratifying the commencement of these proceedings.
According to Mr Fairbairn's affidavit dated 12 December 2019, a meeting of a number of persons occurred on 7 February 2019 who resolved to register the incorporated association. Nine people met. Unincorporated BHRG's membership was around 30 residents at the time and has grown since. The decision to incorporate taken on 7 February 2019 and to appoint a committee was not a decision of the majority of the membership of the unincorporated BHRG. Clause 15(6) of the Model Constitution requires the election of office-bearers and ordinary committee members at an AGM in "any usual and proper manner that the committee directs" and s 38 of the AI Act defines "ordinary resolution".
Whilst BHRG Inc has been registered as an incorporated association, there has never been an AGM convened at which a committee was appointed to manage BHRG Inc as required by cll 14(1) and 15(6) of the Model Constitution. Clause 25(1) of the Model Constitution and s 37(1) of the AI Act require an incorporated association to hold its first AGM within 18 months of registration. The minutes of the "BHRG Inc - Ex - General Meeting" dated 15 May 2019 are heavily redacted and unsigned by the chairperson (the latter contrary to cl 16(3) of the Model Constitution). Although a motion was passed at the general meeting dated 15 May 2019 that the office-bearers would "continue through into incorporated entity" and the current committee would continue until the next AGM, this meeting was not an AGM duly convened as required by cl 26(3) of the Model Constitution. Clause 26(3) states that an AGM must be specified as that type of meeting in the notice convening it. Clause 15 of the Model Constitution requires nomination of candidates for election as office-bearers or as committee members to be made in writing, signed by two members of the association and accompanied by the written consent of the candidates.
Similarly, the minutes of the "BHRG Inc - General Meeting" dated 3 November 2019 are heavily redacted and not signed by the chairperson as required by the Model Constitution.
Appointment of a committee of seven is required by cl 14 of the Model Constitution. However, according to Mr Fairbairn's affidavit dated 15 December 2019, there are only six members of the committee (since Mr Davis stepped down as treasurer).
Section 28(1) of the AI Act states that an association must establish a committee to manage its affairs. Contrary to BHRG Inc's submission, s 37(1) of the AI Act does not imply that a committee can be formed before convening the association's first AGM because cll 14(1) and 15(6) of the Model Constitution make clear that committee members can only be elected at an AGM. Only a committee duly elected at an AGM called by the public officer, the only person required to be identified at the time of application for registration, can validly resolve to commence court proceedings.
Absent a validly appointed committee, BHRG Inc has never authorised the commencement of the proceedings. The management of the association is vested in the committee by the AI Act and the Model Constitution and the commencement of proceedings and appointment of agents to appear for it can only be authorised by the committee: Massey v Wales; Massey v Cooney (2003) 57 NSWLR 718; [2003] NSWCA 212 (Massey) at [59]; Saad v Doumeny Holdings Pty Ltd [2005] NSWSC 893 at [21]-[23]; Owners of Strata Plan 57164 v Yau (2017) 96 NSWLR 587; [2017] NSWCA 341 at [179]; Islamic Association of Western Suburbs Sydney Inc v Survery [2008] NSWSC 77 at [31]; Christian Revival Crusade Inc v Milne (2007) 252 LSJS 113; [2007] SADC 125 at [110] and [139].
A decision to commence court proceedings is a management decision that only a duly appointed committee can make (not a general meeting of members).
BHRG Inc's submission that s 1322 of the Corporations Act applies in these proceedings is incorrect. Section 1322 applies to the Federal Court, the Family Court and the Supreme Court of a state or territory: Corporations Act s 58AA. This Court is not such a court although it is a superior court of record: LEC Act s 5.
A consequence of the failure of BHRG Inc to validly appoint a committee is that the protection from exposure to personal liability that is provided to committee members acting in good faith under the AI Act by s 30B is not available. The indemnity provided by s 30B can only be conferred on a committee member who is validly elected, not to an individual representing the incorporated association in court simply by way of self-assertion of an entitlement to do so. Certain benefits are provided to those who commence proceedings under the corporate veil of an incorporated association. BHRG Inc does not have entitlement to those benefits. It is essential that steps are taken to ensure that what occurs before the Court is actually endorsed by the management committee.

[13]

Marist in reply

In reply, the presumption of regularity is a rebuttable presumption and cannot overcome an absence of authority to commence these proceedings in the absence of a validly appointed committee. It is irrelevant that committee members believed they were undertaking their duties to the best of their information and understanding. The attempt to appoint a committee on 7 February 2019 before registration as an incorporated association was not a decision of a majority of unincorporated BHRG Inc members but an ineffectual decision of a small group of people.
The explanatory notes for the legislation, the second reading speeches or the 2015 review of the AI Act are of no assistance here. BHRG Inc chose to adopt the Model Constitution and is bound by it in relation to the creation of a committee. That committee members are volunteers, acted in good faith or used their best endeavours is irrelevant. Marist is a not-for-profit charitable organisation with a duty to protect its resources from being exhausted by litigation unlawfully commenced against it.
The AI Act 1984 (now repealed) did provide for the identification of a first committee upon registration of an association. Those provisions (ss 9, 21) were removed when the AI Act was introduced in 2009. Only the first public officer must be identified in an application per ss 3(e) and 34(5). Section 37(1) does not provide for a committee to be in place and appointed other than in accordance with the adopted constitution of the association. There is no implied authorisation of the appointment of a committee other than by way of the procedure described in the Model Constitution adopted by BHRG Inc. Luen Fook Tong Inc v Lowe [2011] NSWSC 1004 (Luen Fook Tong) confirms that the only way to appoint a committee is at an AGM, at [46]. Following registration the association must hold its first AGM and appoint a committee in accordance with its constitution. It is nonsensical for an association to conduct its affairs by self-appointed persons for the time being without regard to its constitution and whether or not the membership has been agreed. If business is urgent an AGM can be held quickly or the adopted constitution can be modified to make alternative arrangements. Otherwise at the first AGM a committee can and will be appointed and can administer the affairs of the association. Unlike the Corporations Act the AI Act does not envisage that a committee will be in place at the date of registration.
The public officer can call an AGM. The AI Act imposes obligations on the holder of that office. The AI Act, AI Regulation and Model Constitution do not authorise some members of the association to informally appoint themselves as committee members and manage the association prior to the first AGM.
No committee was validly appointed at the date of registration, nor does the AI Act require that. If an association is concerned about a management void it could modify the Model Constitution. A non-existent committee cannot make decisions let alone valid ones.
The Land and Environment Court is a court of statutory jurisdiction per National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573. The Court cannot provide the authority or make declarations of a state of affairs if these don't exist.
The Court is not conferred with any jurisdiction under the Corporations Act. The Court does not have any implied or general power to overlook the failure of BHRG Inc to appoint a committee under the AI Act.

