Chowdhury v Bangladesh Islamic Centre of NSW

LEGISLATION CITED : Associations Incorporation Act 1984 s 26(3)(b)

Fakhruddin Ahmed Chowdhury (P) Bangladesh Islamic Centre of NSW Incorporated (D1) Mushtaque Ahmed Syed (D2) Shahid Uddin Ahmed (D3) Serajum Monir Chowdhury (D4) PARTIES : Ma Yousuf (D5) Ariful Haque (D6) Firoz Ahmed (D7) Khasrul Alam Talukder (D8) Didarul Alam Chowdhury (D9) Ishrat Hussain (D10) Syed Qamrul Hasan (D11)

COUNSEL : R Mitry, Solicitor (P) J G Azzi (Ds)

SOLICITORS : Morgan Ardino & Co (P) No appearance (Ds)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4576/08 FAKHRUDDIN AHMED CHOWDHURY v BANGLADESH ISLAMIC CENTRE OF NSW INC & ORS JUDGMENT 1 HIS HONOUR: These proceedings concern the validity of a meeting and a resolution of the first defendant. In August 2007 the plaintiff was elected as president and the second to eleventh defendants were elected as other office bearers of the first defendant for a period of two years expiring in August 2009. Disagreements have broken out between the plaintiff on the one hand and the second to eleventh defendants on the other. On 29 June 2008 a meeting was held purporting to be an annual general meeting of the first defendant. At that meeting a resolution was passed which purported to bring to an end the holding by the plaintiff of the office of president of the first defendant and the election of a new president in his stead. 2 By summons filed on 5 September 2008 the plaintiff sought in effect declarations that the meeting was not a valid annual general meeting of the first defendant and that the resolution at the meeting that purported to remove him from office was invalid. That summons included a prayer for an order removing the second to eleventh defendants from office or from conducting the business of the first defendant. However, it is clear that there is really no basis for orders to that effect and, indeed, the plaintiff conducted the proceedings on the basis of seeking only the declarations of invalidity which I have mentioned above. 3 On 12 September 2008, when the matter came before me on the application for interlocutory relief, I suggested that to save time and money the proceedings be conducted on that day as a final hearing. The defendants would not consent to that course and I granted interlocutory relief preventing the defendants from acting on the basis that the defendant had been validly removed from office or that the meeting of 29 June was a valid annual general meeting of the first defendant. I then stood the matter over to today. Today the defendants have sensibly consented to the matter being heard on the basis of a final hearing, so that time and money need not be spent on the proceedings beyond today. 4 Central to the matters that I have to resolve are provisions of the constitution of the first defendant, which is incorporated under the Associations Incorporation Act 1984 ("the AIA"). Those provisions need to be set out at length. 5 The constitution provides by clause 31: "31(a) The Centre in a General Meeting may by resolution remove any member of the Executive Council from the office before the expiration of the member's term of office and by resolution appoint another person to hold office until the expiration of the term of office of the member so removed.

(b) Where the member of the Executive Council to whom a proposed resolution referred to in rule 31(a) relates makes representations in writing to the General Secretary or the President (not exceeding a reasonable length) and requests that the representations be notified to the members of the Centre, the General Secretary or the President may send a copy of the representations to each member of the Centre or, if they are not sent, the member is entitled to require that the representations be read out at the meeting at which the resolution is considered." 6 It contains further relevant provisions in clauses 36, 37 and 38: " ANNUAL GENERAL MEETINGS - CALLING OF AND BUSINESS AT

36 Annual General Meetings shall be held as follows:

(a) With the exception of the first Annual General Meeting of the Centre, the Centre shall, at least once in each calendar year and within the period of 2 months after the expiration of each financial year of the Centre, convene an Annual General Meeting of its members.

(b) The Centre shall hold its first Annual General Meeting: i Within the period of 18 months after its incorporation under the Act; and ii Within the period of 2 months after the expiration of the first financial year of the Centre

(c) Rules 36(a) and 36(b) have effect subject to any extension or permission granted by the Commission under section 26(3) of the Act.

