345 It is a common criteria of membership of an association that the applicant subscribes to the objects of the association. Although nothing turns on this point, I believe the requirement that the applicant subscribes to the objects of the centre is, indeed, a fifth criteria of membership. However, it would have been far better for the criteria to be included in cl 6.2.

346 Clause 6.3 substantially replicates cl 6.1. This is yet another example of the poor drafting of this constitution. Membership of the centre is said to be for an indefinite period: cl 6.4. The various categories of membership are further defined. An ordinary member must be a natural person: cl 6.5.1. Supervisors are ordinary members who are appointed by the Board to oversee the operations of the Board of Directors: cl 6.5.2, and it would appear that no one was appointed to this class of membership. An associate member can either be a natural person or a corporate body, who wishes to assist the Centre in achieving its objects and in its activities: cl 6.5.3. Foundation members are defined as 'the first contributors of all the Centre's assets at the Centre's formation stage': cl 6.5.4.

347 It is clear from these provisions that approval of the Board is required before a person can become a member. However, under cl 8.3, members of the board must be elected by ordinary members at an AGM. Clause 11.9.3 provides that a quorum for a general meeting is 30 ordinary members. The consequence then is that 30 ordinary members are required to elect a board which, once elected, is the means by which a person becomes an ordinary member. Counsel for the defendants described this situation as a 'nonsense'. It is certainly a good example of what is commonly referred to as a 'catch-22' situation.

348 The clauses of the constitution which deal with the appointment of directors states that the board shall consist of a minimum of five and a maximum of nine elected members: cl 8.2. Clause 10.1.6 provides that only ordinary members are eligible for election to the board of directors. Consequently, a foundation member may not be a board member of the board elected at the AGM. The final part of cl 10.1.6 does not appear anywhere else in the constitution.

349 It can be seen from cl 6.5 that there is no express prohibition on a person being placed into more than one category of membership. For example, a person can be both an ordinary member and a supervisor. However, to also be an ordinary member, a foundation member would need to meet the criteria under cl 6.2 and be placed into that membership group by the board under cl 6.5. Consequently, unless the foundation members were to approve their own applications, they could not be a member of the first elected board. However, once the board was elected, they could apply for ordinary membership and stand for election at the next board election. Counsel for the defendants described this as a somewhat strained outcome, a view with which I agree. Counsel also considered that such an approach would seem to defeat what a foundation member is and should be recognised to be. A better approach would be an amendment to the constitution allowing foundation members to vote.

350 The defendants' submission was that the only way to make sense of the membership provisions of the constitution is to recognise a distinction between the formation stage and the operation stage of the Association. It was further submitted that the constitution only identifies foundation members as the means by which the Association commences its activities. Counsel for the defendants described the foundation members as 'the moving force which leads the body to its creation or incorporation'. That is, they are the means by which the organisation can become a separate legal entity and be registered as an association. The requirement for there to be at least five members in any body proposed for incorporation is said to be consistent with this interpretation.

351 The defendants submitted that the foundation members are the people who can trigger the further steps: to invite people to become members, to arrange a general meeting and to manage the affairs of the Association until the other steps can be achieved. In other words, the foundation members constitute the inaugural board which serves through that formation period. The inaugural board receives the applications for membership and, on approval, allocates the members to any one of the three membership categories. According to counsel, no allocations may be made to the final category of foundation members as that category would be closed. At the next AGM, the members appointed by the inaugural board then vote as to who constitutes the first elected board of the Association. In essence, the submission made on behalf of the defendants was that cl 6.5 should not be given unjustified status and the most appropriate interpretation was that the board described in cl 8.3 and cl 8.5 is the board appointed after the AGM.

352 Counsel for the defendants conceded in his submissions that, from the start, the originators seem to have approached their role on the basis that they were the Association and operated in a de facto sense as both members and directors. A situation where the people who have put their money into an organisation, and who are the only people in the organisation at that time, actually have the running of the organisation, in my view, accords with common sense. In this case, at the time of incorporation, the only members of the Association were the six originators. Even if they could properly be described as ordinary members and had held an AGM at the outset, they could only have elected themselves. For that reason, despite the terms of cl 8.3, I believe there is considerable force to the defendants' submission that the six original members should act as the inaugural board of directors of the Association in order to overcome the fact that the terms of the constitution simply do not address the circumstances which applied at that time.

353 However, this approach could only be justified on an interim basis. Once there were sufficient members, formal processes for the election of board members should have commenced, thereby preventing the organisation from becoming a vehicle for personal agendas as opposed to a separate legal entity operating fairly and democratically in accordance with its constitution.

354 Counsel for the defendants identified the Association's problem as the fact that no one understood English and, therefore, no one read the constitution. This would not be a problem if the persons running the organisation were truly interested in identifying the rules and requirements under which the Association was to operate. All that was required was something as simple as translating the constitution and any relevant provision of the Act into the Chinese language. This simply was not done, despite Master Wang, Tiao and Hui Ping Wang being made aware by Chou at the 8 April meeting that the content of the constitution should affect the way in which the Association was run. Consequently, I do not see the fact that the originators could not understand English as providing any explanation for why the Association was not run in accordance with its constitution and the law. The opposition to Chou's request for a copy of the Constitution supports the conclusion that the intention of Master Wang, Tiao and Hui Ping Wang was to operate the Association unfettered by any such constraints.

355 The plaintiff's contention is that the people who were the initial contributors of funds for the purchase of the property and the building of the temple were all foundation members and were the only members of the Association. Therefore, the list of the foundation members is the list appearing on the red commemorative banner.

356 In an effort to point out the difficulty with such an approach, counsel for the defendants questioned Lai about a number of the entries on the banner. There are a number of donations from other temples and two from members of a Pu-Kuan association in Hong Kong. There is an entry from staff members of 13th class of Chun Su College, who donated some lamps, and one for the Happy Buddha restaurant for food. The point being made was that these organisations could not be foundation members simply as a result of making a contribution. Of course, another organisation may be an associate member as there is no requirement for an associate member to be a natural person as there is with ordinary members. However, I do see difficulties with the proposition that such organisations could be foundation members.

357 On behalf of the plaintiff it is also said that there were no members when the Association was incorporated. It was said that, although the DOCEP application form asserts that there were six members, the person who signed the form, Mr Tong, could not say who they were. The proposition put by counsel for the plaintiff was that Mr Tong simply failed to ensure there were any members and the assertion on the form is false.

358 I am not persuaded that this is a fair statement of the situation. The evidence indicates that, prior to the incorporation of the Association, a group of adherents of the I-Kuan Tao religion worshipped at a temple in Master Wang's house. Master Wang, Lai, Chou, Tiao, Kuo and Hui Ping Wang were members of that group and came together to form an association for the purpose of raising money, purchasing land and building a much larger temple in which to worship. They decided that their association should be incorporated and Lai instructed Mr Tong to apply for incorporation on behalf of the six of them. The fact that Mr Tong may not have been able to identify the members when he asserted that the Association had more than five members does not mean that there were not more than five members, as required.

359 Counsel for the plaintiff submitted that the constitution would make sense if there were provision for 'incorporating members' but there is no such provision. It was said that it is not possible to draw a conclusion that the 'board members' are members of the Association let alone all the members. Further, this is said to be contrary to the DOCEP evidence and the evidence of Mr Tong. It was also said that there is no reason to distinguish between the originators and the many other persons who contributed to the funds that were used to obtain the land and build the temple. I would have thought that one difference was that the originators were the driving force of the Association, were the first contributors and were the ones responsible for the decision making and for seeking out all subsequent contributions.

360 Of the five originators who gave evidence, they each considered themselves to be a foundation member of the Association. Although Master Wang was deceased, he was referred to by others as a foundation member. Both the plaintiff and the defendants called a number of individuals to give evidence, inter alia, of their understanding of their status as a member and the means by which that status was bestowed on them. Of those called by the defendants, their membership was said to be based on the approval of their application for membership in 2005. In the case of those called on behalf of the plaintiff, the basis of their belief that they were members was that they contributed sums of money for the building of the temple and had been baptised into the I-Kuan Tao religion. The plaintiff's witnesses did not allege they were foundation members. Although the view of the witnesses is not determinative of the issues, it is clear that the representative group of contributors to the Association drew a distinction between those who first came together to form the Association, the originators, and those who made donations to the Association up until the opening in 1996.

361 In his submissions, counsel for the defendants described the constitution as a living document which is supposed to enable and enliven the way in which the people who subscribe to it relate to each other within the structure. I accept that, as far as possible, a constitution should be construed in a way which enables the association to operate and move forward. However, there must be limits to such an approach. Creating unfairness to persons who at all times have acted appropriately would be one situation where, in my view, the aim of enabling the association to move forward should not be paramount.

362 In all the circumstances, I prefer the construction of the constitution put forward by the defendants. It seems to me that the only way to construe the constitution so as to allow the Association to function at all from the outset is to identify a formation stage by which those involved in incorporating the Association can operate it whilst attracting membership sufficient to hold an AGM. If the membership is not sufficient, it would then be for the foundation members to consider whether the Association should be wound up. It would have been far better if the constitution had specifically dealt with this formation stage. However, that not being the case, I believe the better interpretation is that the originators are the foundation members and were entitled to act as the inaugural board of directors pending the membership increasing to a level where an AGM could be held and a board of directors voted in. Therefore, it is only when the membership has reached the appropriate level that cl 8 comes into play.

363 I am not at all persuaded by the view put forward by counsel for the plaintiff that the foundation members were every person who, until the opening of the temple, made a contribution to the Association, however small, and irrespective of whether they wished to be, or could in fact be, a member of the Association. Whilst the definition of foundation member requires a fairly arbitrary cut off point, it seems to me that the period of time involved in the purchase of the land and the building of the temple cannot properly be described as the formation stage of the Association. It may be the formation stage of the temple, but not of the Association itself. Further, such a construction does not allow for management of the Association other than by every member, which has obvious difficulties. It also does not explain why the originators became or assumed the role of board members when there was no basis to differentiate between them and other foundation members. Neither does this construction assist in determining ordinary membership, a prerequisite for the operation of the Association in accordance with the constitution. The result would be a significant number of founding members but not a single ordinary member to allow the Association to move forward.

364 Consequently, I find that, under the terms of the constitution, the six originators were the foundation members of the Association as well as the inaugural board members and were entitled to manage the Association until the AGM at which time, if there were sufficient membership, the first elected board of directors would take over management of the Association.

365 The next issue raised for consideration is the period during which the foundation members could properly constitute the inaugural board of directors, although the finding I have just made effectively addresses this issue. Clause 8.5 provides that all office bearers will hold office for a period of three years and unless re-elected, their positions shall be terminated at the conclusion of the AGM at which an election is held.

366 Counsel for the defendants submitted that, if the originators are the foundation members and the board members, they would hold office until the next AGM which was held in 2006. Counsel did refer to the three year maximum period in cl 8.5 but submitted that if the board are the members and have acted as the members and the residual power lies with the members then they can simply continue to operate as if they had re-elected themselves at regular intervals and dispense with the formalities. Counsel added the proviso that it must be in the interests of the Association for this to occur. However, counsel expressed the view that it must be in the interests of the Association, because otherwise the Association would be without the means of acting in its own interests. Counsel for the defendants noted that the foundation members, as directors, would retain the power under the constitution to approve applications for membership. In my opinion, it is not in all circumstances that it is in the interests of the Association, as opposed to the interests of the inaugural board of directors, for the Association to continue to operate.

367 The purpose of the defendants' analysis is to suggest that the foundation members constituted the inaugural board until the general meeting held in 2006 when there was a board election. The contrary argument is said to be that, if no AGM is held within the three year period or immediately after the expiration of the three years, then there would be no directors of the Association. However, as I understand it, both positions are dependent on there being no ordinary members prior to that time.

368 I am not persuaded by the defendants' submissions on this issue. As I have already concluded, the board of directors referred to in cl 8 is a board of directors elected by ordinary members at an AGM. Consequently, the three year period of office is the appropriate time frame for board members elected in that way. It is not the appropriate time frame for the inaugural board operating through the formation stage. Consequently, I do not accept that after three years, if there has been no AGM and no election of board members, the inaugural board made up of the foundation members must cease to operate. However, neither do I accept that the inaugural board could simply continue on, either by notionally re-electing itself or by some other means, until such time as the majority of the foundation members saw fit to call an AGM, in this case in 2006. Such a construction would only encourage those who wished to personally control the Association to continue in office rather than hand over to an elected board of directors. It may be that, if the membership is growing but not sufficiently quickly to be at the required level of 30 members at the time an AGM is to be held to elect a new board of directors, it would be in the interests of the Association for the inaugural board to continue to operate the Association but only for the purposes of increasing the membership to the required level and then holding a delayed AGM.

369 Consequently, it is my view that, although the foundation members were entitled to act as the board of directors pending the membership increasing to the necessary level, once the membership reached that level an AGM should have been held in accordance with the constitution. Clause 11.2 of the constitution requires an AGM to be convened not later than 30 October of each year. In other words, in my opinion, an AGM should have been held no later than 30 October in the first year that the membership reached 30 members. In Popovic v Tanasijevic [2001] SASC 289, the South Australian Full Court referred with approval to the decision in Green v Page [1957] Tas SR 66, 78 - 79, where it was held that, even if a provision of the constitution requires the AGM to be held in a particular month it by no means follows that an annual general meeting held at a later time must be treated as having been invalidly convened and unable legally to do any business. It was further held that the legal duty to convene the meeting did not cease to exist because it had not been performed within the prescribed time: Green v Page (42). Therefore, if the meeting which was held on 26 February 2005, or any subsequent meeting, was not validly convened, and despite the fact that an AGM should have been convened at a much earlier stage, the legal duty to convene the AGM continues to exist and an AGM could and should be called by the inaugural board of directors to overcome their failure to call the AGM in accordance with cl 11.2 of the constitution.

370 The principal proposition put on behalf of the plaintiff is that the only sensible and just conclusion is that the members are the persons identified on the red commemorative banner or the marble plaque, the content of the latter being annexed to the statement of claim. The plaintiff also submitted that there have never been any board meetings or general meetings because the so-called 'General Meetings' or 'Board Meetings' called by Tiao never complied with the relevant requirements: cl 9.4 and cl 11.1. Acceptance of this proposition would exclude from membership those persons who applied for membership in 2005.

371 In order to determine the actual membership of the Association, I believe it is necessary to consider the evidence of how the Association actually approached the issue of membership before the specific requirements of the constitution were known and then to consider the effect of the later identification of membership criteria.

372 The defendants' position is that the six originators are the foundation members of the Association and those whose applications were approved in 2005 are the ordinary members of the Association. The defendants take the view that, because the membership criteria under the constitution were not known prior to 2005, no members were admitted to the Association between its incorporation in December 1992 and when membership application forms were first made and provided to certain persons in 2005.

373 As I have already observed, in considering the issue of membership it must at all times be kept in mind that no instructions were given to the person who drafted the constitution on membership criteria and the membership criteria were never drawn to the attention of those involved in setting up the Association. Therefore, none of the requirements can be considered fundamental to the Association or even within the consideration of the directors of the Association.

374 It is difficult to imagine an incorporated association which does not wish to have members. Increased membership increases the number of people available to carry out the various activities of such an organisation, including fundraising activities, and usually increases the income of the Association either by membership fees or by donations or other means. Sadly, in the case of religious organisations, the more usual complaint is one of falling membership. Yet, on the defendants' evidence, other than the foundation members, the Association did not attract a single member until 2005. Further, of those attending the Association's opening ceremony in 1996, only six were members, and they were foundation members.

375 Of course, the defendants base their position on the terms of cl 6 of the constitution. Apart from the requirement for the application to be in writing, the critical criteria relied upon by the defendants in determining who were members of the Association was the criteria that an applicant has been baptised 'at the centre'. When it came to being given notice of meetings and voting on resolutions, it was this criteria on which Tiao and Hui Ping Wang relied to differentiate between those were members and those who were mere contributors of money.

376 The word 'centre' is not defined in the constitution. The only reference to the word is in the name of the incorporated Association. In the membership clauses, the reference is to membership of the 'centre'. A number of other clauses refer to the 'centre' and are clearly referring to the Association: see cl 6.5.4, cl 6.6 and cl 6.7. Counsel for the defendants submitted that the best construction of the expression 'centre' in cl 6.2 is the word as used in the full description of the Association. On the evidence that is said to be the small temple in Master Wang's home, where everything occurred until the temple was built on the land, as well as the temple opened in March 1996.

377 On considering the term 'centre' in the context of the constitution, I believe the phrase 'baptised at the centre' should be given a broad meaning. There is, in my view, no reason why it should be given a restricted meaning which might unnecessarily restrict membership of the organisation. The conclusion I have drawn is that the phrase 'baptised at the centre' means baptised at the Association and means baptised under the auspices of the Association. Consequently, at the very least, all members must be baptised after the incorporation of the Association and in some place or by someone authorised or approved by the Association. For example, the temporary temple at Master Wang's house would then fall within the meaning of 'baptised at the centre'. However, in my view, the criteria cannot be interpreted to include people who were baptised prior to the incorporation of the Association or at some other place not authorised by the Association.

378 Because this interpretation would exclude from membership everybody who had already been baptised elsewhere, if the terms of the constitution were known, the expectation would be that the constitution would have been amended as soon as possible. It must be kept in mind that the conclusion I have drawn is that the provision cannot be interpreted to include as members those baptised before and elsewhere is an interpretation of the terms of cl 6.2. It does not address the way in which the board actually approached the issue of membership.

379 Once the constitution was translated, the position taken by Tiao and Hui Ping Wang was that anyone who did not strictly meet each one of the criteria, in particular the criteria that the person be baptised at the centre, simply was not, and could not be, a member. Indeed, the only person to whom membership application forms were provided were those that Tiao and Hui Ping Wang believed fell within the criteria of the constitution. No consideration appears to have been given to any previous approach taken by the inaugural board of directors to the issue of membership and whether people who became members when the terms of the constitution were unknown could be members.

380 Counsel for the defendants conceded that, if the Association had been run in the way which one would expect and in the way contemplated by the Constitution, an amendment would have been moved at the first available opportunity to allow those who had already been baptised in the I-Kuan Tao religion to be members of the Association. Obviously this could not have been done as no meetings were ever held. Further, as the activities of the Association were not being conducted in accordance with the constitution, no one was aware of, or was applying, the membership criteria in any event. However, in view of counsel's concession, it is curious that, on becoming aware of the criteria, an amendment was not moved at the first available opportunity by Tiao, Hui Ping Wang or Kuo or at any of the meetings convened by them. To the contrary, the position taken by them at every stage was to require strict compliance with the criteria, despite the consequent exclusion from membership of the vast majority of contributors.

381 The approach taken by Tiao, Hui Ping Wang and Kuo that only those who had been baptised at the Association could be members ignores the reality of what had occurred prior to the translation of the constitution. The particular criteria which were applied to membership of the Association prior to the translation of the constitution do not appear in any record of the Association, although record keeping was not the Association's strong suit. Clearly, however, some criteria had to be applied as the Association was created for the specific charitable purpose of providing a temple and other facilities for the followers of I-Kuan Tao. It can be accepted then that one criteria was that the person be a follower of I-Kuan Tao and be baptised into the religion or wished to be baptised. I have already found as a fact that the original intention behind the creation of the Association was for an Association and temple which was governed by and for different worship groups of I-Kuan Tao. Even the originators who formed the Association were from different worship groups. Therefore, it could not have been intended that there would be a requirement for baptism within a particular worship group. In view of the intention for the Association to represent and be run by adherents of a number of different worship groups, it could readily be expected that baptism according to the rules of any such worship group would have been acceptable.

382 The evidence of the approach taken to membership prior to the translation of the constitution can only come from the foundation members and those people who believed they acquired membership prior to that time. The evidence of Lai was that it was his understanding that a person who was properly baptised into the I-Kuan Tao religion elsewhere, not only at the temple, could be a member of the Association. The basis of his understanding was not that there was a waiver of any baptismal requirements, it was stated to be the fact that, once baptised, there is no necessity to be baptised again at the temple. Lai's view was supported by the evidence of the IKTA masters, Ma Nien Chou and Ma Chiu Chou, that a person is not baptised into this religion more than once.

383 It was, however, Lai's view that, in order to be properly baptised, a person needs to go through a baptism ceremony conducted by a master who is an institutional member of IKTA. Chou also expressed this view. I have dealt with this further refinement in addressing the affiliation of the Association with other organisations and do not accept that any particular affiliation was a prerequisite for membership.

384 Putting that requirement to one side for the moment, it was baptism in the I-Kuan Tao religion that was seen by Lai, without any knowledge of the terms of the constitution, to be a pre-requisite for membership. Lai noted that very few contributors were baptised in the temple because the temple was only built in March 1996 and many contributors were baptised before then. However, as I have noted, the requirement was for baptism at the Association and not the actual temple, later constructed. According to Lai, out of the group of approximately 50 foundation members or contributors, about 30 were baptised at the worship room at his house by Ma Chiu Chou, who is an authorised master from IKTA. However, he does not say when that occurred and whether it was done pending completion of the temple. The remaining members, which Lai referred to as foundation members, were baptised in Taiwan. According to Lai, because a person cannot be baptised twice, the requirement to be baptised in the temple made it impossible for any person who was already a member of the I-Kuan Tao religion to be a member of the Association. I agree that such is the consequence of a strict interpretation of the membership requirements, although if those members were allowed to be baptised again, that difficulty could be overcome.

385 Lai also stated that, from the incorporation of the Association until October 2006, no person had ever applied in writing for membership to the Association. In fact, the Association did not have any membership application forms, and certainly did not request anyone seeking membership to fill one out. The reference to October 2006 is because Lai was not made aware until then of the application forms allegedly dealt with by Tiao, Hiu Ping Wang and Kuo early in 2005.

386 It is clear that Lai, as a foundation member and a member of the inaugural board, considered that, prior to the time when the membership requirements under the constitution were translated into Chinese, all that was required for a person to be a member of the Association was to be baptised in the I-Kuan Tao religion and to have made a financial contribution to the Association. No written application was required and applications were not formally approved by a meeting of board members, because no such meetings were held.

387 In support of this proposition, rather than calling everyone on the list of contributors, the plaintiff adduced evidence from a representative group said to be members of the Association. Ying Yuen Liong described himself as a member of the Association. He was baptised by Ho Ming Wang at his home. He could not now recall when that took place, although it was before the construction of the temple. Mr Liong and his wife donated $5,000 towards the construction of the temple and their names also appear on the marble plaque. Liong believed that because of his contribution he became a member of the Association. He also believed that he was invited to attend the opening because he was a member. Mr Liong would seem to meet all other requirements of membership under the constitution but was not provided with a membership application form.

388 Chang Ming Tang also described himself as a member of the Association who stated that he was baptised by a master from IKTA at Lai's home before the temple was built. The amount of Mr Tang's contribution was $400 and it is included on the marble plaque. He understood that as a result of this donation he became a member of the Association. He was invited to attend the opening and it was his understanding that this, too, was because he was a member.

389 Chin Kuei Hsu said he was a member of the Association. He was baptised at the home of Master Wang because he believed he was a master from IKTA. He could not remember the date of the contribution except that it was before the construction of the temple. Mr Hsu contributed $3,000 and his name appears on the marble plaque affixed to the temple. Mr Hsu believed that, as a result of his contribution, he became a member of the Association. Following the completion of the temple, he was invited to and did attend the opening ceremony in 1996. It was his understanding that he was invited because he was a member. Mr Hsu has only attended the temple once since the opening ceremony and that was on the occasion of the first year anniversary. I note that Mr Hsu's name does not appear on Tiao's list of donors who are also members, even though he was baptised at the home of Master Wang, as were a number of those on Tiao's membership list.

390 Chun Nan Chen also said he was a member of the Association. He is a distant relative of Lai. Chen was baptised in Taiwan and the baptism was conducted by a master from IKTA. Mr Chen's name and the amount of his donation appear on the marble plaque inside the temple. He believed his donation made him a member of the Association. He was invited to the opening ceremony and believed that this was because he was a member. Mr Chou could not be precise about when he made his contribution but it was between 1993 and 1994.

391 It was not suggested that any of these witnesses were being untruthful. They were all baptised in the I-Kuan Tao religion and had each made a financial contribution to the temple, in some cases significant contributions. They had been invited to the opening of the temple and clearly considered themselves to be members of the Association.

392 In fact, the Association had operated for 13 years without applying the criteria under the constitution. The board members had deliberately failed to make themselves aware of the criteria for membership, had not prepared membership application forms, did not require written applications for membership and, by a failure to state the contrary position, led contributors to believe that they would become members of the Association. On that basis, the contributors acted to their detriment in contributing money to an organisation that, if it strictly applied the relevant clause of the constitution, would not permit them to become members and ultimately, through the actions of Tiao and Hui Ping Wang, did exclude them from membership. It can be seen that significant unfairness would arise if the membership criteria were subsequently applied to deprive those people of membership.

393 A determination of the membership of the Association and of who may be eligible for membership is complicated by the absence of documentation created at the relevant time. In particular, the Association never kept an up to date list of members. However, on one interpretation, the red banner and the marble plaque are membership lists, valid as to the date on which they were created. Tiao produced a document he referred to as the 'baptismal register'. The document is headed 'Baptised List'. This is not a document which has been kept since the Association became incorporated. It would appear from the evidence that this list was created after the 8 February 2005 meeting at which the applications of the members included in the list were accepted. Curiously, the list does not include the place of baptism, although the application forms themselves contain that information in Chinese. The list does identify the name of the master who carried out the baptism. The Baptised List contains the names of a greater number of people than 38 and against a number of names is written 'no application form'. Even excluding those persons who did not submit an application form, and those under 18 years of age, there are still more than 38 people on the list. Tiao maintained that, based on the Baptised List, of the list of contributors on the plaque, only nine were baptised at the temple. The list of nine members baptised at the temple whose names also appear on the plaque includes Tiao and Hui Ping Wang. Consequently, only seven are members other than foundation members. Because of my views on Tiao's credibility and because the Baptised List was not a record of the Association, kept and updated at all relevant times, I am not prepared to accept Tiao's evidence that so few contributors meet the requirements for membership. Further, although at times Tiao referred to baptism at the Association he also referred to baptism at the centre. Consequently, it is unclear whether the membership list includes those contributors who were baptised at the temple at Master Wang's house or at any other place used by the Association prior to the completion of the temple. As I have noted, Mr Hsu's name does not appear on Tiao's list of contributors who are also members, even though he was baptised at the home of Master Wang. Further, one of the witnesses called by the plaintiff indicated that he had been baptised by an IKTA master at Lai's house before the temple was built. The status of any such temple was never addressed in evidence. Despite Tiao's position that seven of those persons included on the marble plaque were members, they were not included in the list of members given notice of the members' meeting called by Tiao after January 2005.

394 Chou, who was baptised at a Taoist temple in Taiwan by a master from IKTA, said in his evidence that there was no truth in the proposition that to be a member a person had to be baptised at the Association's temple because he was included in the list of members prepared by Tiao and Hui Ping Wang. However, I believe that Chou's name was included as a foundation member and not as an ordinary member. The same can be said of Kuo who, although baptised in 1974 when living in Taiwan and hence not baptised at the Association, was a foundation member. Hui Ping Wang was also baptised in Taiwan and, therefore, although a foundation member, he would not be eligible for ordinary membership on the approach taken by Tiao.

395 Tiao's responses to questions in cross-examination about his failure to provide application forms to those people who contributed money to the Association were evasive and unconvincing. His responses also indicated that he added a further membership criteria of 'participation' in the activities of the temple or the Association. In response to the proposition that he never gave any application forms to the people who contributed money to the Association, Tiao said:

That was not the case. My members are willing and voluntary, to participate in the association. There are no false names. I give them the application forms.

When asked if there was a reason why he did not give an application form to the contributors, Tiao's response was that there was a difference between baptism and participating in an association. He said: 'These two matters cannot be mixed and have to be separated'. Tiao was also asked if the reason why those who contributed were not given application forms was because they were not baptised. Tiao said this:

In 1992 - in the period of 92 to 93 some people donate money. This does not mean they want to participate. They did not experience tan tao, or baptism. Not everyone who donated money has been baptised or tan tao.

396 Tiao also maintained that, in some cases, where a baptised person goes to a second place of worship, the person can be baptised again in case the person is not accepted. This was the only example Tiao could give of a situation where being baptised a second time might occur and, in my view, it was a very poor and unconvincing example of the need to be baptised twice into the same religion. Tiao acknowledged that Masters Ma Nien Chou and Master Ma Chiu Chou disagreed with the proposition that it is necessary to baptise a person twice in the I-Kuan Tao religion but Tiao said that 'we belong to a different group'. He explained that his group has a relationship with IKTA but does not having anything to do with the general association of IKTA. Tiao stated that IKTA only represents I-Kuan Tao in Taiwan and has nothing to do with his group. I note again that the organisation of which Tiao is said to be a master is called The Taiwan I-Kuan Tao Pu Kuang Tao Association Ming Te Saint Tan. Whilst there may be no connection between this group and IKTA, and whilst Tiao may belong to a different worship group from Lai, they are both followers of I-Kuan Tao. It would appear that Tiao's explanation for holding a different view to that of Masters Ma Nien Chou and Ma Chiu Chou is that he belongs to a different worship group. However, as I have previously remarked, the Association was not one which related to a particular worship group and the evidence points to the Association having an inclusive approach to the various worship groups of the I-Kuan Tao religion.

397 Hui Ping Wang was asked on a number of occasions why he, Tiao and Kuo did not approve as members those people who had contributed money to the Association. He gave a number of explanations. Hui Ping Wang said it was because they knew the applicants and saw them often as they often came to the temple and were interested in the temple. It would seem that Hui Ping Wang was also applying an additional criteria of participation which is not reflected in the constitutional requirements for membership. Hui Ping Wang's answer to the question about why those who donated money to the Association were not invited to be members reinforces the conclusion that he applied this additional criteria. He said:

Because they either donated money, no matter how much or less, and if they did apply, they cannot be members. They can only be vouching. It means the people who often come to pray, just believers.

When Hui Ping Wang was again asked why the donors could not be members, he repeated the proposition that it was because they did not come to the temple often.

398 Hui Ping Wang went on to suggest that some of the contributors were not willing to apply to be a member of the Association but there was no evidence that any of the contributors had been asked this question. When asked how he knew some contributors were unwilling to be members, Hui Ping Wang said that, although they donated money, they came to the temple very seldom. However, Hui Ping Wang agreed that most people came to the temple very seldom. It was apparent to me that Hui Ping Wang was grasping at any possible explanation for why they did not take the obvious step of inviting to become members those who had contributed financially to the Association and had been considered by the Association to be its members until January 2005.

399 Kuo's explanation for why he did not raise the issue of admitting the contributors to membership was that they did not meet the requirements of the constitution. However, he did not mention how he knew that every one of them would not be eligible.

400 It can be seen that, in dealing with the issue of membership, Tiao has acted in accordance with a principle which applies only to his own worship group and has also applied a criteria of participation in the temple or Association which is not included in the constitution. Hui Ping Wang also applied the criteria of participation but in addition maintained that some contributors were unwilling to be members. Kuo simply made the bald assertion that the contributors did not meet the criteria.

401 Tiao agreed that somebody translated the constitution to him on 31 January after the trouble started over the sale of the land. He denied that he heard about the requirement for members to be baptised at the Association and decided to use that requirement against Lai. Tiao maintained that it mattered whether people were baptised at the temple. However, although Tiao maintained that people can be baptised a second time, no contributors were given the opportunity to be re-baptised or advised that they could be re-baptised. It was clear from Tiao's evidence that the view that he took was that the people who contributed funds to the Association, but were not baptised at the Association, simply could not be members of the Association.

402 Therefore, once the constitution was translated and it became known that it included a membership clause which required baptism 'at the centre', people who were baptised in the I-Kuan Tao faith, who considered themselves members and who had donated money to assist in creating the Association and building the temple and who believed that they would thereby become members, were not provided with membership application forms, were not advised of the difficulty with their membership and were not given the opportunity to be re-baptised 'at the centre' if they wished. Indeed, at no stage were they advised that, according to the newly translated constitution, they were not in fact members.

403 I found Tiao's account of the application of the membership requirements to be self-serving and inconsistent with other evidence of the nature and purpose of the Association. It was also clear that Tiao made no attempt to address the position of the people who had contributed the money for the temple, who believed they were members and who had been treated as members. The evidence of Hui Ping Wang and Kuo was no more compelling. Based on the available evidence, the conclusion I formed was that, on finding out the requirements in the constitution which Tiao knew had never been applied for the 13 years during which the Association had operated, Tiao used those requirements in order to exclude from the Association anyone who was not a part of his particular worship group. In doing so, Tiao also reinforced his control of the Association because the only people who were then entitled to vote were his followers.

404 Consequently, the people who had contributed significant amounts of money to become, on their understanding, members of the Association, who were baptised in the I-Kuan Tao faith and had been involved in the Association from the outset, were excluded from membership of the Association. However, people who came to the Association much later, did not contribute to the acquisition of the land or the construction of the temple, but who had filled out an application form and were baptised at the temple or at Master Wang's house, were made members.

405 I have formed the view that, in the absence of any knowledge of the membership criteria contained in the constitution, the foundation members and members of the inaugural board of directors applied their own membership criteria. All that was required was for a person to be baptised in the I-Kuan Tao faith and to have made a financial contribution to the Association. There was no requirement for application forms or for re-baptism at the Centre or any associated temple and nor was a requirement for formal approval by the board adopted. I have no doubt that all the natural persons listed in the red commemorative banner who donated sums of money to the Association and who are baptised in the I-Kuan Tao faith were considered by the board to be members of the Association and certainly considered themselves to be members. To later exclude them from membership would, in my view, create a real injustice.

406 I have found that the members of the board of the Association were unaware of the membership provisions of the constitution. However, I have also found that they deliberately chose not to find out what the requirements were and took no advice on the issue. It was the deliberate decision of Master Wang, Tiao and Hui Ping Wang at or following the meeting of 8 April 1996 not to have the constitution translated and, therefore, not to manage the Association in accordance with the constitution, that has now led to this issue being raised at this very late stage where it is being asserted by the first defendants that the members identified in the marble plaque do not meet the membership criteria and that any declaration I make as to membership should exclude those persons.

407 In my view, the board effectively waived the membership requirements, whatever they may have been, and decided to apply their own criteria. The criteria was that, provided a person was properly baptised in the I-Kuan Tao faith and made a donation to the building of the temple, they were received as members. They were treated as members and invited to the opening of the temple as members. That being the position, the only record of the members of the Association is the marble plaque. Although the precise date of the creation of the marble plaque was not given in evidence, it would appear to have been created some time after the opening in March 1996. Therefore, the only record of membership of the Association is as at March 1996. Unfortunately, although others were no doubt admitted to membership according to the same criteria between March 1996 and January 2005 when the constitution was translated, there is no record of who they are.

408 It appears to be the case that at least some portion of those persons do not meet the more restrictive criteria contained in the constitution. For the reasons I have already given, I do not accept Tiao's evidence of those persons on the List of Contributors (compiled from the marble plaque) who have been baptised by the Association. However, it may well be that the number who are eligible for membership under the constitution are far fewer than the 20 members required to request a general meeting be convened (cl 11.2.1) or the 30 members required for a quorum at a general meeting (11.9.3) which included the AGM.

