Bundagen Co-Operative v Battle [2010] NSWSC 160 | Case summary

Bundagen Co-Operative v Battle [2010] NSWSC 160 | Case summary | Zoe

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JUDGMENT 1 HER HONOUR: The plaintiff seeks an order upholding the validity of a resolution, passed at its general meeting on 22 July 2007, expelling the defendant from the co-operative and an order granting leave to obtain a writ of possession, and other consequential relief, in respect of land occupied by the defendant. The proceedings are the culmination of a lengthy dispute between members of the plaintiff and the defendant, concerning his conduct towards other occupants of the plaintiff's property. That conduct is said to have breached the rules of the co-operative and justified the resolution to expel the defendant. 2 There was a further meeting held on 29 November 2008 that sought to address some complaints the defendant had made about the procedures followed at the July 2007 meeting. A further resolution expelling the defendant was passed at that later meeting and the defendant also contests the validity of that decision. 3 The facts have been agreed upon by the parties and were summarised in Exhibit E. Having regard to that Exhibit and the evidence in the proceedings, the issues fall to be determined against the following background. 4 The plaintiff is a co-operative registered under the Co-operatives Act 1992 (the Act). It owns a large amount of land on which there are several homes in which members and their families or guests live. The co-operative's rules (Exhibit RPH 1) regulate the affairs of the co-operative, including the conduct of general meetings, the resolution of disputes, the expulsion of members, matters of notice and voting entitlements. The objects of the co-operative, pursuant to rule 10, include the management of the land owned by the co-operative "in a manner consistent with the ideals of environmental responsibility, social harmony and economic independence", "the establishment and development of a multiple occupancy, conceived as an intentional, rural-based community, comprising co-operative members and their immediate family", and the regulation, organisation and conduct of the affairs of the co-operative "using communal decision-making systems based on a commitment to the principle of non hierarchical, participatory democracy." 5 Rule 47 provides that a member may be expelled from the co-operative by special resolution at a general meeting where the member has been found guilty of conduct detrimental to the co-operative, in particular, breaking the rules or bylaws. The rule further provides that written notice of the proposed resolution shall be forwarded to the member not less than 21 days before the date of the meeting and the member shall be given a reasonable opportunity of being heard at the meeting. 6 The defendant, who had been a member of the plaintiff since February 1989 and had been accepted into a group known as "the Outback Village", was given notice by way of a letter dated 8 June 2007 in accordance with the terms of rule 47. The letter advised the defendant that a resolution, the terms of which were set out, to effect his expulsion from the co-operative had been proposed, together with a request for a special general meeting. The letter also invited the defendant to submit a written response. He did so by way of a lengthy document on 21 June 2007. 7 On about 24 June 2007, the plaintiff served the defendant with notice of a special general meeting to be held on 22 July 2007 in the schoolhouse on the plaintiff's property. The notice set out the terms of the special resolution and the grounds thereof, including that the defendant had breached rule 47(a)(ii) by engaging in conduct detrimental to the co-operative. The eight particulars of that alleged conduct are of no material significance to the issues raised by these proceedings, save that the defendant was notified of them. Every other member of the plaintiff living at the property was also served with a copy of the notice of meeting and a copy of the defendant's response. 8 The general meeting was held on 22 July 2007. The meeting commenced at 10:45 am and was attended by 56 members. In the course of the meeting two persons, one a member and one a non-member, were chosen as co-facilitator or chair. A time-keeper was appointed for the purposes of allowing members of the plaintiff to speak for or against the resolution. The minutes of the meeting (Exhibit RPH 2) record in significant detail the process undertaken. Consistent with the custom adopted by the plaintiff, the members sat in a circle on the floor. The venue did not allow all the members to be seated comfortably in this fashion and from time to time, various members went outside for short periods of time. In summary, a number of members of the plaintiff spoke in the course of the meeting before the resolution was put to the vote. The defendant was also given the opportunity to speak to the meeting without interruption. The meeting did not conclude until 4:30 pm. The resolution that the defendant be expelled from the plaintiff (the first resolution) was supported by 42 votes, with 11 voting against and 3 abstaining. 9 Various other proposals which were dependent upon the success of the resolution were deferred to a general meeting on 4 August 2007. At that meeting, it was determined that the defendant's structures and/or building materials would be independently valued and the defendant reimbursed according to any decision taken at a further general meeting. In the event that the defendant did not accept that process, he was to be given three months within which to remove any improvements to the land and leave the property. It was further determined that the defendant be informed that he was from that time onwards a visitor on the plaintiff's land, and was required to pay visitors levies. 10 The defendant was informed by way of a letter of 17 September 2007 from the plaintiff's solicitors that the decision to expel him from the membership took effect on 30 July 2007 when that resolution was registered by the Department of Fair Trading, Registry of Co-operatives. The defendant was further advised in that letter of the decisions taken at the meeting of 4 August 2007. The defendant's response to this letter, by way of his letter of 23 September 2007, was to deny the validity of the decision made at the meeting of 22 July 2007. 11 Over the ensuing months, the defendant mounted various arguments, the tenor of which is that he was denied procedural fairness. He sought to challenge the validity of the resolution by claiming that there had been substantial departure from the rules. On 29 November 2007, the plaintiff delivered to the defendant a letter reminding him of the decision to expel him from the co-operative and nominating 1 December 2007 as the date by which the defendant was required to leave the plaintiff's land. The defendant remained on the land nonetheless. 12 As I have already noted above, in an effort to address some of the defendant's concerns, on 7 November 2008 the plaintiff gave the defendant notice of a further meeting to be held on 29 November 2008. The notice of that meeting was also sent to other members of the co-operative. On 25 November 2008, the defendant received a letter from the plaintiff advising him that he would be able to attend the forthcoming general meeting. The defendant was on the property on 29 November 2008 but declined attendance at the meeting, in spite of the fact that two members went to the defendant's premises during the meeting, invited him to attend and informed him that he could speak and vote, notwithstanding the effect of the first resolution effectively stripping him of member status. 13 The meeting of 29 November 2008 reconsidered the resolution to expel the defendant in considerable detail. It was attended by 54 members. I do not propose to discuss the procedures followed at that meeting, otherwise than to note that a document written by the defendant as a letter to the meeting was read out to the members. Each of the particular allegations made against the defendant was put to the meeting in terms of whether or not it constituted conduct detrimental to the co-operative. Each of those particulars was put to the vote, each of them was passed, and the final resolution expelling the defendant was again passed, 37 in favour, 8 against, with 2 abstentions. That resolution (the second resolution) was registered with the Department of Fair Trading on 11 December 2008.