[14]

BHRG Inc's submissions

BHRG Inc submitted that Marist's only ground to assert that the proceedings are incompetent is its claim that there was no validly appointed committee when BHRG registered. The committee was validly appointed in accordance with the AI Act and the Model Constitution. There is potential inconsistency or tension between the provisions of the Model Constitution and the AI Act. Section 28(1) of the AI Act provides that a committee must be established. It does not specify a timeframe for doing so. There is a penalty attached to a failure to establish a committee. Presumably, the committee must be established immediately on registration to avoid liability for a penalty.
Section 37(1) of the AI Act says that the committee must ensure that the first AGM is held within 18 months after registration. Therefore, it is the committee that must call the first AGM. It follows that the committee must exist first before any AGM can be properly convened.
Clause 13 of the Model Constitution confirms that the committee must control and manage the association. This must include taking steps to convene the first AGM within the time provided in the AI Act. The Model Constitution confirms that the committee includes the office-bearers. Clause 25(1) of the Model Constitution says that the first AGM must be held within 18 months. Clause 14(6) of the Model Constitution says "[e]ach member of the committee is, subject to this constitution, to hold office until immediately before the election of committee members at the annual general meeting next following the date of the member's election …".
As was the case here, if there are insufficient nominations at the meetings held on 7 February and 15 May 2019, the candidates are taken to be elected. There were six attendees at the 15 May 2019 meeting which according to cl 29 of the Model Constitution constitutes a quorum. It is only if there is more than one nomination that a ballot is required to be held at an AGM.
BHRG Inc submitted that the proper functioning of the AI Act and the Model Constitution requires a committee including office-bearers to be in place immediately upon registration.
In the case of BHRG Inc, the only members who nominated for office-bearer and committee roles were appointed as at the date of registration. BHRG Inc submits that this was the proper course and that the committee was validly appointed. In the alternative, BHRG Inc submitted that any irregularity can be corrected by the Court pursuant to s 1322 of the Corporations Act as provided in s 96 of the AI Act and reg 18 of the AI Regulation.

[15]

BHRG Inc in reply

In reply, Marist's interpretation of the AI Act is impractical and overly technical. In essence, the purpose of the AI Act is to assist small, not-for-profit, volunteer community groups to organise their operations and structure, understand their duties, and obtain the benefits of registration as an incorporated association. This purpose requires a committee to be in place from the date of registration, as it is necessary for an incorporated association to have the immediate capacity for management following its registration. An interpretation of the AI Act in which the committee is not formed until after the AGM could result in an incorporated entity with no management structure of any kind during the 18 month period before an AGM is required.
As the Corporations Act requires at least one director from the date of incorporation of a company, the analogous implication is that the AI Act must necessarily have envisaged that a committee be in place at the date of registration of an association.
Marist is seeking to read into the AI Act an obligation on the public officer of an incorporated association to immediately notify all members of, and convene, an AGM. This obligation does not exist in the AI Act. Rather, requiring a committee to be in place from the date of registration is the only interpretation consistent with the purpose of the AI Act. Hence, the BHRG Inc committee was validly appointed at the date of registration.
As to the inferred intention of Marist to pursue personal costs orders against members of BHRG Inc, BHRG Inc submitted that considerable efforts have been made by it to follow the requirements of the AI Act and the directions of the Court. Further, all members of the BHRG Inc committee have acted in good faith and endeavoured to follow the provisions of the AI Act. Ongoing communication has been maintained between the BHRG Inc committee and BHRG Inc members through regular meetings and email circulars. Regarding the appointment of office bearers and committee members, no evidence exists that any member of BHRG Inc, other than those who volunteered for the roles prior to registration of the incorporated association, was not given the opportunity to volunteer for a position.
The presumption of regularity means it is appropriate to assume that the appointment of the BHRG Inc committee was correctly undertaken. The presumption of regularity is described in Cambodian Buddhist Society of NSW & Anor v Meng Eang Thai [2017] NSWSC 1433 (Cambodian Buddhist Society) at [65] as a rebuttable presumption of law and a presumption of fact associated with a reasonable inference based on what ordinarily happens in the normal course of human affairs. The clear evidence that BHRG Inc has acted to the best of its understanding means that the presumption of regularity should be applied to the appointment of office-bearers and committee members.
Incorporated associations are regular litigants in the Court and the AI Act is referred to in many decisions of the Court. In RAID the defendant also sought to strike out a resident group's claim on the basis of alleged failure to comply with provisions of the AI Act. Adopting the submissions of the applicant in RAID, BHRG Inc submitted that the Court should consider the interpretation of the provisions of the AI Act in light of the general purpose of the Act, being to provide an easy to understand framework for small community based interest groups to create a legal structure.
Should the Court not be satisfied that the BHRG Inc committee was validly appointed, a number of other sources of relief may be applied to validate the appointment of the BHRG Inc committee: 1. Arnold v Minister Administering the Water Management Act 2000 (2007) 157 LGERA 379; [2007] NSWLEC 531 (Arnold) noted that the Court may determine matters that would otherwise not be within the jurisdiction of the Court if the resolution is a necessary step in the cause of action which is within jurisdiction. It is open to the Court to make use of its ancillary powers to make a finding, whether by declaration or otherwise, that the BHRG Inc committee was validly appointed. 2. The making of a finding or declaratory order pursuant to the Corporations Act s 1322 would be a matter ancillary to the Court's exercise of its powers to determine the notice of motion. If the Court finds that an AGM was a necessary prerequisite to the valid appointment of the BHRG Inc committee, s 1322 would enable the first extraordinary general meeting of the association to be treated as the first AGM for the purposes of the BHRG Inc committee. The Court can make an order by way of declaration, despite this not having been originally sought in the proceedings, pursuant to the Civil Procedure Act 2005 (NSW) s 90 and Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.1. In Sengthong v Lao Buddhist Society of NSW Incorporated [2016] NSWSC 1408, these provisions were described as authorising or requiring a court to give such judgment or make such order as the nature of a case may require whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion. In that case, the jurisdiction to make an order designed to regularise the management of the affairs of an incorporated association was located in s 1322 as rendered applicable by s 96 of the AI Act. 3. The Court is also able to determine all matters in dispute between the parties to avoid a multiplicity of proceedings pursuant to s 22 of the LEC Act. 4. The Court has general powers to control its own processes and manage its cases pursuant to UCPR r 14.28 (strike out pleadings) and r 2.1 (making of directions and orders for the just quick and cheap disposal of proceedings).
The first AGM of BHRG Inc was held on 29 January 2020 and convened by the BHRG Inc committee. For the sake of caution, members who attended this AGM unanimously voted to approve and ratify all previous decisions of the BHRG Inc committee.
Clause 29 of the Model Constitution adopted by BHRG requires a quorum of five members to be present, rather than a majority of all members. Hence, a quorum was present at the inaugural AGM.
Section 1322 of the Corporations Act applies to these circumstances by virtue of the AI Act as noted in Ahmed v Chowdhury [2012] NSWSC 1452 (Chowdhury). The AI Act is a NSW Act. The Court is capable of making orders in accordance with that Act.

[18]

QUESTION (2): Has the BHRG Inc committee been established for the purposes of the AI Act?