409 The limits of the court's jurisdiction to adjudicate on disputes arising between members and executive committees of clubs and other voluntary associations have been addressed in a number of authorities which have extended the jurisdiction of the courts in relation to such disputes: Green v Page (73); Popovic v Tanasijevic (Full Court) [33].

410 The authorities make it clear that the court has no jurisdiction to entertain an action of a member against members of the management committee if the issues between the parties merely involved questions of irregularities in internal management which could be resolved by a general meeting of the members: Green v Page (77). Of course, in this case, the action is brought by a foundation and board member against two other foundation and board members, as well as against the Association where the relief sought has the potential to adversely affect a significant number of the members of that Association. Unfortunately, because the first defendants currently, and in my view totally inappropriately, have the control of the Association, the interests of the existing members have not been properly addressed in this action.

411 As I have noted, the consequence of intervening in this issue is that a group of members who have generously contributed to the construction of the temple in the belief they would become members of the Association, and done so with the acquiescence of the board of the Association, indeed with the complicity of the first defendants who had deliberately decided not to inform themselves of the membership criteria, would now be excluded from membership.

412 Not only would intervening on this issue create a real injustice, I see no reason why the court should intervene to change the membership status of those persons identified in the List of Contributors. The board decided to waive any requirements which may exist as to membership and grant these people membership. For over a decade there was no issue raised about the status of these members and the only ones objecting to their membership are two of the people involved in granting them membership.

413 I see this particular issue as an internal matter best dealt with by the Association itself, which it has in fact done by determining alternative membership requirements when the actual requirements were not known.

414 As I can see no reason to intervene in the issue of the membership of those persons on the List of Contributors, the consequence is that they remain members of the Association.

415 Tiao asserts that since 2005, when the constitution was translated, eight meetings of the board of the Association have been held. The minutes of these meetings were produced to the court. They are all handwritten and it is not immediately apparent from the document themselves when they were written. The first meeting is said to have been held on 8 February 2005. The English version of the minutes of that board meeting was said by Tiao to have been prepared by his son. According to the minutes, present at the meeting were Tiao, Hui Ping Wang and Kuo. Against Kuo's name are the words 'via phone'. Lai and Chou are identified as members who did not attend the meeting. At the end of the minutes it states the number of members on the board as five and the number of members who attended the meeting as three. In relation to the question of who called the meeting, in his evidence Tiao vacillated between stating that he called it and that it was a joint idea. Tiao denied the proposition that no such meeting had been held and relied on the fact that there was a record of the meeting as evidence of the meeting taking place.

416 The minutes of the meeting describe Lai and Chou as members who did not attend the meeting. Tiao admitted that he did not contact Lai or Chou to advise them of the meeting. He initially maintained he sent notice of the meeting to Lai but later abandoned that proposition and admitted that there was no written notice of the meeting.

417 Hui Ping Wang's explanation for not advising Lai and Chou of the meeting was that they tried to contact them but were unable to find them and also because Lai and Chou did not participate in the activities of the temple. In the context of considering the Level Holdings contract, I have already rejected the first proposition and, in my view, the second proposition provides no reason for failing to notify two persons who, on Hui Ping Wang evidence, he considered to be members of the board. However, it does reinforce the conclusion that, as with the issue of entitlement to membership, Hui Ping Wang considered that people who did not participate in the activities of the temple were not entitled to be involved in the Association.

418 Kuo explained the fact that Lai was not at the board meeting by stating that Tiao had sent him letters to notify him of the time to attend the meeting but he did not attend. He added that, when the time was reached, the meeting started. This was plainly inaccurate as even Tiao ultimately abandoned the proposition that he had given notice of the meeting to Lai. The implication that they waited for Lai until the commencement time and then went ahead with the meeting is an interesting gloss which shows Kuo to be capable of providing apparently plausible detail of a false proposition.

419 All three witnesses maintained that, notwithstanding the absence of Lai and Chou, the meeting was validly convened. When it was put to Kuo that he knew that a board meeting is supposed to be a meeting of all the board, he said that he knew, but 'three among five would be enough'. When asked about the number of directors necessary for a board meeting to be valid, Tiao drew a distinction between before 2005 and after 2005. He said that after 2005, four members were needed for a board meeting. However, before 2005 there were five board members and he thought three was enough for a board meeting because three was over half the number of board members. Again, this is a clear indication that Tiao believed that Lai and Chou remained board members despite never being advised of meetings or asked to participate in running the Association.

420 The basis of Tiao's view that three would be enough was said by him to be cl 8.2 of the constitution. However, before 31 January 2005, when Tiao had the constitution translated into Chinese, he was unaware of the terms of the constitution so could not have relied on cl 8.2 in reaching that conclusion. Presumably, he thought three would be enough, because it was more than half the number of board members.

421 The constitution provides that the board shall consist of a minimum of five and a maximum of nine elected members: cl 8.2. Clause 9.4.5 is in the following terms:

No business shall be transacted at any meeting of the board unless a quorum of board Members is present at the time when the meeting proceeds to business. Except otherwise provided herein at all meetings of the board a quorum shall be 50% of the elected board Members. (emphasis added)

The effect of the inclusion of the italicised words is that, if the constitution is otherwise silent on the number of directors required to make a quorum, a quorum of the board requires the presence of 50% of board members. In the case of a five person board, a quorum would be three members. However, the Association's constitution includes a separate clause which sets out the quorum for board meetings, general meetings considering ordinary resolutions and general meetings considering special resolutions: cl 11.9. Clause 11.9.1 provides that the quorum for the board meeting is four. Therefore, as the constitution does otherwise provide for a quorum for board meetings, the quorum set out in cl 9.4.5 does not apply and the quorum for a meeting of the board of directors of the Association is four directors. There is no evidence to suggest that the error made by Tiao was deliberate but, nevertheless, it was an error and none of the board meetings attended by Tiao, Hui Ping Wang and Kuo were held in accordance with the constitution.

422 Even if the number of board members present constituted a quorum under the constitution, as I have previously observed, where only the number of board members required for a quorum are advised of, or invited to, the meeting, such a meeting would not be validly held in any event. If the position were otherwise, the board member calling the meetings could control the vote on any issue by controlling which members were advised of the board meeting. The unfairness and obvious potential for abuse are the reasons why a deliberate failure to advise every board member of a board meeting invalidates the meeting.

423 Turning to the agenda for the 8 February board meeting, the first item on the agenda is a letter of 17 January 2005 advising that Lai had lodged a caveat against the Association's property and was taking the matter of the land development to the court. In the second item there is a reference to having had the constitution translated into Chinese and having received 38 applications for memberships. The third item requests the Board to examine the application of the 38 members. The terms of the resolution are that the board examined and approved all 38 members' applications.

424 It was suggested in oral evidence that the other matter dealt with at the meeting was the decision to hold a meeting of members on 26 February 2005 and, in accordance with the constitution, to send out notices to members advising of that meeting. However, I note there is no reference to this issue in the minutes and no explanation was provided for why such a significant issue (a meeting of members had never previously been held) would not be reflected in the Minutes. Clause 11.2.1 of the constitution provides that other meetings of the Association (other than AGMs) shall be convened as the Board may from time to time decide. Consequently, the board must make the decision to call a general meeting, not simply one or two of the board members.

425 The oral evidence was to the effect that Tiao and Hui Ping Wang were both present at the meeting but Kuo, who was in Taiwan, was contacted by telephone. Hui Ping Wang could not recall whose phone was used, although he indicated that there was no phone at the temple and suggested that if it was not his phone then it would be Tiao's. Despite the fact that there were only two sets of phone records to obtain and that phone records would have provided independent confirmation of a phone meeting being held, and held on that particular date, no phone records were discovered. Until the evidence of Hui Ping Wang, the plaintiff was unaware of the phone used to make the calls. A written request was made of the defendants to produce the phone records some three working days before the commencement of the trial. No phone records were produced. Counsel for the defendants advised the court that it appeared that a fax was sent to his instructor's office but they had no record of receiving it. He asked for urgent inquiries to be made. However, at no stage before the conclusion of the trial or, indeed, after the trial, were the relevant phone records produced to the court.

426 Hui Ping Wang was questioned about how both he and Tiao were able to speak to Kuo. Hui Ping Wang said that Tiao spoke with Kuo 'because he was the Chairman'. When asked whether he could hear what Kuo was saying, Hui Ping Wang said that he overheard. It was not until the proposition of a speaker phone was put to Hui Ping Wang that he said:

It was a phone we both can listen to but when we had to talk, it was only Tiao who talked on the phone.

427 The conclusion I drew from observing Hui Ping Wang give this evidence was that this response was an attempt to incorporate the speaker phone into the answers he had already given. He then said that he could hear Kuo speaking and yet in response to an earlier question he had said that he 'overheard' what Kuo was saying, an unusual term to use in the context of a speaker phone conversation. I found Hui Ping Wang's evidence on this issue, as on others, to be lacking in credibility. It appeared to me that he was caught by surprise by the questions and struggled to provide a plausible answer.

428 Kuo said Tiao had notified him by telephone in January 2005 of the 38 applicants for membership. Kuo said that the list of the applicants was sent to him by post. It would appear that he was not provided with copies of the applications themselves. He stated that all the applicants had all been properly baptised in the temple and had paid their subscriptions. He approved of all the applications and posted his approval back to Tiao. The only 'approval' produced was Kuo's signature on one or more copies of the Chinese version of the minutes of the meeting.

429 In view of Taio's evidence, it is difficult to see how Kuo could have been notified of the 38 applicant in January 2005. Taio said that he obtained a copy of the constitution on 29 January 2005 and received the translation of it on 31 January 2005. Even if he immediately contacted the proposed members and asked them to immediately sign and return membership forms, that exercise could not have been carried out and a list of applicants prepared in 24 hours, so that Kuo could receive it in January 2005.

430 Tiao maintained that the Chinese version of the minutes was written at the time of the meeting. It was put to Tiao that there are actually two Chinese versions. Tiao said both were written 'on the spot' although he did not say why two versions were prepared. The two Chinese versions are, in fact, different. One has the words 'Kuo Song Tyan' written on it but those words are missing from the other. Tiao's explanation was that, because Kuo did not physically attend the meeting, and as Tiao could not sign on his behalf, the minutes were sent to Kuo for his signature and he then mailed them back. However, that does not explain why different Chinese versions were prepared.

431 In fact, contrary to the question put to Tiao, there are three Chinese versions of this document. There is a line on each of the three documents for Kuo's signature. On one document the line commences from the left with the Chinese symbols for Kuo's signature, then in brackets the Chinese symbols for the words 'telephone meeting', followed by the English words 'Kuo, Song-Tyan'. The second document has the Chinese symbols for Kuo's signature then in brackets the Chinese symbols for the words 'telephone meeting' and a blank space. The third document has the Chinese symbols for Kuo's signature then the English words 'Kuo, Song-Tyan' followed by the Chinese symbols for the words 'telephone meeting' in brackets. According to Tiao, the words 'telephone meeting' on the third document were written by Kuo.

432 The Chinese symbols for 'telephone meeting' on the first and the third document are the same. However, the Chinese symbols for 'telephone meeting' on the second document are different. It was explained that the relevant symbol used in the second document was a verb rather than the noun used in the first and third documents. Tiao acknowledged that the Chinese symbols for the words 'telephone meeting' on the third document were different from those on the first and second document. However, he maintained that the meaning was the same. He did not explain why different symbols were used in what is said to be one of three handwritten copies of the minutes of the same meeting.

433 Tiao further explained that, on the first document, the Chinese symbols for 'Kuo Song Tye' and for 'telephone meeting' were written by him. He stated that the English version of 'Kuo Song Tye' was written by Kuo. On the third document all the words on the line, in Chinese and in English, were written by Kuo. Tiao maintained that both documents were the real minutes of the meeting. Tiao was not asked about who wrote the words on the second document.

434 All three documents or versions of the minutes were put to Kuo. As to the first document, Kuo stated that he wrote his name in English but his name in Chinese characters was not written by him. Kuo was also shown the second document of the 8 February board meeting minutes. He recognised the document as the minutes of the board meeting in Chinese. Kuo said that the document was written by Tiao. Kuo identified his name in Chinese character but said that he did not write it. Kuo identified the third document, where his signature in Chinese characters is the first writing on the line, followed by his signature in English and then the Chinese characters for 'telephone meeting'. Kuo identified his signature in Chinese characters and agreed it was written by him.

435 On being shown the first and third document and it having been pointed out that his signature was in a different place on the two documents, Kuo said:

Mr Tiao send this to me because he wanted me to sign my name on this line. I remember I signed my name. Then I mailed it back to him.

When it was again pointed out that his name was in a different place, Kuo said:

Perhaps - I mailed it back to him. Perhaps he did not receive it, so after a while he sent another copy for me to sign.

Kuo was then asked if he was saying perhaps that happened or that it did happen:

In the period of time he did not receive it and he will become anxious. Therefore he needed another copy.

When Kuo was told that Tiao had not given this explanation, he suggested that either Tiao had not been asked about it or that perhaps he had forgotten it.

436 Kuo was asked about the second document and his attention drawn to the fact that there was no English version of his name in that document. His response was:

He sent this to me for me to sign my name. I did not sign my name, so this one is empty here.

This response states the obvious but does not explain why Kuo's name appears in Chinese symbols but not in English, as with the other versions. Neither does it explain why he did not sign his name.

437 In my view, none of the witnesses were able to provide a satisfactory explanation for the existence of three versions of the minutes or for the differences in the minutes. One difficulty with Kuo's explanation was that it did not account for there being three copies of the document. Another flaw in his account was that, if one copy was sent but did not arrive, that copy should not be in the possession of the defendants. However, these were not my only concerns in relation to the evidence of Kuo. I formed the view that his explanation for the existence of two copies of the minutes was a way of explaining why two copies might exist rather than a statement of what had in fact occurred. I consider the validity of Kuo's explanation is undermined by the fact that the same explanation was not given by Tiao, who wrote the minutes and should, therefore, know why he wrote so many of them.

438 Independent translations were obtained for all three documents which appear to be minutes of the 8 February 2005 directors' meeting. It is apparent from the translations that, apart from the line on which the signature of Kuo appears in Chinese symbols, the balance of the documents are in almost identical terms, although there are some minor differences between the English translation provided by the defendants and the independent translation.

439 The independent translation of one passage of the documents is in these terms:

I got hold of a copy of the constitution of this Saint Tao centre in English on [about] 29 January 2005 and quickly got it translated into Chinese [The translation was completed on 31 January 2005] and understood its contents in detail. I immediately completed supplementary administrative documents with the agreement and assistance from 38 members in the hope that the Saint Tao centre could continue its operation and would not let down Master Wang Ho Ming's painstaking efforts for the establishment of the 'Saint Tao centre'.

It would appear that the first action taken by Tiao on becoming aware of the requirements of the constitution was to obtain membership applications from the 38 members for the express purpose of ensuring that the centre could continue to operate and 'not let down Master Wang's painstaking efforts'. The resolution passed at the meeting was to approve all 38 membership applications.

440 The applications for membership forms were tendered in evidence. Amongst the other information required in the form is the date of the application. Of 39 applications received three were dated 2 February, 13 were dated 6 February, 16 dated 7 February, five dated 8 February and two were dated 19 February 2005.

441 Kuo said in his evidence that he had been notified of the 38 applicants in January 2005 and that the list of the applicants had been sent to him by post. Implicit in his evidence was that he had that list of 38 applicants with him at the meeting. It is difficult to see how a list including all 38 applications could have been sent to Kuo by post when 21 of them were dated 7 and 8 January and two were dated 19 February 2005. It is also clear from the dates of the applications that the minutes of the meeting could not accurately have referred to 38 applications being approved.

442 Tendered into evidence together with the minutes of the special general meeting held on 16 July 2006 were a group of documents entitled 'Member's Particulars'. Amongst other information to be included are the date of application for membership of the Association and the date of approval of membership. It is apparent from the 31 completed forms that the membership of 26 people was approved on 8 February 2005 and the membership of five was approved on 29 March 2005. In relation to the other 26 applications, all were made between 2 and 8 February 2005. Of the five whose membership was approved on 29 March 2005, all were said to have made their application in April of 2005, a month after the alleged date of approval. This information is inconsistent with the information contained in the minutes of the 8 February board meeting with respect to the membership applications. I note that the date of approval of membership has been written in a different hand to the writing providing the balance of information in the Member's Particulars form. In comparing these documents with the membership application forms, I note that the date of application of at least one member differs between the application form and the member's particulars form.

443 Having considered the evidence of Tiao, Hui Ping Wang and Kuo and considered the discrepancies and improbable explanations referred to above, I am satisfied that no board meeting was held on 8 February 2005. In my view, the minutes of the 8 February meeting were created at a later point in time. It is unnecessary for me to make a determination as to the precise reason for creating minutes of a meeting which did not take place. However, in my view the more probable explanation is that any decision made which is reflected in the minutes of the alleged meeting were decisions taken by Tiao alone or by Tiao and Hui Ping Wang together and hence were not decisions of the board of the Association.

444 The result is that there was no approval of the membership applications as required by the constitution. Consequently, the 38 applicants are not members of the Association.

445 As referred to above, the affairs of the Association were the subject of a complaint to DOCEP. Three letters from DOCEP were tendered into evidence as truth of their contents. In her letter of 22 March 2005, Ms Leeson, wrote to the Association about an allegation that a member of the Association signed an offer to sell part of the land owned by the Association without obtaining the necessary consent of the Association. Another allegation referred to was that the Association had not held regular meetings since 1996. The third allegation was that the bank accounts of the association may have been utilised without appropriate signatories and has been dealt with above.

446 Ms Leeson requested provision of a copy of the minutes of the meeting at which the decision to sell part of the land was voted on and copies of current versions of the following records which are required by the Act to be kept by an incorporation Association: record of office holders (s 29); member's register (s 27); Minutes of the AGM held in 2004 (s 23); and the financial statements provided to members at the AGM held in 2004 (s 26). Neither the record of office holders or the member's register were provided because they had not been kept as required. Further the minutes of the 2004 AGM could not be provided because no such meeting had been held.

447 In a later letter Ms Leeson addressed another matter which was described as a likely breach of the Act and she requested that the Association deal with these issues as a matter of urgency. The matter was the members' and office bearers' registers. Ms Leeson advised that the Association must maintain an up-to-date register of all members and their addresses. She further noted that people residing outside of Australia, who can show that they have complied with the requirements for membership, should be recognised as members and included in the register. Tiao was advised that it was necessary to maintain a similar register for office bearers.

448 In her letter of 22 March 2005 Ms Leeson also warned the Association to be cautious about its actions and to ensure that the Association complies with its obligations under the Act and the rules. Notwithstanding this warning, Tiao convened a special general meeting dealing with some of the very issues referred to by Ms Leeson, without inviting all directors or any of the contributors who believed themselves to be, and were considered by the Association to be, members.

449 According to Tiao, in February 2005 a notice of a special general meeting to be held on 26 February was sent to 40 members, including Lai, and was published in The Oriental Post. A document was produced by the defendants, which included the agenda in Chinese and also translated into English. The English translation was prepared by Tiao's son. Both the Chinese version and the English translation have a third item on the agenda which is handwritten in Chinese on both the Chinese and English versions. However, it is apparent that the Chinese symbols on the translation are not the same as on the Chinese version. There is no evidence as to whether the third agenda item was added before or after the notice was sent out. The comment that can be made is that the handwriting appears to be consistent with some of the annotations which do not appear to be part of the original notice, such as information about the postage of the notices. Tiao maintained that the notice had been sent out in that form with the handwritten information included. The document also includes a handwritten annotation which says 'Advertisement in The West Australian (public notice section)'. I note that there is no endorsement to the effect that the notice was advertised in The Oriental Post. No record of The Oriental Post establishing the publication of the notice was produced. Another annotation indicates that 40 notices were posted and the receipt for postage is annexed to the document.

450 It was put to Tiao that he never told Lai and Chou about the 26 February meeting. Tiao's response was evasive, explaining that Lai was not at the board meeting at which the decision was made to hold a special general meeting on that date. Tiao omitted to mention that neither had Lai been advised of the board meeting. Tiao said that of the 40 notices, 38 were sent to members and two to board members. Tiao agreed that the 38 people were his friends but insisted that they were also members. He admitted that he did not give notice to any of the people who had contributed money to the Association.

451 Tiao did not identify the two board members who were sent a notice. Presumably he would not have sent one to himself and he admitted that he did not send a notice to Chou. Tiao insisted this was because he did not have his address. I have already indicated that I do not accept that explanation.

452 Lai maintained that he had not received notice of the meeting and that the first he heard of the meeting taking place was when he received the 9 March letter from Conal O'Toole, Solicitors. The letter indicated that a special general meeting had been held on 26 February 2006 at which the contract to effect subdivision of a portion of the property was ratified. The letter further stated that Lai was entitled to peruse the minutes of the meeting, which should be available from Tiao. The suggestion that Lai obtain information from Tiao overlooks the fact that Lai had previously asked Tiao to provide various documents but had received no reply.

453 In my view, the wording of the letter is more consistent with advising a person of something of which they were not aware. Further, in view of his interest in the matter, it would be highly surprising, if Lai were in fact given notice of the meeting, that he neither attended the meeting nor took some action in relation to it. I prefer the evidence of Lai on this issue, supported as it is by the content of the solicitor's letter. Further, in view of the conclusions I have drawn as to Tiao's credibility, I am not prepared to conclude that he sent a notice of the meeting to Lai. If Tiao sent a notice to two board members, I am unable to determine to whom they were sent.

454 Chou denied that he received notice of the 26 February meeting. Neither did he see any advertisement in any Chinese newspaper circulating in Perth. Chou expressed the view that Tiao did not want him to attend the 26 February meeting because he was afraid that Chou would raise objections to his plans to sell off the property.

455 Lai stated that he later discovered the Association had advertised the notice of the meeting in The West Australian, an English language newspaper. It was apparent from the evidence of Lai and the witnesses in this trial that quite a few could not read English, or at least stated that they could not read English. In those circumstances an advertisement in an English language newspaper would have limited effect in giving notice to people who considered themselves members and who, for whatever reason, may not have received a notice. It was also pointed out by Lai that approximately 70% of the Association's contributors were Taiwan nationals with Australian citizenship who resided in Taiwan. The stated basis of this proposition was Lai's personal knowledge of approximately 100 members of the Association. Further, Lai maintains that the short period of notice, from 11 February to 26 February, would have made it exceedingly difficult for members residing in Taiwan to return to Western Australia in time to attend the meeting, there being no right under the constitution to vote by proxy.

456 I am satisfied that Tiao did not give notice of the meeting to Lai or Chou or any of the large number of people who had contributed to the Association's funds. In considering that conduct it must be kept in mind that this was the first meeting of members ever held by the Association. Further, it was being held at a time when concerns had been raised in solicitors letters about the propriety of Tiao's and Hui Ping Wang's management of the Association, in particular the decision to enter into the Level Holdings contract and the general failure to comply with the constitution. The conduct also occurred following a warning from DOCEP to be cautious and to ensure that the Association complies with its obligations under the Act and the rules.

457 As I have noted, the failure to have the constitution translated meant that many people had made significant financial contributions to the Association, and considered themselves to as a result be members of the Association, when they did not meet the criteria for membership, if the criteria were strictly applied. It was clearly a time when it was necessary to restore the Association to order by the best means possible. In my view, in those circumstances there would be a reasonable expectation amongst those involved with the Association that the membership issue would be addressed in a way which would maximise membership, particularly if the Association had financial problems. It would also reasonably be anticipated that the issue of the Level Holdings contract would be addressed and resolved by providing as much information as possible with respect to the Association's financial problems and the commercial benefits to the Association of the Level Holdings contract. There would also, in my view, be an expectation that the board of directors would disseminate notice of the meeting as widely as possible so that everyone affected by the failure to manage the Association in accordance with the constitution could be heard and the Association could move forward.

458 If these were indeed the legitimate expectations of those people involved with the Association then they would have been extremely disappointed by what in fact occurred. The failure to include Lai and Chou, or any of the large number of people who had contributed to the Association's funds, in such circumstances was inexcusable. In my view, rather than an attempt to resolve issues and allow the Association to move forward, the way in which this meeting was handled was consistent with a desire to ensure that the conduct of Tiao and Hui Ping Wang would not be scrutinised or questioned. It also established the lengths to which Tiao and Hui Ping Wang were prepared to go to maintain control of the Association. Further, it was consistent with the conduct of directors who were prepared to act in relation to major matters, such as the sale of Association property, without the authorisation of the members, and were keen to ensure that no person who could influence the decision of the members on these issues would attend the meeting.

459 Following the trial, an independent translation of the notice of the 26 February member's meeting was obtained and provided to the Court in accordance with an undertaking given at trial. The translation indicates that the agenda items were:

(1) the election of the board of Directors;

(2) cooperative development of ACCMSTC owned land with Level Holdings Pty Ltd (ABN 89009219185), and

(3) subsequently confirming the resolution on 12 December 1992.

It was clarified in evidence by Tiao that the reference to 12 December was in error and the date was intended to be 22 December 1992 the date of incorporation of the Association.

460 The principal difference between the defendant's English translation and the independent translation is that agenda item (2) of the defendant's translation refers to 'approval' of the development with Level Holdings. It is clear then that the notice indicated that the Level Holdings subdivision was to be discussed, rather than approved. Even Tiao agreed that the notice and the advertisement indicated that the sale of the land was to be discussed. However, Tiao did not appear to appreciate the difference.

461 Putting to one side the issue of notice, if the translation provided by Tiao were accepted, then it would appear that there had been notice of a resolution to approve the Level Holdings contract and a subsequent resolution to that effect would be valid. This is because only matters identified in the agenda may be discussed at a meeting.

462 It is also the case that item (3) on the agenda could not possibly give any indication to members that they would be asked to retrospectively ratify the actions of any person acting on behalf of the Association since incorporation. Consequently, not having been identified in the notice of the meeting, no general ratification motion could be validly passed.

463 It was not simply the exclusion of certain directors and all the contributors or the deficiencies in the notice which is concerning about this meeting. It is also what transpired at the actual meeting. An English translation of the Minutes of the 26 February special general meeting, prepared by Tiao's son and provided on behalf of the defendants, was tendered into evidence as part of the bundle of documents. As a result of alleged inaccuracies in the defendants' translation, and pursuant to an undertaking given at trial, an independent English translation of the Minutes was subsequently provided.

464 The Minutes do confirm that Lai did not attend and that the election of the board of directors took place. The resolutions passed are also set out. According to the defendants' translation of the Minutes, the meeting also ratified and confirmed all acts, actions, deeds, transactions and omissions of whatever nature of each and every person that has acted or purported to act for or on behalf of the Association since its registration on 22 December 1992. The independent translation of the minutes provides the following account of this resolution:

This Saint Tao centre (ACCMSTC) has never held any General Meeting of the Members since its registration with the government on 22 December 1992. Therefore it is requested that the members subsequently ratify and confirm all past resolutions and projects such as the purchase of the land for building the Saint centre, buildings, conclusion of the constitution.

It is apparent that the scope of the actual resolution is not as wide as that contained in the defendants' translation. The effect of the resolution actually passed is a ratification of past resolutions, of which there were none as no meetings had been held, and of the purchase of the Association's land and the constructions of the temple.

465 Tiao denied that the form of words included in the defendants' translation had been provided by a third party. He also denied that the English version was written after a lawyer was consulted and that the wording was provided by a lawyer. However, it is clear to me that the words are far too close to a legally worded, all encompassing, ratification, and far too dissimilar to the actual resolution recorded, to have resulted from a poor attempt at translation.

466 When questioned about the circumstances which had given rise to the need for a resolution ratifying past conduct, Tiao responded defensively, maintaining that he had been unaware of the relevant legal requirements. He was also evasive about the information he had provided to the meeting about his failure to comply with the requirements of the constitution and was unwilling to admit any error on his part.

467 The final agenda item contained in the defendants' translation of the Minutes is in these terms:

The members approve the development of ACCMSTC properties to raise infrastructure funds for the Association. The project to be undertaken jointly with Level Holdings Pty Ltd in accordance with the terms and conditions of the contract. Critical details of the contract include that the developer, Level Holdings Pty Ltd will sub-divide the designated and agreed portion of the ACCMSTC property into ten separate lots paying all expenditure incurred. In return, the developer will receive title to five lots of the sub-divided property while ACCMSTC will retain the remaining five lots.

468 The independent translation records the motion as 'The project for the joint development of ACCMSTC owned land with Level Holdings Pty Ltd' and records the following discussion and resolution:

After the subdivision of the land, one block will be sold with the approval of the members and the income from the sale will be used as fixed daily expenses for the Saint Tao centre, such as fees for insurance, gas, electricity, telephone, maintenance of the buildings. Currently, the annual fixed expenditure is between $13,000-$15,000 Australian dollars. To continue the legacy passed on by the late Master Ho-Ming Wang, founder of the Saint Tao centre, and the affairs of the Saint centre, it is essential; for this motion to be passed.

469 It can be seen that the meeting was told that one block of land from the subdivision would be sold and the proceeds of sale put towards the fixed daily expenses of the centre. However, it is also apparent that, according to the independently translated Minutes, and contrary to the defendants' translation, the members were not told of the terms of the contract with Level Holdings, in particular that the Association would cede half of the subdivided land.

470 When Tiao was questioned about the Level Holdings development resolution, he initially maintained that the translation in the defendants' translation agreed with the Chinese version of the resolution. However, when it was suggested to him that the translation was not accurate, Tiao prevaricated by saying that he could not read clearly and the relevant paragraph had not been translated to him.

471 Tiao agreed that he did not tell the members that he wanted to repay himself money from the sale of the land. In circumstances where the need for money was raised and the means of obtaining the money was discussed and approved, it is difficult to understand why Tiao omitted to mention one of the central purposes of obtaining the funds, which was to repay to himself the money he alleges he was owed by the Association. Neither did Tiao take the opportunity to obtain approval to be repaid the money. If Tiao were to seek approval to pay himself out of the proceeds of sale of part of the land, another meeting would be required for that purpose. This omission, particularly in view of Tiao's repeated conduct in acting without appropriate authorisation and in avoiding scrutiny, causes me considerable concern as to whether he was intending to simply pay himself what he believed to be owing to him from the proceeds of sale.

472 As the need to sell part of the Association's land was said to be because of the Association's financial problems, Tiao was asked whether accounts were provided to the members in relation to the Level Holdings development resolution and gave a number of conflicting responses. Tiao initially said that he could not remember whether the accounts had been finalised. When it was suggested to him that no financial information was given to the members at the meeting, he explained that this was because he spoke about the Association's annual expenditure of $13,000 to $15,000 per year. At another point his explanation was that accounts were not provided to the members because they had not been prepared, although neither did he advise the members that this was because the board had failed to have accounts prepared as required by the Constitution. He then said that he did tell the members that no accounts had been prepared. Tiao was also evasive when responding to questions concerning the amount of financial information provided to the members in relation to the resolution which involved selling part of the Association's land because of alleged financial problems. He was also unwilling to accept any responsibility for the failure to comply with the requirements of the constitution.

473 At this meeting the members were being called upon to pass wide ranging resolutions approving all action taken on behalf of the Association, including the sale of part of its land. Tiao's explanation for the dearth of information provided to the members in the Notice and at the meeting showed a failure to appreciate the responsibilities of the board to its members. Whilst Tiao agreed that the information was not given to the members before the meeting he said that, after the meeting, the Minutes were sent to the members to confirm and they signed their names to confirm the accuracy of the Minutes. Tiao appeared to believe that any deficiency in process or the provision of information could be overcome in this way.

474 Of course, even accurate minutes do not identify everything raised at a meeting. Much of the detail and the nature of the information provided to those who attended the meeting, comes from the evidence of witnesses who attended the meeting.

475 Hui Ping Wang recalled the meeting but could only recall discussing something related to the selection of the board and the chairman. He could not recall what else was discussed at the meeting.

476 The defendants' called as witnesses a number of the members who attended the meeting. Kwee Fong Chai considered herself a member of the Association, having been baptised by Master Wang in 1992 and having applied for membership on 19 February 2005. Curiously, she said she paid her subscription on the date she was baptised although it was apparent from all other evidence that at that time the membership requirements under the constitution were not being applied. Ms Chai said that it is the rule that if you want to be baptised and become a member, you have to pay the $10. It may well be that, consistent with the content of Chou's notes, there was a practice of paying a small sum to the Master who conducted a baptism. However, in 1992 that was not payment of a membership fee under the constitution. Yet clearly Ms Chai considered that being baptised by Master Wang and paying $10 meant that she was a member, rather than filling out and obtaining approval of a membership application. Ms Chai was not asked how she came to apply for membership. She was asked if she contributed money to the Association and said she thought her husband had donated money but she could not remember the amount.

477 Ms Chai was present at the 26 February meeting. To her recollection they discussed the election of the board members and there was mention of the subdivision of the land by Level Holdings. According to Ms Chai, it was explained by Tiao that at least $13,000 to $15,000 was needed yearly to run the temple so they wanted to subdivide the land then sell one piece of the land to support the temple. The meeting was told that a caveat had been lodged on the land but she could not remember whether they were told that a contract had already been signed with Level Holdings. Ms Chai said that the meeting was not told that no board or members' meetings of the Association had been held since its incorporation. She could not remember Tiao asking the meeting to ratify his past actions.

478 Keng Thing Wong described himself as a member of the Association and was baptised on 30 December 1992 by Master Wang. He maintained that he applied for membership of the Association and paid his subscription on the date of his baptism but that is clearly in conflict with the date on his application form, which is 19 February 2005, and with other evidence of when these application forms came into existence. Mr Wong also said he made a small donation of $250 to the buying of the land or the building of the temple. He indicated that he participates in Association's activities on about three to four occasions a year.

479 Mr Wong was present at the 26 February meeting. He recalled there was a discussion about financial matters. He could not recall anything about the discussions except Tiao mentioning that the Association had money problems; that they were spending between $10,000 and $15,000 per year. According to Mr Wong, there was also a discussion about the matter of the land. To his recollection they discussed the land in terms of a loan from the bank and they agreed to allow Tiao 'to borrow some loan from the bank' but he could not remember the sum of money involved. In the minutes there is no reference to Tiao being allowed to borrow from a bank but there is a reference to the fact that the Association, since incorporation, had never borrowed money from a bank.

480 Mr Wong was aware that the organisation which would develop the land was Level Holdings. He also remembered Tiao telling the meeting there was a fight with Lai about selling the land and that he had received some letters from Lai's lawyers, although he did not mention the contents. Mr Wong could not recall whether he was told this was the first meeting of members since incorporation.

481 On Khiong Chiang gave evidence without an interpreter. He described himself as a member of the Association and was baptised on 15 February 1993 by Master Wang. On 8 February 2005 he applied for membership and paid a subscription fee of $10. Mr Chiang's name does not appear on the plaque and hence if he made a donation it must have been for less than $100. He was not specifically asked if he was a contributor to the Association. Mr Chiang said he participates in the Association's activities about six times per year.