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The Rules of a Domestic Tribunal 14 The defendant's defence filed on 9 April 2009 discloses a number of bases for contesting the validity of the first and second resolution. The defence was supported by a number of affidavits, including a comprehensive affidavit from the defendant. The defendant filed two lengthy documents setting out his submissions in detail and the defendant amplified these submissions orally at the hearing. Whilst representing himself in the proceedings, the defendant displayed a firm grasp of legal principles, supported by many references to authority. 15 Before proceeding to deal with the issues, it is appropriate to explore the nature of the decision-making process adopted by the plaintiff at the two meetings, and the attributes of a domestic tribunal (a description which both parties accepted). 16 By way of preamble, there is a contractual basis to the defendant's membership of the plaintiff. Section 106 of the Act provides that :- The rules of a co-operative have the effect of a contract under seal: (a) between the co-operative and each member, and (b) between the co-operative and each director, the principal executive officer and the secretary of the co-operative, and (c) between a member and each other member. (2) Under the contract, each of those persons agrees to observe and perform the provisions of the rules as in force for the time being so far as those provisions are applicable to that person. 17 It is not disputed that the rules of the plaintiff provide, as between the plaintiff and the defendant, not only the contractual basis for membership, but that they also regulate the occupation of the plaintiff's land, standards of conduct, expulsion from membership, the procedure at meetings, voting rights and matters of notice, among other things. 18 In Re Minister for Immigration and Multicultural Affairs ; Ex Parte Miah [2001] HCR 22 ; 206 CLR 57, McHugh J explained that a domestic tribunal was a body where the processes are founded on "consensual acceptance". By way of example, his Honour cited the committee of the Australian Jockey Club in Calvin v Carr [1979] 1 NSWLR 1 "because the procedures in issue had been consented to by 'those engaged in the various activities connected with horse racing.'" 19 In Calvin v Carr, the Privy Council said (at 12) that where the "conclusion [may] be reached, on the rules and on the contractual context, … that those who have joined in an organization, or contract, should be taken to have agreed to accept what in the end is a fair decision, notwithstanding some initial defect, [then in such cases] …. matters of domestic disputes should be ……. settled by the agreed methods without requiring the formalities of judicial processes to be introduced." 20 These authorities reinforce the primacy of the rules pertaining to the conduct of the plaintiff's affairs as the touchstone for the consideration of the issues that follow. Many of the defendant's arguments were based upon the formalities of legal processes which the plaintiff was not required to observe. Various grounds were advanced in support of the principal submission that the defendant was denied natural justice.