BHRG Inc has filed and served affidavits of Adam Fairbairn dated 12 December 2019 and 15 December 2019. Its submissions refer to s 28 of the AI Act and state that "there were no other nominations or expressions of interest from any other group member for office bearer positions or committee member positions. That is, all who volunteered were appointed". Apparently, BHRG Inc relies upon the list of committee members dated 7 February 2019 which appears to comply with the requirements of the register under s 29 as evidence of establishment of the BHRG Inc committee. BHRG Inc also appears to rely on the minutes of the "general meeting" dated 15 May 2019 for the establishment of the committee.
Marist submits that: 1. there has never been an AGM, nor have ordinary committee members been appointed to manage the association; 2. the commencement of the proceedings was never duly authorised by a validly authorised committee; 3. the management of the association is vested in the committee by statute and its constitution; and 4. the continuation of the proceedings and appointment of agents to appear for it can only be authorised by the committee.
The Minister notes s 37 of the AI Act provides that "an association's committee must ensure that the association's first annual general meeting is held within 18 months after its registration under this Act" (emphasis added). This implies that a committee can be established first, before an AGM is held (where a committee is to be elected in accordance with cl 14 of the Model Constitution).
In order to comply strictly with the AI Act to establish a committee, an incorporated association could lawfully: 1. appoint a committee in accordance with a resolution at a meeting following registration; 2. keep a register of committee members pursuant to s 29 of the AI Act; and 3. hold an AGM 18 months after registration where those committee members are elected.
In relation to (a) above, a resolution appears to have been passed on 15 May 2019 at a general meeting of six people (a quorum is formed with five members), in which it was resolved that "office bearers of unincorporated BHRG was voted in January. Office bearers continue through into incorporated entity, next AGM is due in January". Otherwise, (b) appears to have been complied with (assuming that register is capable of being prepared prior to registration) and (c), at the time of these submissions, is yet to occur.
Section 28(4) of AI Act declares the acts of a committee member as valid despite any defect in his or her appointment. This provision targets circumstances where a slip has been made in appointing a committee member, not where substantive provisions pertaining to an appointment have been ignored or overridden.
In the Minister's submission, a committee appears to have been established for the purposes of the AI Act. It is therefore not necessary to address s 1322 of the Corporations Act. However, if it were necessary, the Court does not have power to make an order under s 1322 for the reasons set out in Marist's submissions (in [38] above).

[19]

QUESTION (3): Has the commencement of the proceedings been ratified by BHRG Inc (by committee or otherwise)?

As referred to above, at the general meeting on 15 May 2019, the purpose of which was to "discuss legal options, action, ways forward", it was resolved to "continue with current course of legal action… All for, carried".
This resolution is approximately one week before the proceedings were commenced. However, it should be noted that: 1. the resolution is not signed contrary to cl16(3) of the Model Constitution; 2. the meeting was a "general meeting" rather than a "committee meeting"; 3. in any event, it is not clear on the evidence before the Court whether there were six or seven committee members as at 15 May 2019 (seven committee members is required by cl 14(2) of the Model Constitution); and 4. this resolution does not refer specifically to the proceedings that are to be commenced, the forum, or the relief etc.
Notwithstanding the technical non-compliance with the AI Regulation, it is noted that the minutes are appended to an affidavit of Mr Fairbairn who is the president of the BHRG Inc committee, the person who would ordinarily be the signatory on such minutes.
Notwithstanding that the 15 May 2019 resolution seems to go some way towards a proper resolution to commence the proceedings by BHRG Inc, it is not a decision of the BHRG Inc committee but said to be a decision of a "general meeting". There is authority that general meetings may only deal with matters that a constitution says may be dealt with in a general meeting and otherwise management decisions can only be authorised by a committee: cases in Marist's submissions (in [36] above). Even if the general meeting were construed to be a committee meeting, it would need to be established by BHRG Inc that there were seven committee members at the time of the resolution.
It is submitted that if these other matters are found not to affect the effectiveness of the 15 May 2019 resolution regarding the commencement of the proceedings, the precise terms of the resolution would be sufficient (accepting that incorporated associations are often run by lay people) to authorise the commencement of the proceedings.

[22]

Consideration of 2019 issues

At issue is whether the decision to commence these proceedings on 22 May 2019 before the holding of the first AGM at which a committee is appointed to manage the affairs of BHRG Inc was competent. According to Marist, the consequence of a finding that no committee had been appointed as required by the statutory scheme means that these proceedings are incompetent and should be dismissed and a costs application by Marist would be likely. In its reply submissions in December 2019, the possibility of personal liability for costs of committee members was identified. I consider below what incompetent proceedings means in the context of this case. It has been difficult to relate what has occurred to how the AI Act and related instruments operate.
A brief overview of the evidence set out above in [14]-[29] identifying those matters material to my decision follows. Mr Fairbairn's two affidavits prepared for the December 2019 hearing summarised above in [14]-[26] refer to four meetings: (i) a general meeting of the unincorporated group on 7 February 2019; (ii) a general meeting of BHRG Inc on 15 May 2019 (iii); a general meeting of BHRG Inc on 3 November 2019; and (iv) a committee meeting on 12 December 2019.
The redacted minutes of the meeting of nine people on 7 February 2019 (above in [15]) state that a motion to register BHRG Inc as an incorporated association was passed unanimously. A motion was passed unanimously appointing office-bearer roles (president, vice-president, secretary and treasurer) and three committee members. It was agreed at the meeting to investigate legal action, the costs of legal action, and unanimously resolved to engage Grant Long to undertake a "GIPA Act" (Government Information (Public Access) Act 2009 (NSW)) process and represent BHRG Inc in resulting legal action.
On 7 February 2019, a document called "Register of committee members" also appears to have been completed, listing seven people in office-bearer positions and committee members including Adam Fairbairn as president.
The application form for registration as an incorporated association was signed by the nominated public officer, Ms Janine Wilson. The application was completed as if made by a group of five individuals. The Model Constitution was adopted. I note that the application did not indicate that BHRG Inc was previously an unincorporated association for which a special resolution of the unincorporated body would be required to be attached to the application form.
On 13 February 2019, BHRG Inc was registered as an incorporated association under the AI Act, becoming a body corporate enjoying legal entity status.
On 15 May 2019, a general meeting was held. How many people attended is not clear from the attachment to Mr Fairbairn's affidavit sworn 15 December 2019. Six names are listed under attendees. The document includes a large area of blank page after these names. A heading "apologies" has no entry underneath it. Mr Fairbairn stated in his oral submissions that names were redacted. The meeting was to "discuss legal options, action, ways forward". At this meeting, it was resolved that the office bearers of unincorporated BHRG voted in in January [2019] would continue through into the incorporated entity and to continue with the current course of legal action (above in [20]).
These proceedings were commenced on 22 May 2019 by Grant Long solicitor as nominated legal representative for BHRG Inc. Mr Long filed a notice of ceasing to act on 25 November 2019.
On 3 November 2019, BHRG Inc held a general meeting at which the members voted to continue the legal proceedings without a solicitor and appointed two agents (above in [17]).
A committee meeting was held on 12 December 2019 dealing with the appointment of an agent in these proceedings inter alia (above in [24]).
It is necessary to relate these events to the scheme established by the AI Act, AI Regulation and Model Constitution and to construe those instruments. Principles of statutory construction require the words of a statute to be considered in their context: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [381]-[382] (McHugh, Gummow, Kirby and Hayne JJ) cited in Minister Administering the Crown Lands Act 1989 v New South Wales Aboriginal Land Council (2018) 231 LGERA 145; [2018] NSWLEC 26. Section 33 of the Interpretation Act 1987 (NSW) requires a construction which promotes the purpose or object of an Act over one which would not. A general principle of statutory construction is that where words are plain and unambiguous they should be given their ordinary and grammatical meaning: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26 at 305 (Gibbs CJ) cited in Roden v Bandora Holdings Pty Ltd (2015) 213 LGERA 103; [2015] NSWLEC 191 at [42]. In this case the interaction of the AI Act and the Model Constitution in Sch 1 of the AI Regulation requires close scrutiny so that their operation can be rendered harmoniously, if possible.
Section 32 of the Interpretation Act states that an instrument (here the Model Constitution) should be construed as operating to the full extent of, but not exceeding, the power conferred by an Act under which it is made. According to D C Pearce and R S Geddes, Statutory Interpretation in Australia (9th ed, 2019, LexisNexis Butterworths) a general rule of construction is that delegated legislation made under an Act should not be taken into account for the purposes of interpreting the Act itself (see for example Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60; [2007] NSWCA 137 at [41], Waugh Hotel Management Pty Ltd v Marrickville Council (2009) 171 LGERA 112; [2009] NSWCA 390 at [94]): at [3.48]).

