Daphne Lowe v Australian Chinese Community Association of NSW

Daphne Lowe v Australian Chinese Community Association of NSW - [2010] NSWSC 1375 - NSWSC 2010 case summary — Zoe

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11 The petition gives no more detail of the conduct against which it is directed than is set out in the words immediately above. The petition goes on to request a Special General Meeting of the defendant Association to be convened to consider, and if thought fit, to pass resolutions that: "(1) in accordance with clause 18.2 of the ACCA Constitution that Ms Daphne Lowe be removed as the secretary of the ACCA, and (2) in accordance with clause 18.2 of the ACCA Constitution Ms Maggie Wu be removed as a member of the Executive Committee." 12 The petition bears many of the usual characteristics of a petition. It is actually a collection of separate documents, bundled together, each of which was likely to have been presented individually to potential signatories for signature. Some of the signatories have signed, placed their Association membership numbers and their signatures on the document. Others have merely signed the document and not spelled out their name in addition to placing their signature on the document. 13 Ms Lowe says that on 22 July 2010 she attended the offices of the defendant and checked the names on the petition against the names of the members on the members' register. Her evidence now at final hearing is that of all the names on the petition fewer than 50 are financial members of the Association. That evidence was advanced at the interlocutory hearing. It remains unanswered by the defendant at the final hearing and I find that 50 financial members of the Association did not sign the petition. 14 In response to the petition the Executive Committee of the defendant held a meeting on 3 July 2010 in Surry Hills. A number of matters were dealt with at that 3 July meeting. In form the petition sought action under Rule 18.2 of the Association Rules, which empowers a general meeting to remove a member of the Executive Committee before the expiration of the member's term of office. The Executive Committee also regarded the petition as a basis to activate Rule 8 of the Association's Rules relating to the Disciplining of Members. The Executive Committee resolved to allow the plaintiffs each to make submissions under Rule 8.2 of the Constitution, a rule relating to the Discipline of Members. The resolution for example for Ms Lowe was in the following terms: "Resolved that Daphne Lowe be given 14 days to make a submission to EXCO regarding the petition in accordance with clause 8.2 of the Constitution. Moved by Raymond Cheung, seconded by Rong Mu Dong". The resolutions allowing the other plaintiffs to make submissions in response to the petition were in similar terms. 15 The 3 July Executive Committee meeting also resolved to suspend Ms Lowe from her position as honorary secretary and from all other positions within the defendant Association, pending her response to the petition. The resolution was, "Resolved that with immediate effect that Daphne Lowe be suspended from her position as the Hon. Secretary as well as all other positions within ACA pending her response to the petition." Moved by Raymond Cheung, seconded by Rong Mu Dong." A similar resolution was passed suspending Ms Wu from her position as an Executive Committee member pending her response to the petition. 16 The effect of the 3 July Executive Committee meeting, therefore, was that Ms Lowe and the other plaintiffs were given 14 days to make a submission to the Executive Committee in relation to the petition. In the meantime Ms Lowe and Ms Wu were suspended from their executive roles. The document upon which the Executive Committee acted is described throughout these minutes as a "petition". It is mostly described this way in the subsequent correspondence that the Association sent to the plaintiffs. 17 The Executive Committee acted on this resolution. On 6 July 2010 the Association sent a letter to Ms Lowe referring to the Executive Committee's resolution of 3 July and asking for submissions in the following terms: "Please be advised that at the Executive Committee meeting held on 3 July 2010 the following resolution was adopted- 'That, in accordance with clause 8.2 (b) pf the Objects and Rules of ACCA, Ms. Daphne Lowe is asked to make submission to the Executive Committee in connection with the complaints from members of the Jung Sing Association and a petition received from ACCA members'. An Executive Committee meeting is scheduled to be held on 24 July 3020 to consider any submission made by you in accordance with clause 8.2 (c)of the Objects and Rules of ACCA. Under clause 8.3 of same if the Executive Committee is satisfied the facts alleged in the complaint have been proven it could consider calling a SGM for the purpose of removing you as a life member of ACCA. Accordingly, your submissions addressing the allegations raised in the petition, should reach ACCA office no later than 22 July 2010." 