ANNUAL GENERAL MEETINGS - CALLING OF AND BUSINESS AT

37 The following applies in relation to the calling of and business at Annual General Meetings:

(a) The Annual General Meeting of the Centre shall, subject to the Act and rule 36 be convened on such date and at such place and time as the Executive Council thinks fit.

(b) In addition to any other business which may be transacted at an Annual General Meeting, the business of an Annual General Meeting shall be: i To confirm the minutes of the last preceding Annual General Meeting and of any General Meeting held since that meeting; ii To receive from the Executive Council reports upon the activities of the Centre during the last preceding financial year; iii To elect office-bearers of the Centre and ordinary members of the Executive Council; and iv To receive and consider the statement which is required to be submitted to members pursuant to section 26(6) of the Act. This statement shall include a true and fair view of the income and expenditure of the Centre during the financial year and the assets and liabilities of the Centre at the end of the financial year. v To elect the auditor or the auditors of the Centre .

(c) An Annual General Meeting shall be specified as such in the notice convening it.

38 The requirements in relation to notice are as follows:

(a) Where the nature of the business proposed to be dealt with at a General Meeting requires a resolution of the Centre, the General Secretary shall, at least 14 days before the date fixed for the holding of the General Meeting, cause to be sent by prepaid post to each member at the member's address appearing in the register of members, a notice specifying the place, date and time of the meeting and the nature of the business to be transacted at the meeting. In the case of an emergency, a general meeting may be called by giving 7 days notice.

(b) Where the nature of the business proposed to be dealt with at a General Meeting requires a special resolution of the Centre, the General Secretary shall, at least 21 days before the date fixed for holding of the General Meeting, cause notice to be sent to each member in the manner provided in rule 38(a) specifying, in addition to the matter required under rule 38(a), the intention to propose the resolution as a special resolution.

(c) A member desiring to bring any business before a General Meeting may give notice in writing of that business to the General Secretary who shall include that business in the next notice calling a General Meeting given after the receipt of the notice from the member.

(d) No business other than that specified in the notice convening a General Meeting is to be transacted at the meeting. In case of an Annual General Meeting, other business may be transacted outside the rule 37 ." 7 The notice calling the meeting is in evidence. It is dated 30 May 2008 and contains the following agenda: " AGENDA

Renewal of Membership (and new membership) for year 2008-09 : From 9:30am - 10.30am