[23]

Registration in February 2019

BHRG Inc was registered as an incorporated association on 15 February 2019. It is necessary to understand the application process. The requirements for registration of associations are specified in Pt 2 Div 1 of the AI Act. Under s 6 an application can be made by a public officer on behalf of five individuals or an unincorporated body having five or more members inter alia. Mr Fairbairn describes BHRG as an "unincorporated group" in his affidavit of 15 December 2019. A meeting of people he described as members met on 7 February 2019 and agreed on a volunteer committee and to make an application for registration. Mr Fairbairn attached to his first affidavit dated 12 December 2019 a document headed "Register of Committee Members" which lists seven people identified as being appointed to the committee on 7 February 2019. In his second affidavit dated 15 December 2019 Mr Fairbairn stated that he understood this document had to be submitted to Fair Trading as part of the application for registration.
According to the completed application form annexed to Ms Edward's affidavit the application for registration was not made as an unincorporated association but by five individuals. I infer from Mr Fairbairn's affidavit of 15 December 2019 which refers to a decision of the unincorporated group to register that what was intended was that the unincorporated body make application for incorporation. That is not what occurred. Under s 6(2)(a) an application on behalf of five or more individuals must be authorised by each of the individuals. A copy of the completed application form made on behalf of five individuals by the public officer was produced. The documents produced to Ms Edwards by Fair Trading pursuant to a notice to produce did not include the Register of Committee Members prepared on 7 February 2019. The other requirements of an application are identified in s 6(3). Most relevantly the approved form (subs (a)) requires the identification of a public officer (subs (e)). Under s 4 of the AI Act, "approved, in relation to a form, means approved by the Secretary".
The basis for the application for registration as an incorporated association has consequences for membership of the new association. Membership of a newly registered association is provided for in the Model Constitution in cl 2(3) in this case. It provides that a person is taken to be a member of the association if that person was one of the five individuals on whose behalf an application for registration of the association under s 6(1)(a) of the AI Act was made. If an unincorporated association becomes incorporated cl 2(b)(i) would have applied and the members of the unincorporated body immediately before the registration of the association would be taken to be members of the incorporated body.
New members can apply for membership of an association in writing to the secretary of the association who sends applications to the committee to approve or reject, as provided for in cl 3 of the Model Constitution.
A register of members must be kept and be made available for inspection to other members as provided for in cl 7 of the Model Constitution. I note for completeness that s 4 of the AI Act contains definitions of "committees", "committee member", "model constitution" and "public officer" but I do not need to further refer to the definitions.

[24]

Establishment of committee prerequisite to commencement of legal proceedings (Minister question (1))

In the decision tree identified by the Minister, the first question raised is whether the establishment of a committee is a prerequisite to the commencement of legal proceedings. Marist's notice of motion assumes that it is. According to Dal Pont (footnotes omitted): Powers exclusively vested in management committee 8.10 While only the New South Wales Act explicitly provides that the committee may exercise such of the association's powers as are not required by the Act or its rules to be exercised by the association in general meeting, the same can be inferred in the remaining jurisdictions [s 28(3) AI Act]. This is because, consistent with company law in this context, the case law acknowledges that where the rules of an association vest in its management committee certain responsibilities and discretions, it is not competent for members, in general meeting or otherwise, to direct the committee in their exercise. …
Commencement of legal proceedings is not referred to in the AI Act or the Model Constitution as a matter which must be determined by a general meeting of members, suggesting the decision to commence these by an association is to be exercised by a duly appointed committee as the body managing the affairs of an incorporated association. Clause 26 of the Model Constitution specifies what business must be transacted at an AGM in subcl (2)(a)-(d). No matters of business to be considered at general meetings are otherwise specified in the Model Constitution.
Under s 28(3) of the AI Act the committee may (emphasis added) exercise such powers of the association not required by the AI Act or the Model Constitution (in this case) to be exercised by the association in a general meeting. Under cl 13 of the Model Constitution the powers of the committee are specified as being to control and manage the affairs of the association, exercise all functions not required to be exercised by a general meeting of members of the association and do all things necessary for the proper management of the affairs of an association. Under cl 13 of the Model Constitution the committee's role is subject to the AI Act, AI Regulation and any resolutions passed by the association in general meetings. No evidence of resolutions being passed requiring that a general meeting determine if legal proceedings should be commenced has been provided. The commencement of legal proceedings by BHRG Inc is therefore a decision for a duly appointed committee.
Such a conclusion is supported by Massey. At issue was whether a resolution of a general meeting of a corporation could authorise the commencement of legal proceedings. The Court of Appeal held at [45] that where the articles of association of a company provide that the business of the company is to be managed by the directors, there is generally no power in the general meeting to make management decisions or to control or direct the board of directors in the management of the company. This applies to the commencement of legal proceedings citing Kraus v JG Lloyd Pty Ltd [1965] VR 232. By analogy, the same finding applies here. The cases cited by Marist above in [36] further support the proposition that a general meeting cannot exercise powers belonging exclusively to the board of directors and has no power to make management decisions.
I agree with the Minister that given s 28(1) of the AI Act requires an association to establish a committee to manage its affairs and as the commencement of legal proceedings are part of the affairs of an incorporated association, the establishment of a committee is a prerequisite to their commencement.

[25]

Establishment of first committee of incorporated association (Minister question (2))