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In Australia, the preferable view is that natural justice comes to operate in private clubs and associations by the rules of those private organisations being construed on the basis that fair procedures are intended, but recognising the possibility that express words or necessary implication in the rules could exclude natural justice in whole or part. The judgments in Dickason v Edwards support that view. Further, in Australian Workers' Union v Bowen (No.2) (1948) 77 CLR 601 the statement of O'Connor J in Dickason v Edwards to that effect (set out in paragraph 84 above) was approved by Latham CJ at 617, and also by Dixon J (with whom Starke J agreed) at 631. Williams J, at 638 said: "But the principles of natural justice cannot override the express provisions of the rules, and it could not be "contrary to the essence of justice" for the executive council honestly and bona fide to exercise all its powers and duties under the rules." 98 To some extent the rules of natural justice are applied to the rules as a matter of construction of terms within them (so that a reference to a "hearing" will be construed as a reference to a fair hearing, and a reference to "after inquiry" will be construed as a reference to "after due inquiry" , unless there is a context which shows that that construction was not intended), and to some extent the rules of natural justice are applied to the rules of the private organisation by a process of implication of terms, when there is no express term inconsistent with the implication of such a term. 99 In Thorborn v All Nations Club (1975) 1 ACLR 127 Helsham J held, at 132: "In my view, the rules of a social club may expressly provide that the rules of natural justice shall not apply to expulsion of a member for misconduct in cases where there are no proprietary rights involved and the livelihood of members is not involved. It seems to me impossible in such cases to draw a distinction between the cases where the express provisions of the rules make it impossible to imply that the rules of natural justice are to be observed and a case where those rules are alluded to and expressly excluded." 100 That this should be so is consistent with the way that the "rules of natural justice" are recognised as having a variable content. In General Medical Council v Spakman [1943] AC 627, at 644 the expression was described as "sadly lacking in precision" . In Russell v Duke of Norfolk [1949] 1 All ER 109 at 188 Tucker LJ said: "The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth. Accordingly I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case."

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24 The procedure adopted for the purposes of the meeting on 22 July 2007 was that the proposal was read, that an opportunity was granted for questions to be asked in relation to the proposal, that speakers alternating in favour of, and against, the proposal were allowed 10 minutes each, subject to extension after a vote, and that a summary of the respective positions was given at the end of this process. That procedure was observed, and the defendant was provided with an opportunity to speak generally in response to the allegations raised and in response to the comments of those who had spoken. The minutes record the fact that the defendant addressed the meeting, after which the resolution that the defendant be expelled from the co-operative was put and passed with a two thirds majority. 25 The rules of natural justice are not necessarily broken by the absence of an opportunity to cross-examine or respond to each allegation as it is given. A distinction ought to be drawn between, on the one hand, the dictates of procedural fairness in the conduct of statutory bodies in public administration, where an established course of procedure is invariably prescribed for the purposes of disciplinary proceedings, and, on the other hand, the dictates of procedural fairness in the conduct of organisations constituted by voluntary officers, where there is no regular or established course of procedure and where there is generally no high degree of expertise in dealing with disciplinary issues; see Thomson v Earlwood-Bardwell Park RSL at [17]. 26 The defendant was notified of the particulars of the allegations made against him and of the proposal to expel him from the plaintiff's land. The minutes of the meeting also disclose that the defendant was given an opportunity to respond to what had been said at the meeting and that he took advantage of that opportunity. It should also be borne in mind that the defendant had already previously responded to the allegations by a lengthy document (12 closely typed A4 pages) that had been served on every member of the plaintiff before the meeting commenced. Regardless of the fact that the defendant was given the opportunity to respond globally to what was said at the meeting, it cannot be maintained in these circumstances that the defendant did not know of the substance of the allegations against him and was not given an adequate opportunity to respond to them. 27 It is not necessary to enquire into the reasons for the defendant's absence from the November 2008 meeting. He was invited to attend and he was given notice of the matters to be discussed at the meeting. Thus, he was given the opportunity to be heard and chose not to exercise that right.