1 Recitation from the Holy Qu'ran 2 Approval of the Previous Minutes (AGM 2007) 3 Secretary's Report 4 Discussion on the current situation of the EC and steps towards its resolution. 5 Re-organize/re-elect the vacant positions in the EC of the current committee of 2007-09 (if required). 6 Amendment proposal regarding the membership renewal procedures time frames. 7 Treasurer's report/Issues related to accounts. 8 Update/feedback on the court case. 9 Any other issues/concerns. 10 Du'a and Conclusion." 8 The minutes of the meeting of 29 June 2008 are also in evidence. There was no election conducted at that meeting. The reason for that is simple. All office bearers had been elected for two years in August 2007 so that, apart from what transpired in respect of the plaintiff as president, there was no occasion for any other election. The meeting was presided over by the vice president by direction of the executive committee. In reality, no substantive business was conducted at the meeting, save for the passing of a motion of no confidence in the president and an announcement that "according to Constitution clause 31 the president's position for Mr Fakhruddin Ahmed Chowdhury is dissolved." An election for a new president was then conducted. 9 It was submitted by Mr Mitry, solicitor, on behalf of the plaintiff that the annual general meeting was invalid because it was not called in accordance with the requirements of the constitution. The relevant requirement is that the annual general meeting shall be held "at least once in each calendar year and within a period of 2 months after the expiration of each financial year". The provision for the holding of the annual general meeting other than the first annual general meeting is that the first defendant shall at least once in each calendar year and within a period of two months after the expiration of each financial year" convene an annual general meeting. The provision is ambiguous, since "convene" could mean either call or hold. However, that ambiguity need not be resolved in the present case because a meeting was both called and held before the expiration of the financial year, rather than in the period of two months after its expiration. 10 Mr Azzi, of counsel for the defendants, has argued that the proper interpretation of clause 36(a) is that the annual general meeting shall be convened within an eight month period commencing at the beginning of the calendar year and ending two months after the expiration of the financial year. There is no dispute that the financial year of the first defendant is a financial year ending on 30 June in each year. Clause 36(b), he said, is complied with if the meeting is convened at any time within the eight month period. Mr Mitry, however, said that the annual general meeting must be convened in each year within the two month period after the conclusion of the financial year. 11 In my view, Mr Mitry must be right. This is confirmed when one considers the business to be conducted at the annual general meeting of this body, which is similar to the business at annual general meetings generally. A vital part of the business is to receive and consider reports, financial and otherwise, on the activities of the body during the last preceding financial year. To make sense, that must mean the financial year that just ended. That cannot be done if the meeting is held before the end of the financial year. In my view, therefore, this annual general meeting was not convened in the period specified in clause 36(a) and is therefore invalid. 12 It is not entirely clear what the first defendant must now do to hold a valid annual general meeting. Time for annual general meetings can be extended by the Director General of Fair Trading under s 26 of the AIA, but it is not certain that the present circumstances fit within the provisions of that section. However that may be, it is quite clear to me that the annual general meeting held before the end of the financial year cannot be regarded as valid. It may be that, if an annual general meeting is not held before the end of this calendar year, permission can be obtained from the Director General for it to be held during 2009 under the provisions of s 26(3)(b) of the AIA. In any event, that is not the Court's problem. 13 As the meeting was not a valid meeting, the action taken in respect of the plaintiff as president cannot be valid action. However, even if I am wrong about the validity of the meeting, it is clear that the resolution passed relating to the plaintiff as president was invalid. The reason for that is made plain in clause 31(b) and, in any event would probably flow under the general rules as to procedural fairness. The president who is being dismissed should be given an opportunity to respond to the proposal to dismiss him. But, even more basically, clause 38(a) requires in respect of a general meeting notice specifying the nature of the business to be discussed at the meeting. It is plain from the agenda above that no notice was given of any proposal to dismiss the president. 14 Mr Azzi has submitted that it is as a result of clause 38(d), and in particular the second sentence of that sub-clause, that general meetings and annual general meetings are to be regarded as totally different animals and that the intent of clause 38(d) is that, although a general meeting is restricted to the agenda in the notice to convene the meeting, no such restriction is placed on an annual general meeting, which may conduct any business, whether or not notice of the business is given. 15 I decline to give that construction to clause 38(d). Although the clause is not elegant, I take it that the intent of the second sentence is simply to indicate that (provided proper notice is given) an annual general meeting is not restricted to the limited items of business set out in clause 37. It would be a very strange interpretation of this constitution if ordinary general meetings were restricted to business on the agenda but the annual general meeting could conduct any business at all without notice to the members. 16 In those circumstances, if it is not already made plain in these reasons for judgment, let it be plain that the view taken by the Court is that the second to eleventh defendants remain in office and are able under the constitution to carry out their duties and administer to the first defendant as office bearers of the first defendant, together with the plaintiff. Further consideration will need to be given to how a valid annual general meeting can be held. That has less importance and is less urgent than it would be in some cases, as all the existing office bearers remain in office until August 2009. However, in due course, a report on the affairs of the first defendant both general and financial should be reviewed by an annual general meeting. But it is not part of the function of this Court in disposing of these proceedings to specify how and when that can and should be done. 17 According to the ordinary rules as to costs, the result must be that the plaintiff have his costs of the proceedings. This is an unhappy disagreement. It would be better if the parties could, after this judgment, agree concurring the conduct of the affairs of this body. As I have already said in open court, I regard it as an entirely worthy body, important to the entire community as well as to the Muslim community. It would be better if the members who have differences could be reconciled and people could get on with conducting its affairs in due course. **********

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