As these proceedings were commenced before the first AGM was held, I now turn to consider the validity of the establishment of the first committee of BHRG Inc in light of the statutory scheme. Mr Fairbairn's evidence is that he understood a committee was required to be established at the time of registration and this was done.
The Second Reading Speech at the time the Associations Incorporation Bill 2009 (NSW) (AI Bill) was presented stated that the AI Bill sought to streamline and simplify administrative procedures for groups and assist associations to manage their affairs more efficiently. The objects inserted in the legislation as outlined in the Second Reading Speech were "to establish a scheme for the registration of associations engaging in small-scale, non-profit and non-commercial activities, and to provide for the corporate governance and financial accountability of associations". The Second Reading Speech stated that significant changes would be made, making it easier for associations to manage their own affairs while ensuring they remain accountable to their members and the public.
The provisions necessitating a first committee to be established at the time of registration under the AI Act vary from the repealed AI Act 1984 which expressly stated in ss 8(2)(d) and 21(1), extracted above in [12], how a first committee was to exist. Both the AI Act and the Model Constitution have general provisions dealing with the establishment and composition of a committee. Marist focussed on cll 14(1) and 15(6) of the Model Constitution in submitting that a committee can only be appointed at an AGM. The Model Constitution does not have provisions dealing expressly with the establishment of a first committee of a newly incorporated association. Clause 15(6) is a general provision about how committee members are to be appointed, backed up by cl 26(2)(c). Part 4 Div 3 s 37(1) of the AI Act makes provision for a committee to exist before the first AGM in that it states an association's committee must ensure that the association's first AGM is held within 18 months of registration.
As BHRG Inc identified, Pt 4 "Management of associations" specifies in Div 1 s 28 that an association must establish a committee consisting of three or more members to manage its affairs. Section 28(1) requires a committee to manage the affairs of an association and subs (2) specifies a minimum number of committee members of three or more members. The committee may exercise the association's powers that are not required by the AI Act or (in this case) the Model Constitution to be exercised by a general meeting of the association under s 28(3). The powers of the committee are otherwise identified in cl 13 of the Model Constitution which states that subject to the AI Act, the AI Regulation and other provisions of the Model Constitution and any resolution passed by the association in a general meeting, the committee controls and manages the association and does all things that appear to the committee to be necessary or desirable for the proper management of the association. Under s 28(4) a committee member's acts are valid despite any defect in appointment as a committee member. Dal Pont at [8.9] (footnotes omitted) states: Validity of acts despite defect in appointment 8.9 The New South Wales and Queensland legislation declares a committee member's acts as valid despite any defect in his or her appointment [citing s 28(4) of the Associations Incorporation Act]. This provision, which replicates the substance of provisions that have long existed in company law statutes, does not operate to validate acts of a person who assumes to act as a committee member without any purported appointment at all. Together with rules expressed in a similar fashion, it targets where a slip has been made in appointing a committee member, not where substantive provisions pertaining to an appointment have been ignored or overridden. [citing Luen Fook Tong Inc v Lowe [2011] NSWSC 1004 at [84] and Ahmed v Chowdhury [2012] NSWSC 1452 at [200]].
Section 37 of the AI Act and cl 25(1) of the Model Constitution require that an AGM be held within 18 months of registration and within six months of the end of an association's financial year. As already noted in [107] above s 37 requires the committee of an association to hold an AGM. As s 28 requires the establishment of a committee, a committee must exist before the first AGM is called, as BHRG Inc relied on and the Minister accepted.
On registration of BHRG Inc five people were deemed members of the association. On the date of registration five people could be committee members. The Register of Committee Members shows seven people. If five of the committee members were members of the association on its registration, that number complies with s 28(2) of the AI Act. That committee of five complies with ss 37(1) and 28(1) and (2) of the AI Act.
Marist also insisted that the first AGM can be called by the public officer, that position being required at the time of registration as an association as specified in s 34(5) of the AI Act. No duty of a public officer to call the first AGM is specified anywhere in the AI Act or the Model Constitution and such a requirement is contrary to s 37(1) which expressly requires the committee to hold the first AGM. I do not agree with Marist that the implied role of the public officer is to call the first AGM, there being no such express provision. The duties of the public officer are specified in s 34 of the AI Act and do not include holding an AGM.
Marist's approach to statutory construction gives inappropriately greater weight to the Model Constitution than the terms of the AI Act. The scheme specified in the AI Act, and to a lesser extent the Model Constitution, suggests that up to the time of holding the first AGM (which is required to be held within 18 months of registration) an incorporated association is to be managed by a committee created pursuant to s 28 with committee meetings to occur as required under s 30 of the AI Act (including when a constitution provides for meetings to be held). The Minister's submissions in [66]-[68] above support this conclusion, albeit the Minister submitted that a committee must have seven members relying on cl 14(2) of the Model Constitution.
Before registration nine BHRG members met on 7 February 2019 to approve incorporation and select a committee, as identified in the minutes extracted in [15] above. The Register of Committee Members was annexed to Mr Fairbairn's affidavit dated 12 December 2019 showing seven members.
The legal effect, if any, of the resolution at the general meeting of 15 May 2019 referred to in [20] above, several months after the date of registration in February 2019, of "office bearers of un-incorporated BHRG was voted in January. Office bearers continue through into incorporated entity, next AGM is due in January" arises. This resolution was not passed at an AGM.
There are some procedural irregularities with the copy of the minutes of the general meeting of 15 May 2019 annexed to Mr Fairbairn's affidavit dated 15 December 2019 as Marist and the Minister identified. The copy of the minutes of the general meeting is unsigned. The attendance list appears to list only six people. I infer from Mr Fairbairn's submissions that in fact more people attended but their names have been whited out/redacted in such a way that I cannot see any reference to them in the copy. Accepting that submission, the number of people attending the meeting is unknown on the evidence. The copy of the minutes does not make clear whether there were six or seven committee members (I have held above that the five members of BHRG Inc upon registration could be committee members, which is sufficient given the requirement for three or more committee members under s 28(2)). The Minister identified that a quorum of five people is required for general meetings by cl 29(2) of the Model Constitution suggesting that requirement was satisfied.
Given my conclusion that the initial committee of five (or seven depending on who was a member at the date of incorporation or subsequently) is valid until an AGM is held in accordance with the AI Act and Model Constitution, the meeting of 15 May 2019 confirmed the legal standing of the committee. It continues as a valid committee until the first AGM is held at which a new committee can be appointed. I consider that a properly constituted committee was established for slightly different reasons to those of the Minister. Whether it was established with five or seven members (the Minister submits seven is required in accordance with cl 14(2) of the Model Constitution) is difficult to know on the evidence. Either number satisfies the legislative requirements in place up to the holding of the first AGM as required by the AI Act, provided that all committee members were members of BHRG Inc. This finding would also apply if in fact there were six committee members as identified by the Minister's submissions in [77(c)] above.
A register of committee members must be kept as required by s 29 of the AI Act. Regulation 12 of the AI Regulation further specifies what must be kept in a register of committee members, as provided for by s 29(2)(d). A Register of Committee Members required by s 29 of the AI Act has also been kept. The one in Mr Fairbairn's evidence shows seven committee members. As I have identified it may be that only five members were required on registration.
My conclusion on the operation of the AI Act in relation to the first committee is not entirely satisfactory in that the comprehensive operation of the Model Constitution adopted by BHRG Inc which would generally be required to be complied with in all aspects from the date of its adoption need not occur, provided that the AI Act is complied with in relation to the committee. The principles of construction referred to in [95]-[96] above whereby the Model Constitution should be applied subject to the AI Act and the AI Act should not be interpreted in light of the Model Constitution apply however.

[28]

Section 1322 of Corporations Act does not apply in the Land and Environment Court

BHRG Inc argued that if any procedural irregularity was found this Court has jurisdiction to make an appropriate order to regularise proceedings in light of s 96 of the AI Act, enabling reg 18 of the AI Regulation which provides that any matter relating to associations is declared to be an applied corporations legislation matter for the purposes of parts of s 1322 of the Corporations Act. BHRG Inc argued that the Court could "cure" any legal failures to comply with the AI Act relying on Chowdhury at [78], [85], [233]-[234]. In Chowdhury the plaintiff sought a declaration that his displacement as general secretary of the incorporated association and the election of members of the incorporated association to its executive council were invalid as contravening the AI Act. Lindsay J in the Supreme Court made orders pursuant to s 1322(2) and (4)(a) of the Corporations Act against the plaintiff.
Chowdhury identifies the scope of the exercise of power under s 1322 of the Corporations Act. It can have no application in the Court simply because the Court has no power to make orders under that section, as submitted by Marist and the Minister. The Court is not identified as a court in s 58AA(1) of the Corporations Act for the purposes of s 1322 of that Act. I do not consider there is any ancillary jurisdiction of the Court which would enable me to make a declaration or orders as provided for in s 1322(4)(a) to the effect that any proceeding instituted is not invalid by reason of a contravention of the AI Act or the constitution of BHRG Inc. If such an order becomes necessary, I consider separate proceedings in the Supreme Court would need to be instituted.
I have held above in [127] that the Court has no jurisdiction to make an order under s 1322(4)(a) of the Corporations Act. Consequently, nor do I consider the other bases BHRG Inc submitted could be vehicles for the Court to make an order "curing" any defect in BHRG Inc's procedures under the AI Act are within power, (outlined in [59(a)], [59(c)]-[59(d)] above) such as s 22 of the LEC Act, the UCPR or Arnold. The appropriate vehicle is s 1322 and that can only be utilised by BHRG Inc in Supreme Court proceedings. What I can do is allow time for BHRG Inc to hold the necessary committee meeting to ratify its decision to commence legal proceedings. It should have the opportunity to do so.