482 Mr Chiang was present at the 26 February meeting and recalled part of what occurred. He said that the two main matters discussed were the appointment of board members and the other was 'Tiao ... telling us he had signed a contract for a piece of land with a contractor and asking for our opinion'. According to Mr Chiang, the members retrospectively approved all Tiao's actions. When asked what those actions were, Chiang said that the main thing was the building contract, which he also referred to as 'the sale of the land to Level Holdings'. He also said that it was all the actions Tiao had carried out before and all the finances incurred. Mr Chiang was asked what the meeting had been told by Tiao that he had done. He said that Tiao referred to the fact that over the years he had incurred expenditure for the temple and now this had to be formalised and the members were asked to give their approval. However, Mr Chiang did not say exactly what was being approved. He could not remember how much was the amount of the expenditure but thought it was in the region of $100,000, more or less. Mr Chiang maintained that the amount was of that sort of order. According to Mr Chiang, Tiao told them he had spent most of the money in relation to running the temple and also for security, lighting, water and repairs. Tiao said that he would be paid money from the sale to compensate or pay him back. When asked what Tiao showed the members to establish that he had spent this money, Mr Chiang said that he provided statements of expenditure. However, Mr Chiang was extremely vague on exactly what the members had been shown. He said it was a very brief statement of one or two pages which he thought was typed.

483 As to other information provided to the members at the meeting, Mr Chiang indicated that they were made aware of the caveat and of the dispute between Lai and Tiao. He later said that this was discussed during the discussion about ratifying the past acts. To Mr Chiang's recollection, he was told that Lai was invited to attend the meeting but did not turn up. Mr Chiang initially said that the meeting was told that those people who had contributed money to the Association were also invited but then added that he was not sure.

484 The luncheon adjournment occurred during Mr Chiang's cross-examination. An order had been made at the commencement of the trial for witnesses to remain out of court until called upon. Unfortunately, when the court adjourned during Mr Chiang's cross-examination, I omitted to remind him that he was not to speak to anyone about the case. However, Mr Chiang was given such a warning by counsel for the defendants, Mr McGowan.

485 After the luncheon adjournment Mr Chiang said that the members were told to ratify retrospectively the contract and the expenditure. When Mr Chiang was reminded of the figure of $100,00 he said he wanted to correct that statement because he had now read the minutes, a copy of which he had with him, and nothing like that was mentioned. He also said that no financial statements were provided at the meeting but they were told that the expenditure incurred was between $13,000 to $15,000 a year.

486 Not surprisingly, Mr Chiang was asked if he had spoken to anyone else about the case at lunchtime. He said that he had lunch with 'our people' but 'they did not really talk much about it'. When questioned further, Mr Chiang said he lunched with eight people including Tiao and Hui Ping Wang and added that Hui Ping Wang 'could not understand a thing of course' because they were talking in English. It is interesting to note that Tiao had maintained in his evidence that he could neither speak nor understand English.

487 Retraction of the statement that Tiao had mentioned a figure of $100,000 owed by the Association was not the only change Mr Chiang made to his evidence. He volunteered that he seldom saw Lai at the temple and then added that he never saw him there. He was again asked about whether Lai was invited to the meeting and said that as far as he knew he was invited but added that he did not do the invitations. Mr Chiang said Lai's supporters were not invited to the meeting because they were not members. He denied that he had previously said that they were invited and maintained that there was a misunderstanding. Mr Chiang said he was not surprised that a vast number of people who had contributed money for the land and the temple were not there because they were 'not qualified'. I note that this was the same expression used by Tiao and a number of the defendants' witnesses to explain why the contributors were not members and not given notice of meetings. I gained the impression that this was an expression Mr Chiang and other witnesses had been given rather than one they each would normally use to describe someone who had not applied for membership or who did not meet the criteria. Mr Chiang also said that just because a person is a donor it does not mean that they are qualified to attend a meeting. This explanation was also one used by other witnesses called by the defendants.

488 Mr Chiang denied the proposition that he had discussed his evidence with Tiao before court and that he had discussed it again at lunchtime in Tiao's presence. In my view, it was obvious that a discussion had taken place over the lunch break and that Mr Chiang had been provided with the information that he later gave in evidence as his own substituted recollection. Mr Chiang's evidence is clearly tainted by these circumstances. Further, the evidence of the defendant's witnesses who gave evidence after Mr Chiang requires close scrutiny.

489 Mr Chiang's wife, Hong Mee Fun Chiang, also gave evidence. She said she was a member of the Association, having been baptised by Master Wang in 1993 and having applied for membership on 8 February 2005. She said she participates in activities of the Association about six times per year. Ms Chiang said that she and her husband did not donate any money to buy the land or build the temple but they put some money in the donation box when they attended the temple. Ms Chiang did not know any of the people who had contributed to the Association, other than Tiao and Wang Hui Ping, and did not know whether the contributors were members of the Association or not. Mrs Chiang agreed that the case had been discussed by her husband and others over lunch. Clearly then, her husband had deliberately lied when he denied this.

490 Ms Chiang said she was present at the 26 February meeting. She recalled that they discussed electing a board of directors and the development of the Association's land. They also discussed the spending of the temple, and the fact that the Association was in need of money because the temple cost about $14,000 to $15,000 per year to run. Ms Chiang was asked about the arrangement with Level Holdings but she said she was not quite clear about that although she said that the meeting approved 'the sale of the land to Level Holdings' in order to meet the spending requirements of the temple. Ms Chiang said the members were asked to ratify what Tiao had done before. However, her evidence on what it was that Tiao had done before was extremely difficult to understand. She said they were asked 'to ratify whether he owe moneys to the bank and the temple owe money to the bank or not'. When asked how much money the temple owed to the bank, she said that Tiao did not say how much money. She then said that Tiao did not owe the money and at the time he did not borrow the money. It was apparent that not only did Ms Chiang have a limited recollection of what was discussed at the meeting, she also had little understanding of the proposals which were passed by resolution of the members.

491 Emi Setyawati, described herself as a member, having been baptised by Tiao, and applied for and been granted membership in February 2005. She said she had contributed money for the land or for the construction of the temple and identified her name on the plaque. Ms Setyawati said that about twice per month she participates in the activities of the Association. She remembered that at the meeting they discussed the election of the board and the fact that the temple lacked the source of financial income. She understood that the Association's land was to be divided and was to be used for the spending of the temple. With respect to the ratification resolution, Ms Setyawati said she thought the previous actions of Tiao were quite good. However, Ms Setyawati did not indicate the type of actions she was referring to or the criteria she applied in describing those actions as 'quite good'. She said she did not know if Tiao had done anything wrong before February 2005.

492 Ms Setyawati said that she knows Mr and Mrs Chiang, with whom she had lunch before giving evidence. She was also with Mrs Liong, Tiao, Mrs Wang, Hui Ping Wang and Mr Kuo. According to Ms Setyawati, they were speaking in Chinese. She denied that they were talking about the case and maintained that they talked about food.

493 I accept that the evidence of this group of witnesses was affected by the length of time since the meeting took place. However, their evidence, together with the evidence of Tiao and the documentary evidence relating to the meeting, allows a number of conclusions to be drawn. With respect to the sale of the Association's land, said to be necessary as a result of the Association's poor financial situation, the only financial information provided to the members was Tiao's assertion that the Association required $13,000 - $15,000 each year to operate, a sum of money said to be in excess of its income. No financial statements, accounts, bank records or any financial material at all was provided to the members of the Association. Further, no information was provided as to the money that would be recouped from the sale of the land and whether the arrangement entered into, or to be entered into, was commercially sound or in the interests of the Association.

494 In my view, the members were clearly not provided with sufficient information to make an informed decision to sell part of the Association's assets or to ratify any action taken to achieve that result. In my view, the information provided could not possibly justify the resolutions passed. In particular, neither in the minutes of the meeting nor in the evidence of any of the witnesses called by the defendants was there mention of the fact that Level Holdings were to receive half the subdivided land in return for meeting the costs of subdivision. Indeed, the majority of the witnesses were under the impression that the portion of land to be sold in order to obtain funds to the Association would be sold to Level Holdings.

495 Further, the only witness who indicated that part of the proceeds of sale were to be used by Tiao to reimburse himself for his alleged past expenditure on behalf of the Association was Mr Chiang, who retracted his evidence after discussions with Tiao, Hui Ping Wang and others over lunch. No other witness gave any indication that Tiao intended to reimburse himself when the Association's land was sold; there is no reference to it in the Minutes and even Tiao conceded that he had not raised that issue. It would also seem that Mr Chiang was the only witness who was aware that the Level Holdings contract had already been entered into by Tiao. The other witnesses seemed to believe they were approving the sale of the land to Level Holdings. Neither were the members given sufficient information of what it was they were being asked to ratify. Most stated that the ratification related to the sale of the Association's land.

496 It is also the case that the members were not told of the reason a ratification resolution was needed. They were not told that decisions had been made by individual or groups of directors without reference to the entire board or to the membership, where appropriate. There was no reference to the fact that, in the 12 years since incorporation, the board had failed to comply with any requirement of the constitution. Neither was it mentioned that the reason for this was that not one of the board members considered it necessary to even read the constitution and hence did not have it translated into Chinese. They did not even obtain advice on their obligations.

497 In fact, Tiao managed to convince the members to pass the resolutions without at any stage advising of or conceding any wrongdoing on his part or on the part of any other member of the board of directors. As I have noted, neither did Tiao think it appropriate to provide the members with the information so obviously necessary to the decisions they were being asked to make. I consider Tiao's conduct in this regard not only to be disgraceful but also deliberate. In my view, he not only stifled debate by not giving proper notice and by not raising all relevant issues, he maximised the prospects of the resolutions being passed by not providing all relevant information. Tiao's conduct in this regard is consistent with his conduct in relation to other matters referred to in these reasons and was, in my view, designed to maintain his control of the Association and avoid any consequences arising from his previous actions.

498 When the significance of the resolutions are considered, it is difficult to understand how any member acting reasonably would have passed them when so little information and explanation was provided. It may well be that, if they had themselves contributed to the Association's assets, they may have been more vigilant in determining whether it was in the Association's interests to part with part of its assets. I can only assume that friendship, as alleged by Lai, or the impact of the Master-worshipper relationship played a considerable role in the members present at the meeting accepting at face value the facts provided in support of the resolutions and the necessity for the resolutions to be passed. This reinforces the need for caution in placing the Master of the temple in a position where he can control the Association. Lai asserted in his evidence that seven of the applicants for membership were relatives of Tiao and Hui Ping Wang. They are said to include Tiao's wife, daughter, son and son-in-law and Hui Ping Wang's son and two daughters. There can be no criticism of family members being the members of the same religious organisation. However, it may be the case that allegiances such as this, as well as those arising from Tiao being the Master of the congregation, resulted in the members not considering the propositions being put to them objectively and in making decisions the interests of the Association rather than in the interests of individuals.

499 In chairing the 26 February 2005 meeting, Tiao effectively was in a position of conflict. He was the one moving for the resolutions to be passed and providing the only information concerning them when the effect of the resolutions was to approve his actions, albeit the actions of others as well.

500 Lai expressed the view in his statement that the resolution in the Minutes approving the development and sale of part of the Association's land confirms that the sale of the property was unauthorised and that Tiao had no authority to deal with the property. Such a conclusion does not automatically follow. Ratification can take place where certain formalities have not been complied with, even if there is general agreement and authorisation for the action. Ratification can be called for to overcome any suggestion, as occurred in this case, that previous actions were not properly approved. In my view, one needs to look to all the surrounding circumstances before determining whether such a conclusion may be drawn.

501 It was not only the plaintiffs who questioned the validity of the 26 February meeting. Having met with Tiao on 11 April 2005, Ms Leeson from DOCEP wrote to him on 22 April 2005 addressing a number of different issues pertaining to the Association including the meeting held on 26 February 2005.

502 Ms Leeson noted that the meeting was likely to have been invalid due to notice requirements not having been met. It was drawn to Tiao's attention that cl 15 of the constitution required that notice of a meeting must be handed to a member or left at the member's registered address but the Association had only advised members of the meeting by placing an advertisement in The West Australian newspaper. This information is inconsistent with the evidence of Tiao which is, to some extent, supported by the receipt attached to the minutes which indicates that 40 stamps were purchased on 11 February 2005. I note that Ms Leeson makes no reference to the Notice being advertised in any Chinese Language newspaper which no doubt Tiao would have told her, if that had indeed occurred.

503 Ms Leeson also noted that only business identified in the notice of the special general meeting may be discussed at the meeting and referred to the fact that the notice did not advise that a motion regarding the ratification of acts undertaken on behalf of the Association would be considered. I have already referred to this issue.

504 The third issue in relation to the meeting was that the Association had no up-to-date register of members for use in ascertaining the current membership. Therefore, according to Ms Leeson, there is no clear indication that all members of the Association were notified of the meeting and the business to be considered and, as a result, motions purporting to elect office bearers for the Association and approving the sale of land should not be relied upon.

505 In her letter, Ms Leeson also addressed a number of areas described as likely breaches of the Act and requested that the Association deal with these issues as a matter of urgency. One matter was the Association's accounting records and banking processes. Mr Tiao was advised that under s 25 of the Act the Association was required to keep and maintain up-to-date account records for all financial dealings of the Association. He was further advised of the requirement that members be provided annually with accounts showing the financial position of the Association. Ms Leeson also noted that cl 11.1(a) of the Association's constitution requires the documents provided to members annually to be audited documents.

506 Subsequent to this advice, Emi Setyawati was appointed as the person who was to prepare the Association's accounts. Ms Setyawati was a witness for the defence at trial. She described herself as a member of the Association and is clearly aligned with Tiao. In the circumstances which applied during the period in which Ms Setyawati prepared the accounts, the Association's interests would have been best served by having the Association's account prepared and audited by independent persons. I make that observation without suggesting in any way that Ms Setyawati is anything other than a capable and competent accountant. If the members who had approved Ms Setyawati's appointment are the persons preparing the accounts, were considering the best interests of the Association they should have realised how important it was, in the circumstances, particularly in light of the allegations being made against Tiao, to appoint someone independent of Tiao and the Association to carry out this function.

507 The second matter raised in the letter of 22 April 2005 was the holding of an AGM. Ms Leeson indicated that it was unclear when the Association last held an AGM and stated that, once the membership register was up-to-date, an AGM should be held at which the members were to be provided with an annual report and audited financial statements and elections were to be conducted.

508 The third matter identified by Ms Leeson was the sale of the part of the Association's assets. She noted that DOCEP had no jurisdiction to comment on the sale but observed that, prior to an event such as the selling of the Association's assets, it is likely to be appropriate to seek the approval of members to do so. Ms Leeson referred to her previous observation that the motion purportedly passed at the 26 February 2005 meeting was likely to be invalid and encouraged the Association to hold a further meeting to consider a similar motion.

509 Ms Leeson noted that certain administrative matters must be addressed before a motion may be dealt with by a special resolution. The first was that the notice of meeting must specify the resolution to be proposed is a special resolution. That did not occur. Secondly, the notice must clearly identify all the motions to be considered at the meeting and any items not included in the notice cannot be dealt with at the meeting. The next matter was that the notice must be given to all members of the Association. That clearly did not happen. Finally, Ms Leeson advised that, in accordance with cl 11.9.4 of the constitution, the quorum to vote on the relevant type of motion requires that 75% of the members be present at the meeting where the special resolution is being considered, and then 75% of those members present at the meeting must vote in favour of the resolution.

510 Ms Leeson concluded the letter of 22 April 2005 by advising Tiao that she was taking action to have the commissioner, in accordance with s 31(1)(h) of the Act, formally direct the Association to comply with its obligations under the Act. However, having become aware of the plaintiff's claim, Ms Leeson advised Tiao of DOCEP's decision to close its file pending a decision being handed down by this Court.

511 In my view, the meeting of 26 February 2005 was invalid and the resolutions purportedly passed similarly lacked validity. There are a number of factors which contribute to this conclusion, one of which, the fact that the meeting was not convened by a decision of the board or at the request of at least 20 members, has already been referred to above.

512 In the pleadings, the plaintiffs allege that the defendants called a general meeting but that the meeting was invalid. In their defence, the defendants deny that the meeting was a general meeting and allege that it was a validly held special general meeting.

513 The constitution provides for two types of general meeting, an AGM under cl 11.1 and a general meeting under cl 11.2. There is no provision for a special general meeting. Neither party alleges that the meeting was an AGM although there was an election of board members. General meetings of the Association must be convened as a result of a decision of the Board or at the request of at least 20 ordinary members of the Association: cl 11.2.1. Any such request by members must be in writing: cl 11.2.2. There is no evidence to suggest that this meeting was called by members. Consequently, the meeting should have been convened as a result of a decision of the Board. I have noted that there was an allegation that the decision to hold the 26 February meeting was made at the 8 February board meeting although there is no reference to that in the minutes. However, as I have found that no such meeting took place, the conclusion I have come to is that the decision to call the 26 February meeting was made by Tiao or by Tiao and Hui Ping Wang, and hence not be the board of directions. Consequently, the meeting of 26 February 2005 was not convened as a result of a decision of the board and nor was it convened at the request of at least 20 ordinary members. Consequently, the meeting was not convened in accordance with cl 11.2.1 of the constitution.

514 Whilst the constitution does not provide for a special general meeting, it does provide for Special Resolutions: cl 11.6. A special resolution is said to be required where the business to be transacted is of the following type:

(a) dispose of the majority of the Association's assets; or

A special resolution is defined in the Act as a resolution passed by a majority of not less than three-fourths of the members of the association at a general meeting of which notice specifying the intention to propose the resolution as a special resolution was given in accordance with the rules: s 24. A special resolution must be decided by a minimum of two thirds of the Ordinary Members present and eligible to vote: cl 11.6.

515 Clause 11.5 of the constitution provides that, at general meetings, all matters, other than matters to be resolved by special resolution, shall be resolved by an ordinary resolution decided by a majority of ordinary members present and eligible to vote: cl 11.5. Implicit in this provision is the conclusion that a special resolution is to be dealt with at a general meeting. Further, as there are no provisions of the constitution dealing with the way in which a meeting considering a special resolution should be conducted, the rules applicable are those relating to general meetings. Clause 11.2.3 provides that notice of general meetings must be forwarded to ordinary members at least 14 days before the general meeting. Clause 11.2.4 states that no business other than as stated on the Notice of general meeting shall be transacted at a general meeting. Finally, the constitution provides that minutes of general meetings shall be approved by the Board and tabled at the next general meeting: cl 11.3.

516 The Act also addresses the issue of notice, specifically in relation to special resolutions. A special resolution is defined in s 24(1) of the Act as a resolution passed by a majority of not less than three-fourths of the members of the association at a general meeting of which notice specifying the intention to propose the resolution as a special resolution was given in accordance with the rules. The term 'members' is expressly stated to be members of the association who are entitled under the rules of the association to vote and vote in person or, where proxies or postal votes are allowed by the rules of the association, by proxy or postal vote: (emphasis added). Consequently, under both the Act and the constitution, notice must be given of the resolution to be considered at the meeting.

517 Under s 27 of the Act an incorporated association is required to keep and maintain, in an up-to-date condition, a register of the members of the association and their postal or residential addresses. Upon the request of a member, the association must make the register available for the inspection of the member and the member may make a copy of or take an extract from the register but does not have any right to remove the register for that purpose.

518 At the time of the 26 February meeting, no Register of Members had been compiled or kept. Further, the Register of Members subsequently compiled contained only those members Tiao considered to have met the membership requirement of the Constitution. However, as I have found that the meeting at which their membership applications were approved did not in fact take place, it cannot be said that this document reflects the membership of the Association. Consequently, any meeting of which notice was given according to this list cannot be validly held in accordance with the provisions of the constitution.

519 Further, as a result of the conclusion I have drawn concerning the status as members of those persons who contributed money for the temple, the failure to provide them with notice also, in my view, invalidates the meeting. Consequently, not all members of the Association were notified of the meeting and the business proposed and the motions posed cannot be relied upon. Further, neither Lai nor Chou were given notice of the meeting. In my view, Tiao intentionally omitted them from the list of those who were to be given notice.

520 In the letter from DOCEP Ms Leeson noted that the meeting was likely to have been invalid due to notice requirements not having been met. It was also said that it was drawn to Tiao's attention that cl 15 of the constitution required that notice of a meeting must be handed to a member or left at the member's registered address but the Association had only advised members of the meeting by placing an advertisement in The West Australian newspaper. As I have noted above, this information is inconsistent with the evidence of Tiao which is to some extent supported by the receipt attached to the Minutes which indicates that 40 stamps were purchased on 11 February 2005. I note that Ms Leeson makes no reference to the Notice being advertised in any Chinese language newspaper which no doubt Tiao would have told her, if that had indeed occurred. This supports my conclusion that the notice was not advertised in the Oriental Post, as alleged by Tiao. I am unaware of the date on which Tiao located the notice to which the amount of postage is annexed. It may be that he did not, or was unable to draw this to Ms Leeson's attention. In the circumstances, although I have some doubt on the matter, I am not prepared to conclude that Tiao failed to send any notices at all.

521 However, I can be satisfied that inadequate notice was given. Under cl 11.2.3 of the constitution a notice of general meeting must be forwarded to ordinary members at least 14 days before the general meeting. The only evidence of when the notices were sent comes from the Australia Post receipt of when the 40 stamps were purchased. That date is 11 February 2005. If that was the date on which the notices were posted then members resident in Western Australia may have received notice on 12 February 2005, thereby being given 14 days notice. However, there is no evidence that the notices were in fact sent on the same day the stamps were purchased and it is not possible to be satisfied that even those members who were sent notices in fact received them within the requisite time.

522 Another significant factor relating to the invalidity of the resolutions is the fact that the nature of the business actually discussed at the meeting was not, in my view, adequately referred to in the notice of meeting. The notice advised members in agenda item (1) that there was to be an election of the board of directors. Agenda item (2) simply referred to 'cooperative development of ACCMSTC owned land with Level Holdings Pty Ltd'. The conclusion I have drawn, as referred to above, is that, at best, the members were notified that a co-operative development of the Association's land with Level Holdings was to be discussed. In my opinion, the wording of the Notice does not provide notice to members that they would be asked to approve, and approve retrospectively, the development or any contractual arrangement with Level Holdings. In my view, neither would the wording of agenda item (3) have given members a clear idea of what was to be addressed or discussed at the meeting. In no circumstances could it be said that the members were being given notice that they would be asked to retrospectively ratify all actions of any person acting on behalf of the Association since incorporation.

523 For these reasons, I have formed the view that the 26 February meeting was not validly convened and all resolutions passed at that meeting are invalid and of no effect. There is, therefore, no ratification of any actions taken by Tiao or Hui Ping Wang and no approval of the Level Holdings contract by the members of the Association.

524 In the period following the 26 February 2005 general meeting a number of meetings of varying types were held or were attempted to be held either by Tiao or by Lai. In some cases legal action was taken to prevent meetings from being held. Despite requests from Lai, at no time would Tiao agree to hold a general meeting of all members, including the contributors as well as those whose applications were approved to that point in time by him and Hui Ping Wang. Tiao continued to maintain the position that only those whose membership had been approved by him or Hui Ping Wang were actually members of the Association. I refer to Tiao and Hui Ping Wang personally because, as I have found, at no stage was a valid board meeting held to consider membership.

525 It is unnecessary to consider each of the meetings which were held between 26 February 2005 and the trial. I will refer only to those meetings which raise matters relevant to the conclusions to be drawn in this action. Unfortunately, the Court has not been provided with independent English translations of the minutes of these meetings. The English translations tendered into evidence were provided by the defendants and presumably were prepared by Tiao's son, as in the case of those to which I have already referred. Consequently, I cannot be certain that the translations are accurate.

526 It appears that a board meeting took place on the same day as the 26 February general meeting and almost immediately following that meeting. The minutes record that a motion was proposed that at least one AGM should be held during September and October but before 31 October each year. However, the minutes do not record a resolution to that effect, although they do record next to the election of the treasurer that 'accounts shall be sorted out by an accountant and the details of the accounts shall be publicised at the Annual General Meeting of the members'. The minutes do not indicate that a motion ratifying the minutes of the 26 February meeting was either discussed or passed. Clause 11.3 of the constitution requires the Board to approve the minutes of general meetings and for the minutes to be tabled at the next general meeting. As this meeting took place immediately after the general meeting, it is likely that the minutes of the general meeting were not available. However, the minutes of subsequent board meetings do not include approval of the minutes of the general meeting and nor were the minutes tabled at the next general meeting.

527 On 10 April 2005 Lai organised an informal meeting with 23 people, said to be members of the Association, to discuss his concerns regarding what he considered to be the unauthorised actions of Tiao and Hui Ping Wang. At that meeting, the members resolved to provide a notice to the Association requesting that a proper general meeting be convened to discuss certain issues. One of the critical issues was identified as the sale of the Association's property. A draft notice of general meeting, to be sent to the Association, was prepared and 24 signatures of those present at the meeting, including Lai's signature, were placed on it.

528 The draft notice was sent to the Association, its solicitors, and Hui Ping Wang on 13 April 2005. The proposed date of the general meeting of members was 29 May 2005. Under cl 11.2.1 of the constitution, the Association is obliged to organise a meeting within 14 days of receiving a request for a meeting made by at least 20 members. Neither the Association, its solicitors, nor Hui Ping Wang responded to the request to convene a general meeting.

529 On 19 April 2005 this court ordered the caveat lodged by Lai to be removed but granted an interlocutory injunction to restrain the sale of the land pending the outcome of this action.

530 Lai said in his evidence that he doubted the Association would organise a general meeting on 29 May 2005 in accordance with the request contained in the draft notice. Consequently, he decided that, as the highest ranking office-bearer of the Association, Vice-Chairman, he would organise the general meeting. On or about 11 May 2005, Lai caused a notice of a proposed general meeting of the Association to be advertised in three newspapers circulating in Perth. He also sent notices to the 37 persons who attended the 26 February general meeting. In this regard, Lai's conduct was in direct contrast to that of Tiao, who at all times excluded the contributors from attendance at any meeting and ignored or opposed any suggestion that they should be considered as members or offered membership of the Association.

531 The general meeting organised by Lai was to be held at the temple. On 25 May 2005, three days prior to the meeting, Tiao and Hui Ping Wang obtained an injunction restraining the holding of the meeting. Lai's understanding was that the court order was granted on the basis that the existing state of affairs should be preserved until the membership of the Association could be determined.

532 For a number of reasons, including his understanding that some members had flown in from Taiwan for the general meeting, Lai decided to have a public meeting of the members of the Association on 29 May 2005. On the day of the public meeting, Tiao and his family members, and also Hui Ping Wang, stood outside the temple and handed out copies of the injunction. A security guard was also present and stood in front of the temple entrance. Lai said that he saw about 30 members leaving the temple grounds after seeing or speaking to Tiao, Hui Ping Wang and their associates. Before the meeting Lai spoke to Tiao and Hui Ping Wang and invited them to attend the public meeting but they declined the invitation.

533 Lai's evidence was that 155 members attended the 29 May 2005 public meeting. Out of the 155 members, 52 people were said by Lai to be amongst the first contributors of funds for the construction of the temple. Attendance sheets were compiled which confirm those figures. None of the 37 persons who attended the 26 February meeting attended the public meeting.

534 At the public meeting an overview of events was presented to those in attendance. Everyone was handed a document entitled Explanatory Memorandum to inform them about the situation with the Association and the present litigation proceedings. Lai advised the attendees at the 29 May 2005 public meeting that those who satisfied membership requirements under the Association's constitution should formally register themselves as members in order to ensure that they were able to participate in the future activities of the Association. Lai said in evidence that a large number of those present at the public meeting chose to become members of the Association. Each of them completed a membership application, agreed to have his or her baptism conducted by one of the masters from IKTA present at the public meeting and paid the $10 fee. Lai said that 100 members formally registered on 29 May 2005. The funds collected were handed to Lai's solicitor to be held on trust on behalf of the Association. According to Lai, as a consequence there are now over 155 official members of the Association, a figure which includes those contributors who attended the 29 May 2005 public meeting. Lai sees the result of the exercise as creating an association with a large body of members who are bona fide Taoists, baptised and committed to the philosophy and faith of Taoism. Nevertheless, at trial, Tiao, Hui Ping Wang and Kuo maintained the position that the only members of the Association were the foundation members and those members whose applications were alleged to have been approved by the board on 8 February 2005.

535 By providing each attendee with a document entitled 'Member's Opinion on Matters Concerning The Australian Chinese Confucius Mencius Saint Tao Centre' (the Questionnaire), written in English and in Chinese, Lai also obtained the written views of those in attendance to the following questions:

1. Do you vote for the sale of any part of the Association's land?
2. Do you vote for the resolutions of the meeting held by Mr Cheng Chih Tiao and Mr Hui Pin Wang on 26 February 2005 to be cancelled?
3. Do you vote for Mr Conal O'Toole who represent for Mr Cheng Chih Tiao and Mr Hui Pin Wang to represent the Association as its solicitor?
4. Do you vote for Raymond Tan who represent for Mr Sheng Chin Lai to represent the Association as its solicitor?
5. Do you vote for removing Mr Cheng Chih Tiao from the board of the Association?
6. Do you vote for removing Mr Hui Lin Wang from the board of the Association?

536 Lai stated that he also collected a further 30 voting slips from members who were not at the 29 May 2005 public meeting. Consequently, a total of 185 voting slips were filled out. It is apparent from the voting slips that those in attendance at the meeting and the 30 others canvassed by Lai overwhelmingly rejected the sale of the property, the resolutions passed at the 26 February meeting, the appointment of Mr O'Toole as solicitor for the Association and Tiao and Hui Ping Wang as representatives of the Association. It is always necessary to exercise caution in considering the results of a questionnaire completed by people who, as in this case, have only heard one side of a contentious issue. However, the Questionnaire does reveal conflict between the views of the attendees at the meeting with those of the members who attended the 26 February general meeting.

537 Tiao was asked in evidence about the questionnaires completed at the public meeting. After initially denying any knowledge of them, Tiao did agree that he knew what they were. He denied being notified of the meeting or being at the meeting and initially denied knowing anything about it. He then relied on a probable lapse of memory, although he ultimately agreed that he had asked his lawyers to obtain an order to stop the meeting. Tiao was once again evasive in answering questions about the public meeting. He would not accept that the people who went to the meeting wanted to discuss the affairs of the Association, responding that it was not necessary for him to understand that because of the order stopping the meeting. In my view, Tiao was simply refusing to acknowledge that there could be other members of the Association and that those members did not share the views of the smaller number of members who attended the 26 February general meeting. Tiao expressed the view that the people who attended the meeting were not qualified to discuss Association matters because they were not eligible for membership under the constitution. This was a response which Tiao often gave to any suggestion that the Association had a greater number of members than those who attended the 26 February general meeting. However, it was apparent from Tiao's evidence that he had never given any consideration to the particular circumstances of each person in order to determine whether they could meet the membership criteria.

538 On 26 June 2006 Lai returned to Taiwan on business. On the same day a Notice of a board meeting to be held on 28 June 2006 was couriered to his home. The proposed agenda of the meeting included a discussion of the legal action including the estimated trial costs, the funding of the legal action, the application for an order for security for costs to be given by Lai in the sum of $50,000 and possible settlement of the action. Another agenda item was to fix a date for a special general meeting of the Association's members. The final agenda item was the appointment of a replacement board member following the death of Master Wang. As there was an election of board members at the meeting on 26 February 2005, this agenda item can only be explained in terms of an acceptance of the view expressed by the DOCEP officer that the meeting was invalid. I have reservations as to whether, under the constitution, it is open to the remaining board members to appoint a replacement board member: see cl 8.2, cl 8.3, cl 8.5, cl 8.7 and cl 10. However, as a general meeting of members was to be held on 16 July 2006, less than a month later, the preferable approach would have been for the replacement board member to be elected by the ordinary members. In those circumstances I consider that the board should have resolved to allow the members to elect a replacement board member at that meeting.

539 The minutes of the 28 June board meeting reveal that there were discussions about borrowing money and applying for a loan from the bank in the name of the board. It would seem that consideration was being given to the borrowing of funds, essentially by the Association, to defend the legal claim brought by Lai. It is difficult to accept that the board members present at the meeting thought it was appropriate to put the Association into debt rather than accept, as members, people who had been baptised in the same faith and had contributed substantial amounts of money to construct the temple and support the Association. It is also difficult to accept that, having entered into an agreement without first determining its commercial viability and without obtaining authorisation from the members of the Association, Tiao considered it appropriate to place the Association into debt in order to justify his actions. It was also resolved at the board meeting that the date of the general meeting of members would be 16 July 2006 at 1.30 pm.

540 On 30 June 2006 Lai received a telephone call from his son, who informed him that he had received a courier letter enclosing a notice of a special general meeting of the Association to be held on 16 July 2006. The notice is dated 29 June 2006 and identifies only one agenda item which is the discussion of the legal action by Lai against Tiao, Hui Ping Wang and the Association. The discussion is stated to include the costs of the trial estimated at $70,000 - $80,000, the funding of the costs of the legal action, the application for Lai to give security for costs and the possible settlement of the action. According to Lai, the only persons sent notice of the meeting were the board members and those persons Tiao and Hui Ping Wang had brought into the Association.

541 Lai instructed his solicitors to write to the Association's solicitors objecting to the calling of the meeting when the issue of membership was yet to be resolved by the court. No response was received until a further letter was written advising of Lai's instructions to seek an injunction to prevent the proposed meeting from taking place unless written confirmation was received by 10 July advising that the meeting would not proceed.

542 On 10 July the Association's solicitors provided a reply which stated that, as the notice of the special general meeting did not propose any resolutions, there was no reason why the meeting should not take place. However, somewhat inconsistently, the letter also contained the observation that, if it is subsequently determined that the persons attending the meeting are not members of the Association, decisions taken at the meeting could not be of any legal effect. Although Lai returned to Perth on 9 July 2006, he did not attend the 16 July 2006 special general meeting which was attended by 31 people.

543 Tiao stated that the purpose of the meeting was to consider the costs of this action, funding the costs and possible settlement of the action. Despite the implicit assurance given to Lai that the purpose of the meeting was to discuss issues relating to the action rather than pass resolutions, it is apparent from the minutes that the meeting was conducted as a formal special general meeting and that three resolutions were passed.

544 With respect to the different components of the only agenda item, the minutes record that, should the plaintiff choose to continue with the legal proceedings, the Association will be asked to pay $70,000 - $80,000 in legal fees after the court has examined documents put forward on 21 July 2006. Hui Ping Wang suggested that the Association pre-sell one block of the five blocks and have the title transferred to the buyer after the trial or, alternatively, to discuss with the solicitor other possible financial arrangements in regards to postponing all legal fees until completion of the trial, such arrangement to possibly include an interest fee or postponement fee.

545 Hui Ping Wang's suggestion that title not be transferred until after the trial could well be categorised as a deliberate attempt to avoid the effect of the injunction by giving the appearance of compliance until after the trial. Any attempt to sell the Association's land would be in breach of the injunction which, inter alia, restrained the sale of the land covered by the Level Holdings contract. The resolution recorded was that these suggestions be coordinated at the same point of time and the board was authorized to make the final decision. The second resolution was to instruct the solicitors to prepare an application for security for costs.