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(ii) Whether the meetings were infected by actual bias and/or pre-judgment. 28 The defendant's submission on this ground essentially asserts that over half of the members who initiated the Special General Meeting in July 2007 were the 14 members of a group known as "the Outback Village". The majority, if not all, of the particulars notified to the defendant for the purposes of the July 2007 meeting concerned alleged conduct by the defendant towards members of this group, of which the defendant was also a member. Thus, these members were, it is said, actually biased against the defendant (in the sense of a conflict of interest) and their determination to expel the defendant was communicated to other members at the meeting, thereby giving rise to apprehended bias in the nature of pre-judgment. It is then submitted these failings carried over to the November 2008 meeting. 29 It is not surprising that the complainants, who had provided instances of the defendant's conduct towards them that allegedly breached the rules of the plaintiff, would support the proposal to expel the defendant, even to the extent of letting others at both meetings know of their attitude in that regard. Nor can it be assumed that others at the meetings failed to exercise their own judgment merely because they became aware of the strength of the opposition to the defendant. 30 In order to establish a breach of the rules of natural justice in this particular case, the defendant must clearly establish bias, whether actual or apprehended, on the part of the decision-maker, that is, the whole of the membership that voted in favour of the resolutions. 31 It is convenient at this point to review the law in relation to actual and apprehended bias, a subject that is invariably canvassed with respect to the operation of judicial and quasi judicial tribunals. The test for apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the decision maker might not bring an impartial and unprejudiced mind to the resolution of the question at hand: Webb v The Queen (1994) 181 CLR 41 at 47, 57, 67-68; Johnson v Johnson (2000) 201 CLR 488 at 492; Ebner v Official Trustee (2000) 205 CLR 337 at 344. The hypothetical reasonable observer gives the issues some consideration and has some knowledge of the actual circumstances of the case. That hypothetical observer must then fairly assess the decision-maker's conduct in the context of the whole of the process. 32 The test for reasonable apprehension of bias by pre-judgment is whether an independent observer might reasonably apprehend that the decision-maker might not be open to persuasion ; McGovern v Kuringai Council [2008] NSWCA 209 at [23]. 33 Actual bias may be made out where the decision maker is shown to have an interest in the outcome of the proceedings. The test is usually formulated by reference to the performance of a public duty, that is, whether a reasonably well-informed person would conclude that the interest might influence the exercise of that duty; Old St Boniface Residents Association v Winnipeg (City) [1990] 3 SCR 1170, applied in McGovern v Kuringai Council [2008] NSWCA 209.

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34 The concepts underlying apprehended bias in tribunals and administrative bodies regulated by statute do not readily translate to co-operatives. That is because, amongst other things, the decision maker in judicial, quasi judicial or administrative tribunals is generally constituted by one, two or three persons, who solely or jointly preside over the proceedings. Where the decision maker is comprised of multiple members, the test cannot be so strictly applied. The NSW Court of Appeal, when reviewing the application of the test to a planning decision made by a local council, confirmed that the test has "a flexible quality depending upon the nature of the power, the character of the repository of the power and the circumstances in which the power comes to be exercised" ; McGovern v Kuringai Council [2008] NSWCA 209, per Basten JA (Spigelman CJ and Campbell JA agreeing) at [71]. Importantly, quite different standards operate in relation to the membership of an organisation committed to a consensual, democratic form of decision making, such as was adopted by the plaintiff ; McGovern v Kuringai Council at [75] to [77]. 35 Even in the case of a quasi judicial tribunal, some knowledge of, and experience in, the issues requiring resolution, do not necessarily give rise to apprehended bias. In Commissioner of Corrective Services v GREAT [2004] NSWCA 291, Giles JA (Sheller JA and Ipp JA agreeing) said :- 22 In determining whether a decision-maker is disqualified by reason of an appearance of bias the question is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial and unprejudiced mind to the resolution of the question he or she is required to decide: Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-4; Ebner v Official Trustee (2000) 205 CLR 337 at [6]; Re Refugee Review Tribunal; ex parte H (2001) 75 ALJR 982 at [27]. 23 The nature of the tribunal and the proceedings must, however, be taken into account. In Re Finance Sector Union of Australia; ex parte Illaton Pty Ltd (1992) 66 ALJR 583 at 583 it was said that "the precise practical requirements of [the Livesey ] principle vary from case to case. They will be influenced by the nature, function and composition of the particular tribunal". Speaking of the Australian Industrial Relations Commission, it was said at 583-4 - "The nature of industrial relations in this country makes it inevitable, that in a particular industry, the leading employer and employee organisations, and their officers, will be frequently involved in dispute with one another. Obviously the functioning of the Commission requires that its members participate in the determination of matters in circumstances where they have a familiarity with the industry in which the particular dispute arises, with the context of that dispute and, inevitably, with facts relevant to the dispute and with one or more of the parties to the dispute. In that regard, it has long been recognised that, in most cases, that familiarity is an advantage rather than a disqualifying factor." 24 Again, in Re Polites; ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 it was said at 86-7 that - " … the test in Livesey cannot be pressed too far when the qualifications for membership of the tribunal are such that the members are likely to have some prior knowledge of the circumstances which give rise to the issues for determination or to have formed an attitude about the way in which such issues should be determined or the tribunal's power's exercised. Qualification for membership cannot disqualify a member from sitting."