[29]

Presumption of regularity not applicable

As set out above in [57] BHRG Inc submitted a presumption of regularity could prevail to render valid the commencement of proceedings. BHRG Inc relied on Cambodian Buddhist Society where the presumption of regularity was considered in the context of the AI Act, above in [57]. In that case the validity of elections of the governing body and management committee of the plaintiff was in issue. The dispute focussed on whether certain constitutional amendments concerning the conduct of elections purportedly passed in 2000 were valid. The defendants sought to invoke the presumption of regularity to argue that the amendments were valid. The plaintiffs submitted that the presumption of regularity was displaced given unambiguous evidence that the amendments were not passed by a majority. Sackar J held at [91] that the presumption of regularity only applies where there is an absence of evidence going to the act in question, citing Darley Australia Pty Ltd v Walfertan Processors Pty Ltd (2012) 188 LGERA 26; [2012] NSWCA 48 (Darley). The presumption did not apply given the existence of evidence plainly showing the amendments were not passed by the requisite majority.
In Darley McColl JA (with whom Macfarlan and Whealy JJA agreed) observed at [114]-[115]: [114] The presumption of regularity has been described as both a "rebuttable presumption of law" (Cross on Evidence, LexisNexis Butterworths, at [1175]) and "a presumption of fact, associated with a reasonable inference based on what ordinarily happens in the ordinary course of human affairs" (Hill v Woollahra Municipal Council [2003] NSWCA 106 ; (2003) 127 LGERA 7 (at [52]) per Hodgson JA (Ipp JA and Davies AJA agreeing)), whose "natural home … is public law": Minister for Natural Resources v NSW Aboriginal Land Council (1987) 9 NSWLR 154 (at 164) per McHugh JA. [115] The presumption of regularity has also been described as one which "arises from the ordinary course of business", being "a rule of very general application, that where an act is done which can be done legally only after the performance of some prior act, proof of the later carries with it a presumption of the due performance of the prior act": McLean Bros & Rigg Ltd v Grice [1906] HCA 1 ; (1906) 4 CLR 835 (at 850) per Griffith CJ (Barton and O'Connor JJ agreeing), citing Knox County v Ninth National Bank 147 US 91 (1893). In Minister for Natural Resources v NSW Aboriginal Land Council (at 164) McHugh JA explained its operation in the public law context as follows: Where a public official or authority purports to exercise a power or to do an act in the course of his duties, a presumption arises that all conditions necessary to the exercise of that power or the doing of that act have been fulfilled.
The nature of the presumption is identified by McColl JA in Darley extracted immediately above. It is debateable in light of these authorities that the presumption applies in this context in favour of BHRG Inc. Firstly, as a rebuttable presumption of fact concerning reasonable inference of what ordinarily happens in the ordinary course of human affairs, there is evidence about the circumstances of the appointment of a committee which raises issues about whether this was correctly done in the context of the AI Act and consequently whether these proceedings have been properly commenced. Secondly, under the presumption, when an act is done which can only be done legally after the performance of some prior act, here commencement of these proceedings by a properly appointed committee, proof of the latter act carries with it a presumption of the due performance of the prior act. This presumption cannot cure the problem that the committee has not authorised or is yet to ratify the commencement of these proceedings, the latter act. BHRG Inc cannot have the benefit of the presumption of regularity. For the reasons I have given above, I consider the committee was properly appointed.
Additional issues arose in the course of the December 2019 hearing as will now be considered.

[30]

Additional issues heard in 2020

Following argument on Marist's notice of motion on 18 December 2019, the issues in which I have considered above, Mr Fairbairn was provided with an opportunity to seek leave to rely on further evidence and make additional submissions. He did so by seeking leave to rely on an affidavit sworn by him dated 10 February 2020. On receipt of that affidavit Marist served a notice to produce dated 20 February 2020 on Mr Fairbairn seeking various records of BHRG Inc in relation to membership and proceedings at the AGM inter alia. BHRG Inc filed a notice of motion dated 3 March 2020 seeking an order that Marist's notice to produce be set aside in whole or part. Mr Fairbairn swore an affidavit dated 3 March 2020 in support of the notice of motion in which he objected to producing documents on the basis that the committee of BHRG Inc has at all times complied with the requests of its members that their personal information not be disclosed to Marist. In oral submissions addressing Marist's notice to produce, Mr Fairbairn stated that the reason BHRG Inc had agreed to keep the names and personal details of its members from Marist was because of Marist's behaviour. Mr Fairbairn expressed concern that Marist's lawyers would use information sought in the notice to produce for other purposes.
Marist objects to leave being given to BHRG Inc to rely on the affidavit of 10 February 2020 on procedural grounds. If the affidavit is able to be read Marist objects to most of its contents inter alia and seeks to cross-examine Mr Fairbairn and issue subpoenas and possibly rely on further evidence.
Additional issues that therefore may arise to be considered in the remainder of this judgment are: 1. whether BHRG Inc should be given leave to rely at all on Mr Fairbairn's affidavit sworn 10 February 2020; 2. if allowed to be relied on, whether all or some of that affidavit can be read; 3. if read, the legal consequence; 4. whether BHRG Inc's notice of motion dated 3 March 2020 seeking to set aside Marist's notice to produce documents dated 20 February 2020 arising from Mr Fairbairn's affidavit should be upheld in whole or part and also by inference whether the notice to produce serves any forensic purpose in these proceedings; and 5. if BHRG Inc is granted leave to rely on Mr Fairbairn's affidavit sworn 10 February 2020 should Marist be allowed to issue subpoenas and potentially serve further evidence?

[31]

Can affidavit of Mr Fairbairn sworn 10 February 2020 be relied on by BHRG Inc?

The first procedural issue to consider is whether the affidavit of Mr Fairbairn sworn 10 February 2020 can be relied on by BHRG Inc ([136(a)] above). The short affidavit of Mr Fairbairn sworn 10 February 2020 states: I say on oath: 1. I refer to my previous affidavits sworn in these proceedings. 2. I have attended every BHRG committee meeting and members meeting during 2019. I also attended the AGM in January 2020. At each of those meetings, more than 5 members were present. 3. 23 members attended the AGM held on 29 January 2020. Two members sent apologies. All motions proposed at the AGM were carried unanimously. 4. Annexed and marked "A" is a copy of the email sent by Mandy Barton on 8 January 2020 to all members regarding the proposed AGM together with the attachments to that email. 5. Annexed and marked "B" is a copy of the minutes of the AGM signed my me.
This affidavit is objected to by Marist on procedural grounds because leave was not correctly sought by the filing of a notice of motion by BHRG Inc with a supporting affidavit advising why it should be able to be read so late, the evidence to be relied on was closed before the substantive hearing on 18 December 2019 and the important need for finality of litigation dictates that leave ought not be granted by the Court. The affidavit attempts to cure defects which Marist needs to consider.
BHRG Inc relied on my orders of 18 December 2019 that: … 3. The Applicant to file and serve written submissions by 3 February 2020 in relation to new material in the First Respondent's reply including the challenge to leave granted to Mr Fairbairn to act as agent for the Applicant. If the Applicant wishes to rely on new evidence, it must make an application by 3 February 2020 to Her Honour's Associate by email. 4. The First Respondent to file and serve brief submissions in reply by 10 February 2020.
BHRG Inc is now not legally represented and allowance for that needs to be made in procedural determinations. When I made orders on 18 December 2020 contemplating further evidence being relied on, it was apparent that new issues had arisen in Marist's reply concerning the competency of the proceedings which were likely to warrant a response by BHRG Inc. The affidavit is dated 10 February 2020, later than 3 February 2020 as referred to in the orders of 18 December 2019. No substantial prejudice to Marist arises from that later date. I waived a requirement to proceed by way of notice of motion as would be the usual procedure. I consider the affidavit can be read subject to whether I uphold any of Marist's objections to most of the affidavit on the basis that it is hearsay inter alia.