546 The final resolution was to nominate Tiao to represent the Association and advise Lai to cease all legal actions taken with respect to the Level Holdings contract. The resolution also states that the Association would then consider legal action against Lai for responsibility for all legal expenses, including $40,000 legal expenses since January 2005 until 16 July 2006, and to compensate for Tiao's time and energy for the duration of the trial which is actually stated to be from January 2005 until the end of the trial.

547 On 23 August 2006 Lai's son received a notice dated 22 August 2006 of a board meeting to be held on 27 August 2006. Lai was overseas at the time. The agenda items were stated to be, inter alia, to convene and fix a date for an annual general meeting of the members of the Association and other business.

548 On receiving the notice Lai instructed his solicitors to write to the Association's solicitors to object to the holding of the meeting, again for the reason that the membership of the Association as well as the membership of the board were to be determined in the legal proceedings and because the holding of a meeting was contrary to the purpose of the injunction granted to preserve the status quo until the resolution of the legal proceedings. A request was made for the meeting to be cancelled. No response was received to this letter and the meeting proceeded. The minutes of the meeting were not tendered into evidence. However, a letter from Lai's solicitors to the defendant's solicitors dated 18 September 2006 indicates that, despite Lai's objection that any meeting convened under the notice would be contrary to the spirit and terms of the injunction, the defendants proceeded with the meeting. The letter also refers to a notice of general meeting schedule for 8 October 2006 and again asserts that an attempt to call the AGM for the purpose of election of board members or the ratification of the sale of the land to Level Holdings was a flagrant disregard of the injunction. The response from the defendants' solicitors was to state that the AGM was required to be held both by the constitution and the Act and also to reject the proposition that the meeting disregarded the injunction granted on 15 April 2005.

549 An application was then made to the court on behalf of Lai seeking to restrain the Association from holding the meeting. At the hearing on 6 October 2006 counsel for Tiao and Hui Ping Wang conceded that an agenda item dealing with the ratification of the sale of the property should not been on the agenda. Consequently, the application was dismissed, although the court ordered that Tiao and Wang give seven days notice in writing to Lai's solicitors of any proposal to admit new members to the Association.

550 An AGM was held on 8 October 2006. According to Tiao, notice of the meeting was sent to Lai and Chou by registered post. The notice included the following agenda items:

(i) consideration of the annual report of directors, financial statements and audited reports for the year ended 30 June 2006;

(iv) ratification of the sale of the land to Level Holdings; and

Presumably, in view of the concession made at the injunction application, the fourth item on the agenda was not discussed.

551 According to Tiao, 37 persons attended the meeting, all resolutions were passed and seven board members were appointed. Although, according to the index to the Trial Bundle, the minutes of the meeting are said to be included, it contains only the list of attendees' names and signatures without the minutes which are usually attached to the list.

552 Lai did not attend the 8 October 2006 AGM but later became aware that the annual report of the directors, the financial statements and auditor's report for the year ended 30 June 2006 were adopted.

553 A notice dated 12 February 2007 advised of a special general meeting to be held on 4 March 2007. According to Tiao, a copy of the notice was sent on 16 February 2007 to Lai and Chou but they did not attend. Lai said that he was in Taiwan at the time. According to the notice, the only agenda item was the consideration of a proposal from Level Holdings.

554 The minutes of the meeting refer to a resolution passed at a board meeting on 12 February 2007 in the following terms:

1. Level Holdings has proposed an offer to end the land development contract with the Association. Level Holdings is prepared to accept the sum of $500,000 and the statutory charges of approximately $180,000 to complete the subdivision;
2. To this date, the Association has already accumulated a debt of $90,000;
3. An estimate of $100,000 in expenses is expected for the Association in the next years (including lawyer fees);
4. Estimates of $180,000 for 2 years mortgage interests;
5. A total of $1,050,000 needs to be borrowed from the bank;
6. To nominate representatives to act on behalf of the Association to borrow funds from the bank; and
7. To nominate representatives on behalf of the Association to sign a new contract with Level Holdings (to end the old contract).

555 The meeting passed a resolution authorising Tiao to make arrangements for the necessary funding. However, due to the litigation the Association was unable to obtain funds to complete any deal with Level Holdings. A second resolution authorised Tiao to represent the Association in signing a new contract with Level Holdings. The records of the meeting reveal that 34 people attended the meeting and 33 voted in favour of all resolutions. In my view, the level of influence which Tiao held over the members at the meeting is evidenced by the fact that they would countenance borrowing over $1 million to deal with the consequences of Tiao's actions, rather than attempt to address the issues which resulted in legal proceedings.

556 On 23 June 2007 Lai requested that a board meeting be held to discuss his application for winding up the Association. The request was sent to Tiao, Hui Ping Wang and Kuo. Tiao and Hui Ping Wang replied that Lai was no longer a director of the board and was only an ordinary member. Notwithstanding that response, Lai and Chou held a meeting on 6 July 2007, addressing the Association's significant losses in YEJ 2004, 2005 and 2006 and discussing whether the Association should be dissolved.

557 Lai's reasons for seeking to wind up the Association were to break the deadlock situation concerning the membership of the Association and to appoint a liquidator to carry out his or her functions and protect the interests of the Association, its foundation members and creditors. The approach of winding up was suggested by Templeman J in his judgment on the injunction application heard on 6 October 2006 and delivered on 8 October 2006.

558 An AGM was held on 14 October 2007. The plaintiff attended and addressed the AGM. Lai explained that the Association has been in debt since 1996 and it was impossible to maintain the temple without selling the Association's land. Lai's application to wind up the Association was rejected by 32 of the members present. At the meeting a document entitled 'Lai's Lies' was produced by Tiao. The document contains 11 items, mostly statements said to establish that Lai had made false statements in the course of the legal action. None of the statements made by Tiao are supported by any documentary evidence to establish that his version of the various events is the accurate one. In my view, it was totally inappropriate for these issues to be raised in this forum. In particular, the last item on the list contains an unsubstantiated allegation about Lai's conduct with respect to his application to migrate to Australia. The matter bears no connection to the issues involved in the litigation and is of no relevance to the Association.

559 Another document produced by Tiao was entitled 'Personal Attacks On The Temple And Its Staff'. Item 1 indicates that Lai questioned both Tiao and Wang's integrity over the profit to be made from the selling of the Association's land and whether Tiao and Wang intended to keep the money for themselves. This and some other items seem to indicate that it was not only inappropriate to question Tiao and Hui Ping Wang but questioning their conduct amounted to a personal attack on the temple and its staff. This reaction is consistent with the view that the conduct of Tiao and Wang was not to be questioned when it is the entitlement, indeed the obligation, of any member of an association or a director of the board, to question the activities of those who have the actual control of the association or who purport to act on behalf of the Association. That is particularly so where one of those people have entered into a contract, not under the seal of the organisation, to sell part of the Association's land without the decision to deal with the land being put before the members of the Association, nor recorded in minutes of a duly convened meeting of the board of directors. It would also be an obligation of directors and members to question the conduct of those in actual control of an organisation where no financial statements had been placed before the membership for many years and where the association's bank accounts have been closed and no record kept of the location of Association money.

560 These documents do not reflect well on Mr Tiao and are consistent with the assessment I have made of him as a witness. The content of the documents also had the potential to influence the members to refrain from questioning the conduct of those involved in the management of the Association.

561 From 25 May 2005, when the injunction was granted to restrain Lai from holding a general meeting, to the time that Lai's witness statement was affirmed on 22 October 2007, no meeting of members has been called by the Association, Tiao or Hui Ping Wang to discuss the issues raised in the 13 April draft notice of general meeting. In fact, the Association held two purported annual general meetings, one on 8 October 2006 and another on 14 October 2007 but the issues were not raised at either meeting.

562 It is apparent that Tiao had no intention of allowing any issue raised by Lai to be objectively considered by the members. Nor was Tiao prepared to accept as members those people identified by Lai who were said to meet the criteria and wished to become members. I consider that the refusal by Tiao to hold a meeting to which all interested persons were invited, with a view to resolving membership issues and identifying a way for the Association to move forward, was a direct result of his desire to maintain control over the Association. In my view, there is no other plausible conclusion which can be drawn in the circumstances which applied, particularly where his stance has resulted in significant legal costs. The steps taken by Lai with respect to membership were reasonable and, in my view, necessary, in order to correct the unfairness which arose from the failure by the board at the time that contributions were made to comply with the constitution with respect to approving membership. It was also necessary in order to overcome the unfairness which resulted from Tiao and Hui Ping Wang refusing to recognise any of the contributors as ordinary members of the Association.

563 The minutes of the meetings held over this period of time also establish that, despite the fact that it was Tiao's conduct in executing the Level Holdings contract without authorisation which led to the situation where the Association owed substantial sums in legal fees and resolutions were passed approving borrowing over $1 million in order to pay those fees and settle any claim against the Association by Level Holdings, no member at any meeting questioned either Tiao's conduct or the merits of expending Association funds in defending his conduct. Indeed, the members authorised Tiao, on behalf of the Association, to attempt to borrow the money and deal with Level Holdings with respect to a new contract.

564 The minutes reveal that at no stage was there any questioning of Tiao's actions. The records of discussions indicate that they were dominated by Tiao and Hui Ping Wang. Almost all resolutions were unanimous. At most, one person either voted against the motion or abstained from voting.

565 It has not been suggested by either party that the court has no jurisdiction to intervene in the activities of the Association. Accordingly, I do not propose to do other than refer to the authorities that entitle the court to intervene in a case such as this where the dispute is of such a nature that it is impossible for the Association to move forward without resolution of the dispute by a court: Green v Page (78, 80); Popovic v Tanasijevic (Full Court) [33].

566 It can be seen from the conclusions I have referred to above that, in my view, since incorporation the Association has been treated as the personal fiefdom of individual board members. Indeed, the fact that the same group of directors purported to manage the Association continuously without any thought of relinquishing the role to other members at an AGM supports the conclusion that they acted as if the Association was their personal business. Indeed, Tiao expressed the view that the amount of money donated to the Association by Master Wang gave him greater rights with respect to the Association over and above those who had donated lesser amounts. Few of the originators seemed to have any real appreciation of the meaning of donation, acting as if the amount or the purpose of the donation attracted certain rights. Even Lai appeared to believe that donating the money for the Association to purchase the land gave him the right to be consulted on the Association's use of that land. I have already noted that the only right Lai had was the right as a member to vote in relation to any proposal with respect to dealing with the land.

567 From 1996, first Master Wang and then Tiao sought to control the Association's management, and hence the Association, by excluding Lai and Chou from involvement in the activities of the board. They have done so with the assistance of Hui Ping Wang, and at least in the context of this trial, also with the assistance of Kuo. The Association has deliberately been managed without recourse to the legal requirements of an incorporated association and without recourse to the constitutional requirement of the Association.

568 Whilst none of the statutory obligations were met by any of the board members, at the early stages when the operation of the Association was principally obtaining donations and arranging for the construction of the temple, there were no real consequences to the omission. However, after the opening of the Centre, there is no doubt, in my view, that this approach has not been in the interests of the Association.

569 Significantly, despite the proposed nature of the Association at the time of its creation as an Association involving different worship groups, Tiao's conduct has also worked to restrict the nature of the Association to one representing and meeting the needs of only one worship group, which was Tiao and Hui Ping Wang's worship group.

570 Tiao, Hui Ping Wang and Kuo have also never considered it necessary to hold any meeting of members and clearly considered it appropriate to manage the affairs of the Association without any input from the membership. Further, no AGMs of the Association have ever been held and hence the entitlement to vote for a new board of management has also been removed from the members.

571 In fact, the Association has been treated by Master Wang and then by Tiao, particularly aided by Hui Ping Wang, as a personal fiefdom, free of any legal and constitutional constraints and free from the input of the other board members and the membership itself.

572 In my opinion, at all times the first defendants have acted out of self interest and not in the interests of the Association and its membership. Over time Tiao has adopted the approach that it is his prerogative to decide what is in the best interests of the Association. He either has no real grasp of the concepts of separate corporate identity or chose to disregard the distinction between his view and that of the Association which would normally be identified by the resolutions passed by members at general meetings.

573 This is best illustrated by his decision to enter into the Level Holdings contract without raising the matter at a validly convened board meeting with notice given to all board members before putting the matter before the members of the Association at a validly convened general meeting. Such steps were required of Tiao but, in my view, he deliberately declined to take them.

574 Moreover, when Lai became aware of the Level Holdings contract and the issue of the validity of Tiao's actions were called into question, rather than conceding the error in failing to obtain the authority of the membership, Tiao instructed solicitors, again without the authorisation of the whole board of directors or the members of the Association, and defended the action through to trial. I have not dealt specifically with the issue of Tiao engaging solicitors on behalf of the Association to defend this action. However, again it is clear that he took this approach without consultation and without consideration of whether it was in the Association's interests to meet the legal costs of this action. Overtures made by Lai to bring the dispute to an end were rejected. Even the obvious approach of putting the issues before a general meeting of all 'members' was declined. In the light of the quantum of legal costs of an action of this type, it was clearly in the interests of the Association to take all reasonable steps to reach some agreement which would move the Association forward without the necessity of a trial.

575 In the course of the dispute with Lai, Tiao finally obtained a translation of the constitution and then embarked upon a course of obtaining and approving membership applications from his relatives and members of his worship group who were clearly more likely to support his actions and also of disenfranchising those who had become members with his approval and who had generously donated the funds for the temple of which Tiao had become a master.

576 Tiao also convened meetings, of which notice was selectively given to members, and attempted to have his actions ratified by his group of followers. In attempting to obtain approval of his actions from the members attending the meeting, Tiao provided them with grossly inadequate information about the matters for which approval was requested. Notwithstanding the dearth of relevant information, those members resolved to ratify Tiao's past actions. That they did so indicates the strength of their allegiance to Tiao for, in my view, no person acting objectively and in the interests of the Association, rather than the interests of Tiao, could have resolved as they did.

577 The issue of whether the Association should be wound up was squarely raised by counsel at the trial. Unfortunately, because of the absence of records and my view of the credibility of Tiao and Hui Ping Wang, it is extremely difficult to determine exactly what the Association's financial position was or is currently. I certainly have reservations about the amounts of money said to be owing to Tiao and Hui Ping Wang and Mrs Tiao's company. Tiao plainly stood in a fiduciary relationship with the Association. In those circumstances it was imperative that, if there were to be significant financial transactions between him and the Association then they should have been carefully documented and the subject of definitive committee and general meeting resolutions. Of course, that never occurred. The manner in which Tiao and Hui Ping Wang dealt with this issue, however well intentioned they may have been in providing funds to the Association, was entirely inappropriate; particularly so where there was no contemporaneous agreement or meeting records evidencing the transactions and the terms of them.

578 Ultimately, it will be for the Association to determine whether there is sufficient evidence to establish that the moneys were required by the Association and were in fact loaned to the Association and whether, and to what extent, the amounts said to be owing, should be repaid.

579 The issue of the Level Holdings contract also presents a difficulty for the membership and may lead to legal proceedings. However, Level Holdings has to confront the obstacle of having constructive notice of the Association's registered constitution and hence would be treated as having been put on inquiry as to the true powers of Tiao to execute the contract, particularly without affixing the Association's seal: see Broadlands Finance Ltd v Gisborne Aero Club Inc (in liq) [1975] NZCA 7; [1975] 2 NZLR 496, 500 (Cooke J). That, of course, is a matter for the Association to address should the need arise.

580 It is also the case that, because of the restrictive approach taken by Tiao as to membership it is not possible to drawn any conclusion as to whether the Association would be viable if a less restrictive approach to membership were adopted.

581 For all those reasons, I would not be prepared to order the Association be wound up, although that may need to be the outcome for the Association should a new board with access to all the relevant information and having addressed all the outstanding issue form the view that the Association has insufficient funds and no real prospects of operating viably.

582 For the moment I believe the appropriate way to move forward is for a general meeting to be held at which a new board of directors is elected. The board should then admit to membership every person who meets the criteria in the constitution. The board should also consider the terms of the constitution and identify appropriate amendments. The board should also take all necessary steps to identify the Association's financial position before putting all such matter before the membership at a further meeting of members. Only then will it be possible to determine whether the Association can continue to operate.

583 It remains for me to summarise the answers to the questions I identified when addressing the issues to be resolved in this action. I would prefer to hear from the parties with respect to the specific orders necessary to resolve this action.

1. Who are the foundation members of the Association?
2. The originators: Master Wang, Lai, Chou, Tiao, Hui Ping Wang and Kuo.
3. Are there ordinary members of the Association?
4. Yes. They are the natural persons identified in the List of Contributors compiled from the marble plaque.
5. Was Tiao authorised by the Board, or by the members of the Association, by retrospective ratification or otherwise, to enter into the Level Holdings Contract?
6. No. Tiao had no authorisation to enter into the Level Holding contract and the meeting at which the retrospective ratification took place was invalidly convened and the resolution ratifying his past conduct was invalid and ineffective.
7. Was the meeting of 26 February 2006 valid?
8. No.
9. Was Tiao required to call a meeting of members as requested by the plaintiff?
10. Providing that the 24 persons who signed the draft notice of meeting were foundation members or members whose names appear on the marble plaque, then Tiao was required to call the meeting.
11. Did Tiao fail to comply with the plaintiff's request to call a meeting of members?
12. Yes.
13. Was Conal O'Toole validly engaged as solicitor for the defendants?
14. Conal O'Toole, Solicitors, was not validly engaged as solicitor for the Association.
15. Are the first defendants elected members of the board of the Association?
16. Technically, the position of all board members should have been declared vacant at the first AGM which should have been held in accordance with the constitution at the appropriate time after the membership reached 30 ordinary members. As the AGM was not held and as the obligation to hold an AGM is a continuing one, notwithstanding the extensive period of time which has passed, the first defendants should remain as directors only until such time as a meeting of members can be convened when the position of all board members should be declared vacant. Each board member is entitled to stand for re-election.

584 I propose to hear from the parties as to the specific orders sought to reflect the conclusions reached in these reasons for decision.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAI -v- TIAO [No 2] [2009] WASC 22 (S)

HEARD : 19 ­ 23 & 26 NOVEMBER 2007, 22 FEBRUARY 2008

AUSTRALIAN CHINESE CONFUCIUS­MENCIUS SAINT TAO CENTRE INC

Colgate-Palmolive Co v Cussons [1993] FCA 536; (1993) 46 FCR 225

Fazio v Fazio [2008] WASC 161

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95

Glew v Frank Jasper Pty Ltd [2008] WASCA 186

Re Malley SM; Ex parte Gardner [2001] WASCA 83

Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court, French J, 3 May 1991)

Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190

WA Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

1 JOHNSON J: On 12 February 2009 the reasons for decision in the above matter were delivered. I indicated at the time that I proposed to hear from the parties as to the specific orders which would reflect the conclusions reached in those reasons.

2 Interim orders were made on that date for the first defendants to hand over the keys to the Association's premises as well as to hand one to the Association's financial documentation. The matter was then adjourned to 6 March 2009. Unfortunately, there was a delay in compliance with the interim orders which, in my view, was not satisfactorily explained. It took the first defendants over a week to hand over the keys. The first defendants also chose to place an unjustifiably narrow construction on the scope of the financial documentation to be provided. The first defendant's protestation that the 'Management Accounts' are in evidence and that this fact is compliance with the interim orders is wholly without substance.

3 At the hearing on 6 March 2009 the court was advised that the keys had been delivered up. The court was also provided with the assurance of counsel for the first defendants that he had explained to them in categorical terms the effect of the order and that the financial documentation was to be delivered to the plaintiff as soon as possible.

4 Prior to the hearing on 6 March 2009, the solicitors for the plaintiff had filed a minute of proposed orders (the Minute) and submissions on the Minute. The approach adopted at the hearing was for submissions to be made on the Minute, first with respect to the eight proposed declarations and then with respect to the 21 orders sought by the plaintiff. In addressing those submissions and determining whether the declaration or order sought should be made, I propose to rely on the same abbreviations and general terms used in the reasons for decision.

5 On behalf of the plaintiff it was submitted that the declarations and orders sought fall to be considered in the context of an extreme set of factual circumstances that require orders that correspond to that level of conduct. In making that submission, counsel referred to some of the specific findings made against the first-named first defendant, Tiao. In particular, counsel referred to the fact that Tiao had been found to have acted deliberately disgracefully at the general meeting of 26 February 2005, a meeting found to have been invalidly held. Tiao was also found to have treated the Association as his personal fiefdom and mixed the Association's funds with his own. In addition, counsel for the plaintiff referred to the fact that the second-named first defendant, Hui Ping Wang, openly contemplated acting in contempt of court. This is a reference to the suggestion made by Hui Ping Wang at the 16 July 2006 special general meeting that the Association pre-sell one of the developed blocks of land but have the title transferred to the buyer after the trial so as to avoid the effect of an injunction which restrained the sale of the land covered by the Level Holdings development contract. It was further submitted that the orders must be considered in light of the fact that the first defendants have already ignored the interim orders.

6 It is not entirely accurate to state that the first defendants ignored the interim orders but it is certainly the case that there was an unexplained and unreasonable delay in handing over the key and an untenable position held by the first defendants in relation to the production of the financial records. In my view, the first defendants' assertions that the 'Management Accounts' were in evidence, and no further compliance with the interim order was therefore required, displays a reluctance to accept the outcome of the action as well as a cavalier approach to the orders of this court.

7 Keeping in mind the court's findings as to the extent to which the first defendants were prepared to go to maintain control of the Association, the plaintiff's concerns about the conduct of the first defendants with respect to the future activities of the Association are legitimate. I accept that it will be necessary to ensure that the steps which now need to be taken by the Association to comply with its constitution are not impeded in any way by inappropriate conduct on the part of the first defendants. It will therefore sometimes be necessary for the orders to address specific conduct rather than simply rely on the fact that steps are to be taken in accordance with the constitution.

8 I propose to identify each proposed declaration and order before setting out the submissions and conclusion in relation to each and then separately identify the declarations and orders which are to be made.

Declaration 1: All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ('Association'), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ('Members').

Declaration 2: Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.

Declaration 3: Except as provided in declarations 1 and 2, there are no other members of the Association.

9 These three declarations deal with the membership of the Association. Counsel for the defendants expressed no difficulty with the first two declarations which identify the ordinary membership, the foundation membership and the board members of the Association. Although counsel for the defendant took no objection to the third declaration, he did observe that it seemed tautological.

10 Counsel for the plaintiff submitted that the problem was that there are other categories of members in the constitution and by way of example observed that it would be worrying if somebody claimed to be a supervisory member. Clause 6.5.2 of the constitution defines supervisors as ordinary members who are appointed by the board to oversee the operations of the board of directors. The powers of supervisors are not identified. Counsel submitted that this case is not an ordinary case and it needs to be pointed out with absolute clarity that no action may be taken to alter the membership in any way prior to the holding of a general meeting and the election of a new board of directors. Counsel for the plaintiff also expressed his concern that the first defendants have not accepted the thrust of the court's ruling and intend to carry on as they have always done, as evidenced by the first defendants' response to the interim orders. Counsel further referred to the finding that Tiao could actually understand English, contrary to his assertion, and noted that any explanation for non-compliance based on communication difficulties or a misunderstanding of the terms of any order ought to be viewed with caution.

11 It certainly is uncommon for unsuccessful litigants to take such an approach although the level of acrimony in this matter may well explain it, although certainly does not justify it.

12 In the normal course of events, a declaration in the terms of the third declaration would be unnecessary. However, in the circumstances of this case where there were attempts made to confer membership on others in order to increase the first defendants' support base and where the level of acrimony does not appear to have abated following the court's decision, out of an abundance of caution all three declarations will be made.

Declaration 4: There was no Board Meeting of the Association held on 8 February 2005.

Declaration 5: The General Meeting held on 26 February 2005 was invalid.

Declaration 6: All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-

a. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and

b. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.

13 In relation to declaration 6, counsel for the plaintiff explained that, although no specific findings were made in relation to the validity of these meetings, the fact of invalidity flows from the finding that no board meeting was held on 8 February 2005 and hence the 38 applicants whose membership was alleged to have been approved at that meeting were not members of the Association. It was apparent from the evidence that the attendees at the meetings referred to in declaration 6 were from that same group of applicants who were found not to be members. Consequently, the meetings were invalid as there was not a quorum of members.

14 Counsel for the defendants made no objection to declaration although he considered that declarations 4 and 5 were incorporated in declaration 6 and were, therefore, unnecessary.

15 I have no difficulty with making declaration 5, in addition to declaration 6 because the validity of the general meeting of 26 February 2005 and, consequently, the validity of the resolutions allegedly passed at that meeting, was one of the issues that was specifically requested to be addressed on the pleadings and in relation to which a declaration was sought. However, the finding that the boarding meeting of 8 February 2005 never occurred was simply a finding of fact in the course of determining the actual membership of the Association which was a matter central to the action. In my view it would not be appropriate to make a declaration with respect to a matter which is a simple finding of fact along the path of determining one of the primary issues involved in the litigation. Declarations 1 to 3 exclude from membership the applicants approved at the purported meeting of 8 February 2005.

16 Although the history of the matter caused counsel for the plaintiff to have some reservations about not making this particular finding as clear as possible, the reasons for excluding declaration 4 were ultimately accepted by him.

Declaration 7: Conal O'Toole, Solicitor and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.

17 The actual declaration sought on the pleadings was that the purported appointment by the first defendants of Conal O'Toole as the Association's solicitor was invalid. However, at trial, the defendants were represented by the firm of Butcher Paull & Calder. Counsel for the plaintiff explained that Mr O'Toole became a consultant or employee of Butcher Paull & Calder at an unidentified point in the proceedings. It is for those reasons that the declaration sought includes Butcher Paull & Calder.

18 On behalf of the defendant it was conceded that the content of this declaration arose from the findings in the reasons for decision and no objection was taken to it.

Declaration 8: The contract entered into between Level Holdings Pty Ltd and the Association dated 11 May 2004 in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('Land'), including any subsequent contracts between Level Holdings Pty Ltd and any purchasers of any subdivided lots of Land ('Contracts'), is null and void.

19 An objection was taken on behalf of the defendants to declaration 8 which seeks a declaration that the Level Holdings contract is null and void. Counsel for the defendants submitted that it is not open to the court to make such a declaration because it was not within the purview of the issues raised on the pleadings in this action and could not be made in an action to which Level Holdings was not a party. It was, however, conceded that a declaration could be made that the first defendant was not authorised to enter into the Level Holdings contract because that issue is one which was squarely raised on the pleadings and was an issue between the parties to this action.

20 Counsel for the plaintiff advised that Level Holdings had applied to be joined as a party but the application had been refused. However, Level Holdings has been notified of the reasons for decision and of the interim orders made.

21 In the plaintiff's written submissions on the minute, reference was made to the determinations contained in the reasons for decision with respect to the questions raised by the pleadings. However, the only determination made in relation to the Level Holdings contract was that Tiao was not authorised by the board, or by the members of the Association, by retrospective ratification or otherwise, to enter into the Level Holdings contract.

22 In my view, the validity of the Level Holdings contract is an issue for another court to decide. Answering the question of whether the contract is null and void requires a consideration of matters which were simply not addressed in the course of this action. In any event, it would be inappropriate to make a declaration with respect to the Level Holdings contract without hearing from Level Holdings. However, the declaration I am prepared to make, that Tiao was not authorised to enter into the Level Holdings contract, will have the effect of removing that issue from determination in any action brought by Level Holdings in relation to the contract.

Order (1): The plaintiff, Yung Sen Chou and the members do have immediate access to the property of the Association including the Temple situated at Lot 42 Warton Road, Canning Vale ('Property') and all financial records of the Association for the period from July 1996 to date.

23 Order 1 allows the plaintiff, Chou and the members of the Association immediate access to the Association's property and also to all financial records of the Association. As I have noted, similar orders were in fact made at the time the reasons for decision were delivered. The order to hand over the key to the Association's premises was not promptly complied with. There was also a reluctance to comply with the order to hand over all financial records of the Association.

24 Counsel for the plaintiff relied on the first defendants' response to the interim orders as highlighting their attitude to these proceedings and justifying the need for a permanent order.

25 Counsel also relied on Tiao's previous conduct in relation to a general meeting called by Lai for 29 May 2005. Lai said in his evidence that he doubted the Association would organise a general meeting for 29 May 2005 as requested by him so decided to organise the meeting himself. As mentioned in the reasons for decision, three days prior to the meeting Tiao and Hui Ping Wang obtained an injunction restraining the holding of the meeting. For a number of reasons, including his understanding that some members had flown in from Taiwan for the general meeting, Lai decided instead to have a public meeting of the members of the Association on 29 May 2005. On the day of the public meeting, Tiao and his family members, and also Hui Ping Wang, stood outside the temple and handed out copies of the injunction. A security guard was also present and stood in front of the temple entrance. Lai said that he saw about 30 members leaving the temple grounds after seeing or speaking to Tiao, Hui Ping Wang and their associates.

26 Although counsel placed reliance on the fact that Taio prevented people from exercising their lawful right to enter the premises, it is the case that Tiao had an injunction to prevent a general meeting from being held and had a lawful right to take steps to ensure the meeting did not take place.

27 In my view, that incident, of itself, is insufficient to justify an order in the terms sought, particularly in circumstances where the keys to the premises have been handed over. In my view, that part of the proposed order dealing with access to the premises would be better worded if it stated that the persons identified 'are not to be denied access to property'. In my view, an order in those terms would overcome any concern raised by the first defendants' previous conduct.

28 At the time of the hearing the first defendants had not yet complied with the interim order to produce all financial documents of the Association. It is also the case that, in view of the way in which the finances of the Association were dealt with, as referred to in the reasons for decision, there is always the possibility that relevant documentation may be identified even after the parties consider that the financial documentation has been handed over. In those circumstances I believe it would be prudent to include the financial documentation in the items to which the persons nominated are not to be denied access.

29 In the event that the court was minded to make an order of the type contemplated in order 1, counsel for the first defendants agreed to the substituted wording. For these reasons I would make the order, amended in the above terms.

Order (2): The first defendants be and are permanently restrained from changing any locks at the property.

30 The justification for this order is said by the plaintiff to lie in the evidence before the court that the first defendants had, in fact, previously changed the locks. To my recollection, no specific finding was made in the reasons for decision in relation to that allegation.

31 Counsel for the defendants submitted that an order of this type was simply not necessary. Nor, it was said, was it the sort of order which would typically be made in an action of this type. Notwithstanding the acrimonious nature of the dispute and the antagonism that has developed between the parties, in my view it is unnecessary to descend to this level of detail in the orders simply to prevent problems which the plaintiff envisages might arise. It is not the court's intention to micro-manage the conduct of individual board members arising from the findings made in the reasons for decision, or reacting against those findings.

32 It should be clear from the reasons for decision that the first defendants are only board members until the members can meet and vote for a new board of directors. As such, they have no power to change locks or take any action that might prevent access to the Association's property by its members and other inaugural board members. If the first defendants were to take such action, the other board members would have the right to take any action with respect to the property, including calling for the assistance of the relevant authorities, to ensure they and the other members obtain the access to which they are entitled. Further, Lai or Chou, as members of the inaugural board until the election is held, would be quite entitled to force entry if someone changed the locks to the Association's property because changing the locks would not be an authorised act.

33 For these reasons I am not prepared to make an order in terms of the proposed order 2.

Order 3: The first Defendants be and are permanently restrained from permitting any persons, other than the members of the Association, to use or access the property.

34 Counsel for the plaintiff advised that the purpose of this order was to prevent other people, who have no connection, relationship or potential relationship with the Association and its members, from wandering in and out of the Association's property. Counsel further explained that there was a need to prevent the first defendants from bringing in other people to intimidate the members from exercising their rights as members. It was submitted that the first defendants had permitted their relatives and friends to enter the property and had also permitted at least one other totally unrelated organisation to camp there. This was done without the authority of the members.

35 Counsel for the defendants submitted that this order ignores the fact that the Association has a spiritual purpose to its operations. Counsel noted that the Association's property includes a temple and people, irrespective of whether they are actually members, may wish to access the temple and it may well be the desire of the membership that such people be allowed to access the temple. Further, it was submitted that members should be able to bring other people to the temple. As counsel has noted, not all activities are religious in nature and people should be able to bring non-members to other activities that take place at the Association's property. Counsel for the defendants expressed the view that it should be up to the newly elected board or the membership to determine whether they want to pass and enforce a rule that only members can access the Association's property.

36 I understand the concerns of the plaintiff which have led to an order of this nature being sought. However, it is the case that the order sought would have a far wider effect than overcoming the conduct identified by counsel for the plaintiff. The potential effect of the order is to prevent perfectly legitimate people from being at the temple for spiritual or other purposes. For example, the order would prevent a member, even a board member, from bringing someone to the temple to show them around and invite them to seek membership of the Association.

37 I put to counsel for the plaintiff that, in view of the findings in the reasons for decision, Lai, as a member of the inaugural board would be entitled to address the conduct identified by counsel by having those people removed from the property. Counsel's response was that, even as a board member, Lai had to come to court to stop such things from happening. I accept that Lai was required to bring legal proceedings in order to return control of the Association to the membership. Nevertheless, the plaintiff, who holds office as a member of the board only until the election of a new board, seeks a permanent order which has the potential to affect the future activities of the Association. In all the circumstances to which I have referred I am not prepared to burden the Association with such an order simply on the application of the plaintiff.

Order 4: The first defendants do pay the plaintiff's costs of the action, including reserved costs, and such costs:-

a. are to include all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred so that the plaintiff will be completely indemnified by the first defendants for his costs and the amount of such costs to be taxed; and

b. to be paid by the first defendants forthwith.

38 Counsel for the defendants conceded that there must be an order for costs but resisted the claim for indemnity costs. Counsel also raised the issue of how costs can be paid forthwith if they are to be taxed. Presumably the intention is that the costs be paid immediately after taxation. However, because of the likely quantum of the costs I consider it appropriate to allow the first defendants one month to pay the taxed costs.

39 In submitting that an award of costs on an indemnity basis is justified in the circumstances of this case, counsel for the plaintiff referred to and relied upon a number of findings and observations made in the reasons for decision. Specific reference is made to [562] of the reasons for decision which is in the following terms:

It is apparent that Tiao had no intention of allowing any issue raised by Lai to be objectively considered by the members. Nor was Tiao prepared to accept as members those people identified by Lai who were said to meet the criteria and wished to become members. I consider the refusal by Tiao to hold a meeting to which all interested persons were invited, with a view to resolving membership issues and identifying a way for the Association to move forward, was a direct result of his desire to maintain control over the Association. In my view, there is no other plausible conclusion which can be drawn in the circumstances which applied, particularly where his stance has resulted in significant legal costs. The steps taken by Lai with respect to membership were reasonable and, in my view, necessary, in order to correct the unfairness which arose from the failure by the board at the time that contributions were made to comply with the constitution with respect to approving membership. It was also necessary in order to overcome the unfairness which resulted from Tiao and Hui Ping Wang refusing to recognise any of the contributors as ordinary members of the Association.