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See also Tuch v SouthEastern Sydney and Illawarra Area Health Service [2009] NSWSC 1207 at [147] to [149] and McGovern v Kuringai Council at [11] with respect to administrative bodies. 36 Turning to the issue of actual bias, there is no evidence before the Court of the identity of the members of the Outback Village or how many of them attended the meeting and/or spoke at the meeting and/or voted in favour of expulsion. However, I am prepared to accept that some of them attended and spoke, and voted in favour of the motion at the July meeting. The question then arises, accepting that these persons were relevantly interested in the outcome of the meeting, do their contractual obligations as members of the plaintiff and/or the doctrine of necessity excuse them from the stringent dictates of the doctrine of actual bias? It should be noted at this point that the general rationale underlying the doctrine is reinforced by the principle expressed in the maxim that nobody may be a judge in his/her own cause. For the reasons I have expressed below, that principle does not apply in the circumstances of this case. 37 In Laws v. Australian Broadcasting Tribunal [1990] HCA 31 ; (1990) 170 CLR at [39], Mason CJ and Brennan J discussed the rule of necessity in the following terms :- The rule of necessity permits a member of a court who has some interest in the subject-matter of the litigation to sit in a case when no judge without such an interest is available to sit: [citations omitted] The existence of the principle has been recognized in this Court by Isaacs J. in Dickason v. Edwards [1910] HCA 7 .. at p 259, and by Brennan and Deane JJ. in Builders' Registration Board of Queensland v. Rauber (1983) 57 ALJR 376, at pp 385-386, 392. In the latter case, Brennan J. had no hesitation in holding that the principle applied to a statutory tribunal as well as to a court: see pp 385-386. And Deane J. acknowledged that this might be so: see p 392. The conclusion reached by Brennan J. upon this point conforms to principle and to received opinion in other common law jurisdictions: see the citations in Rauber, at pp 385-386, 392. The rule of necessity gives expression to the principle that the rules of natural justice cannot be invoked to frustrate the intended operation of a statute which sets up a tribunal and requires it to perform the statutory functions entrusted to it. Or, to put the matter another way, the statutory requirement that the tribunal perform the functions assigned to it must prevail over and displace the application of the rules of natural justice. 38 By analogy, having regard to the rules of the plaintiff, in particular rules 10, 47, 52, 59, 60 and 61, the plaintiff was obliged to conduct the meetings in accordance with an established procedure, including the provision of an opportunity to any member who wished to speak and the recognition of the right of any member to vote. It must be stressed again that the plaintiff was not performing a statutory, judicial or quasi judicial function. However, paraphrasing the words of Mason CJ and Brennan J above, the rules of natural justice, in particular the doctrine of actual bias, cannot be invoked to frustrate the intended operation of the rules that mandate the plaintiff's procedures.

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39 The question of apprehended bias or pre-judgment falls into the same category, although I am not satisfied that, as a matter of fact, apprehended bias has been made out. The minutes of the meeting of July 2007 disclose that six people spoke in favour of the motion to expel the defendant, whilst five spoke against the proposal (not including the defendant). Shortly thereafter, a number of other people, who had formed a circle, spoke in turn, although the minutes suggest that these contributions to the meeting were of a general nature, that is, not limited to whether the speaker was "for" or "against" the motion. A similar procedure was adopted at the November 2008 meeting. 40 The defendant claims, and a number of affidavits filed on his behalf by other members of the plaintiff who attended the July meeting confirm, that various people were discussing the motion and their support for it, immediately outside the premises during the meeting. The room where the meeting was conducted provided insufficient space for everyone to sit comfortably and a number of people stood or sat cross-legged on the floor. It appears that no-one who supported the defendant's expulsion was being discrete about their position. However, those who opposed the motion were likewise vociferous, according to the minutes. The minutes of the November 2008 meeting disclose lengthy and vigorous discussion on each of the particulars of misconduct, and the resolution. 41 Spigelman CJ (with whom Campbell JA agreed) commented in McGovern v Kuringai Council at [51] that :- In the context of a multi-member elected decision-making body, there is no requirement that each of the decision-makers must keep an "open mind" until every decision-maker is prepared to make a decision. It is perfectly legitimate for one member of such a collegial body to make up his or her mind before others do so and, in accordance with a process of democratic decision-making, to seek to persuade other decision-makers to agree with his or her conclusion, if necessary by changing their minds. 42 This reasoning applies equally to the circumstances of this case. The fact that feelings ran high, the fact that people's views may have been entrenched before the start of the meeting, and the fact that people were quick to express those views to others, are all consistent with democratic processes. The reasonable hypothetical observer, appreciating the nature of the proceedings, would not conclude that apprehended bias existed in the membership as a whole.