[32]

Marist's objections to Fairbairn affidavit dated 10 February 2020

Marist objected to the reading of Mr Fairbairn's affidavit of 10 February 2020 ([136(b)] above). Its counsel submitted by way of criticism that the affidavit details attempts to cure substantive defects in the management of BHRG Inc as identified by Marist. That does not render it inadmissible.
Paragraph 2 of the affidavit is controversial and is hearsay, as Marist has already shown on the evidence and by reference to the AI Act. There has never been the valid appointment of a committee and therefore committee meetings could not have occurred during 2019. I have not accepted this submission above in [113]-[114]. Paragraph 2 can be read, it is not hearsay.
According to Marist, facts asserted in pars 3 and 4 are hearsay. Mr Fairbairn has not proven that the meeting that occurred was an AGM of the membership properly convened. The purported appointment of the committee on 29 January 2020 was entirely invalid under its constitution. The membership of BHRG Inc cannot retrospectively resolve to commence proceedings in 2019 or so resolve to do that in 2020 as management is only vested in the committee (I agree and I deal with this issue below in [147]-[150]). These objections are disputes as to the legal effect of what is attested to. They are not a proper basis for objection and the paragraphs are not hearsay. They may be read.
According to Marist, par 5 annexes minutes of a meeting of members however there is no evidence to prove the meeting was validly called. The membership of a general meeting cannot appoint committee members and it cannot ratify decisions of a non-existent committee in any event. These objections are about the legal effect of the events attested to and are not a proper basis for not allowing the text to be read.
Mr Fairbairn submitted that everything in the affidavit was factual and not objectionable.
I find that Mr Fairbairn as president of BHRG Inc is able to attest to matters of which he has personal knowledge. All the paragraphs can be read on this basis. That the affidavit is an attempt to overcome procedural irregularities is not a basis for finding it objectionable. The annexed minutes are admitted into evidence. The question then arises on BHRG Inc's case whether by later resolution at its first AGM held in January 2020 BHRG Inc could ratify its earlier decision to commence proceedings.

[33]

Marist and Minister submitted AGM/general meeting legally ineffective to ratify commencement of legal proceedings

Marist and the Minister submitted that the AGM/general meeting was legally ineffective to ratify commencement of legal proceedings ([136(c)] above). If the affidavit of Mr Fairbairn dated 10 February 2020 is allowed to be read contrary to Marist's submissions the actions attested to in the affidavit are legally ineffective according to Marist and the Minister. The purported ratification of all previous decisions of the committee at the 29 January 2020 AGM is not permissible or valid. Firstly, there never was a committee that made decisions that could be ratified. I have held to the contrary. Secondly, the membership of a company cannot manage it - that is the role of the directors. Accordingly, the membership cannot ratify decisions that must be made by a board of directors or a committee of an incorporated association. This fundamental principle was restated in Massey at [71] where it was affirmed that a general meeting of the shareholders does not have the power to ratify the commencement of legal proceedings where that decision rested with the board of directors. There are no residual powers in the company membership to manage the company (subject to limited exceptions) where management rests with the board of directors.
Marist submitted that a small group of people have been undertaking litigation in the name of an incorporated association believing they are members of a committee of that association when they are not and never have been. According to Mr Long's affidavit of 18 September 2019 BHRG Inc had a membership of 84 at that time (I note this affidavit was not read in this part of the proceedings). The membership has never elected a committee and this litigation is unauthorised. While s 28(4) states that a committee member's acts are valid despite any defect in appointment, this cannot apply where no appointment at all has occurred, see Dal Pont p 207 at 8.9. I have not accepted this submission above in [111]-[118].
The Minister made brief submissions to assist the Court to the effect that as the affairs of an association could only be conducted by a committee, its actions cannot be ratified by a general meeting including an AGM. Any ratification must be by a duly appointed committee. I agree.
I note that ss 23 and 24 of the AI Act specify assumptions that are entitled to be made in relation to various aspects of an incorporated association's affairs. These do not apply to the particular circumstances before me. Even if they do apply, Marist does not wish to rely on any assumptions in any event and is not required to.

[34]