40 Counsel for the plaintiff extracts from this paragraph the propositions that the steps taken by the plaintiff were both reasonable and necessary and that the action should never have been opposed by the first defendants. From those basic propositions counsel then draws the conclusion that the first defendant's defence was an abuse of process and that, therefore, an order to pay indemnity costs is necessary. In my view, the conclusions drawn do not flow from the findings relied upon.

41 Counsel for the plaintiff also refers to what is described as 'a key finding', which is that the first defendants should have submitted to the plaintiff's demands for a general meeting before the litigation commenced because the plaintiff's offer to hold a general meeting of all members could not have been rejected on any basis. It is further said that, had they done so, the litigation would never have occurred.

42 In making this submission, counsel for the plaintiff has turned findings that Tiao did not behave in the way in which a reasonable person would have been expected to behave in the same circumstances, into a conclusion that the litigation should never have been defended. Further, he has turned observations based on findings, into findings of fact and afforded to them the same level of importance as the findings made in relation to the questions raised on the pleadings.

43 To these submissions, counsel for the plaintiff adds a series of further adverse findings made against Tiao:

1. that he was not a witness of truth: par 138;
2. that he prepared totally inappropriate documents for meetings: par 558 559;
3. that he had Kuo give evidence about a board meeting that never happened: par 418 - 443. I note that this alleged finding is a conclusion drawn by counsel for the plaintiff from the paragraphs to which he refers and was not a finding of fact made by the court;
4. that he had other witnesses say they had been baptised before that was possible: par 476. Again, this alleged finding is a conclusion drawn from the paragraph and was not a finding of fact made by the court;
5. that he had witnesses say they completed membership application forms before such forms existed: par 478. This alleged finding is not justified by the content of the paragraph; and
6. that he had witnesses discuss and align their evidence before and even during the trial: par 485 - 489, 492. Although there was a finding that certain witnesses had discussed their evidence over lunch with Tiao and others, no statement or finding was made to the effect that Tiao 'had witnesses discuss and align their evidence'.

44 According to counsel for the plaintiff, this conduct can be categorised as 'some element of improper or at least unreasonable conduct on the part of the parties' and relies on the decision in Glew v Frank Jasper Pty Ltd [2008] WASCA 186 [15] as authority for the proposition that conduct so categorised can attract an indemnity costs order as a mark of disapproval on the part of the court of that conduct. However, counsel overlooks the express requirement that the improper or unreasonable conduct must be 'in the conduct of the litigation' as opposed to being a description of the conduct which leads to the litigation.

45 It is also the case that only two of the alleged findings were in fact made. One was a finding that Tiao was not a witness of truth and the other was that he prepared totally inappropriate documents for meetings where such conduct took place well prior to the litigation and not in the conduct of the litigation.

46 Indemnity costs are also said by counsel for the plaintiff to be justified on an approach analogous to Order 24A. The plaintiff offered to do exactly what will now be ordered, that is, to call a general meeting for all members to decide the very matters in dispute: 574, 583. In fact, the plaintiff even suggested that the first defendants' purported members also attend. In making this submission counsel for the plaintiff again takes the approach that findings made by the court following trial lead inexorably to a conclusion that the litigation should never have been defended. However, such observations were dependent on findings as to credibility and on interim findings of fact. However, as counsel for the defendants points out, each of these finding were made after trial and, however adverse they may be to the first defendants, they do not necessarily lead to the conclusion that it was improper or inappropriate to defend the proceedings.

47 Indeed, the observation that the first defendants should have submitted to the plaintiff's demands for a general meeting before the litigation commenced, is the key finding on which the plaintiff relies. The proposition submitted on behalf of the plaintiff is that, had the first defendants permitted that meeting to occur, the conflict would have been resolved and the litigation would never have occurred. Consequently, it is said, the first defendants' defence was an abuse of the process of the court.

48 Counsel for the plaintiff maintains that the offer to settle the proceedings, by holding a meeting attended by all members and alleged members, was eminently reasonable and in fact was what the court directed should happen. In fact, the issue raised on the pleadings which the court determined was whether Tiao was required to call a meeting of members as requested by the plaintiff. The determination was that, providing the 24-person who signed the draft notice of meeting were foundation members or members whose names appear on the marble plaque, then Tiao was required to call the meeting. A determination of the membership of the Associate was a necessary component of that determination. Whilst it would have been in the interests of the Association for the offer to have been accepted, if only to avoid the costs of litigation and hopefully, bring to an end conflict as to membership, it does not follow that a refusal of the offer constitutes an abuse of process or conduct justifying indemnity costs.

49 One clear reason why the first defendants were not obliged to accept the plaintiff's offer is that it would not have legally resolved the issue of membership. There would still be an issue whether those people who were admitted to membership before the constitution was translated could lawfully vote at any meeting. Counsel maintained that Tiao did not suggest that the people on the plaque were not members until it was very late and litigation was in the offing. He then decided to start organising meetings and having friends and relatives apply for membership. In my view those matters are not an answer to the proposition that accepting the plaintiff's offer would not necessarily have prevented litigation from resulting. Further, however late in the day, it was still conduct which pre-dated the proceedings.

50 Another reason why acceptance of the plaintiff's offer would not necessarily have precluded litigation is that it would not prevent another person from taking up the issue of the lawful membership of the Association and consequent voting rights.

51 Counsel for the plaintiff took the matter even further in submitting that the key question of who are the members of the Association should never have been opposed. However, that was a central issue because, in accepting the contributors as members, the Board of the Association had acted contrary to the terms of the constitution and, if someone were to take issue with their membership, an order from the court was necessary as no record of the Association established their membership. As counsel himself submitted, the issue of membership was a very big part of the case. Until such time as the court made a finding about the Association's membership, that issue was in dispute and a number of disputes followed on from that.

52 To suggest, as I did, that it was clearly in the interests of the Association to take all reasonable steps to reach an agreement which would move the association forward without the necessity of a trial, is a statement as to what a reasonable person in the position of the first defendants would have done, leaving legal issues to be answered on another occasion, if that occasion ever arose. However, as I have noted, it does not follow that taking legal action to positively determine membership is so unjustified as to result in an order for indemnity costs.

53 Counsel for the plaintiff also submitted that it is necessary to award indemnity costs because the steps taken by the plaintiff were both reasonable and necessary. Counsel for the first defendants conceded there was a proper basis to conclude that the plaintiff's actions in bringing these proceedings were reasonable but submitted that it doesn't follow, as a result, that the defence of these proceedings by the defendants was unreasonable and they should be visited with indemnity costs. On my reading of the authorities, the fact that the litigation was reasonable and necessary is not criteria for an award of indemnity costs.

54 Counsel for the defendants submitted that none of the factual findings adverse to the first defendants take away the fundamental issue which was agitated in the action which was the proper interpretation, application and construction of the constitution and the differing views which were advanced before the court as to who were properly members of the Association were primarily directed to that end. However, the other fundamental issue agitated in the action was the Level Holdings contract which, on the findings ultimately made, was not authorised by the Association prior to the contract being entered into, as Tiao well knew. Although I expressed considerable concerns about the translations prepared on behalf of the first defendants of the meetings where the Level Holdings contract was raised with the members, the documents did prima facie reflect a ratification of past action. Once again, the issue of the validity of the membership was central to this issue as well. Further, irrespective of the membership issue, it was not until the independent translations were obtained that it became evident that no such ratification had taken place.

55 Counsel for the defendants submitted that what the court found was that the board, criticised as it was, waived the constitution and that, in a practical sense, had operated on the basis that the people on the plaque were the members of the Association. It was further submitted that these findings do not give rise to the conclusion that the arguments raised by the defendant as to the interpretation and construction of the constitution were unreasonable. I accept that to be the case.

56 Counsel for the defendants further submitted that the point of distinction between the parties was that a finding of misconduct made at the conclusion of a trial says nothing about the conduct of the proceedings. In other words, according to counsel, the issues on which the plaintiff relies were issues which were live, which were there to be tested and findings adverse to the first defendants were made by the court. Because disputed issues were determined by the court adversely to the first defendants, does not mean that they were not matters incapable of being advanced before the court. Counsel for the defendants maintained that it was the court's detailed analysis of the evidence given by all the witnesses that, together with careful reasoning, led to the specific findings rather than, for example, a reference to an unqualified admission or a basis in the defendant's own position from which one could infer there never was, and never could be, an arguable defence. Counsel maintained that there was nothing in the conduct of the proceedings which would incur the wrath of indemnity costs.

57 One basis of concern with respect to the first defendants' position is the finding that Tiao's refusal to hold a general meeting to which all interested persons were invited was a direct result of his desire to maintain control over the Association. Indeed, most of Tiao's conduct prior to commencement of the litigation was directed to maintaining control. However, in my view, that motivation does not undermine the arguments that legitimate issues were raised at trial which, if answered in Tiao's favour, could well have resulted in his conduct being validated and in him maintaining control over the organisation, at least on an interim basis until there was compliance with the provisions of the constitution as to the holding of meeting.

58 Before reaching a concluded opinion on whether it is appropriate to order indemnity costs it is necessary to consider the authorities on the issue.

59 In Re Malley SM; Ex parte Gardner [2001] WASCA 83 [2] the court held that an award of costs on an indemnity basis will only be made in exceptional circumstances. Further, in the absence of a legal costs agreement under s 221 of the Legal Practice Act 2002 (WA), the recovery of costs can be no greater than the paying party has the obligation to pay his solicitor which is the amount identified in the scale. No submission was made on behalf of the plaintiff that a legal costs agreement was in place. In Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95 [19] Pullin J concluded that, where there is no costs agreement, there should not often be any need for an indemnity costs order.

60 In Flotilla Nominees Pty Ltd v Western Australian Land Authority Pullin J also succinctly stated the principles relating to indemnity costs orders as follows [8] - [9]:

The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.

Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra) at page 233 and the circumstances referred to in Fountain Selected Meats (Sales)Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397 and in Unioil's case. Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to indemnity costs orders. See Colgate-Palmolive v Cussons (supra) at 233. The creation of false issues by tactical denials or failure to admit the facts may, in the circumstances of particular cases, lead to such an order: Unioil's case. An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law: See Fountain Selected Meats (supra) [8] - [9].

61 It can be seen that some support can be found in the above extract for the proposition put by counsel for the defendant that the improper, or at least unreasonable, conduct on the part of the first defendants must be in relation to the case.

62 In Fazio v Fazio [2008] WASC 161 [16] Martin CJ observed that although the authorities establish that, in general, the discretion to award indemnity costs will not be exercised unless there is something in the conduct of the party against whom the order is sought that makes it appropriate for the court to take the unusual step of ordering costs. An example of such conduct was said by Martin CJ to be where the conduct of that party has been unreasonable; for example, where there is no substantive ground for opposition to a grant of probate in solemn form or where the unreasonable conduct has magnified the costs of proceedings or where there is something in the conduct of the party that merits censure or reproof or the defence or the claim has been pursued for some collateral or improper purpose.

63 In Fazio v Fazio the ground upon which the indemnity costs were sought was essentially that the conduct of the defendant was unreasonable because there was no clearly identified ground of opposition to the grant of probate. In that case, the grounds of opposition were found to be entirely without substance and an award of costs on an indemnity basis was made because the defendant's conduct was found to be unreasonable: [25]. That is not this case. In this case the arguments made on the proper construction of the constitution and the membership of the Association were perfectly reasonable despite the fact they did not ultimately find favour with the court.

64 In Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190, 191 Ipp J observed that an order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice and cited the decision of Sheppard J in Colgate-Palmolive Co v Cussons [1993] FCA 536; (1993) 46 FCR 225, 233. His Honour noted that the court has a wide discretion quoted French J's remark in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court, French J, 3 May 1991) that: 'The categories in which the discretion may be exercised are not closed.'

65 In that case, Ipp J held (193 - 194) that the creation of false issues by tactical denials, failures to admit contained in pleadings or a failure to make a bona fide attempt to agree facts may justify the ordering of payment of costs on an indemnity basis. This was said to be because, inherent in the case management system now in operation in the Supreme Court of Western Australia, is a general duty upon lawyers, in appropriate circumstances, to co-operate so as to avoid needless disputes. It was further noted that appropriate costs order could be made when the use of aggressive, discourteous and non-co-operative behaviour leads to the incurring of delay, inconvenience and costs. However, on an overall consideration of the issues in that case, Ipp J determined (192) that the facts did not warrant the making of a global order for indemnity costs.

66 In this case, despite having real concerns about the first defendants' motives in defending this action, there were real legal issues involved in the case and the arguments put on behalf of the first defendants could not be said to be wholly without merit. Further, it is not the case that the action was unnecessarily prolonged by any conduct of the first defendants. The fact remains that most of the first defendants' inappropriate and improper conduct pre-dated the commencement of the litigation. The fact that I did not find the first defendants to be witnesses of truth would not justify an award of indemnity costs.

67 Whilst I have great sympathy for the plaintiff who was required to commence litigation to establish the correct membership of the Association and hence establish the validity of certain meetings at which particular resolutions were passed, I am simply not satisfied that in defending the plaintiff's claim in the way that the first defendants did, their conduct was so improper or unreasonable as to warrant an order for indemnity costs.

Order 5: The First Defendants do pay the Plaintiff interest at 8% per annum, since the date of filing the writ of summons herein, on the taxed amount.

68 The plaintiff is seeking interest on the taxed amount of costs. Counsel for the plaintiff accepts that the granting of this order stands or falls with the indemnity costs issue. The plaintiff submits that it is important to take into account the totally unwarranted strain on the plaintiff's finances caused by the first defendants' actions before and during the litigation. It is said that interest is justified as a mark of disapproval.

69 The plaintiff submits that, alternatively, the order can be justified under s 37 of the Supreme Court Act which provides that the costs of and incidental to all proceedings in the Supreme Court shall be in the discretion of the court or judge and the court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid. Counsel relies on the decision in WA Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 [115] where the Court considered what is meant by costs and, in particular, whether the words costs was wide enough to include financing costs; that is, interest: at [114]. The Court also considered whether, if interest is incurred, whether it is 'incidental to proceedings in the Supreme Court' which is the wording used in s 37 of the Supreme Court Act: [115].

70 The Court held that, viewed in isolation, it was arguable that financing costs incurred for the purpose of funding the conduct of a Supreme Court action are costs 'incidental' to the proceedings in the Supreme Court: [115]. However, the court also considered whether s 37 should be read down because of s 43 of the Supreme Court Act which expressly empowers the court to make awards of pre-judgment interest but does not apply to costs. The Court identified the issue for resolution as being whether a construction of s 37 that would enable the award of financing costs should prevail in light of s 32 which makes express provision for the circumstances in which the court may order pre-judgment interests. The preliminary view, expressed by McLure J (with whom Anderson and Steytler JJ agreed), was that, in the absence of a conflict between s 37 and s 32, there was no reason to read down s 37: [115]. My preliminary view is to the same effect.

71 McLure J considered it unnecessary to decide these questions, expressing the view that, even if the court had the jurisdiction to award interest on costs incurred in conducting the action, she was not persuaded that the trial judge erred in the exercise of his discretion. The trial judge concluded that s 32 and s 37 of the Supreme Court Act do not authorise the court to award interest on costs and that it had no inherent jurisdiction to do so. The trial judge also concluded that even if he had the power to make such an award, he would not have exercised the discretion to do so because the progress of the case to trial was largely a mater within the respondent's control: [109]

72 On appeal, McLure J observed that it is currently the case that, absent misconduct by a party, a successful litigant is not compensated for all costs directly incurred in the conduct of the proceedings and that there was nothing in the circumstances of the litigation that would justify the respondent receiving all of its direct costs much less its financing costs: [116].

73 It can be seen that, whilst the discussion in WA Planning Commission v Arcus Shopfitters Pty Ltd provides some support for construing s 37 as justifying an award of costs which includes interest, the actual decision does not decide the issue and reinforces the proposition that, absent misconduct, a successful litigant will not usually be compensated for all costs directly incurred.

74 Counsel for the plaintiff accepts that the claim is absolutely unusual and for the same reasons as have been given for refusing an award of costs on an indemnity basis, I am not prepared to make the order sought.

75 In the circumstances there is no need to address the fact that the civil judgment interest rate is 6% and not the 8% sought on behalf of the plaintiff.

Order 6: All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan be repaid to the Association by the First Defendants, Conal O'Toole, Butcher Paull & Calder or Peter McGowan, jointly and severally, with interest at 8% per annum from the date of payment.

76 Counsel for the plaintiff advised that the plaintiff filed a challenge to Mr O'Toole's supposed retainer very early in the litigation. The basis of the challenge was that there was no board resolution or other form of authority in existence justifying the engagement by Tiao of Mr O'Toole to act on behalf of the Association. Counsel noted that Mr O'Toole maintained that this was an issue to be determined at trial. However, no board resolution was ever put before the court to justify the retainer and the finding of the Court was that Tiao had no authority to engage a solicitor on behalf of the Association. According to counsel for the plaintiff, Mr O'Toole is now caught by the consequences of his decision not to sight a retainer before acting on behalf of the Association and of seeking a determination of the issue at trial. Counsel further noted that, even on the account given to Mr O'Toole by his client, Mr O Toole should have known that the proposition that Tiao was authorised couldn't be justified. According to counsel, a prudent solicitor would ask to see the resolution or other form of authority and would not simply take the word of one board member, particularly where that board member's word is hotly contested by another board member.

77 In seeking an order that the legal representatives repay all monies paid to them from the Association's fund, the plaintiff also relies on the finding in the reasons for decision that a lawyer had drafted the key resolution purported to have been passed at the 26 February 2005 members' meeting. According to the plaintiff, this means the legal representatives were closely involved in the actions of the first defendants and can be ordered to refund Association money on that basis also. This submission overlooks the fact that whilst the finding is adverse to the first defendants, it is not necessarily adverse to the first defendants' solicitors.

78 In the reasons for decision reference was made to a translation of the minutes of the meeting of 26 February 2005 which was prepared by Tiao's son. That translation indicated that, at the meeting, a resolution was passed which ratified and confirmed all acts, actions, deeds, transaction and omissions of whatever nature of each and every person that has acted or purported to act for or on behalf of the Association. The effect of such a resolution would be to retrospectively ratify Tiao's actions in entering into the Level Holdings contract, irrespective of whether he was authorised at the time. However, an independent translation of the minutes obtained at the conclusion of the trial revealed that that the terms of the actual resolution passed was to ratify and confirm all past resolutions and projects such as the purchase of the land for building the centre. This resolution would not have ratified Tiao's actions.

79 Despite Tiao's denial, I found that the words contained in the translation prepared by Tiao's son were far too close to a legally worded, all encompassing, ratification, and far too dissimilar to the actual resolution recorded, to have resulted from a poor attempt at translation; hence the conclusion that the wording must have been provided by a lawyer.

80 However, it does not follow from this finding that Mr O'Toole was the solicitor who provided the appropriate form of words or, if he were, that he did so with a view to the preparation of a false or inaccurate translation. Actions of directors can quite properly be retrospectively ratified by members and if such a resolution had been passed by a properly called meeting of the actual members of the Association, informed of the relevant circumstances, then no issue could be taken with the resolution or the solicitor's advice on the appropriate terms of such a resolution. It can be seen that the finding does not adversely reflect on the conduct of Mr O'Toole.

81 In oral submissions, counsel for the plaintiff continued to press for an order that the solicitor and counsel should be jointly and severably liable for the costs. This approach was said to be necessary until the plaintiff could be assured as to who received funds from the Association and the amount received by each person. It was further submitted that, if the interim order with regard to the Association's financial records had been complied with, the plaintiff would be in a far better position to make such a determination without having to ask for this order. Counsel noted that Mr O'Toole had failed to answer the plaintiff's demands for an explanation as to why the order relating to the Association's records has been ignored. Consequently, it was said that the plaintiff cannot be certain exactly how much of the Association's money has been paid to any particular person but added that it was clear, purely from the accounts in evidence, that over $70,000 has gone to the legal advisers.

82 Counsel submitted that the Association may not be able to recover the monies paid out by Tiao and wished to preclude the necessity of an action to recover monies owing to the Association.

83 Having considered this particular submission, I am not prepared to order that a party's legal representatives be jointly and severably liable for monies owed to the Association simply as a method of identifying the amount, and simplifying the means of obtaining repayment, of the Association's money which has been paid out without authorisation.

84 Another difficulty with the order sought is that part of the order requiring that the barrister be jointly and severably liable. The inclusion of the barrister in that order misunderstands the nature of the relationship between the barrister and the client. The barrister is in fact engaged by the solicitor to appear as counsel on behalf of the client and is paid by the solicitor. Indeed, the barrister expects to be paid by the solicitor irrespective of whether the solicitor is put in funds by the client. For that reason alone, it would not be expected that the barrister would seek to sight an authorisation directed to the client to engage and pay for legal representation. Further, the fact that the order is for the barrister to be jointly and severably liable means that he would also be liable for monies paid to the solicitor which is money he never received. Counsel for the plaintiff agreed that it was not the usual practice for barristers to sight authorisation because his or her fees are to be paid by the solicitor. Counsel also conceded that the barrister is 'two steps removed' from any liability to repay the Association's money.

85 However, my preliminary view is that there is some substance to the claim for the solicitor, Mr O'Toole, to repay to the Association the monies received by him for legal services including money paid for counsel fees.

86 In the more usual course of events solicitors must act upon the account given to them by their client. If, before accepting instructions, solicitors were meant to make a subjective judgment about the truthfulness of the client or of the prospects of the action's success, certain people in the community would have little prospect of being represented. It also seems to me that the end result would be an entirely inappropriate impediment to a person enforcing his or her rights because of the likelihood that the solicitors of an unsuccessful party would be required to disgorge the costs paid to them for their work.

87 However, the preliminary view I have formed is based on the fact that the issue of whether Mr Tiao was authorised to engage solicitors on behalf of the Association was one of the central issues at trial and was the subject of a specific finding that he was not so authorised. At trial no evidence was adduced to suggest that the first defendants were authorised to engage solicitors on behalf of the Association to defend the plaintiff's claim. Neither was there evidence of any authorisation for the first defendants to pay for their legal fees from Association funds.

88 In circumstances where Mr OToole was on notice with respect to the issue of authorisation it cannot be said that he did not turn his mind to the issue. Clearly, either Mr O'Toole was advised that no such authorisation existed or his client failed to provide such authorisation. It was not a situation where it would have been reasonable to accept the word of either of the first defendants that authorisation existed. Either situation notified Mr O'Toole of the potential risks of continuing to act and accepting Association funds by way of payment.

89 Counsel for the first defendants submitted that there is no point in principle articulated for an order of that kind. It was said that, if there were some persuasive point of principle sighted, then the court would be required to hold a factual inquiry to establish a basis upon which to make such an order. This is because, as counsel observed, the relevant facts do not establish a basis upon which to make such an order against him. I do not share that view because of the matters to which I have referred; the fact that Mr O'Toole was put on notice and the fact that one of the issues at trial which was determined in favour of the plaintiff was that no authorisation existed.

90 The final point raised by Mr McGowan was that, before making such an order, Mr O'Toole would be entitled to be separately heard. It would seem from that statement that, although Mr McGowan addressed the issue of the liability for repayment of Association funds from Mr O'Toole, he was not briefed to also appear on his behalf. Further, it may be the case that Butcher Paull & Calder will wish to be heard in so far as their interests may differ from those of Mr O'Toole.

91 I have no difficulty in determining that it is appropriate for the first defendants to repay to the Association all of the Association's funds paid to Mr O'Toole and Butcher Paull & Calder. However, because my tentative view is that there is a basis upon which to order the solicitors to disgorge the fees paid to them, I do not propose to make any order at this stage before hearing from Mr O'Toole and Butcher Paull & Calder.

Order 7: The first defendants and the Association, by themselves, their agents or servants or otherwise, be and are permanently restrained from giving effect to or further proceeding with the contracts.

92 Counsel for the defendants had no objection to this order providing that the term 'contracts' is defined to relate only to the Level Holdings contract. In my view, there is ample justification for making such an order in relation to the Level Holdings contract.

Order 8: The First Defendants do indemnify the Association from any present or future claims by Level Holdings Pty Ltd against the Association.

Order 9: The first defendants do indemnify the Association from any present or future claims by persons who claim to have suffered any loss or damage as a result of the unauthorised actions of the first defendants or Level Holdings Pty Ltd, including, without limiting the generality of the foregoing, any persons who believe they are purchasers of any subdivided lot of the Land.

93 To a large extent, this issue was dealt with in relation to the request for a declaration in terms of declaration 8.

94 Counsel for the plaintiff submitted that there was no question the Association was a victim in relation to the execution of the Level Holdings contract and no question that the contract was void. I have no difficulty with the first observation. However, for the reasons given in relation to the declaration which was sought by the plaintiff, I do not consider it appropriate in this context to make any observation, declaration or order on the validity of the Level Holdings contract.

95 Counsel for the plaintiff observed that, apart from the first defendants, the representatives of Level Holdings are as much to blame as anybody for the situation whereby a prospective purchaser who has entered into an agreement to purchase one of the sub-divided lots has done so in circumstances where one party to the Level Holdings contract to develop the Association's land was not authorised to enter into that contract. The proposition put on behalf of the plaintiff was that there can be no other explanation but that Level Holdings knew Tiao was not authorised by the Association to enter into the Level Holdings contract.

96 Counsel for the plaintiff also submitted that the Level Holdings representative who attended court, and who was the only representative of the company involved in the execution of the contract, gave evidence in court and his evidence was completely unsatisfactory. However, the fact is that the representative did not give evidence. He simply produced documents under subpoena. Although I found a number of his responses to questions concerning the existence of documents to be implausible, he was not cross-examined.

97 Counsel for the defendant submitted that, until Level Holdings' position emerges, crystallises and, in some respects, is determined, no such order should be made. Counsel pointed out that if Level Holdings decides to assert its position under the Level Holdings contract, the Association will necessarily be a party to such an action and an indemnity could be claimed from the first defendants at that time with an application being made to join them as a party. Alternatively, Level Holdings could decide to bring its action against both the Association and Tiao.

98 In response, counsel for the plaintiff noted that the Association should not be required to pay to defend Level Holdings' claim again it, particularly in circumstances where any future claim could not contradict the finding in this action that Tiao was not authorised to enter in to the Level Holdings contract. Neither, according to counsel, should a charitable organisation such as the Association be required to meet the costs of filing third party notices. In taking this approach, counsel indicated that the plaintiff's only intention was to protect the Association. However, it is not always possible to protect an organisation against that which might transpire in the future, nor from the need to establish the right to an indemnity before receiving the benefit of it.

99 Notwithstanding the matters raised on behalf of the plaintiff, I remain of the view that the validity of the Level Holdings contract is an issue for another court to decide should an action be commenced which addresses this specific issue.

Order 10: The First Defendants do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

100 The evidence of the witness Eric Archer given at trial was that by 21 January 2005, the development under the Level Holdings contract was almost 90% complete. It was also the case that there was no evidence of an intention on behalf of the Association to develop the land. Indeed, there was ample evidence of a clear intention on the part of those involved in the Association to use the balance of the land after the building of the temple for expansion of the temple's facilities. Various potential uses were discussed including aged care facilities, villas, a recreation centre, a library, an extension of the temple, retirement home, an amusement park for children, and for fruit and vegetable gardening.

101 However, the issue of what would happen to the land should the plaintiff establish that the Level Holdings contract was executed without the authorisation of the Association, was simply not agitated at the trial of the plaintiff's action. There is no evidence before me of the intentions of the majority of the Association's membership arising from a finding that the Level Holdings contract was not authorised by the Association. On behalf of the plaintiff, reference was made to the public meeting arranged by the plaintiff and held on 29 May 2005 at which those who attended, including 52 of the first contributors, overwhelmingly rejected the sale of the land subject to the Level Holdings contract. However, the result of a questionnaire put to attendees at a public meeting does not equate to a resolution passed at a validly held meeting which establishes the Association's position with respect to a matter.

102 Counsel for the plaintiff submitted that Level Holdings had trespassed on the Association's property by developing it, that the first defendants encouraged and permitted Level Holdings' trespass and the first defendants had never suggested they were not responsible for the trespass. It was further submitted that the plaintiff has always wanted the property brought back to its original condition

103 As to the latter point, the plaintiff does not speak for the Association any more than Tiao does. The plaintiff donated the money to purchase the land and does not retain any rights in relation to the money, the land or the future use of the land. His opinion on the matter has no more force than that of any other member of the Association. Whilst I believe the plaintiff has the best of intentions, the separation between the plaintiff's interests and those of the Association must always be kept in mind.

104 An order of the type sought is properly one for the Association to make and would be best made when there has been a meeting of members and a new board elected in accordance with the constitution. In no circumstances should an order of this type be made at the request of an inaugural board member who has already held his position well beyond that which was ever contemplated by the constitution.

105 Further, the financial position of the Association is currently not completely known and, notwithstanding that the Level Holdings contract was entered into without authorisation, there remains the possibility that the Association might ultimately reach the conclusion that it needs to sell some of the land. In those circumstances, the development which has already occurred may facilitate that sale. Similarly, some of the future intended uses of the land to which I have already referred may be facilitated by some of the development of the land that has already taken place. In my view, it would not be appropriate to pre-empt whatever decision the members of the Association find it necessary to make.

106 Having conveyed to counsel for the plaintiff the court's preliminary view on this issue, counsel indicated that the plaintiff would prefer for the order to be made with liberty to apply to set it aside if the Association does not wish to be bound by the order and determines to use the land in a way which would be facilitated by the development which has already taken place. However, the difficulty arises if, by the time the Association has met, elected a board, identified the financial position, and the membership has made a determination as to the future use of the land which requires some of the infrastructure which is currently in place, the land has already been restored to its original condition in accordance with the order. That is a position which is potentially adverse to the Association because it will then have to incur the cost of redeveloping the land to the necessary degree. In effect, such an order will foreclose the Association's options.

107 Whilst I accept that the Association should not have to bring another action for the first defendants to right the wrong visited on the Association, the Association must be given the opportunity to determine what action is in its best interests. I have some reservations about granting liberty to apply generally. The history of this matter is such that there is a significant potential for the matter to be regularly returned to the court. However, in the circumstances to which I have referred, it would neither be appropriate for the order to be made before the Association is in a position to determine its best interests, nor should it be necessary for another action to be brought to ensure that Tiao rights the wrong he has inflicted on the Association in entering into the Level Holdings contract. I would, therefore, grant liberty to apply for an order of this type once the Association has held a general meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed.

Order 11: The Members' register of the Association is to be rectified in accordance with declarations 1 and 2 above.

108 Counsel for the plaintiff maintained that this issue was a key problem in the action. However, it was the membership, not the absence of a membership register, which was the problem in the action. The issue of membership is properly addressed in the declarations.

109 The absence of a register was an issue with the Department of Consumer and Employment Protection (DOCEP) and, in my view, rectification of the members register is an administrative matter. Once the board is elected a member's register should be created and it must include as a minimum the group of people identified in the plaque to which should be added any new members admitted after the election of the board of directors. Until then the plaque is the member's register.

110 I consider it unnecessary for the court to make the proposed order.

Order 12: A general meeting of the Association is to be convened to appoint a new board and is to be held within 60 days from the date of this order ('GM')

111 No specific opposition was made on behalf of the defendants to this order although it was pointed out that, if this order were amended to insert after the word 'convened' the phrase 'in accordance with the terms of the constitution', some of the subsequent orders would not be necessary As the holding of an annual general meeting is fundamental if the Association is to move forward, the order will be made as sought and, for clarity and to obviate the need for further orders to the same effect, the order will be amended as indicated.

Order 13: All board positions of the Association are to be declared vacant upon the commencement of the GM.

Order 14: Notice of the GM to Members of the Association shall be given 14 days before it is held.

112 Counsel for the defendants maintains that orders 13 and 14 address administrative and constitutional matters already prescribed by the constitution. That view is not entirely accurate. Under cl 8.5 of the constitution, all office bearers of the board of directors hold office for a period of three years and, unless re-elected, their positions shall be terminated at the conclusion of the annual general meeting at which an election is held. Therefore, any inaugural board member who is not re-elected ceases to become a board member at the end of the meeting and not at the commencement, as the order requires.

113 Order 13 is indeed a replication of the requirement in cl 11.1 and cl 11.2.3 of the constitution.

114 I see no reason why the court should, by order, alter a requirement of the constitution unless its application would impede the steps to be taken to ensure the Association continues to operate. In my view, a change from declaring board positions vacant at the commencement rather than the end of a general meeting would have no impact on the outcome of the meeting. It is, therefore, unnecessary to make the order sought.

Order 15: The plaintiff do take all necessary steps under the Association's constitution to convene, organise and chair the GM.

115 Counsel for the plaintiff submits that there is a need for caution in allowing the first defendants any control of the Association's pending general meeting and elections. Counsel cites in support of that submission a number of the findings made in the reasons for decision which are adverse to the first defendants and one finding which is critical of those supporters of the first defendants who supported resolutions but forward by Tiao where little of the obviously necessary information or explanation had been provided. It was further submitted that none of Tiao's supporters should be permitted any role pending the elections. Counsel then referred to the findings with respect to the support obtained by the plaintiff from the attendees at the public meeting of 29 May 2005 and submitted that Tiao would be in a position of conflict if he were to act as chairperson or organise the general meeting. Counsel then submitted that the plaintiff had acted calmly under extreme provocation and could be trusted to act appropriately if he were to conduct the general meeting to be held.

116 Counsel for the defendants considered that this order has no purpose given the order to be made under order 12 that the meeting is to be called and convened in accordance with the constitution. In the usual course of events, the role of organising a general or annual general meeting would fall to the board. Under cl 11.4.1 of the constitution, the director-general, if willing, presides as chairman and, if he or she is not available, then that position is offered in turn to the persons holding the positions set out in cl 8.1 until a person is found to chair the meeting.

117 Normally, I would not make orders addressing matters which are already dealt with in the constitution. However, this Association currently has a dysfunctional board where the members of the board oppose each other and where the majority of the board have against them a finding of acting in their own interests, rather than the interests of the Association. In those circumstances, I can see the potential for problems arising. In order for the general meeting to be held in circumstances best suited for informed decision making, I consider the plaintiff is the more appropriate person to actually take the steps to organise the meeting. I am, therefore, prepared to make the order sought.

Order 16: No new members shall be admitted between the date of this order and the holding of the GM. For the avoidance of doubt, no persons purportedly admitted by the first defendants as members of the Association between 8 February 2005 and the GM are members.

118 Counsel for the plaintiff submitted that the first defendants' behaviour in ignoring the interim orders alone warrants an assumption that they may admit more friends or relatives to membership and this justifies the making of this order. I do not consider that fact alone to provide the basis for making such an order. However, it is the case that the first defendants did purport to grant membership to their supporters in order to create their own power base and with a view to identifying those supporters as the only members of the organisation.

119 There are currently five surviving members of the inaugural board of directors. As against three of them there is an adverse finding in relation to granting membership to their supporters. There is, therefore, a majority of the board, which has the power under the constitution to grant membership, who have shown themselves to be prepared to behave improperly with respect to granting membership. In my view, it would be inappropriate for those board members to now be able to further interfere with the membership of this organisation. In particular, it would not be appropriate for new members to be admitted at this point before the changes envisaged in the reasons for decision can be put into effect by the current members.