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(iii) Whether adjudicators were acting as prosecutors. 43 The defendant relies upon Dickason v Edwards [1910] HCA 7 ; (1910) 10 CLR 243, Australian Workers Union v Bowen (No. 2) [1948] HCA 35 ; (1948) 77 CLR 601 and Stollery v Greyhound Racing Control Board [1972] HCA 53; (1972) 128 CLR 509 in support of the submission that the 14 members of the Outback Village, who provided the particulars and put the motions to the meetings, were effectively prosecutors judging their own cause. 44 The principle discussed in these authorities is not absolute. Some appreciation of the context of these decisions is necessary in order to comprehend the limits of the application of this aspect of the rules of natural justice. 45 In Dickason, a "friendly society" whose rules were made under the authority of statute, formed a committee called the "District Judicial Committee," charged with investigating complaints against members, and a "District Appeal Committee," which exercised an appellate jurisdiction from the decisions of the District Judicial Committee. The principal officer of the society was the "District Chief Ranger." He was a member of all the committees appointed by the District, and head of the District Executive. The plaintiff was charged with using various expressions, described as vulgar abuse with particular reference to the District Chief Ranger and some other members of the District Executive. The charges were heard by the District Judicial Committee, over which the District Chief Ranger presided as chairman. 46 In holding that the decision of the Committee was vitiated by the presence of the District Chief Ranger, Griffiths CJ noted that :- In the case of tribunals created by contract between the parties it is entirely a question of the construction of the contract whether the parties have agreed that an interested person shall or shall not be disqualified. To exclude the general rule of fair play I think it is necessary that it should appear that the parties intend that a person may sit although he is interested, that is to say, you must be able to collect from the contract itself an agreement either expressly or by necessary implication to that effect.

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O'Connor and Isaacs JJ also upheld the appeal on the facts of the matter, whilst acknowledging that the question of disqualification depended upon the rules of the organisation. 47 The judgments in AWU v Bowen are to the same effect. Latham CJ stated in the course of his judgment :- 34. The provisions of a statute ….. or the rules of a voluntary association may exclude the application of the principle that a person who prepares and formulates charges and takes part in the prosecution of them is thereby precluded from taking part in the consideration and determination of them. ……………………………………………………………… It appears to me to be obvious that the express provision of the rules that the Executive shall have the power of expelling members excludes in this case the application of the rule that a person who formulates and prosecutes charges is necessarily excluded thereby from participating in the hearing and determination of the charges. As O'Connor J. said in Dickason v. Edwards (1910) 10 CLR, at p 255 : - "The rules of a society may give power to decide disputes on any principle the members think fit. The rules may be of such a nature as to empower a judicial body to decide in violation of all principles of natural justice. If the parties choose to agree to a tribunal having power of that kind the courts will not interfere." In the present case the rules are clear that the Executive Council constituted in the manner prescribed by the rules may hear a charge against a member. It is a function of the Executive Council, not only to determine and to uphold the policy of the union, but also to deal with charges of disloyalty to the union. Accordingly, in the present case the rules permitted Dougherty and all the other members of the Executive Council to sit, and the fact that he formulated charges on behalf of the Executive does not in my opinion vitiate the proceedings. (at p617) 48 Rich J said :- In considering the question whether the proceedings of the executive council of the union were carried out in accordance with the requirements of natural justice, the rule to be applied in this case is entirely different from that which is applied to judges, magistrates or any person in a judicial capacity, where the tribunal is not chosen by the parties who are sending their disputes to be settled by it, but is a tribunal constituted apart from any agreement or consent of the parties. Where the tribunal is not chosen by the parties, no doubt the rule is very strict. But where the parties choose their own tribunal the case is very different. 49 Dixon J agreed with Latham CJ in respect of the role of the Executive Council, although his Honour held that the Secretary, Mr Dougherty, stood in a different position because he had "assumed the functions of a prosecutor". On the subject of the Executive Council, his Honour said :- In choosing as a domestic forum a governing body and in authorizing it to make inquiries and investigations of such a kind the rules necessarily bring about, if they do not actually contemplate, such a situation. Domestic tribunals are often constituted of persons who may, or even must, have taken some part in the matters concerning which they are called upon to exercise their quasi-judicial function. 50 Finally, on the subject of the principle that one cannot sit in judgment on his/her own cause, Williams J said:- But this principle must also give way to express or implied provisions to the contrary. It happens over and over again that the rules of voluntary associations impose both administrative and quasi-judicial functions on the body set up by the rules to manage its affairs, and entrust to the same body the duty of deciding whether to call upon a member to show cause why he should not be expelled, and then determining whether his conduct warrants his expulsion or not. 51 There is nothing in Stollery that departs from the dicta referred to above. The High Court in Stollery determined the matter on the basis that the tribunal entrusted with the regulation and control of the greyhound racing industry in NSW was bound to act judicially. The presence of a Board member, who brought the complaint against the plaintiff (that the plaintiff had offered him a bribe), during the tribunal's hearing, infringed the principle that is invoked in this case. 52 There are a number of features of the plaintiff's organisation that place it outside the ambit of the rule that persons cannot prosecute in their own cause. Firstly, the plaintiff was not operating judicially, nor bound to so act, during the meetings in question. Second, the forum was of the defendant's choosing, in that he was a member of the co-operative and bound by the contractual obligations imposed by the rules. Rule 47 provided that "a member may be expelled from the co-operative by special resolution at a general meeting of the co-operative." Third, the rules of the plaintiff implicitly allowed a complainant, in respect of an expulsion motion, to speak and to vote at a meeting. Rule 59 provided that "any member or visitor invited to attend the meeting may speak on any issue at a meeting with the permission of the two thirds majority of the meeting provided that the permission may be conditional". Rule 60 provided that every member present at a meeting shall have one vote. There is nothing in the rules that qualifies the voting rights of members or their right to participate in proceedings.