Consideration of outstanding issues arising in 2020

I have held that a valid committee existed at the time proceedings were commenced. A different committee can ratify the earlier decision by a general meeting of members to commence proceedings. I understand this is accepted by Marist and the Minister. The necessary ratification of the decision to commence these proceedings has yet to be made by the committee of BHRG Inc. There are outstanding issues arising from the hearings in 2020, as identified in [136(d)] and [136(e)] above. I consider below in [157] that further court time should not be spent answering these for the reasons I will now discuss.
Section 19 of the AI Act states that an association has the legal capacity and powers of an individual both in and outside NSW, and its legal capacity is not affected by doing something which does not serve an association's interests. In RAID, responding to Qube's challenge to the basis of registration of the incorporated association, Preston CJ observed at [110] that unless and until a court of competent jurisdiction sets aside the registration of the association, the Court should accept the regularity of both the application for registration and the determination of that application. In the Court of Appeal in Qube Holdings Ltd v Residents Against Intermodal Development Moorebank Inc, Macfarlan JA (Meagher and Payne JJA agreeing) held at [50] that even if Qube's submission that RAID Moorebank was not an "unincorporated body" of the character referred to in the AI Act was accepted, that "would not mean that RAIDM Inc's registration was invalid". This view was based on his Honour's conclusion at [46] that the AI Act does not evince a legislative intent that non-compliance with the application requirements in s 6 will invalidate a registration resulting from an application which, although defective, was accepted by the Secretary. While addressing a different issue to that before me, the RAID cases underline the importance of registration of an incorporated association as confirmed by s 19 of the AI Act.
It is instructive in considering BHRG Inc's predicament to consider observations in McEvoy at [28]-[32] [footnotes omitted]: [28] The fact that proceedings have been commenced without authority does not render them a nullity. As much was recognised by the House of Lords in Russian Commercial and Industrial Bank v Comptoir D'Escompte de Mulhouse. In that case it was held that defendants wishing to dispute the authority of the manager of a branch of an expropriated Russian bank ought to have moved to have the bank's name struck out as plaintiff; it was not open for them to raise the issue by way of defence to the action. By implication, the court was prepared to countenance the action's proceeding to judgment with the question of the plaintiff's authority to bring it unresolved. As Ferris J, sitting in the Chancery Division in Re Oriental Gas Co Ltd, remarked of the decision, The court is thus prepared to contemplate the anomalous result that an action may be tried on its merits in a case where there was no authority to commence proceedings in the name of the plaintiff. He went on to observe: If the decision is in favour of the plaintiff this may cause no real problem, because those who have authority to give instructions on behalf of the plaintiff will be likely to adopt the favourable decision. [29] In the Australian context, in Doulaveras v Daher the New South Wales Court of Appeal similarly held that a challenge to (in that case, a tutor's) authority to bring proceedings could not be raised in defence pleadings; instead, the court might, on a proper application or of its own motion, litigate the question of authority and take steps to bring any abuse of process entailed in unauthorised proceedings to an end. [30] It is well established that the commencement of proceedings without proper authority may be cured by subsequent ratification. In Danish Mercantile Co Ltd v Beaumont, an action was commenced in the name of a company without necessary approval by a general meeting or by the board of directors, but the action was adopted some months later by the liquidator appointed on the company's winding up. Subsequently, the defendants applied by motion to strike out the name of the company as a plaintiff. Jenkins LJ observed that the practice of the court in cases where there was dispute as to the authority for use of a company's name as a plaintiff was to adjourn any motion to strike out the company's name with a view to the holding of a meeting to determine whether the company adopted the bringing of the action. It was, Jenkins LJ said: ...open at any time to the purported plaintiff to ratify the act of the solicitor who started the action to adopt the proceedings, to approve all that has been done in the past, and to instruct the solicitor to continue the action. Similarly, in Alexander Ward & Co Ltd v Samyang Navigation Co Ltd and Presentaciones Musicales SA v Secunda it was held that proceedings taken without authority could be subsequently ratified; in the latter case, ratification was effective notwithstanding the expiration of the limitation period. [31] In Ox Operations Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd (in liq), Finkelstein J discussed and applied the English line of authority as to ratification of proceedings, as well as noting the practice, where an action had been brought without a company's authority, of permitting the company to convene a necessary meeting to consider whether it would adopt the action. In Victoria Teachers Credit Union Ltd v KPMG the Victorian Court of Appeal similarly recognised the principle that a client could, by subsequent ratification, validate the commencement of an action without authority, the ratification relating back "so as to be deemed equivalent to an antecedent authority." [32] The disinclination to characterise improperly constituted proceedings as a nullity is consistent with the approach of the High Court in Berowra Holdings Pty Ltd v Gordon. Of particular significance to the QCAT proceedings here is the distinction the court made between an order made by an inferior court without a power which was a nullity and an order... made within power but improperly, in which case, until set aside by a superior court, the order had to be obeyed.
This extract from McEvoy identifies that a consequence of incompetently commenced proceedings is not necessarily their dismissal. McEvoy identifies that procedural irregularities concerning court proceedings need to be considered from the point of view that proceedings are not a nullity. This case is unlike Massey where proceedings commenced without authority by a company were dismissed. In Massey it appears that the decision to dismiss proceedings at first instance was made because no entity such as a liquidator then existed to ratify the commencement of proceedings and/or make an application under s 263 of the Corporations Act which concerns bringing proceedings by a company, at [72]. BHRG Inc is very likely to have a committee which can ratify the decision to commence proceedings.
I have not resolved all the procedural matters set out in [136] above. Firstly outstanding is whether BHRG Inc's notice of motion seeking to set aside Marist's notice to produce documents seeking details of membership of BHRG Inc should be upheld (see [136(d)] above). BHRG Inc's objection was essentially that it did not trust handing over membership records to Marist's solicitor. That is not a proper basis for objection and can be overcome by Marist's solicitor entering into a confidentiality undertaking. An issue that was not canvassed at the 20 March 2020 hearing was the forensic purpose of the notice to produce issued by Marist's solicitor. Given my finding on validity and the availability of ratification, it is debateable whether Marist's notice to produce served on BHRG Inc seeking membership information serves any forensic purpose in the context of these proceedings. My strong preference is that Marist not press its notice to produce, with the result that BHRG Inc's notice of motion need not be pressed. As I express below in [157], I hope that further hearing time will not be spent on this issue.
Secondly, I have held above that the affidavit of Mr Fairbairn sworn 10 February 2020 annexing minutes of the AGM held on 29 January 2020 can be read. At the first AGM in January 2020 a committee was appointed according to the minutes. Marist's counsel has said that if the affidavit is read he wants the opportunity to cross-examine Mr Fairbairn, and issue subpoenas (to whom is unknown) (see [136(e)] above). Marist submitted that BHRG Inc has not explained why the alleged meeting of 29 January 2020 was not called earlier and appears to accept that up until that date the proceedings were commenced without the authority of a validly appointed committee. These submissions cannot apply given my finding that a committee was formed as required by the AI Act and any decision to commence court proceedings can be ratified. I infer that Marist's counsel also wishes to challenge whether an AGM was held in accordance with the AI Act and presumably whether a committee was correctly appointed. I do not favour further court time being spent on that issue.
No criticism of any party is intended by the following comments which are motivated by the overarching need to progress this matter in the most efficient manner overall. The parties and the Court are now in danger of spending far longer on these procedural issues than the substantive proceedings. The final hearing was set down for two days in December 2019. The procedural matters have now occupied much the same amount of time and have caused me to prepare this lengthy judgment. They will take up more time if allowed to do so. There is potential for further procedural dispute which will require further Court time and the parties' resources if all the additional motions and parties' issues are allowed. I am particularly conscious that Marist, while a charity, is a relatively large organisation with substantial financial resources represented by senior counsel and solicitors. BHRG Inc is presently unrepresented and its agent Mr Fairbairn is not legally trained. The overarching obligation of the Court and the parties in s 56 of the Civil Procedure Act is to ensure the just, quick and cheap disposal of proceedings. Spending further time on procedural matters which can be cured by the BHRG Inc committee is not a good use of the Court or the parties' time and money.
Regardless of the outcome of these procedural motions, the members of BHRG Inc have the benefit of registration as an incorporated association. I accept Mr Fairbairn's evidence and submissions that members have been kept informed about what is intended, such as above in [56] where Mr Fairbairn submitted that ongoing communication has been maintained between the BHRG Inc committee and BHRG Inc members through regular meetings and email circulars. Through the affidavit material read by BHRG Inc, BHRG Inc members and its committee appear to be informed about these proceedings and support their commencement and continuation. I do not accept that a small number of BHRG Inc members are engaging in a frolic on their own, contrary to the thrust of Marist's submissions. I note that s 30A of the AI Act specifies that the duty of a committee member is to carry out his or her functions with due care and diligence. Under s 30B no liability arises for a committee member if a matter or thing is not done if the committee member acted in good faith. No suggestion arises from the evidence that the committee members have not acted in good faith and not exercised due care and diligence.
Consistent with my finding that BHRG Inc's committee is able to pass the necessary resolution to ratify the commencement of these proceedings, a date for the final hearing should be set as soon as possible. Evidence of the passing of a sufficiently precise resolution ratifying these proceedings should be provided by BHRG Inc in a timely manner.
The parties should consider this judgment before any final orders, if any, are made and also consider the further conduct of these proceedings at a final hearing. My preference would be an order that Marist's notice of motion dated 17 December 2019 be discontinued with each party paying its own costs, Marist's notice to produce dated 20 February 2020 not be pressed so that BHRG Inc's notice of motion dated 3 March 2020 seeking to set aside the notice to produce can also be discontinued with each party to pay its own costs of that motion. A timeframe to enable consideration will be discussed with the parties.

Black Hill Residents Group Incorporated v Marist Youth Care Limited

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