120 Out of an abundance of caution I am prepared to make the order that no new members shall be admitted between the date of this order and the holding of the general meeting. However, I am not prepared to include in that order the concluding proposition that, for the avoidance of doubt, no persons purportedly admitted by the first defendants as members of the Association between 8 February 2005 and the general meeting are members. That proposition is, in any event, covered by declarations 1 to 3.

Order 17: The first defendants be and are permanently restrained from creating any disturbance or acting in any intimidating way, prior to, at or after the GM towards the plaintiff, members of the Association and/or their families.

121 Matters of this nature should, in the usual course of events, be dealt with by the use of common sense, rather than orders of the court. When people behave in such a fashion, it is best left to the general law to deal with the individual's conduct. The person acting as chairperson of the meeting is entitled to take appropriate action to prevent disruption of a general meeting and I consider that in almost all circumstances the court should not descend to this level of control over the situations which might confront the Association and any newly elected board. However, because of the history of this case, I can understand that there might be some concern that the members of the Association will be in some way impeded from properly dealing at general meeting with the issues which have arisen and have been addressed in the reasons for decision.

122 For that reason, counsel for the first defendants was asked to advise whether it was his clients' intention to continue their involvement with the Association, in the absence of which there would be no reason to expect problems of the nature described in the order. The advice received was that they did so intend. Counsel for the plaintiff was then asked to identify the evidence which is said to establish a concern that the first defendants would create a disturbance or act in an intimidating way. The evidence was said to be the incident referred to herein in relation to order 1 where, on the day of a public meeting organised by the plaintiff, Tiao and his family members, and also Hui Ping Wang, stood outside the temple and handed out copies of an injunction obtained to stop the meeting being held as a general meeting. A security guard was also present and stood in front of the temple entrance. Lai said that he saw about 30 members leaving the temple grounds after seeing or speaking to Tiao, Hui Ping Wang and their associates.

123 As I observed in relation to order 1, in the situation to which I have just referred, Tiao had an injunction to prevent a general meeting from being held and had a lawful right to take steps to ensure the meeting did not take place. Acting in that way, at that time, does not necessarily lead to a conclusion that the first defendants would behave in an intimidating manner in relation to a properly convened general meeting, although some support for such a conclusion can be found in the numerous adverse findings I have made with respect to the first defendants' conduct in ensuring their control of the Association continued. However, whilst that conduct reinforces the plaintiff's position, in my view it does not justify making the order sought.

124 Counsel for the plaintiff also relied on the conduct of Tiao with respect to the 14 October 2007 annual general meeting where Tiao produced to the meeting a document entitled 'Lai's Lies'. This was a document, unsupported by any evidence to suggest its contents were accurate, which was said to establish that Lai had made false statements in the course of this legal action. The conclusion I drew was that it was entirely inappropriate for the issues contained in the document to be raised in that forum, in particular because some of the allegations bore no connection to the issues in the litigation and had no relevance to the Association. Another document produced and disseminated by Tiao was entitled 'Personal Attacks On the Temple and Its Staff'. The purport of this document was to the effect that the questioning of Tiao and Hui Ping Wang by Lai was not only inappropriate but amounted to a personal attack on the temple and its staff. The observation made in the reasons for decision was that the documents did not reflect well on Tiao. Further, the conclusion drawn was that the document had the undesirable potential to influence the members to refrain from questioning the conduct of those involved in the management of the Association.

125 However, whilst the first defendants would need to be very careful not to make statements that are contrary to the findings made by the court in the judgment, even if the first defendants were restrained from creating a disturbance and acting in an intimidating way that would not necessarily prevent behaviour such as putting forward documents of this type.

126 Counsel for the plaintiff pointed out that the plaintiff was simply trying to ensure that a free and fair election takes place. I accept that to be the case. Further, based on the way in which the first defendants have conducted themselves in the past, particularly in relation to the documents that were put forward at the 14 October 2007 meeting, I understand the plaintiff's concern about the way in which the first defendants will behave at the meeting which is to take place. I have no difficulty with the first defendants properly putting forward their views as members of the association in so far as those views are accurate and truthful, but it is vitally important that personal animosities and inappropriate behaviour do not impede the meeting or the election of board members which is to occur at the meeting.

127 Counsel for the defendants submitted that the factual material advanced by the plaintiff in support of the order did not provide a basis for granting such an order. However, counsel submitted that it might be appropriate for an undertaking to be given by both the plaintiff and the first defendants to the effect that they will not create a disturbance or act in any intimidating way at the meeting. Counsel for the plaintiff indicated that an undertaking would be an acceptable substitute for the order sought.

128 Since this matter was heard, the court has been provided by the respective undertakings which are, unfortunately, not in exactly the same terms. The precise terms will be addressed before this group of orders are made as it is the giving of the undertaking which is the reason I have declined to make any order addressing this issue.

Order 18: The First Defendants be and are permanently restrained from operating or opening any bank accounts of the Association.

129 On behalf of the plaintiff reference was made to the following conduct of the first defendants in relation to the Association's funds:

(i) That Tiao mixed his funds with the Association's funds held in trust;

(ii) That the first defendants' brazenly opened, operated and closed Association bank accounts at will, despite the express requirement of the constitution that operation of the Association's financial accounts required three signatures and further that, unless restrained, there is a real risk they will do so again;

(iii) Tiao intended to reimburse himself from the proceeds of sale of the Association's land, a sum of money which he maintains he spent from his personal funds to meet Association expenses but without having to establish his legal entitlement to be so reimbursed;.

130 The position put before the court on behalf of the plaintiff was that neither the first defendants, their friends nor relatives should hold any financial position in the Association and they should not be involved with the Association accounts. Although I have concerns about the glaring lack of independence and objectivity in decisions made by a number of the first defendants' supporters, the evidence does not support a finding that they should not be eligible for election to the board of an incorporated association. To the contrary, in my view, there is a wealth of evidence which supports a conclusion that the first defendants are not suitable to hold such a position with the Association or to be responsible for Association's funds. Their past conduct illustrates their unsuitability for any future or further involvement of that type with the Association. However, ultimately, such a decision is for the members of the Association to make and not for the court to impose of them.

131 Counsel for the defendants touches on this issue in a limited way in making the observation that, in the event that the outcome of the meeting leads to one or both of the first defendants being given a position requiring or permitting access to Association funds, such an order would be problematic. As counsel observed, it is for the members to determine who becomes a board member and for the board then, in light of the clear findings, to turn this into a functional operating association. In such circumstances a permanent bar of the type sought would cause problems.

132 For these reasons I am prepared to restrain the first defendants from operating or opening any bank accounts of the Association until the conclusion of the general meeting at which the new board is elected. Further, because of the fact that Association funds have in the past been kept in private accounts, the order needs to be extended to any bank account holding Association funds. In that way it should be perfectly clear to the first defendants that they are not entitled to touch any Association funds and will be liable for the consequences if they do so. However, the time period for which this order operates will be only until the conclusion of the general meeting and the election of a new board of directors.

Order 19: Should the first defendants, after the date of this order, fail to obey any of the orders contained herein, the first defendants do stand committed to prison for the period of [_____] for their contempt.

133 In support of this order, counsel for the plaintiff again referred to the first defendants' failure to comply with the initial orders in a timely fashion and submitted that the refusal to obey those orders was a serious matter. It was suggested that it would assist the first defendants to concentrate their minds on the significance of orders of the court to make an order that they stand committed to prison for failing to obey them. I have no doubt that an order that the first defendants stand committed for contempt if they fail to comply with any of these orders would concentrate their minds on the obeying the orders. The more interesting issue is that raised by counsel for the first defendants which is whether a contempt order is appropriate or necessary. In my view, it is not and ultimately the plaintiff did not press this order.

Order 20: The costs of the hearing on 6 March 2009 be included and taxed within order 4.

134 No difficulty was expressed with the order unless the costs are indemnity costs. As there is no award of indemnity costs the order will be made.

Order 21: Liberty to apply with 48 hours' notice.

135 For the reasons referred to in relation to order 10 and other than with respect to order 10, there will be liberty to apply within 48 hours until the meeting referred to in order 12 has been held and a new board elected.

IN THE SUPREME COURT OF WESTERN AUSTRALIA CIV 1442 of 2005

IN THE MATTER OF AUSTRALIAN CHINESE CONFUCIUS-MENCIUS SAINT TAO CENTRE INC

Cheng Chih Tiao and Hui Pin Wang First Defendants

Australian Chinese Confucius-Mencius Saint Tao Centre Inc Second Defendant

This action having been tried from 16 to 20 November, 23 November, 26 November 2007 and 22 February 2008 before the Honourable Justice Johnson in the presence of Mr K G Robson of counsel and Mr RWH Tan for the Plaintiff and Mr P McGowan of counsel for the First and Second Defendants delivered reasons for decision.

All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ("Association"), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ("Members").

Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.

Except as provided in declarations 1 and 2, there are no other members of the Association.

The General Meeting held on 26 February 2005 was invalid.

All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-

1. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and

2. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.

6. Conal O'Toole, Solicitor, and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.

7. Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 (the Level Holdings contract) in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ("Land").

The plaintiff and the first defendants having given an undertaking to refrain from creating any disturbance or acting in any intimidating way, prior to, at or after the general meeting towards the plaintiff, members of the Association, and/or their families

1. There be judgment for the plaintiff.
2. The Plaintiff, Yung Sen Chou and the Members are not to be denied access to the property of the Association, including the Temple situated at Lot 42 Warton Road, Canning Vale ("Property") and to all financial records of the Association.

3. The First Defendants do pay the Plaintiff's costs of the action, including reserved costs, to be taxed if not agreed and paid by the First Defendants within one month from the date of taxation or agreement.

4. The First Defendants and Song Tyan Kuo be and are permanently restrained from giving effect to or further proceeding with the Level Holdings contract.

Once the Association has held a General Meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed, there be liberty to apply for an order that the First Defendants do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

A General Meeting of the Association is to be convened in accordance with the terms of the constitution to appoint a new board and is to be held within 60 days from the date of this order.

The plaintiff is to take all necessary steps under the Association's Constitution to convene, organise and chair the general meeting referred to in order 5.

No new members shall be admitted to the Association between the date of this order and the holding of the general meeting.

The first defendants be and are restrained from operating or opening any bank accounts of the Association or any bank account in which funds of the Association are held until the conclusion of the general meeting referred to in order 6.

The first defendants pay the plaintiff's costs of the hearing on 6 March 2009 and 22 May 2009, to be taxed if not agreed.

All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan of counsel be repaid to the Association by the first defendants

jointly and severally within one month with interest at 6% payable from 22 June 2009.

1. Liberty to apply with 48 hours' notice until such time as the general meeting referred to in order 6 has been held and a new board elected.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAI -v- TIAO [No 2] [2009] WASC 22 (S)

HEARD : 19 ­ 23 & 26 NOVEMBER 2007, 22 FEBRUARY 2008

AUSTRALIAN CHINESE CONFUCIUS­MENCIUS SAINT TAO CENTRE INC

Colgate-Palmolive Co v Cussons [1993] FCA 536; (1993) 46 FCR 225

Fazio v Fazio [2008] WASC 161

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95

Glew v Frank Jasper Pty Ltd [2008] WASCA 186

Re Malley SM; Ex parte Gardner [2001] WASCA 83

Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court, French J, 3 May 1991)

Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190

WA Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

1 JOHNSON J: On 12 February 2009 the reasons for decision in the above matter were delivered. I indicated at the time that I proposed to hear from the parties as to the specific orders which would reflect the conclusions reached in those reasons.

2 Interim orders were made on that date for the first defendants to hand over the keys to the Association's premises as well as to hand one to the Association's financial documentation. The matter was then adjourned to 6 March 2009. Unfortunately, there was a delay in compliance with the interim orders which, in my view, was not satisfactorily explained. It took the first defendants over a week to hand over the keys. The first defendants also chose to place an unjustifiably narrow construction on the scope of the financial documentation to be provided. The first defendant's protestation that the 'Management Accounts' are in evidence and that this fact is compliance with the interim orders is wholly without substance.

3 At the hearing on 6 March 2009 the court was advised that the keys had been delivered up. The court was also provided with the assurance of counsel for the first defendants that he had explained to them in categorical terms the effect of the order and that the financial documentation was to be delivered to the plaintiff as soon as possible.

4 Prior to the hearing on 6 March 2009, the solicitors for the plaintiff had filed a minute of proposed orders (the Minute) and submissions on the Minute. The approach adopted at the hearing was for submissions to be made on the Minute, first with respect to the eight proposed declarations and then with respect to the 21 orders sought by the plaintiff. In addressing those submissions and determining whether the declaration or order sought should be made, I propose to rely on the same abbreviations and general terms used in the reasons for decision.

5 On behalf of the plaintiff it was submitted that the declarations and orders sought fall to be considered in the context of an extreme set of factual circumstances that require orders that correspond to that level of conduct. In making that submission, counsel referred to some of the specific findings made against the first-named first defendant, Tiao. In particular, counsel referred to the fact that Tiao had been found to have acted deliberately disgracefully at the general meeting of 26 February 2005, a meeting found to have been invalidly held. Tiao was also found to have treated the Association as his personal fiefdom and mixed the Association's funds with his own. In addition, counsel for the plaintiff referred to the fact that the second-named first defendant, Hui Ping Wang, openly contemplated acting in contempt of court. This is a reference to the suggestion made by Hui Ping Wang at the 16 July 2006 special general meeting that the Association pre-sell one of the developed blocks of land but have the title transferred to the buyer after the trial so as to avoid the effect of an injunction which restrained the sale of the land covered by the Level Holdings development contract. It was further submitted that the orders must be considered in light of the fact that the first defendants have already ignored the interim orders.

6 It is not entirely accurate to state that the first defendants ignored the interim orders but it is certainly the case that there was an unexplained and unreasonable delay in handing over the key and an untenable position held by the first defendants in relation to the production of the financial records. In my view, the first defendants' assertions that the 'Management Accounts' were in evidence, and no further compliance with the interim order was therefore required, displays a reluctance to accept the outcome of the action as well as a cavalier approach to the orders of this court.

7 Keeping in mind the court's findings as to the extent to which the first defendants were prepared to go to maintain control of the Association, the plaintiff's concerns about the conduct of the first defendants with respect to the future activities of the Association are legitimate. I accept that it will be necessary to ensure that the steps which now need to be taken by the Association to comply with its constitution are not impeded in any way by inappropriate conduct on the part of the first defendants. It will therefore sometimes be necessary for the orders to address specific conduct rather than simply rely on the fact that steps are to be taken in accordance with the constitution.

8 I propose to identify each proposed declaration and order before setting out the submissions and conclusion in relation to each and then separately identify the declarations and orders which are to be made.

Declaration 1: All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ('Association'), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ('Members').

Declaration 2: Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.

Declaration 3: Except as provided in declarations 1 and 2, there are no other members of the Association.

9 These three declarations deal with the membership of the Association. Counsel for the defendants expressed no difficulty with the first two declarations which identify the ordinary membership, the foundation membership and the board members of the Association. Although counsel for the defendant took no objection to the third declaration, he did observe that it seemed tautological.

10 Counsel for the plaintiff submitted that the problem was that there are other categories of members in the constitution and by way of example observed that it would be worrying if somebody claimed to be a supervisory member. Clause 6.5.2 of the constitution defines supervisors as ordinary members who are appointed by the board to oversee the operations of the board of directors. The powers of supervisors are not identified. Counsel submitted that this case is not an ordinary case and it needs to be pointed out with absolute clarity that no action may be taken to alter the membership in any way prior to the holding of a general meeting and the election of a new board of directors. Counsel for the plaintiff also expressed his concern that the first defendants have not accepted the thrust of the court's ruling and intend to carry on as they have always done, as evidenced by the first defendants' response to the interim orders. Counsel further referred to the finding that Tiao could actually understand English, contrary to his assertion, and noted that any explanation for non-compliance based on communication difficulties or a misunderstanding of the terms of any order ought to be viewed with caution.

11 It certainly is uncommon for unsuccessful litigants to take such an approach although the level of acrimony in this matter may well explain it, although certainly does not justify it.

12 In the normal course of events, a declaration in the terms of the third declaration would be unnecessary. However, in the circumstances of this case where there were attempts made to confer membership on others in order to increase the first defendants' support base and where the level of acrimony does not appear to have abated following the court's decision, out of an abundance of caution all three declarations will be made.

Declaration 4: There was no Board Meeting of the Association held on 8 February 2005.

Declaration 5: The General Meeting held on 26 February 2005 was invalid.

Declaration 6: All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-

a. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and

b. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.

13 In relation to declaration 6, counsel for the plaintiff explained that, although no specific findings were made in relation to the validity of these meetings, the fact of invalidity flows from the finding that no board meeting was held on 8 February 2005 and hence the 38 applicants whose membership was alleged to have been approved at that meeting were not members of the Association. It was apparent from the evidence that the attendees at the meetings referred to in declaration 6 were from that same group of applicants who were found not to be members. Consequently, the meetings were invalid as there was not a quorum of members.

14 Counsel for the defendants made no objection to declaration although he considered that declarations 4 and 5 were incorporated in declaration 6 and were, therefore, unnecessary.

15 I have no difficulty with making declaration 5, in addition to declaration 6 because the validity of the general meeting of 26 February 2005 and, consequently, the validity of the resolutions allegedly passed at that meeting, was one of the issues that was specifically requested to be addressed on the pleadings and in relation to which a declaration was sought. However, the finding that the boarding meeting of 8 February 2005 never occurred was simply a finding of fact in the course of determining the actual membership of the Association which was a matter central to the action. In my view it would not be appropriate to make a declaration with respect to a matter which is a simple finding of fact along the path of determining one of the primary issues involved in the litigation. Declarations 1 to 3 exclude from membership the applicants approved at the purported meeting of 8 February 2005.

16 Although the history of the matter caused counsel for the plaintiff to have some reservations about not making this particular finding as clear as possible, the reasons for excluding declaration 4 were ultimately accepted by him.

Declaration 7: Conal O'Toole, Solicitor and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.

17 The actual declaration sought on the pleadings was that the purported appointment by the first defendants of Conal O'Toole as the Association's solicitor was invalid. However, at trial, the defendants were represented by the firm of Butcher Paull & Calder. Counsel for the plaintiff explained that Mr O'Toole became a consultant or employee of Butcher Paull & Calder at an unidentified point in the proceedings. It is for those reasons that the declaration sought includes Butcher Paull & Calder.

18 On behalf of the defendant it was conceded that the content of this declaration arose from the findings in the reasons for decision and no objection was taken to it.

Declaration 8: The contract entered into between Level Holdings Pty Ltd and the Association dated 11 May 2004 in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ('Land'), including any subsequent contracts between Level Holdings Pty Ltd and any purchasers of any subdivided lots of Land ('Contracts'), is null and void.

19 An objection was taken on behalf of the defendants to declaration 8 which seeks a declaration that the Level Holdings contract is null and void. Counsel for the defendants submitted that it is not open to the court to make such a declaration because it was not within the purview of the issues raised on the pleadings in this action and could not be made in an action to which Level Holdings was not a party. It was, however, conceded that a declaration could be made that the first defendant was not authorised to enter into the Level Holdings contract because that issue is one which was squarely raised on the pleadings and was an issue between the parties to this action.

20 Counsel for the plaintiff advised that Level Holdings had applied to be joined as a party but the application had been refused. However, Level Holdings has been notified of the reasons for decision and of the interim orders made.

21 In the plaintiff's written submissions on the minute, reference was made to the determinations contained in the reasons for decision with respect to the questions raised by the pleadings. However, the only determination made in relation to the Level Holdings contract was that Tiao was not authorised by the board, or by the members of the Association, by retrospective ratification or otherwise, to enter into the Level Holdings contract.

22 In my view, the validity of the Level Holdings contract is an issue for another court to decide. Answering the question of whether the contract is null and void requires a consideration of matters which were simply not addressed in the course of this action. In any event, it would be inappropriate to make a declaration with respect to the Level Holdings contract without hearing from Level Holdings. However, the declaration I am prepared to make, that Tiao was not authorised to enter into the Level Holdings contract, will have the effect of removing that issue from determination in any action brought by Level Holdings in relation to the contract.

Order (1): The plaintiff, Yung Sen Chou and the members do have immediate access to the property of the Association including the Temple situated at Lot 42 Warton Road, Canning Vale ('Property') and all financial records of the Association for the period from July 1996 to date.

23 Order 1 allows the plaintiff, Chou and the members of the Association immediate access to the Association's property and also to all financial records of the Association. As I have noted, similar orders were in fact made at the time the reasons for decision were delivered. The order to hand over the key to the Association's premises was not promptly complied with. There was also a reluctance to comply with the order to hand over all financial records of the Association.

24 Counsel for the plaintiff relied on the first defendants' response to the interim orders as highlighting their attitude to these proceedings and justifying the need for a permanent order.

25 Counsel also relied on Tiao's previous conduct in relation to a general meeting called by Lai for 29 May 2005. Lai said in his evidence that he doubted the Association would organise a general meeting for 29 May 2005 as requested by him so decided to organise the meeting himself. As mentioned in the reasons for decision, three days prior to the meeting Tiao and Hui Ping Wang obtained an injunction restraining the holding of the meeting. For a number of reasons, including his understanding that some members had flown in from Taiwan for the general meeting, Lai decided instead to have a public meeting of the members of the Association on 29 May 2005. On the day of the public meeting, Tiao and his family members, and also Hui Ping Wang, stood outside the temple and handed out copies of the injunction. A security guard was also present and stood in front of the temple entrance. Lai said that he saw about 30 members leaving the temple grounds after seeing or speaking to Tiao, Hui Ping Wang and their associates.

26 Although counsel placed reliance on the fact that Taio prevented people from exercising their lawful right to enter the premises, it is the case that Tiao had an injunction to prevent a general meeting from being held and had a lawful right to take steps to ensure the meeting did not take place.

27 In my view, that incident, of itself, is insufficient to justify an order in the terms sought, particularly in circumstances where the keys to the premises have been handed over. In my view, that part of the proposed order dealing with access to the premises would be better worded if it stated that the persons identified 'are not to be denied access to property'. In my view, an order in those terms would overcome any concern raised by the first defendants' previous conduct.

28 At the time of the hearing the first defendants had not yet complied with the interim order to produce all financial documents of the Association. It is also the case that, in view of the way in which the finances of the Association were dealt with, as referred to in the reasons for decision, there is always the possibility that relevant documentation may be identified even after the parties consider that the financial documentation has been handed over. In those circumstances I believe it would be prudent to include the financial documentation in the items to which the persons nominated are not to be denied access.

29 In the event that the court was minded to make an order of the type contemplated in order 1, counsel for the first defendants agreed to the substituted wording. For these reasons I would make the order, amended in the above terms.

Order (2): The first defendants be and are permanently restrained from changing any locks at the property.

30 The justification for this order is said by the plaintiff to lie in the evidence before the court that the first defendants had, in fact, previously changed the locks. To my recollection, no specific finding was made in the reasons for decision in relation to that allegation.

31 Counsel for the defendants submitted that an order of this type was simply not necessary. Nor, it was said, was it the sort of order which would typically be made in an action of this type. Notwithstanding the acrimonious nature of the dispute and the antagonism that has developed between the parties, in my view it is unnecessary to descend to this level of detail in the orders simply to prevent problems which the plaintiff envisages might arise. It is not the court's intention to micro-manage the conduct of individual board members arising from the findings made in the reasons for decision, or reacting against those findings.

32 It should be clear from the reasons for decision that the first defendants are only board members until the members can meet and vote for a new board of directors. As such, they have no power to change locks or take any action that might prevent access to the Association's property by its members and other inaugural board members. If the first defendants were to take such action, the other board members would have the right to take any action with respect to the property, including calling for the assistance of the relevant authorities, to ensure they and the other members obtain the access to which they are entitled. Further, Lai or Chou, as members of the inaugural board until the election is held, would be quite entitled to force entry if someone changed the locks to the Association's property because changing the locks would not be an authorised act.

33 For these reasons I am not prepared to make an order in terms of the proposed order 2.

Order 3: The first Defendants be and are permanently restrained from permitting any persons, other than the members of the Association, to use or access the property.

34 Counsel for the plaintiff advised that the purpose of this order was to prevent other people, who have no connection, relationship or potential relationship with the Association and its members, from wandering in and out of the Association's property. Counsel further explained that there was a need to prevent the first defendants from bringing in other people to intimidate the members from exercising their rights as members. It was submitted that the first defendants had permitted their relatives and friends to enter the property and had also permitted at least one other totally unrelated organisation to camp there. This was done without the authority of the members.

35 Counsel for the defendants submitted that this order ignores the fact that the Association has a spiritual purpose to its operations. Counsel noted that the Association's property includes a temple and people, irrespective of whether they are actually members, may wish to access the temple and it may well be the desire of the membership that such people be allowed to access the temple. Further, it was submitted that members should be able to bring other people to the temple. As counsel has noted, not all activities are religious in nature and people should be able to bring non-members to other activities that take place at the Association's property. Counsel for the defendants expressed the view that it should be up to the newly elected board or the membership to determine whether they want to pass and enforce a rule that only members can access the Association's property.

36 I understand the concerns of the plaintiff which have led to an order of this nature being sought. However, it is the case that the order sought would have a far wider effect than overcoming the conduct identified by counsel for the plaintiff. The potential effect of the order is to prevent perfectly legitimate people from being at the temple for spiritual or other purposes. For example, the order would prevent a member, even a board member, from bringing someone to the temple to show them around and invite them to seek membership of the Association.

37 I put to counsel for the plaintiff that, in view of the findings in the reasons for decision, Lai, as a member of the inaugural board would be entitled to address the conduct identified by counsel by having those people removed from the property. Counsel's response was that, even as a board member, Lai had to come to court to stop such things from happening. I accept that Lai was required to bring legal proceedings in order to return control of the Association to the membership. Nevertheless, the plaintiff, who holds office as a member of the board only until the election of a new board, seeks a permanent order which has the potential to affect the future activities of the Association. In all the circumstances to which I have referred I am not prepared to burden the Association with such an order simply on the application of the plaintiff.

Order 4: The first defendants do pay the plaintiff's costs of the action, including reserved costs, and such costs:-

a. are to include all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred so that the plaintiff will be completely indemnified by the first defendants for his costs and the amount of such costs to be taxed; and

b. to be paid by the first defendants forthwith.

38 Counsel for the defendants conceded that there must be an order for costs but resisted the claim for indemnity costs. Counsel also raised the issue of how costs can be paid forthwith if they are to be taxed. Presumably the intention is that the costs be paid immediately after taxation. However, because of the likely quantum of the costs I consider it appropriate to allow the first defendants one month to pay the taxed costs.

39 In submitting that an award of costs on an indemnity basis is justified in the circumstances of this case, counsel for the plaintiff referred to and relied upon a number of findings and observations made in the reasons for decision. Specific reference is made to [562] of the reasons for decision which is in the following terms:

It is apparent that Tiao had no intention of allowing any issue raised by Lai to be objectively considered by the members. Nor was Tiao prepared to accept as members those people identified by Lai who were said to meet the criteria and wished to become members. I consider the refusal by Tiao to hold a meeting to which all interested persons were invited, with a view to resolving membership issues and identifying a way for the Association to move forward, was a direct result of his desire to maintain control over the Association. In my view, there is no other plausible conclusion which can be drawn in the circumstances which applied, particularly where his stance has resulted in significant legal costs. The steps taken by Lai with respect to membership were reasonable and, in my view, necessary, in order to correct the unfairness which arose from the failure by the board at the time that contributions were made to comply with the constitution with respect to approving membership. It was also necessary in order to overcome the unfairness which resulted from Tiao and Hui Ping Wang refusing to recognise any of the contributors as ordinary members of the Association.

40 Counsel for the plaintiff extracts from this paragraph the propositions that the steps taken by the plaintiff were both reasonable and necessary and that the action should never have been opposed by the first defendants. From those basic propositions counsel then draws the conclusion that the first defendant's defence was an abuse of process and that, therefore, an order to pay indemnity costs is necessary. In my view, the conclusions drawn do not flow from the findings relied upon.

41 Counsel for the plaintiff also refers to what is described as 'a key finding', which is that the first defendants should have submitted to the plaintiff's demands for a general meeting before the litigation commenced because the plaintiff's offer to hold a general meeting of all members could not have been rejected on any basis. It is further said that, had they done so, the litigation would never have occurred.

42 In making this submission, counsel for the plaintiff has turned findings that Tiao did not behave in the way in which a reasonable person would have been expected to behave in the same circumstances, into a conclusion that the litigation should never have been defended. Further, he has turned observations based on findings, into findings of fact and afforded to them the same level of importance as the findings made in relation to the questions raised on the pleadings.

43 To these submissions, counsel for the plaintiff adds a series of further adverse findings made against Tiao:

1. that he was not a witness of truth: par 138;
2. that he prepared totally inappropriate documents for meetings: par 558 559;
3. that he had Kuo give evidence about a board meeting that never happened: par 418 - 443. I note that this alleged finding is a conclusion drawn by counsel for the plaintiff from the paragraphs to which he refers and was not a finding of fact made by the court;
4. that he had other witnesses say they had been baptised before that was possible: par 476. Again, this alleged finding is a conclusion drawn from the paragraph and was not a finding of fact made by the court;
5. that he had witnesses say they completed membership application forms before such forms existed: par 478. This alleged finding is not justified by the content of the paragraph; and
6. that he had witnesses discuss and align their evidence before and even during the trial: par 485 - 489, 492. Although there was a finding that certain witnesses had discussed their evidence over lunch with Tiao and others, no statement or finding was made to the effect that Tiao 'had witnesses discuss and align their evidence'.

44 According to counsel for the plaintiff, this conduct can be categorised as 'some element of improper or at least unreasonable conduct on the part of the parties' and relies on the decision in Glew v Frank Jasper Pty Ltd [2008] WASCA 186 [15] as authority for the proposition that conduct so categorised can attract an indemnity costs order as a mark of disapproval on the part of the court of that conduct. However, counsel overlooks the express requirement that the improper or unreasonable conduct must be 'in the conduct of the litigation' as opposed to being a description of the conduct which leads to the litigation.

45 It is also the case that only two of the alleged findings were in fact made. One was a finding that Tiao was not a witness of truth and the other was that he prepared totally inappropriate documents for meetings where such conduct took place well prior to the litigation and not in the conduct of the litigation.

46 Indemnity costs are also said by counsel for the plaintiff to be justified on an approach analogous to Order 24A. The plaintiff offered to do exactly what will now be ordered, that is, to call a general meeting for all members to decide the very matters in dispute: 574, 583. In fact, the plaintiff even suggested that the first defendants' purported members also attend. In making this submission counsel for the plaintiff again takes the approach that findings made by the court following trial lead inexorably to a conclusion that the litigation should never have been defended. However, such observations were dependent on findings as to credibility and on interim findings of fact. However, as counsel for the defendants points out, each of these finding were made after trial and, however adverse they may be to the first defendants, they do not necessarily lead to the conclusion that it was improper or inappropriate to defend the proceedings.

47 Indeed, the observation that the first defendants should have submitted to the plaintiff's demands for a general meeting before the litigation commenced, is the key finding on which the plaintiff relies. The proposition submitted on behalf of the plaintiff is that, had the first defendants permitted that meeting to occur, the conflict would have been resolved and the litigation would never have occurred. Consequently, it is said, the first defendants' defence was an abuse of the process of the court.

48 Counsel for the plaintiff maintains that the offer to settle the proceedings, by holding a meeting attended by all members and alleged members, was eminently reasonable and in fact was what the court directed should happen. In fact, the issue raised on the pleadings which the court determined was whether Tiao was required to call a meeting of members as requested by the plaintiff. The determination was that, providing the 24-person who signed the draft notice of meeting were foundation members or members whose names appear on the marble plaque, then Tiao was required to call the meeting. A determination of the membership of the Associate was a necessary component of that determination. Whilst it would have been in the interests of the Association for the offer to have been accepted, if only to avoid the costs of litigation and hopefully, bring to an end conflict as to membership, it does not follow that a refusal of the offer constitutes an abuse of process or conduct justifying indemnity costs.

49 One clear reason why the first defendants were not obliged to accept the plaintiff's offer is that it would not have legally resolved the issue of membership. There would still be an issue whether those people who were admitted to membership before the constitution was translated could lawfully vote at any meeting. Counsel maintained that Tiao did not suggest that the people on the plaque were not members until it was very late and litigation was in the offing. He then decided to start organising meetings and having friends and relatives apply for membership. In my view those matters are not an answer to the proposition that accepting the plaintiff's offer would not necessarily have prevented litigation from resulting. Further, however late in the day, it was still conduct which pre-dated the proceedings.

50 Another reason why acceptance of the plaintiff's offer would not necessarily have precluded litigation is that it would not prevent another person from taking up the issue of the lawful membership of the Association and consequent voting rights.

51 Counsel for the plaintiff took the matter even further in submitting that the key question of who are the members of the Association should never have been opposed. However, that was a central issue because, in accepting the contributors as members, the Board of the Association had acted contrary to the terms of the constitution and, if someone were to take issue with their membership, an order from the court was necessary as no record of the Association established their membership. As counsel himself submitted, the issue of membership was a very big part of the case. Until such time as the court made a finding about the Association's membership, that issue was in dispute and a number of disputes followed on from that.

52 To suggest, as I did, that it was clearly in the interests of the Association to take all reasonable steps to reach an agreement which would move the association forward without the necessity of a trial, is a statement as to what a reasonable person in the position of the first defendants would have done, leaving legal issues to be answered on another occasion, if that occasion ever arose. However, as I have noted, it does not follow that taking legal action to positively determine membership is so unjustified as to result in an order for indemnity costs.

53 Counsel for the plaintiff also submitted that it is necessary to award indemnity costs because the steps taken by the plaintiff were both reasonable and necessary. Counsel for the first defendants conceded there was a proper basis to conclude that the plaintiff's actions in bringing these proceedings were reasonable but submitted that it doesn't follow, as a result, that the defence of these proceedings by the defendants was unreasonable and they should be visited with indemnity costs. On my reading of the authorities, the fact that the litigation was reasonable and necessary is not criteria for an award of indemnity costs.

54 Counsel for the defendants submitted that none of the factual findings adverse to the first defendants take away the fundamental issue which was agitated in the action which was the proper interpretation, application and construction of the constitution and the differing views which were advanced before the court as to who were properly members of the Association were primarily directed to that end. However, the other fundamental issue agitated in the action was the Level Holdings contract which, on the findings ultimately made, was not authorised by the Association prior to the contract being entered into, as Tiao well knew. Although I expressed considerable concerns about the translations prepared on behalf of the first defendants of the meetings where the Level Holdings contract was raised with the members, the documents did prima facie reflect a ratification of past action. Once again, the issue of the validity of the membership was central to this issue as well. Further, irrespective of the membership issue, it was not until the independent translations were obtained that it became evident that no such ratification had taken place.

55 Counsel for the defendants submitted that what the court found was that the board, criticised as it was, waived the constitution and that, in a practical sense, had operated on the basis that the people on the plaque were the members of the Association. It was further submitted that these findings do not give rise to the conclusion that the arguments raised by the defendant as to the interpretation and construction of the constitution were unreasonable. I accept that to be the case.