[25]

Whether the Expulsion was Ultra Vires. 55 The defendant's submissions on this limb of his defence claim that the plaintiff acted beyond power in passing the motions to expel him, because of limitations imposed upon its power in that respect by rules 47 and 90. 56 The defendant points to the terms of rule 47 which suggest that a finding of guilt in respect of conduct detrimental to the co-operative must be made before the plaintiff was able to exercise the discretionary power to expel him. According to the defendant, the first step was not taken before the second, in that the resolution put to the July 2007 rolled up the alleged misconduct with the recommendation to expel. 57 There is some merit in the defendant's argument in this respect. The meeting of July 2007 was concerned entirely with the proposal that the defendant be expelled and the particulars notified to the defendant of the misconduct which was alleged to be detrimental to the co-operative, being the basis for the expulsion, may well have been matters of incidental discussion. However, the basis of the special resolution, being the particulars of misconduct, were contained in the documents served upon the members of the plaintiff. It was clear that a vote in favour of the resolution comprehended satisfaction that these incidents occurred. There was no requirement in the rules to adopt a formal method of proof of the misconduct, before proceeding to put the resolution to the vote. I am not persuaded that the procedure adopted at the July 2007 meeting gave rise to any invalidity. 58 Even if I am wrong in that respect, the defendant's objections in that regard were met by the procedure adopted at the meeting on November 2008, where each of the particulars of the defendant's misconduct was referred to the meeting for a finding on the balance of probabilities, before the resolution to expel the defendant was formally put and voted upon. Hence, whatever the status of the July 2007 meeting, the resolution passed at the November 2008 meeting was valid. 59 Rule 90 provides that, in the event of a dispute between members of the co-operative, a party to the dispute cannot commence any court or arbitration proceedings relating to the dispute unless he/she complies with certain conditions as to notice. It appears that the defendant and the 14 members of the Outback Village could not agree on mediation or arbitration. The instigation of the expulsion motion by the members of the Outback Village reflected that impasse. The defendant's contention is that, because the dispute was subject to dispute resolution procedures and arbitration, it was beyond the power of the plaintiff to allow the expulsion motion to be put at the meeting in July 2007. The defendant describes this in his written submissions as a case of lis alibi pendens (legal proceedings pending elsewhere between the same parties). 60 Once again, the defendant is seeking to import concepts that are of no relevance to the circumstances of the instant case. The principle of lis alibi pendens is generally invoked by a party seeking the exercise of a court's discretion to stay proceedings, on the basis that proceedings in another jurisdiction represent the more convenient forum for the determination of the issues. The doctrine says nothing about the institution of parallel proceedings by a party being ultra vires. The plaintiff was entitled to convene a Special General Meeting in July 2007 in order to put the proposal for the defendant's expulsion. As I have noted a number of times, the proceedings at the meetings of July 2007 and November 2008 were not judicial in nature and did not arise out of the conduct of litigation. 61 In any event, rule 90 does not prevent the plaintiff from taking any action towards the expulsion of a member merely because an attempt to settle the dispute at mediation or arbitration has not been made. The rule merely provides that court or arbitration proceedings cannot be commenced before notice of the dispute has been given and attempts have been made to resolve the dispute expeditiously, using conciliation or mediation. No finding of "guilt" ; no opportunity to address in mitigation of penalty. 62 The defendant's further complaint, that he was not given the opportunity to address on guilt or penalty, and that no finding of guilt was made, seek to import notions of judicial procedure. Calvin v Carr stands against that proposition. The defendant was given the opportunity to address both meetings. He took that opportunity in July 2007, but declined it in November 2008.