56 Counsel for the defendants further submitted that the point of distinction between the parties was that a finding of misconduct made at the conclusion of a trial says nothing about the conduct of the proceedings. In other words, according to counsel, the issues on which the plaintiff relies were issues which were live, which were there to be tested and findings adverse to the first defendants were made by the court. Because disputed issues were determined by the court adversely to the first defendants, does not mean that they were not matters incapable of being advanced before the court. Counsel for the defendants maintained that it was the court's detailed analysis of the evidence given by all the witnesses that, together with careful reasoning, led to the specific findings rather than, for example, a reference to an unqualified admission or a basis in the defendant's own position from which one could infer there never was, and never could be, an arguable defence. Counsel maintained that there was nothing in the conduct of the proceedings which would incur the wrath of indemnity costs.

57 One basis of concern with respect to the first defendants' position is the finding that Tiao's refusal to hold a general meeting to which all interested persons were invited was a direct result of his desire to maintain control over the Association. Indeed, most of Tiao's conduct prior to commencement of the litigation was directed to maintaining control. However, in my view, that motivation does not undermine the arguments that legitimate issues were raised at trial which, if answered in Tiao's favour, could well have resulted in his conduct being validated and in him maintaining control over the organisation, at least on an interim basis until there was compliance with the provisions of the constitution as to the holding of meeting.

58 Before reaching a concluded opinion on whether it is appropriate to order indemnity costs it is necessary to consider the authorities on the issue.

59 In Re Malley SM; Ex parte Gardner [2001] WASCA 83 [2] the court held that an award of costs on an indemnity basis will only be made in exceptional circumstances. Further, in the absence of a legal costs agreement under s 221 of the Legal Practice Act 2002 (WA), the recovery of costs can be no greater than the paying party has the obligation to pay his solicitor which is the amount identified in the scale. No submission was made on behalf of the plaintiff that a legal costs agreement was in place. In Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 28 WAR 95 [19] Pullin J concluded that, where there is no costs agreement, there should not often be any need for an indemnity costs order.

60 In Flotilla Nominees Pty Ltd v Western Australian Land Authority Pullin J also succinctly stated the principles relating to indemnity costs orders as follows [8] - [9]:

The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.

Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra) at page 233 and the circumstances referred to in Fountain Selected Meats (Sales)Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397 and in Unioil's case. Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to indemnity costs orders. See Colgate-Palmolive v Cussons (supra) at 233. The creation of false issues by tactical denials or failure to admit the facts may, in the circumstances of particular cases, lead to such an order: Unioil's case. An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law: See Fountain Selected Meats (supra) [8] - [9].

61 It can be seen that some support can be found in the above extract for the proposition put by counsel for the defendant that the improper, or at least unreasonable, conduct on the part of the first defendants must be in relation to the case.

62 In Fazio v Fazio [2008] WASC 161 [16] Martin CJ observed that although the authorities establish that, in general, the discretion to award indemnity costs will not be exercised unless there is something in the conduct of the party against whom the order is sought that makes it appropriate for the court to take the unusual step of ordering costs. An example of such conduct was said by Martin CJ to be where the conduct of that party has been unreasonable; for example, where there is no substantive ground for opposition to a grant of probate in solemn form or where the unreasonable conduct has magnified the costs of proceedings or where there is something in the conduct of the party that merits censure or reproof or the defence or the claim has been pursued for some collateral or improper purpose.

63 In Fazio v Fazio the ground upon which the indemnity costs were sought was essentially that the conduct of the defendant was unreasonable because there was no clearly identified ground of opposition to the grant of probate. In that case, the grounds of opposition were found to be entirely without substance and an award of costs on an indemnity basis was made because the defendant's conduct was found to be unreasonable: [25]. That is not this case. In this case the arguments made on the proper construction of the constitution and the membership of the Association were perfectly reasonable despite the fact they did not ultimately find favour with the court.

64 In Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190, 191 Ipp J observed that an order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice and cited the decision of Sheppard J in Colgate-Palmolive Co v Cussons [1993] FCA 536; (1993) 46 FCR 225, 233. His Honour noted that the court has a wide discretion quoted French J's remark in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court, French J, 3 May 1991) that: 'The categories in which the discretion may be exercised are not closed.'

65 In that case, Ipp J held (193 - 194) that the creation of false issues by tactical denials, failures to admit contained in pleadings or a failure to make a bona fide attempt to agree facts may justify the ordering of payment of costs on an indemnity basis. This was said to be because, inherent in the case management system now in operation in the Supreme Court of Western Australia, is a general duty upon lawyers, in appropriate circumstances, to co-operate so as to avoid needless disputes. It was further noted that appropriate costs order could be made when the use of aggressive, discourteous and non-co-operative behaviour leads to the incurring of delay, inconvenience and costs. However, on an overall consideration of the issues in that case, Ipp J determined (192) that the facts did not warrant the making of a global order for indemnity costs.

66 In this case, despite having real concerns about the first defendants' motives in defending this action, there were real legal issues involved in the case and the arguments put on behalf of the first defendants could not be said to be wholly without merit. Further, it is not the case that the action was unnecessarily prolonged by any conduct of the first defendants. The fact remains that most of the first defendants' inappropriate and improper conduct pre-dated the commencement of the litigation. The fact that I did not find the first defendants to be witnesses of truth would not justify an award of indemnity costs.

67 Whilst I have great sympathy for the plaintiff who was required to commence litigation to establish the correct membership of the Association and hence establish the validity of certain meetings at which particular resolutions were passed, I am simply not satisfied that in defending the plaintiff's claim in the way that the first defendants did, their conduct was so improper or unreasonable as to warrant an order for indemnity costs.

Order 5: The First Defendants do pay the Plaintiff interest at 8% per annum, since the date of filing the writ of summons herein, on the taxed amount.

68 The plaintiff is seeking interest on the taxed amount of costs. Counsel for the plaintiff accepts that the granting of this order stands or falls with the indemnity costs issue. The plaintiff submits that it is important to take into account the totally unwarranted strain on the plaintiff's finances caused by the first defendants' actions before and during the litigation. It is said that interest is justified as a mark of disapproval.

69 The plaintiff submits that, alternatively, the order can be justified under s 37 of the Supreme Court Act which provides that the costs of and incidental to all proceedings in the Supreme Court shall be in the discretion of the court or judge and the court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid. Counsel relies on the decision in WA Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 [115] where the Court considered what is meant by costs and, in particular, whether the words costs was wide enough to include financing costs; that is, interest: at [114]. The Court also considered whether, if interest is incurred, whether it is 'incidental to proceedings in the Supreme Court' which is the wording used in s 37 of the Supreme Court Act: [115].

70 The Court held that, viewed in isolation, it was arguable that financing costs incurred for the purpose of funding the conduct of a Supreme Court action are costs 'incidental' to the proceedings in the Supreme Court: [115]. However, the court also considered whether s 37 should be read down because of s 43 of the Supreme Court Act which expressly empowers the court to make awards of pre-judgment interest but does not apply to costs. The Court identified the issue for resolution as being whether a construction of s 37 that would enable the award of financing costs should prevail in light of s 32 which makes express provision for the circumstances in which the court may order pre-judgment interests. The preliminary view, expressed by McLure J (with whom Anderson and Steytler JJ agreed), was that, in the absence of a conflict between s 37 and s 32, there was no reason to read down s 37: [115]. My preliminary view is to the same effect.

71 McLure J considered it unnecessary to decide these questions, expressing the view that, even if the court had the jurisdiction to award interest on costs incurred in conducting the action, she was not persuaded that the trial judge erred in the exercise of his discretion. The trial judge concluded that s 32 and s 37 of the Supreme Court Act do not authorise the court to award interest on costs and that it had no inherent jurisdiction to do so. The trial judge also concluded that even if he had the power to make such an award, he would not have exercised the discretion to do so because the progress of the case to trial was largely a mater within the respondent's control: [109]

72 On appeal, McLure J observed that it is currently the case that, absent misconduct by a party, a successful litigant is not compensated for all costs directly incurred in the conduct of the proceedings and that there was nothing in the circumstances of the litigation that would justify the respondent receiving all of its direct costs much less its financing costs: [116].

73 It can be seen that, whilst the discussion in WA Planning Commission v Arcus Shopfitters Pty Ltd provides some support for construing s 37 as justifying an award of costs which includes interest, the actual decision does not decide the issue and reinforces the proposition that, absent misconduct, a successful litigant will not usually be compensated for all costs directly incurred.

74 Counsel for the plaintiff accepts that the claim is absolutely unusual and for the same reasons as have been given for refusing an award of costs on an indemnity basis, I am not prepared to make the order sought.

75 In the circumstances there is no need to address the fact that the civil judgment interest rate is 6% and not the 8% sought on behalf of the plaintiff.

Order 6: All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan be repaid to the Association by the First Defendants, Conal O'Toole, Butcher Paull & Calder or Peter McGowan, jointly and severally, with interest at 8% per annum from the date of payment.

76 Counsel for the plaintiff advised that the plaintiff filed a challenge to Mr O'Toole's supposed retainer very early in the litigation. The basis of the challenge was that there was no board resolution or other form of authority in existence justifying the engagement by Tiao of Mr O'Toole to act on behalf of the Association. Counsel noted that Mr O'Toole maintained that this was an issue to be determined at trial. However, no board resolution was ever put before the court to justify the retainer and the finding of the Court was that Tiao had no authority to engage a solicitor on behalf of the Association. According to counsel for the plaintiff, Mr O'Toole is now caught by the consequences of his decision not to sight a retainer before acting on behalf of the Association and of seeking a determination of the issue at trial. Counsel further noted that, even on the account given to Mr O'Toole by his client, Mr O Toole should have known that the proposition that Tiao was authorised couldn't be justified. According to counsel, a prudent solicitor would ask to see the resolution or other form of authority and would not simply take the word of one board member, particularly where that board member's word is hotly contested by another board member.

77 In seeking an order that the legal representatives repay all monies paid to them from the Association's fund, the plaintiff also relies on the finding in the reasons for decision that a lawyer had drafted the key resolution purported to have been passed at the 26 February 2005 members' meeting. According to the plaintiff, this means the legal representatives were closely involved in the actions of the first defendants and can be ordered to refund Association money on that basis also. This submission overlooks the fact that whilst the finding is adverse to the first defendants, it is not necessarily adverse to the first defendants' solicitors.

78 In the reasons for decision reference was made to a translation of the minutes of the meeting of 26 February 2005 which was prepared by Tiao's son. That translation indicated that, at the meeting, a resolution was passed which ratified and confirmed all acts, actions, deeds, transaction and omissions of whatever nature of each and every person that has acted or purported to act for or on behalf of the Association. The effect of such a resolution would be to retrospectively ratify Tiao's actions in entering into the Level Holdings contract, irrespective of whether he was authorised at the time. However, an independent translation of the minutes obtained at the conclusion of the trial revealed that that the terms of the actual resolution passed was to ratify and confirm all past resolutions and projects such as the purchase of the land for building the centre. This resolution would not have ratified Tiao's actions.

79 Despite Tiao's denial, I found that the words contained in the translation prepared by Tiao's son were far too close to a legally worded, all encompassing, ratification, and far too dissimilar to the actual resolution recorded, to have resulted from a poor attempt at translation; hence the conclusion that the wording must have been provided by a lawyer.

80 However, it does not follow from this finding that Mr O'Toole was the solicitor who provided the appropriate form of words or, if he were, that he did so with a view to the preparation of a false or inaccurate translation. Actions of directors can quite properly be retrospectively ratified by members and if such a resolution had been passed by a properly called meeting of the actual members of the Association, informed of the relevant circumstances, then no issue could be taken with the resolution or the solicitor's advice on the appropriate terms of such a resolution. It can be seen that the finding does not adversely reflect on the conduct of Mr O'Toole.

81 In oral submissions, counsel for the plaintiff continued to press for an order that the solicitor and counsel should be jointly and severably liable for the costs. This approach was said to be necessary until the plaintiff could be assured as to who received funds from the Association and the amount received by each person. It was further submitted that, if the interim order with regard to the Association's financial records had been complied with, the plaintiff would be in a far better position to make such a determination without having to ask for this order. Counsel noted that Mr O'Toole had failed to answer the plaintiff's demands for an explanation as to why the order relating to the Association's records has been ignored. Consequently, it was said that the plaintiff cannot be certain exactly how much of the Association's money has been paid to any particular person but added that it was clear, purely from the accounts in evidence, that over $70,000 has gone to the legal advisers.

82 Counsel submitted that the Association may not be able to recover the monies paid out by Tiao and wished to preclude the necessity of an action to recover monies owing to the Association.

83 Having considered this particular submission, I am not prepared to order that a party's legal representatives be jointly and severably liable for monies owed to the Association simply as a method of identifying the amount, and simplifying the means of obtaining repayment, of the Association's money which has been paid out without authorisation.

84 Another difficulty with the order sought is that part of the order requiring that the barrister be jointly and severably liable. The inclusion of the barrister in that order misunderstands the nature of the relationship between the barrister and the client. The barrister is in fact engaged by the solicitor to appear as counsel on behalf of the client and is paid by the solicitor. Indeed, the barrister expects to be paid by the solicitor irrespective of whether the solicitor is put in funds by the client. For that reason alone, it would not be expected that the barrister would seek to sight an authorisation directed to the client to engage and pay for legal representation. Further, the fact that the order is for the barrister to be jointly and severably liable means that he would also be liable for monies paid to the solicitor which is money he never received. Counsel for the plaintiff agreed that it was not the usual practice for barristers to sight authorisation because his or her fees are to be paid by the solicitor. Counsel also conceded that the barrister is 'two steps removed' from any liability to repay the Association's money.

85 However, my preliminary view is that there is some substance to the claim for the solicitor, Mr O'Toole, to repay to the Association the monies received by him for legal services including money paid for counsel fees.

86 In the more usual course of events solicitors must act upon the account given to them by their client. If, before accepting instructions, solicitors were meant to make a subjective judgment about the truthfulness of the client or of the prospects of the action's success, certain people in the community would have little prospect of being represented. It also seems to me that the end result would be an entirely inappropriate impediment to a person enforcing his or her rights because of the likelihood that the solicitors of an unsuccessful party would be required to disgorge the costs paid to them for their work.

87 However, the preliminary view I have formed is based on the fact that the issue of whether Mr Tiao was authorised to engage solicitors on behalf of the Association was one of the central issues at trial and was the subject of a specific finding that he was not so authorised. At trial no evidence was adduced to suggest that the first defendants were authorised to engage solicitors on behalf of the Association to defend the plaintiff's claim. Neither was there evidence of any authorisation for the first defendants to pay for their legal fees from Association funds.

88 In circumstances where Mr OToole was on notice with respect to the issue of authorisation it cannot be said that he did not turn his mind to the issue. Clearly, either Mr O'Toole was advised that no such authorisation existed or his client failed to provide such authorisation. It was not a situation where it would have been reasonable to accept the word of either of the first defendants that authorisation existed. Either situation notified Mr O'Toole of the potential risks of continuing to act and accepting Association funds by way of payment.

89 Counsel for the first defendants submitted that there is no point in principle articulated for an order of that kind. It was said that, if there were some persuasive point of principle sighted, then the court would be required to hold a factual inquiry to establish a basis upon which to make such an order. This is because, as counsel observed, the relevant facts do not establish a basis upon which to make such an order against him. I do not share that view because of the matters to which I have referred; the fact that Mr O'Toole was put on notice and the fact that one of the issues at trial which was determined in favour of the plaintiff was that no authorisation existed.

90 The final point raised by Mr McGowan was that, before making such an order, Mr O'Toole would be entitled to be separately heard. It would seem from that statement that, although Mr McGowan addressed the issue of the liability for repayment of Association funds from Mr O'Toole, he was not briefed to also appear on his behalf. Further, it may be the case that Butcher Paull & Calder will wish to be heard in so far as their interests may differ from those of Mr O'Toole.

91 I have no difficulty in determining that it is appropriate for the first defendants to repay to the Association all of the Association's funds paid to Mr O'Toole and Butcher Paull & Calder. However, because my tentative view is that there is a basis upon which to order the solicitors to disgorge the fees paid to them, I do not propose to make any order at this stage before hearing from Mr O'Toole and Butcher Paull & Calder.

Order 7: The first defendants and the Association, by themselves, their agents or servants or otherwise, be and are permanently restrained from giving effect to or further proceeding with the contracts.

92 Counsel for the defendants had no objection to this order providing that the term 'contracts' is defined to relate only to the Level Holdings contract. In my view, there is ample justification for making such an order in relation to the Level Holdings contract.

Order 8: The First Defendants do indemnify the Association from any present or future claims by Level Holdings Pty Ltd against the Association.

Order 9: The first defendants do indemnify the Association from any present or future claims by persons who claim to have suffered any loss or damage as a result of the unauthorised actions of the first defendants or Level Holdings Pty Ltd, including, without limiting the generality of the foregoing, any persons who believe they are purchasers of any subdivided lot of the Land.

93 To a large extent, this issue was dealt with in relation to the request for a declaration in terms of declaration 8.

94 Counsel for the plaintiff submitted that there was no question the Association was a victim in relation to the execution of the Level Holdings contract and no question that the contract was void. I have no difficulty with the first observation. However, for the reasons given in relation to the declaration which was sought by the plaintiff, I do not consider it appropriate in this context to make any observation, declaration or order on the validity of the Level Holdings contract.

95 Counsel for the plaintiff observed that, apart from the first defendants, the representatives of Level Holdings are as much to blame as anybody for the situation whereby a prospective purchaser who has entered into an agreement to purchase one of the sub-divided lots has done so in circumstances where one party to the Level Holdings contract to develop the Association's land was not authorised to enter into that contract. The proposition put on behalf of the plaintiff was that there can be no other explanation but that Level Holdings knew Tiao was not authorised by the Association to enter into the Level Holdings contract.

96 Counsel for the plaintiff also submitted that the Level Holdings representative who attended court, and who was the only representative of the company involved in the execution of the contract, gave evidence in court and his evidence was completely unsatisfactory. However, the fact is that the representative did not give evidence. He simply produced documents under subpoena. Although I found a number of his responses to questions concerning the existence of documents to be implausible, he was not cross-examined.

97 Counsel for the defendant submitted that, until Level Holdings' position emerges, crystallises and, in some respects, is determined, no such order should be made. Counsel pointed out that if Level Holdings decides to assert its position under the Level Holdings contract, the Association will necessarily be a party to such an action and an indemnity could be claimed from the first defendants at that time with an application being made to join them as a party. Alternatively, Level Holdings could decide to bring its action against both the Association and Tiao.

98 In response, counsel for the plaintiff noted that the Association should not be required to pay to defend Level Holdings' claim again it, particularly in circumstances where any future claim could not contradict the finding in this action that Tiao was not authorised to enter in to the Level Holdings contract. Neither, according to counsel, should a charitable organisation such as the Association be required to meet the costs of filing third party notices. In taking this approach, counsel indicated that the plaintiff's only intention was to protect the Association. However, it is not always possible to protect an organisation against that which might transpire in the future, nor from the need to establish the right to an indemnity before receiving the benefit of it.

99 Notwithstanding the matters raised on behalf of the plaintiff, I remain of the view that the validity of the Level Holdings contract is an issue for another court to decide should an action be commenced which addresses this specific issue.

Order 10: The First Defendants do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

100 The evidence of the witness Eric Archer given at trial was that by 21 January 2005, the development under the Level Holdings contract was almost 90% complete. It was also the case that there was no evidence of an intention on behalf of the Association to develop the land. Indeed, there was ample evidence of a clear intention on the part of those involved in the Association to use the balance of the land after the building of the temple for expansion of the temple's facilities. Various potential uses were discussed including aged care facilities, villas, a recreation centre, a library, an extension of the temple, retirement home, an amusement park for children, and for fruit and vegetable gardening.

101 However, the issue of what would happen to the land should the plaintiff establish that the Level Holdings contract was executed without the authorisation of the Association, was simply not agitated at the trial of the plaintiff's action. There is no evidence before me of the intentions of the majority of the Association's membership arising from a finding that the Level Holdings contract was not authorised by the Association. On behalf of the plaintiff, reference was made to the public meeting arranged by the plaintiff and held on 29 May 2005 at which those who attended, including 52 of the first contributors, overwhelmingly rejected the sale of the land subject to the Level Holdings contract. However, the result of a questionnaire put to attendees at a public meeting does not equate to a resolution passed at a validly held meeting which establishes the Association's position with respect to a matter.

102 Counsel for the plaintiff submitted that Level Holdings had trespassed on the Association's property by developing it, that the first defendants encouraged and permitted Level Holdings' trespass and the first defendants had never suggested they were not responsible for the trespass. It was further submitted that the plaintiff has always wanted the property brought back to its original condition

103 As to the latter point, the plaintiff does not speak for the Association any more than Tiao does. The plaintiff donated the money to purchase the land and does not retain any rights in relation to the money, the land or the future use of the land. His opinion on the matter has no more force than that of any other member of the Association. Whilst I believe the plaintiff has the best of intentions, the separation between the plaintiff's interests and those of the Association must always be kept in mind.

104 An order of the type sought is properly one for the Association to make and would be best made when there has been a meeting of members and a new board elected in accordance with the constitution. In no circumstances should an order of this type be made at the request of an inaugural board member who has already held his position well beyond that which was ever contemplated by the constitution.

105 Further, the financial position of the Association is currently not completely known and, notwithstanding that the Level Holdings contract was entered into without authorisation, there remains the possibility that the Association might ultimately reach the conclusion that it needs to sell some of the land. In those circumstances, the development which has already occurred may facilitate that sale. Similarly, some of the future intended uses of the land to which I have already referred may be facilitated by some of the development of the land that has already taken place. In my view, it would not be appropriate to pre-empt whatever decision the members of the Association find it necessary to make.

106 Having conveyed to counsel for the plaintiff the court's preliminary view on this issue, counsel indicated that the plaintiff would prefer for the order to be made with liberty to apply to set it aside if the Association does not wish to be bound by the order and determines to use the land in a way which would be facilitated by the development which has already taken place. However, the difficulty arises if, by the time the Association has met, elected a board, identified the financial position, and the membership has made a determination as to the future use of the land which requires some of the infrastructure which is currently in place, the land has already been restored to its original condition in accordance with the order. That is a position which is potentially adverse to the Association because it will then have to incur the cost of redeveloping the land to the necessary degree. In effect, such an order will foreclose the Association's options.

107 Whilst I accept that the Association should not have to bring another action for the first defendants to right the wrong visited on the Association, the Association must be given the opportunity to determine what action is in its best interests. I have some reservations about granting liberty to apply generally. The history of this matter is such that there is a significant potential for the matter to be regularly returned to the court. However, in the circumstances to which I have referred, it would neither be appropriate for the order to be made before the Association is in a position to determine its best interests, nor should it be necessary for another action to be brought to ensure that Tiao rights the wrong he has inflicted on the Association in entering into the Level Holdings contract. I would, therefore, grant liberty to apply for an order of this type once the Association has held a general meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed.

Order 11: The Members' register of the Association is to be rectified in accordance with declarations 1 and 2 above.

108 Counsel for the plaintiff maintained that this issue was a key problem in the action. However, it was the membership, not the absence of a membership register, which was the problem in the action. The issue of membership is properly addressed in the declarations.

109 The absence of a register was an issue with the Department of Consumer and Employment Protection (DOCEP) and, in my view, rectification of the members register is an administrative matter. Once the board is elected a member's register should be created and it must include as a minimum the group of people identified in the plaque to which should be added any new members admitted after the election of the board of directors. Until then the plaque is the member's register.

110 I consider it unnecessary for the court to make the proposed order.

Order 12: A general meeting of the Association is to be convened to appoint a new board and is to be held within 60 days from the date of this order ('GM')

111 No specific opposition was made on behalf of the defendants to this order although it was pointed out that, if this order were amended to insert after the word 'convened' the phrase 'in accordance with the terms of the constitution', some of the subsequent orders would not be necessary As the holding of an annual general meeting is fundamental if the Association is to move forward, the order will be made as sought and, for clarity and to obviate the need for further orders to the same effect, the order will be amended as indicated.

Order 13: All board positions of the Association are to be declared vacant upon the commencement of the GM.

Order 14: Notice of the GM to Members of the Association shall be given 14 days before it is held.

112 Counsel for the defendants maintains that orders 13 and 14 address administrative and constitutional matters already prescribed by the constitution. That view is not entirely accurate. Under cl 8.5 of the constitution, all office bearers of the board of directors hold office for a period of three years and, unless re-elected, their positions shall be terminated at the conclusion of the annual general meeting at which an election is held. Therefore, any inaugural board member who is not re-elected ceases to become a board member at the end of the meeting and not at the commencement, as the order requires.

113 Order 13 is indeed a replication of the requirement in cl 11.1 and cl 11.2.3 of the constitution.

114 I see no reason why the court should, by order, alter a requirement of the constitution unless its application would impede the steps to be taken to ensure the Association continues to operate. In my view, a change from declaring board positions vacant at the commencement rather than the end of a general meeting would have no impact on the outcome of the meeting. It is, therefore, unnecessary to make the order sought.

Order 15: The plaintiff do take all necessary steps under the Association's constitution to convene, organise and chair the GM.

115 Counsel for the plaintiff submits that there is a need for caution in allowing the first defendants any control of the Association's pending general meeting and elections. Counsel cites in support of that submission a number of the findings made in the reasons for decision which are adverse to the first defendants and one finding which is critical of those supporters of the first defendants who supported resolutions but forward by Tiao where little of the obviously necessary information or explanation had been provided. It was further submitted that none of Tiao's supporters should be permitted any role pending the elections. Counsel then referred to the findings with respect to the support obtained by the plaintiff from the attendees at the public meeting of 29 May 2005 and submitted that Tiao would be in a position of conflict if he were to act as chairperson or organise the general meeting. Counsel then submitted that the plaintiff had acted calmly under extreme provocation and could be trusted to act appropriately if he were to conduct the general meeting to be held.

116 Counsel for the defendants considered that this order has no purpose given the order to be made under order 12 that the meeting is to be called and convened in accordance with the constitution. In the usual course of events, the role of organising a general or annual general meeting would fall to the board. Under cl 11.4.1 of the constitution, the director-general, if willing, presides as chairman and, if he or she is not available, then that position is offered in turn to the persons holding the positions set out in cl 8.1 until a person is found to chair the meeting.

117 Normally, I would not make orders addressing matters which are already dealt with in the constitution. However, this Association currently has a dysfunctional board where the members of the board oppose each other and where the majority of the board have against them a finding of acting in their own interests, rather than the interests of the Association. In those circumstances, I can see the potential for problems arising. In order for the general meeting to be held in circumstances best suited for informed decision making, I consider the plaintiff is the more appropriate person to actually take the steps to organise the meeting. I am, therefore, prepared to make the order sought.

Order 16: No new members shall be admitted between the date of this order and the holding of the GM. For the avoidance of doubt, no persons purportedly admitted by the first defendants as members of the Association between 8 February 2005 and the GM are members.

118 Counsel for the plaintiff submitted that the first defendants' behaviour in ignoring the interim orders alone warrants an assumption that they may admit more friends or relatives to membership and this justifies the making of this order. I do not consider that fact alone to provide the basis for making such an order. However, it is the case that the first defendants did purport to grant membership to their supporters in order to create their own power base and with a view to identifying those supporters as the only members of the organisation.

119 There are currently five surviving members of the inaugural board of directors. As against three of them there is an adverse finding in relation to granting membership to their supporters. There is, therefore, a majority of the board, which has the power under the constitution to grant membership, who have shown themselves to be prepared to behave improperly with respect to granting membership. In my view, it would be inappropriate for those board members to now be able to further interfere with the membership of this organisation. In particular, it would not be appropriate for new members to be admitted at this point before the changes envisaged in the reasons for decision can be put into effect by the current members.

120 Out of an abundance of caution I am prepared to make the order that no new members shall be admitted between the date of this order and the holding of the general meeting. However, I am not prepared to include in that order the concluding proposition that, for the avoidance of doubt, no persons purportedly admitted by the first defendants as members of the Association between 8 February 2005 and the general meeting are members. That proposition is, in any event, covered by declarations 1 to 3.

Order 17: The first defendants be and are permanently restrained from creating any disturbance or acting in any intimidating way, prior to, at or after the GM towards the plaintiff, members of the Association and/or their families.

121 Matters of this nature should, in the usual course of events, be dealt with by the use of common sense, rather than orders of the court. When people behave in such a fashion, it is best left to the general law to deal with the individual's conduct. The person acting as chairperson of the meeting is entitled to take appropriate action to prevent disruption of a general meeting and I consider that in almost all circumstances the court should not descend to this level of control over the situations which might confront the Association and any newly elected board. However, because of the history of this case, I can understand that there might be some concern that the members of the Association will be in some way impeded from properly dealing at general meeting with the issues which have arisen and have been addressed in the reasons for decision.

122 For that reason, counsel for the first defendants was asked to advise whether it was his clients' intention to continue their involvement with the Association, in the absence of which there would be no reason to expect problems of the nature described in the order. The advice received was that they did so intend. Counsel for the plaintiff was then asked to identify the evidence which is said to establish a concern that the first defendants would create a disturbance or act in an intimidating way. The evidence was said to be the incident referred to herein in relation to order 1 where, on the day of a public meeting organised by the plaintiff, Tiao and his family members, and also Hui Ping Wang, stood outside the temple and handed out copies of an injunction obtained to stop the meeting being held as a general meeting. A security guard was also present and stood in front of the temple entrance. Lai said that he saw about 30 members leaving the temple grounds after seeing or speaking to Tiao, Hui Ping Wang and their associates.

123 As I observed in relation to order 1, in the situation to which I have just referred, Tiao had an injunction to prevent a general meeting from being held and had a lawful right to take steps to ensure the meeting did not take place. Acting in that way, at that time, does not necessarily lead to a conclusion that the first defendants would behave in an intimidating manner in relation to a properly convened general meeting, although some support for such a conclusion can be found in the numerous adverse findings I have made with respect to the first defendants' conduct in ensuring their control of the Association continued. However, whilst that conduct reinforces the plaintiff's position, in my view it does not justify making the order sought.

124 Counsel for the plaintiff also relied on the conduct of Tiao with respect to the 14 October 2007 annual general meeting where Tiao produced to the meeting a document entitled 'Lai's Lies'. This was a document, unsupported by any evidence to suggest its contents were accurate, which was said to establish that Lai had made false statements in the course of this legal action. The conclusion I drew was that it was entirely inappropriate for the issues contained in the document to be raised in that forum, in particular because some of the allegations bore no connection to the issues in the litigation and had no relevance to the Association. Another document produced and disseminated by Tiao was entitled 'Personal Attacks On the Temple and Its Staff'. The purport of this document was to the effect that the questioning of Tiao and Hui Ping Wang by Lai was not only inappropriate but amounted to a personal attack on the temple and its staff. The observation made in the reasons for decision was that the documents did not reflect well on Tiao. Further, the conclusion drawn was that the document had the undesirable potential to influence the members to refrain from questioning the conduct of those involved in the management of the Association.

125 However, whilst the first defendants would need to be very careful not to make statements that are contrary to the findings made by the court in the judgment, even if the first defendants were restrained from creating a disturbance and acting in an intimidating way that would not necessarily prevent behaviour such as putting forward documents of this type.

126 Counsel for the plaintiff pointed out that the plaintiff was simply trying to ensure that a free and fair election takes place. I accept that to be the case. Further, based on the way in which the first defendants have conducted themselves in the past, particularly in relation to the documents that were put forward at the 14 October 2007 meeting, I understand the plaintiff's concern about the way in which the first defendants will behave at the meeting which is to take place. I have no difficulty with the first defendants properly putting forward their views as members of the association in so far as those views are accurate and truthful, but it is vitally important that personal animosities and inappropriate behaviour do not impede the meeting or the election of board members which is to occur at the meeting.

127 Counsel for the defendants submitted that the factual material advanced by the plaintiff in support of the order did not provide a basis for granting such an order. However, counsel submitted that it might be appropriate for an undertaking to be given by both the plaintiff and the first defendants to the effect that they will not create a disturbance or act in any intimidating way at the meeting. Counsel for the plaintiff indicated that an undertaking would be an acceptable substitute for the order sought.

128 Since this matter was heard, the court has been provided by the respective undertakings which are, unfortunately, not in exactly the same terms. The precise terms will be addressed before this group of orders are made as it is the giving of the undertaking which is the reason I have declined to make any order addressing this issue.

Order 18: The First Defendants be and are permanently restrained from operating or opening any bank accounts of the Association.

129 On behalf of the plaintiff reference was made to the following conduct of the first defendants in relation to the Association's funds:

(i) That Tiao mixed his funds with the Association's funds held in trust;

(ii) That the first defendants' brazenly opened, operated and closed Association bank accounts at will, despite the express requirement of the constitution that operation of the Association's financial accounts required three signatures and further that, unless restrained, there is a real risk they will do so again;

(iii) Tiao intended to reimburse himself from the proceeds of sale of the Association's land, a sum of money which he maintains he spent from his personal funds to meet Association expenses but without having to establish his legal entitlement to be so reimbursed;.

130 The position put before the court on behalf of the plaintiff was that neither the first defendants, their friends nor relatives should hold any financial position in the Association and they should not be involved with the Association accounts. Although I have concerns about the glaring lack of independence and objectivity in decisions made by a number of the first defendants' supporters, the evidence does not support a finding that they should not be eligible for election to the board of an incorporated association. To the contrary, in my view, there is a wealth of evidence which supports a conclusion that the first defendants are not suitable to hold such a position with the Association or to be responsible for Association's funds. Their past conduct illustrates their unsuitability for any future or further involvement of that type with the Association. However, ultimately, such a decision is for the members of the Association to make and not for the court to impose of them.

131 Counsel for the defendants touches on this issue in a limited way in making the observation that, in the event that the outcome of the meeting leads to one or both of the first defendants being given a position requiring or permitting access to Association funds, such an order would be problematic. As counsel observed, it is for the members to determine who becomes a board member and for the board then, in light of the clear findings, to turn this into a functional operating association. In such circumstances a permanent bar of the type sought would cause problems.

132 For these reasons I am prepared to restrain the first defendants from operating or opening any bank accounts of the Association until the conclusion of the general meeting at which the new board is elected. Further, because of the fact that Association funds have in the past been kept in private accounts, the order needs to be extended to any bank account holding Association funds. In that way it should be perfectly clear to the first defendants that they are not entitled to touch any Association funds and will be liable for the consequences if they do so. However, the time period for which this order operates will be only until the conclusion of the general meeting and the election of a new board of directors.

Order 19: Should the first defendants, after the date of this order, fail to obey any of the orders contained herein, the first defendants do stand committed to prison for the period of [_____] for their contempt.

133 In support of this order, counsel for the plaintiff again referred to the first defendants' failure to comply with the initial orders in a timely fashion and submitted that the refusal to obey those orders was a serious matter. It was suggested that it would assist the first defendants to concentrate their minds on the significance of orders of the court to make an order that they stand committed to prison for failing to obey them. I have no doubt that an order that the first defendants stand committed for contempt if they fail to comply with any of these orders would concentrate their minds on the obeying the orders. The more interesting issue is that raised by counsel for the first defendants which is whether a contempt order is appropriate or necessary. In my view, it is not and ultimately the plaintiff did not press this order.