[27]

Whether the presence of strangers, or the absence of members during part of the meetings, or the inadequacy of the venue, or the non-member status of a co-facilitator vitiated the resolutions. 64 The minutes of the meetings do not distinguish between members and non members of the plaintiff, although the defendant maintains that there were 7 visitors at the July meeting, three of whom made contributions to the discussion. That is not challenged by the plaintiff. The defendant submits that a line of authority, including Ethell v Whalan [1971] 1 NSWLR 416, Gleeson v NSW Harness Racing Authority (1990) 21 ALD 515, Steuart v Oliver (No. 1) (1971) 17 FLR 99, and Shamballa Co-operative Ltd v Rufus McCrachett (2001) NSWSC 1 November 2001, renders the decisions of the meetings invalid on that basis. 65 All of these decisions depend upon the presence, either in the rules of the relevant association or because of the essentially investigatory and/or accusatory nature of the proceedings, of a requirement that the proceedings be conducted by a defined committee or tribunal. In Ethell v Whalan, only the Executive could deal with a charge against a member and other persons were expressly excluded. Similarly, in Steuart v Oliver, the constitution of a tribunal determining charges of misconduct was confined to four councillors from one State, whereas five had participated. 66 Gleeson concerned a tribunal, charged with the statutory duty of regulating and controlling the racing industry, some of whose members were not present on various days when important evidence was heard. I do not read the comments of Young J as suggesting that temporary or momentary absence from a meeting of a voluntary association invalidates any decision reached by the majority. The remainder of the authorities to which the defendant referred in support of the submission that the absence, from time to time, of members of the plaintiff during the meetings invalidated the resolutions, are of no relevance. They all relate to the power of a court or tribunal to re-constitute itself where a member ceases to sit on the hearing of a matter : see Cotogno v Lamb (1985) 3 NSWLR 221. 67 In Shamballa, there was no issue taken with the presence of a stranger who spoke at a meeting to expel the defendant. The stranger spoke with the consent of the meeting. 68 The rules of the plaintiff allow for the attendance and participation of non members with the permission of a two-thirds majority of the members : rule 59(f)(xiv). The minutes of both meetings do not disclose whether permission in accordance with the rule was given. The defendant asserts that it was not. It would appear as though at least two of the visitors spoke during the "open circle" part of the July meeting, of whom one commented upon the fairness of the procedure compared with other communities she had known. There is no evidence of what was said by the other visitor at the July meeting who spoke as part of the "circle". It is no part of the defendant's case that any visitor spoke for or against the motion to expel him or that any visitor exercised a vote. 69 In those circumstances, I reject the proposition that the presence of these visitors, or the limited participation of any of them in the course of the meetings, could invalidate the resolutions to expel the defendant in July 2007 or November 2008. To the extent that the failure to approve the attendance of the visitors represents a procedural defect, it has not been demonstrated that it affected the outcome of the meetings. The decision making process at the meetings was not confined by the rules of the plaintiff to a select number, or particular class, of its members. All of the members were entitled to participate and vote. 70 One of the people chosen to facilitate the July 2007 meeting was not a member, although the other was a member. Rule 58(b) requires the members to choose someone from their number to facilitate a general meeting. However, rule 58(d) provides that "the meeting may also appoint other persons to assist the facilitator." Thus, there is no restriction on choosing someone other than a member to assist the facilitator. There was no breach of the rules that is capable of invalidating the decision taken at the meeting on this ground. 71 Lastly, the overcrowding of the venue for the meetings may have been unfortunate, but the defendant has not demonstrated that it prevented any member who wished to participate in the discussion and/or to vote on the resolutions from doing so. It may be the case that members found the conditions uncomfortable, and that some of them chose to leave, either temporarily or finally, but such choices are not fatal to the outcome of the meetings. Whether members delegated their decision-making powers. 72 This ground of the defence also depends upon the false characterisation of the plaintiff's responsibilities pursuant to rule 47 as judicial in nature. In any event, it proceeds upon a basic misunderstanding of what constitutes a delegation of decision-making functions. 73 The defendant points to the statements made by some members at the July 2007 meeting that they would support the Outback Village members, or abstain from voting, as in some way demonstrating that those members had delegated their decision-making powers to other members. I disagree. To my mind, it demonstrates that these members agreed with the proposal, because they accepted the allegations made by the Outback Village members, or they were not persuaded either way. Wednesbury unreasonableness. 74 The defendant submits that the plaintiff took into account irrelevant matters, and failed to have regard to relevant matters, in the course of both meetings, thereby producing a decision that no reasonable decision-maker could make. 75 In Hewett & Ors v Royal Volunteer Coastal Patrol [2001] NSWSC 1140, Davies AJ said :- However, on the issue of reasonableness, the authorities are clear that, if a council or a committee has power to act in certain circumstances, it is not for the court to substitute its own view as to what the council or committee ought to have done. In Dawkins v Antrobus (1881) 17 ChD 615, Jessel M R declined to intervene in an expulsion case although, in the course of his reasons, his Lordship said, at p 624, "… I cannot, as far as I am concerned, imagine how this single act could be injurious to the character and interests of the club" . His Lordship concluded that he could not impute legal malice to the committee and went on to say:-

Bundagen Co-Operative v Battle

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (42 paragraphs)

Parties

Cases Cited (29)

Cited By (4)