Order 20: The costs of the hearing on 6 March 2009 be included and taxed within order 4.

134 No difficulty was expressed with the order unless the costs are indemnity costs. As there is no award of indemnity costs the order will be made.

Order 21: Liberty to apply with 48 hours' notice.

135 For the reasons referred to in relation to order 10 and other than with respect to order 10, there will be liberty to apply within 48 hours until the meeting referred to in order 12 has been held and a new board elected.

IN THE SUPREME COURT OF WESTERN AUSTRALIA CIV 1442 of 2005

IN THE MATTER OF AUSTRALIAN CHINESE CONFUCIUS-MENCIUS SAINT TAO CENTRE INC

Cheng Chih Tiao and Hui Pin Wang First Defendants

Australian Chinese Confucius-Mencius Saint Tao Centre Inc Second Defendant

This action having been tried from 16 to 20 November, 23 November, 26 November 2007 and 22 February 2008 before the Honourable Justice Johnson in the presence of Mr K G Robson of counsel and Mr RWH Tan for the Plaintiff and Mr P McGowan of counsel for the First and Second Defendants delivered reasons for decision.

All natural persons named in the List of Contributors compiled from a marble plaque displayed in the Temple belonging to the Australian Chinese Confucius-Mencius Saint Tao Centre Inc ("Association"), situated at Lot 42 Warton Road, Canning Vale, WA, being the persons named in the annexure in Chinese and its English translation to this order, are the only ordinary members of the Association ("Members").

Sheng Chin Lai, Cheng Chih Tiao, Yung Sen Chou, Hui Pin Wang and Song Tyan Kuo are the only foundation members, and the only board members, of the Association.

Except as provided in declarations 1 and 2, there are no other members of the Association.

The General Meeting held on 26 February 2005 was invalid.

All resolutions passed by persons purporting to be office bearers or members of the Association are invalid and not binding on the Association including:-

1. general meetings held on 26 February 2005, 16 July 2006, 8 October 2006, 4 March 2007 and 14 October 2007; and

2. board meetings held on 28 June 2006, 27 August 2006, and 12 February 2007.

6. Conal O'Toole, Solicitor, and Butcher Paull & Calder, were not validly engaged as solicitors for the Association.

7. Cheng Chih Tiao was not authorized by the Board or by the members of the Association to enter into the contract between Level Holdings Pty Ltd and the Association dated 11 May 2004 (the Level Holdings contract) in respect of the land being Lot 42 on Diagram 64776 in Certificate of Title 1660 Folio 668 ("Land").

The plaintiff and the first defendants having given an undertaking to refrain from creating any disturbance or acting in any intimidating way, prior to, at or after the general meeting towards the plaintiff, members of the Association, and/or their families

1. There be judgment for the plaintiff.
2. The Plaintiff, Yung Sen Chou and the Members are not to be denied access to the property of the Association, including the Temple situated at Lot 42 Warton Road, Canning Vale ("Property") and to all financial records of the Association.

3. The First Defendants do pay the Plaintiff's costs of the action, including reserved costs, to be taxed if not agreed and paid by the First Defendants within one month from the date of taxation or agreement.

4. The First Defendants and Song Tyan Kuo be and are permanently restrained from giving effect to or further proceeding with the Level Holdings contract.

Once the Association has held a General Meeting, elected a board of directors, identified its financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed, there be liberty to apply for an order that the First Defendants do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.

A General Meeting of the Association is to be convened in accordance with the terms of the constitution to appoint a new board and is to be held within 60 days from the date of this order.

The plaintiff is to take all necessary steps under the Association's Constitution to convene, organise and chair the general meeting referred to in order 5.

No new members shall be admitted to the Association between the date of this order and the holding of the general meeting.

The first defendants be and are restrained from operating or opening any bank accounts of the Association or any bank account in which funds of the Association are held until the conclusion of the general meeting referred to in order 6.

The first defendants pay the plaintiff's costs of the hearing on 6 March 2009 and 22 May 2009, to be taxed if not agreed.

All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan of counsel be repaid to the Association by the first defendants

jointly and severally within one month with interest at 6% payable from 22 June 2009.

1. Liberty to apply with 48 hours' notice until such time as the general meeting referred to in order 6 has been held and a new board elected.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAI -v- TIAO [No 2] [2009] WASC 22 (S2)

AUSTRALIAN CHINESE CONFUCIUS­MENCIUS SAINT TAO CENTRE INC

Solicitor - Mr C O'Toole : McCallum Donovan Sweeney

Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357

AW & LM Forrest Pty Ltd v Beamish [1998] NSWSC 442; (1998) 146 FLR 450

Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398

Fricker v Van Grutten [1896] 2 Ch 649

Harrison v Goodland [1944] HCA 41; (1944) 69 CLR 509

Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421

Hoskins v Van Den-Braak (1998) 43 NSWLR 290

Lai v Tiao [2009] WASC 22

Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120

Myers v Elman [1940] AC 282

Ridehalgh v Horsefield [1994] 3 All ER 848

Saif Ali v Sydney Mitchell & Co [1980] AC 198

Templeton v Leviathan Pty Ltd [1921] HCA 55; (1921) 30 CLR 34

1 JOHNSON J: When the judgment in this matter was delivered on 12 February 2009 I advised the parties that I proposed to hear from them as to the specific orders to be made to reflect the conclusions reached in the judgment. At a hearing on 6 March 2009 all parties had the opportunity to address the proposed declarations and orders sought by the plaintiff. One order sought by the plaintiff was for all monies paid to the first defendants' firm of solicitors, Butcher Paull & Calder, their solicitor, Mr Conal O'Toole, and to their counsel, Mr Peter McGowan, to be repaid to the Australian Chinese Confucius-Mencius Saint Tao Centre Incorporated (the Association).

2 On 22 May 2009 a supplementary decision was delivered identifying all declarations and orders to be made and providing reasons for the decisions reached. In relation to the order sought against counsel, the decision was that the inclusion of counsel in the order misunderstood the nature of the relationship between counsel and the client, and between counsel and the solicitor, and there was no basis for making such an order in this case.

3 In relation to both the solicitor and the firm of solicitors, I expressed a preliminary view that there appeared to be some substance to the claim for the solicitors to disgorge the fees paid to them. However, as they were not parties to the proceeding and were not represented at the hearing on 6 March 2009, I was not prepared to make any order until they had the opportunity to be heard. Although I made no specific reference to the court's power to make the order foreshadowed, it was O 66 rule 5(1)(e) of the Rules of the Supreme Court 1971 (WA) on which I intended to rely if I formed the view that such an order should, in fact, be made.

4 The foundation for the application for the order to disgorge the fees paid to the solicitors was the finding that Mr Tiao had no authority to engage a solicitor on behalf of the Association which lead to the making of a declaration that neither Mr O'Toole nor Butcher Paull & Calder was validly engaged as solicitors for the Association: Lai v Tiao [2009] WASC 22 [77].

5 The following is the relevant part of the judgment of 22 May 2009 which identifies the reasons for the preliminary view formed concerning the repayment of fees paid to the solicitors:

Counsel for the plaintiff advised that the plaintiff filed a challenge to Mr O'Toole's supposed retainer very early in the litigation. The basis of the challenge was that there was no board resolution or other form of authority in existence justifying the engagement by Tiao of Mr O'Toole to act on behalf of the Association. Counsel noted that Mr O'Toole maintained that this was an issue to be determined at trial. However, no board resolution was ever put before the court to justify the retainer and the finding of the Court was that Tiao had no authority to engage a solicitor on behalf of the Association. According to counsel for the plaintiff, Mr O'Toole is now caught by the consequences of his decision not to sight a retainer before acting on behalf of the Association and of seeking a determination of the issue at trial. Counsel further noted that, even on the account given to Mr O'Toole by his client, Mr O'Toole should have known that the proposition that Tiao was authorised couldn't be justified. According to counsel, a prudent solicitor would ask to see the resolution or other form of authority and would not simply take the word of one board member, particularly where that board member's word is hotly contested by another board member [76].

...

In the more usual course of events solicitors must act upon the account given to them by their client. If, before accepting instructions, solicitors were meant to make a subjective judgment about the truthfulness of the client or of the prospects of the action's success, certain people in the community would have little prospect of being represented. It also seems to me that the end result would be an entirely inappropriate impediment to a person enforcing his or her rights because of the likelihood that the solicitors of an unsuccessful party would be required to disgorge the costs paid to them for their work.

However, the preliminary view I have formed is based on the fact that the issue of whether Mr Tiao was authorised to engage solicitors on behalf of the Association was one of the central issues at trial and was the subject of a specific finding that he was not so authorised. At trial no evidence was adduced to suggest that the first defendants were authorised to engage solicitors on behalf of the Association to defend the plaintiff's claim. Neither was there evidence of any authorisation for the first defendants to pay for their legal fees from Association funds.

In circumstances where Mr OToole was on notice with respect to the issue of authorisation it cannot be said that he did not turn his mind to the issue. Clearly, either Mr O'Toole was advised that no such authorisation existed or his client failed to provide such authorisation. It was not a situation where it would have been reasonable to accept the word of either of the first defendants that authorisation existed. Either situation notified Mr O'Toole of the potential risks of continuing to act and accepting Association funds by way of payment [86] - [88].

6 On 24 August, 2009, a hearing was held for the purpose of giving Mr O'Toole and Butcher Paull & Calder the opportunity to be heard on whether the order sought by the plaintiff, ostensibly on behalf of the Association, should be made. Both were represented by counsel and the Association was also represented separately from the plaintiff. For convenience I will use the collective term 'solicitors' when referring to Mr O'Toole and Butcher Paull & Calder.

7 Various issues were raised at the hearing on behalf of the solicitors. A preliminary point was taken as to whether the plaintiff had the standing to make the application for the order. Another preliminary point was the late stage at which an appearance had been entered by new solicitors for the Association and submissions filed and served on its behalf. It was submitted that the consequence of this should be to disentitle the Association being heard.

8 As to the first of the preliminary issues, counsel for the plaintiff effectively conceded that there was little to justify the plaintiff's involvement in a hearing dealing specifically with orders sought for repayment of Association funds. In terms of the original action, the plaintiff was a director of the Association who, on my findings, had effectively been excluded by Mr Tiao from participation in the Association's activities and who became concerned when he was made aware that part of the Association's property had been sold, apparently without authorisation. If it were not for the plaintiff, it is highly unlikely that anything would have been done about the way in which the Association was being managed by Mr Tiao. However, by the time of the present hearing, an annual general meeting had been held at which new Board members were elected. Although the plaintiff was one of the newly elected Board members, there was no suggestion that the Association could not take action on its own behalf and, as I have noted, it was represented by counsel at this hearing. There was no longer any basis for the plaintiff to attempt to protect the Association's interests by taking action in his own right but for the benefit of the Association. The conclusion I drew was that the plaintiff did not have standing to seek an order for the return from solicitors of the costs paid from funds of the Association or to be heard on the issue and, as a result of that ruling, counsel for the plaintiff withdrew.

9 As to the second preliminary issue, the late involvement of the Association in the proceeding, counsel for the Association relied on the complexity of the issues dealt with in the judgment and the significant time necessary to fully understand the judgment. Difficulties were also said to have been encountered because of the fact that almost all of the people involved in the matter do not speak English and required an interpreter. Further, two of the Board members who were to instruct counsel had been away in Taiwan, requiring telephone link-ups, which increased the language difficulties involved. Emphasis was also placed by counsel on the prejudice to the membership of the Association of being excluded from participation at this hearing, particularly in view of the intense financial, emotional and spiritual impact of the lengthy legal proceedings. Conversely, it was submitted that no prejudice to the solicitors had been identified and no prejudice could arise from the late filing of submissions because the Association's submissions essentially support and reflect the submissions of the plaintiff which had been available for some time.

10 There was, in my view, considerable substance to the submissions made on behalf of the Association and, consequently, I determined to allow counsel for the Association to appear and be heard in relation to the issue before the court. As the Association, a party to the action, was now represented and making the application for the order, much of the submissions on which the solicitors relied were no longer of relevance.

11 In terms of substantive issues, counsel for the solicitors relied on the following allegations:

1. that the monies paid to the solicitors were not paid from the funds of the Association;
2. that neither Mr O'Toole nor the firm, Butcher Paull & Calder were parties to the action and hence an order could not be made against them; and
3. that an order only could be made against a solicitor if the solicitor's actions were improper, unreasonable or negligent.

12 Although these arguments were primarily put before the court by senior counsel for Mr O'Toole, counsel for Butcher Paull & Calder joined in the submissions of senior counsel and raised one further matter, to which I will later refer.

13 Senior counsel for Mr O'Toole submitted that the proper way for the issue of repayment of costs to be brought before the court was for the Association to bring proceedings for repayment of so much of its funds that were not authorised to be disbursed. The basis upon which the Association could claim a refund or repayment of its funds paid to a lawyer was said to be on the basis of a breach of warranty of authority. It was further stated that, in such proceedings, some of the impediments alleged to apply to the making of an order in these proceedings such as issues of privilege, would not apply and the legal basis for the claim could be pleaded and the relief specified.

14 In relation to the first issue raised, it was submitted on behalf of the solicitors that there was no evidence before the court that the Association paid any monies to the solicitors. Indeed, senior counsel maintained that the affidavit evidence before the court was that no monies were paid by the Association. According to counsel, as a minimum, before the court should make the contemplated order there must be some evidence that Association funds had been utilized, and the only evidence before the court at the present time was that the monies paid to the solicitors were not paid from Association funds.

15 The affidavit evidence of Mr Tiao was that, after having first met with Mr O'Toole to obtain legal advice, he opened a new bank account with BankWest in the name of the Association. That account was used to pay legal costs of these proceedings as accounts were rendered. Mr Tiao further deposed to the fact that all monies in the account were deposited by him or Hui Ping Wang or by Cheng Han Pty Ltd, a company of which Mr Tiao is a director. According to Mr Tiao, his expectation was that the monies so advanced would be treated as loans in the accounts of the Association.

16 The proposition put by senior counsel was that, as Mr Tiao had no authorisation to open an account in the name of the Association and Mr Tiao controlled the funds in the account, the result is that the account is not an Association account, the Association had no right to the funds in the account and, therefore, the accounts rendered by the solicitors were not paid from Association funds.

17 It was further submitted that it would be necessary for there to be evidence at trial that Association funds were used to pay the solicitors before an order of the type sought could be made. Senior counsel refuted the suggestion that an order could be made for repayment of Association funds and, in the event it transpired that no such funds were in fact involved, the order would simply have no effect. It was submitted that such an approach would amount to the court making an order based on an assumption.

18 The Association relies on the fact that the substantial sums of money were paid to Mr O'Toole and that they were paid by the Association. The fact that Mr Tiao alleges that he paid the monies into an account of the Association is said not to be a relevant consideration for the following reasons:

(a) Mr Tiao was found to be a person of no credibility;

(c) there is an express finding in the judgment in the action that Mr Tiao mixed his own funds with the Association's funds; and

(d) there is also an express finding that Mr Tiao treated the Association as his personal fiefdom.

19 In oral submissions, counsel for the Association emphasised that Mr Tiao's conduct in setting up the BankWest account must be considered against the background that there had been a blending of monies and a closing down of Association accounts. Consequently, it was submitted, the fact that Mr Tiao had opened the account in the name of the Association and placed funds in it would not preclude the conclusion that it was an Association account and that the funds were that of the Association.

20 It was further submitted that, if Mr Tiao wants to maintain that the monies placed in the account were by way of a loan to the Association, he can make that claim in the context of any action, however instituted, which addresses the correct financial position of the Association as a result of Mr Tiao's management. However, this latter argument tends to reinforce the position of the solicitors that the order proposed should more properly be made in the context of an action to which the solicitors are parties and in which all relevant evidentiary issues could be addressed.

21 With respect to the four specific issues raised on behalf of the Association, it is correct that Mr Tiao was found to be a person of no credibility, whose evidence required corroboration. Further, the court did, in fact, make the two findings to which the plaintiff refers.

22 It is because of the entirely inappropriate way in which Mr Tiao managed the Association and its monies that I have considerable difficulty with the proposition put by senior counsel for Mr O'Toole that the account was not an Association account and that the Association had no right to the funds. In the usual circumstances such conclusions may be able to be drawn. It is entirely because of Mr Tiao's considerable credibility issues and his conduct with respect to the Association that these conclusions cannot so easily be drawn.

23 I would not be prepared to conclude that the funds in the account to which Mr Tiao refers in his affidavit were paid in from his own funds, on Mr Tiao's words alone. More importantly, because of the fact that the Association's accounts had been closed and Association monies mixed with Mr Tiao's monies, I would not be prepared to find that, even if the monies were paid in by Mr Tiao from one of his own bank accounts, the funds were not Association funds.

24 With respect to the issue of credibility, counsel for Butcher Paull & Calder noted that the adverse finding on Mr Tiao's credibility only came at the end of the trial and it was not for the solicitor to determine his credibility. I accept that, in the usual course of events, not only is it not necessary for the solicitor to determine his client's credibility but entirely inappropriate to decline to accept instructions or defend proceedings based on a personal impression that the client is not entirely truthful: Ridehalgh v Horsefield [1994] 3 All ER 848, 863. However, the issue of Mr Tiao's credibility is not the basis of the order proposed. Because of Mr Tiao's role as a director of an incorporated association, and in circumstances where his right to engage solicitors is called into question by a fellow director, there must exist some resolution or written record of authorisation. Further, because the existence of authorisation is an issue at trial, it would not be enough to take Mr Tiao's word for the existence of such an authorisation as it would be a relevant document required to be produced at trial.

25 The second issue on which the solicitors rely is the fact that Mr O'Toole was not a party to the action and no claim has been made against him. Counsel for the solicitors submitted that the relief claimed, that is the proposed order, was not sought in either the originating summons or in the amended statement of claim. This submission was made despite the concession that the foundation for the Association's application for the order was the finding that Mr Tiao had no authority to engage a solicitor on behalf of the Association, a finding which led to the making of a declaration that neither Mr O'Toole nor Butcher Paull & Calder were validly engaged as solicitors for the Association.

26 Senior counsel for the solicitors correctly point out that the jurisdictional basis for the application for the proposed order against the solicitors has not been identified. It was not identified by counsel for the plaintiff when first sought and was not identified by the court in the reasons for decision delivered on 22 May 2009. Counsel for the solicitors submitted that the foundation for the order sought, which is identified in the preceding paragraph, suggests that the order is sought as a consequential order following the declaration and as part of the relief sought in the action. Alternatively, it was submitted, the order may be based on O 66 r 5(1)(e) of the Rules of the Supreme Court.

27 As I have indicated, it was indeed O 66 that I had in mind when foreshadowing the making of an order against the solicitors, rather than simply making the order as a consequence of the declaration. However, in my view, the repayment of the monies would be a logical consequence of the finding that Mr Tiao had no authority to engage solicitors on behalf of the Association, in circumstances where this issue was central to the trial and where Mr O'Toole was well and truly put on notice that his authority to act on behalf of the Association was doubted. However, whether the order can or should be made in those circumstances would also need to be determined.

28 It was submitted by senior counsel for Mr O'Toole that, because the plaintiff failed to join Mr O'Toole as a party to the action, he is not bound by the result: Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357, 380. It was further submitted that the court has no jurisdiction over persons other than those properly before it as parties or persons treated by statutory authority as if they were parties. Accordingly, it was submitted, unless a person is properly joined as a party to the proceedings or properly bound to the outcome, he or she is not bound by the judgment or order of the court: Templeton v Leviathan Pty Ltd [1921] HCA 55; (1921) 30 CLR 34, 70. Accordingly, it was argued, as a matter or jurisdiction, the order sought by the plaintiff should not be made as relief in the action following the declaration.

29 On behalf of the Association it was argued that there are exceptions to the general principle. However, the circumstances which applied in the authorities on which counsel for the Association relies are in no way analogous to the circumstances in this case: see for example, Harrison v Goodland [1944] HCA 41; (1944) 69 CLR 509, which allows for injunctions to be granted against servants or agents of a party but who are not themselves parties to the action; Carnie v Esanda Finance Corporation Ltd [1995] HCA 9; (1995) 182 CLR 398, [6] which deals with representative actions.

30 However, as I have indicated, it was Mr O'Toole's role as solicitor which was the basis of the proposed order. The role of a solicitor as an officer of the court puts him or her in an entirely different situation from any other non-party against whom an order is sought to be made: Myers v Elman [1940] AC 282, 303. Counsel for the Association referred to a number of authorities where costs orders have been made against solicitors for commencing proceedings without authority. In Hoskins v Van Den-Braak (1998) 43 NSWLR 290 the court referred to the decision in Fricker v Van Grutten [1896] 2 Ch 649, 658 - 659 where the solicitor who had acted without authority was ordered to indemnify the plaintiff against all costs and to pay the costs of the defendant. It was further submitted that it is commonplace to make orders that a solicitor who commences proceedings without authority must pay the defendant's costs of challenging the supposed retainer: AW & LM Forrest Pty Ltd v Beamish [1998] NSWSC 442; (1998) 146 FLR 450, 458 - 460; Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421, 431. In Myers v Elman (319) the following statement was made by Lord Wright:

The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Ablinger CB in Stephens v Hill [1842] EngR 607; (1842) 10 M & W 28. The matter complained of need not be criminal. It need not involve speculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice. Thus, a solicitor may be held bound in certain events to satisfy himself that he has a retainer to act, or as to the accuracy of an affidavit which his client swears. It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve a personal obliquity. The term 'professional misconduct' has often been used to describe the ground which involves a failure on the part of a solicitor to fulfil his duty to the court and to realise his duty too. The summary procedure may often be invoked to save the expenses of an action. Thus it may in proper cases take the place of an action for negligence or an action for breach of warranty of authority brought by the person named as defendant in the writ. The jurisdiction is not merely punitive but compensatory. The order is for payment of costs thrown away or lost because of the conduct complained of. It is frequently, as in this case, exercised in order to compensate the opposite party to the action.

31 Not only does this passage support the proposition that the court has the power to make an order against a solicitor who has failed to satisfy himself that he has a retainer to act but that the summary procedure involved in the making of an order in such circumstances may properly be invoked to save the expense of an action such as an action for negligence or for breach of warranty of authority. The latter approach was suggested by senior counsel for Mr O'Toole to be the proper way for the issue of repayment of costs to be brought before the court. On the basis of the decision in Myers v Elman, it is not the only way.

32 It was accepted on behalf of the solicitors that the court has jurisdiction over members of the legal profession, including a jurisdiction to tax accounts, make costs orders and exercise supervision, without the practitioner being made a party. However, it was submitted that it was not appropriate in this case to exercise that power.

33 It was further submitted that the order sought goes beyond the orders made in the authorities cited on behalf of the Association which concern indemnification against costs and payment of other litigant's costs. Irrespective of whether the order sought goes beyond the specific orders made in the authorities, I do not accept that it goes beyond the scope of the principle identified in them.

(1) Where in any proceedings costs are incurred by a party -

(a) as a result of any improper, unreasonable, or negligent act or omission; or

(b) ...

the court may order any practitioner whom it considers to be responsible (whether personally or through a servant or agent) -

(c) ...

(d) ...

(e) to refund any relevant costs or fees which may have been paid already.

35 It can be seen that the jurisdiction to award costs arises where costs are incurred by a party as a result of any improper, unreasonable or negligent act or omission. The court can order the practitioner, inter alia, to refund any costs or fees which have been paid already. Assistance as to the meaning of the terms 'improper', 'unreasonable' and 'negligent' can be found in the judgment of Sir Thomas Bingham MR in Ridehalgh v Horsefield (861 - 862):

'Improper' means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty... But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can fairly be stigmatised as such whether or not it violates the letter of a professional code.

'Unreasonable' also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the events to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable.

The term 'negligent' was the most controversial of the three... But for whatever importance it may have, we are clear that 'negligent' should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.

In adopting an untechnical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence.

36 Sir Thomas Bingham MR then referred to the following quote by Lord Diplock in Saif Ali v Sydney Mitchell & Co [1980] AC 198, 218:

Advice, acts or omissions in the course of their professional work which no member of the profession who was reasonably well-informed and competent would have given or done or omitted to do... [an error of judgment] such as no reasonably well informed and competent member of that profession could have made.

37 The Master of the Rolls also noted that the Court of Appeal was invited to give the three adjectives ('improper', 'unreasonable' and 'negligent') specific, self-contained meanings, so as to avoid overlap between the three, but declined to do so. It was held in Ridehalgh v Horsefield (862) that conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. The Court of Appeal did not consider that any sharp differentiation between the expressions would be useful, necessary or intended.

38 It was submitted on behalf of Mr O'Toole that there was no evidence that Mr O'Toole acted unreasonably, improperly or negligently. In particular, it was submitted, there was no evidence from Mr O'Toole as to the circumstances in which he was retained and those circumstances would have a significant bearing on the appropriateness of an order being made against Mr O'Toole personally. It was further said that the finding that Mr O'Toole was on notice with respect to the issue of authorisation, and that it was not a situation where it would have been reasonable to accept the word of either of the first defendants that authorisation existed, does not amount to a finding that his conduct meets the criteria set out in O 66 r 5(1)(a).

39 Counsel for Butcher Paull & Calder joined in the submission that there was no evidence to support the making of the proposed order and, being counsel at trial, emphasised that, for whatever reason, counsel for the plaintiff chose not to address the issue in evidence. Therefore, it was submitted, any such order would be based on an untested assumption. However, the basis of the proposed order was a tentative finding that there was in fact no authorisation and nothing on which Mr O'Toole could have relied to satisfy himself that he was authorised to act on behalf of the Association

40 The remainder of the written submissions made on behalf of Mr O'Toole would be of considerable substance if it were the plaintiff who was pressing for the order. However, that is no longer the case. The proposition contained in those submissions that the plaintiff seeks to extend the jurisdiction to allow one party to litigation to seek an order that the solicitor on the record for an opposite party disgorge to that opposite party fees received by the solicitor, is not entirely accurate. Here, a defendant party purporting to act on behalf of another defendant party in engaging solicitors is found to have no authority to engage solicitors, nor indeed to act on behalf of that other defendant. In my view, that is an entirely different matter to the situation posited by senior counsel for the solicitors.

41 The final submission made by counsel for Butcher Paull & Calder was that one of the resolutions passed at a meeting of members on 26 February 2005 was an omnibus ratification of all past actions of Mr Tiao and others. Therefore, it was said, there was evidence of authorisation because engagement of solicitors on behalf of the Association fell within the conduct ratified at the meeting on 26 February 2005 and any request for authorisation could have been met with a copy of the minutes of that meeting. Counsel further submitted that the court would be required to determine that Mr O'Toole was not aware or was not made aware of the 26 February 2005 resolution before the court could make him disgorge the costs and there was no evidence on this issue.

42 According to counsel, the fact that Mr Tiao was later found not to be a credible witness, that the meeting of 26 February 2005 was declared invalid, and the actual wording of the resolution was not in fact a ratification, has no impact on the proposition that the ratification resolution of 26 February 2005 provided an appropriate basis for acting on behalf of the Association on the instructions of Mr Tiao.

43 Counsel for the Association submitted that the solicitors have remained silent on the critical issue of the formal appointment to represent the Association when a response is expected. I am not persuaded that, in the present circumstances, there is any obligation on the solicitors to provide evidence on the circumstances of their appointment. The Association has not sought to institute separate proceedings in which it would be expected that the solicitors would give evidence of the matters raised in their defence. Further, although it was then Mr Lai who was the plaintiff in the action against the first defendants and the Association, no attempt was made at trial to question Mr Tiao about the issue of his authorisation to engage council on behalf of the Association. Neither can I see any reason why Mr O'Toole or Butcher Paull & Calder should, on a costs application, provide the evidence that the applicant might need in order to obtain the order. There is a sufficient evidentiary basis for the order sought or there is not. There can be no expectation that the solicitors should fill any evidentiary deficiency.

44 Some of the submissions of counsel for the Association were addressed to the proposition that Mr O'Toole should have arranged for the Association to have separate representation. In my view, this proposition is no more than a consequence of a conclusion that Mr O'Toole should have been aware that there was no authorisation for Mr Tiao to engage him on behalf of the Association and does not further advance the issue of whether an award of costs should be made against Mr O'Toole.

45 Another submission made by counsel for the Association was that, in order to prepare for trial, Mr O'Toole would have had to go through all of the information later adduced in evidence and on going through all of that information it should have become quite apparent, as it did to the Court, that there existed a real problem as to the propriety of him being engaged by Mr Tiao to act on behalf of the Association. I have already referred to Ridehalgh v Horsefield (863) where the English Court of Appeal made reference to the established principle that a legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he acts for a party who pursues a claim or a defence which is plainly doomed to fail. In my view, even if Mr O'Toole formed an adverse view on the strength of the defence case in the course of preparing for trial, that would not provide a basis for the costs order sought.

46 Counsel for the Association further submitted that there were other matters which should have put the solicitors on notice that Mr Tiao's authorisation was questionable. The fact that the Level Holdings contract was signed but not under seal was said to be one such matter which should have resulted in the solicitors concluding that it was necessary for a general meeting to be held to obtain affirmation of Mr Tiao's authorisation. The difficulty with this proposition was that the dispute as to membership, which was also to be resolved at trial, was a clear impediment to obtaining any definitive solution to the issue of authorisation.

47 There is, in fact, no dispute that Mr O'Toole was put on notice. The issue before this court is what he was required to do as a result of being put on notice. Although he clearly had to make some inquiry, what he does not have to do is make his own determination of the credibility of his client or of the veracity of his client's claim. With respect to the solicitors' proposition that any inquiries would have revealed the resolution at the 26 February 2005 meeting which purported to authorise all of Mr Tiao's past acts on behalf of the Association, counsel for the Association submitted that being made aware of the resolution of 26 February 2005 was not a sufficient answer to the making of the costs order sought. It was said that Mr O'Toole would then have had to look at the validity of the meeting, including whether the appropriate people were given notice of meeting. Counsel further submitted that, when provided with the resolution, Mr O'Toole should have considered it and questioned why the members would want their money to be spent in that way and whether the resolution was in the interests of the Association. It was also said that many aspects of the resolution should have forewarned Mr O'Toole but he merely accepted it at face value.

48 I do not accept that Mr O'Toole was obliged to make any inquiries in relation to the validity of the resolution or the meeting or whether it was in the interests of the Association. Those issues were raised in the pleadings and were for the court to resolve on the evidence. Further, as I have already mentioned, a solicitor is not required to judge the strength of the case and to decline to act if it is unlikely to succeed. The fact that Mr O'Toole may have accepted the information from, and the point of view of, Mr Tiao is not, of itself, a reason to make him repay the monies paid to him for his legal services.

49 For the reason to which I am about to refer, it is not necessary to decide the various legal issues raised in opposition to the order for reimbursement of costs which is sought by the Association. The complete answer, in my view, is a factual one.

50 I accept that the Court should not make the order sought against the solicitors unless, proceeding with extreme care, I am satisfied there is nothing the practitioner could say if unconstrained to resist the order and that in all the circumstances it is fair to make it: Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120, 134, 140, 151.

51 It is correct to state that there was no Board or members resolution produced which specifically justified the engagement by Mr Tiao of solicitors on behalf of the Association. In order to fully understand the situation which applied to the Association at the relevant time it is necessary to read the judgment delivered on 12 February 2009. Nevertheless, there are a number of matters which can be briefly mentioned. Mr Tiao, a director of the Association, with the assistance of Hui Ping Wang, another director, was running the Association without holding meetings of directors, general meetings or annual general meetings. One of the primary issues at trial was the actual membership of the Association. When Mr Tiao was operating the Association he formed the view that, under the constitution which had at that time only recently been translated, those people who had been considered the members of the Association were not, in fact, members. Those people were excluded from membership and not advised of any meetings when such meetings were ultimately held. Mr Tiao then commenced to admit certain people to membership. They were the only people who were invited to the meetings which were held when his management of the Association was challenged by the plaintiff. Another issue at trial was the validity of these meetings and the resolutions purported to be passed at them.

52 A meeting did take place on 26 February 2005 at which a resolution was passed which, according to the English translation produced in evidence, purported to ratify and confirm all acts, actions, deeds, transactions and omissions of whatever nature of each and every person that had acted or purported to act for or on behalf of the Association. The effect of such a resolution would be to retrospectively ratify Mr Tiao's actions, which would include the action of engaging legal representation for the Association. However, an independent translation of the minutes of that meeting, obtained at the conclusion of the trial, revealed that the terms of the actual resolution passed was to ratify and confirm all past resolutions and projects and hence could not have ratified Mr Tiao's actions in engaging solicitors. The conclusion reached, as expressed in the judgment delivered on 12 February 2009, was that Mr O'Toole and then subsequently Butcher Paull & Calder were not validly engaged as solicitors for the Association

53 An order to disgorge costs paid to the solicitor from the funds of the entity for whom the solicitor purported to act but had no authorisation to do so, may well be justified in terms of exercising an appropriate supervisory function against an officer of the court. In my view, where it is established that a solicitor, after being put on notice, failed to make inquiries confirming authorisation or, having made inquiries, became aware that no authorisation existed, it is appropriate to make such an order. In this case, the preliminary view about making a costs order against the solicitors was based on a conclusion that, on the evidence, the solicitor did not and could not have made any proper inquiry because, as was evident from the trial, no such authorisation existed, it not being a situation where simply the word of the person instructing would be sufficient. It must also be kept in mind that, in this case, all the available evidence of authorisation would be in the hands of the person said to be authorised to engage solicitors on behalf of the Association.

54 As I have noted, it was apparent from the independent translation of the minutes of the 26 February 2005 meeting that no resolution passed at that meeting could provide any authorisation for Mr Tiao to engage solicitors on behalf of the Association, nor to use Association funds to meet the costs of representation. However, that translation was not provided until after the trial and before judgment was delivered. On the translation available before and at the time of trial, one resolution from that meeting purported to ratify all previous actions of Mr Tiao and others. Therefore, on its face, it constituted a ratification of Mr Tiao's conduct in engaging solicitors on behalf of the Association. It was not for Mr O'Toole to make an assessment of the evidentiary value of the document, the validity of the meeting or any other aspect of the meeting and the resolution. All these issues were for the Court to determine and were determined. In the context of identifying whether Mr Tiao was entitled to retain solicitors, it was entirely irrelevant that the 26 February 2005 meeting was found to be invalid and that the terms of the resolution were not as appeared in the English translation on which the first defendants relied and did not, in fact, authorise Mr Tiao's actions.

55 It is relevant that, as a result of the existence of the resolution from the 26 February 2005 meeting, it cannot be said, as was first thought, that, if Mr O'Toole had made the inquiry expected of a prudent solicitor, he would not have found any authorisation for Mr Tiao to have engaged him as counsel for the Association.

56 In my view, the factual matter raised by Mr McGowan is a complete answer to the concern I expressed in my preliminary observations. It was only where any inquiry could not have identified any authorisation that, in my view, the basis for a costs order would exist.

57 For these reasons, I am not prepared to make the costs order against the solicitors which is sought by the Association.