18 Ms Lowe responded to the 3 July 2010 letter enclosing the petitions. She took many points in her response. As was the situation at the interlocutory hearing it is not necessary for me to set all her points out. The plaintiffs' counsel have relied in argument on the more significant of them. After setting out the terms of the petition Ms Lowe said: "4 (iii) In addition, there is no evidence to support the alleged complaints . Both petitions make the following allegations: … No supporting evidence or facts are stated for any of the allegations made: * have created confusion (what confusion have I created?) * attempted to usurper the legal position of ACCA (how, when and what legal position am I attempting to 'usurper'?) * damaged the stability and harmonious of ACCA (how and when was this damage done to the stability and 'harmonious ; if ACCA?) * undermined ACCA's reputation (how? In fact I believe these petitions and other unconstitutional actions is what is undermining ACCA's reputation) * their misdemeanours critically impacted and affected ACCA normal activities and services (what are these misdemeanours and how did they affect ACCA's normal activities and services?) * they do not listen to the advices (what advices and from whom?) * are obdurate and hell-bent on it. (on what?)" 19 Dr Pun, the second plaintiff, supported Ms Lowe in her response to the petition. Doctor Pun made similar points to those argued by Ms Lowe.

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30 The petition does not define with any precision the alleged conduct which might show a contravention of Rule 8.1 that the plaintiffs' have "persistently refused or neglected to comply with a provision or provisions of the Act or of these rules (Rule 8.1(a))" or "wilfully acted in a manner prejudicial to the interests of the Association (Rule 8.1(b))" such that the petition will be a "complaint" within Rule 8.1. 31 The petition does not in my view qualify as a Rule 8.1 "complaint". Looking at the first paragraph of the petition, it is impossible to discern: to what specific conduct it relates; on what occasions that conduct is said to have occurred such that it might be said the member "persistently refused and neglected" to comply with the Associations Incorporations Act or the Rules (see for example Randazzo v New South Wales Sport Aircraft Club [2009] NSWSC 1473 [23] - [25] and Attorney General for South Australia v Piepkorn [2005] SASC 425); and, what particular aspects of that conduct are alleged to be "prejudicial to the interests of the Association". Any person receiving such a document would be unlikely to understand exactly what he or she was alleged to have done to attract action under Rule 8.1. It would be difficult for a member to organise any reasoned defence against expulsion faced with such limited material. 32 The Executive Committee describes the document as "a petition". It appears that that is exactly the way that it has been framed, rather than as a "complaint" warranting action under Rule 8. Indeed when the petition was sent on by the Executive Committee to the plaintiffs it was sent not with further particulars, but with the exact covering words: "Please find enclosed the petition received in relation to complaint about your conduct and a request for a Special General Meeting for your removal as a life member of the ACCA". 33 No attempt appears to have been made to turn the vague expressions in the petition into defined particulars of the allegations of relevant misconduct. The letters in response from Dr Pun and Ms Lowe asked the very questions that any reasonable reader of the petition sent by the letter of 6 July would ask. Ms Lowe's response has already been set out. These petition documents in my view give no relevant information about alleged misconduct of the plaintiffs, do not qualify as a "complaint" within Rule 8 and cannot be acted on by the Executive Committee. I accept the plaintiffs' submission that the petition does not disclose a persistent or wilful course of conduct on the part of the plaintiffs. 34 A resolution was passed on 11 August 2010 to convene the meeting on Sunday, 12 September 2010. Ms Lowe was in no position to prepare for that meeting on the material that she had. Ms Lowe says that she has been denied procedural fairness and that the defendant was acting in contravention of its own Rule 8. Both of these Ms Lowe submits may be restrained by injunctive relief. The defendant sought to answer that by relying upon Associations Incorporation Act 2009, s 20 which provides:

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"(1) An association's constitution may contain an express restriction on, or a prohibition of, the association's exercise of any of its powers, but the exercise of a power by the association is not invalid merely because it is contrary to such a restriction or prohibition. (2) An act of an association is not invalid merely because it is contrary to or beyond the association's objects." 35 The defendant submits that Associations Incorporation Act 2009, s 20 means that the defendant's relevant exercise of its power to expel a member is not invalidated, merely because the defendant does not comply with particular prohibitions or restrictions in Rule 8. 36 But as I also explained in my interlocutory judgment in my view, Associations Incorporation Act 2009, s 20 is not an answer to the plaintiffs' first contention for two reasons. First, it does not take account of cases such as Goodwin v Vietnam Veteran Motor Cycle Club Australia (2008) 72 NSWLR 224, at 232 paragraph [43], which require strict compliance with the rules of expulsion of members of such Associations, rules that may not readily be classified as containing a "restriction or prohibition". Secondly, the defendant's claimed use of Associations Incorporation Act 2009, s 20 does not give adequate emphasis to the word "merely" in the section, which shows that the provision is not designed to address all the possible circumstances that may produce invalidity. The defendant's submissions on final hearing has not displaced this view. 37 Mr Stomo at final hearing has again referred the Court to the decision of Young J (as his Honour then was) in the The Bodalla Company Pty Limited v Registrar of Co-operative Societies, Supreme Court of NSW, 6 December 1988, (unreported) BC8801258. He submits that I should follow the approach taken by Young J in Bodalla and allow this meeting to proceed, even though there may have been breaches of the rules of the association in the calling of the meeting. He says "the question should be left to the general members who after all controlled the Association". 38 In my view, as I said in my interlocutory judgment, in Bodalla Company Young J was not dealing with the situation, which obtains here with the particular rule that apply here. A deliberate structure appears to have been created in the defendant Association's rules in Rule 8.1 to 8.3 to require its Executive Committee to take preliminary steps before calling any general public meeting. Those preliminary steps involve considering the content of the complaint made, and measuring it against the Rules and the interests of the Association. Then the structure requires the person complained about to be put in a position to exercise the right to respond to that complaint to the Executive Committee before having to deal with it in a public forum. Finally, before acting publicly the Executive Committee should be "satisfied that the facts alleged in the complaint have been proved": Rule 8.3. The rules in issue in Bodalla's case did not require any such preliminary consideration of a complaint by the Executive. In my view, the Bodalla case is not an answer to the plaintiffs' claim that it has an arguable case to require the defendant's Executive Committee to do its duty according to the Association's Rules before exposing the plaintiff's to an Executive Committee sanctioned public meeting. 39 There is another defect in the Executive Committee resolution of 11 August 2010. A decision to deal with the plaintiffs' expulsion as a group was taken in the Executive Committee resolution on 11 August 2010. Ms Lowe and the other plaintiffs say that the proposal to consider all those resolutions at the same meeting is a contravention of Rule 8.4(a) of the Rules. In my view, as I said in my interlocutory judgment, it is such a contravention. Rule 8.4 achieves some important purposes in the management of expulsions from incorporated associations. Where such a Rule is adopted it ensures that expulsion from clubs cannot occur en masse. It arguably ensures that the position of individual members facing expulsion is not too simply identified with the position of other members also facing expulsion. The Rule means that the circumstances of each member are separately and seriously considered at a meeting considering expulsion. Rule 8.4 (a) also has the advantage of ensuring that members who wish to speak in favour of other members being proposed for expulsion can do so without being tainted at the same time by defending their own proposed expulsion. In my view, Rule 8.4(a) serves those objectives, which are important rights of members. None of the defendants submissions at final hearing present a compelling view to the contrary. 40 The resolutions proposed on 11 August for the 12 September meeting would have contravened Rule 8.4 (a) in several ways. Resolutions 3, 4 and 5 propose the expulsion of three persons, Ms Lowe, Dr Pun and Ms Wu, at the one meeting. Resolutions 1 and 2 proposed the removal of Ms Lowe as the honorary secretary and Ms Wu as a member of the Executive Committee at the same meeting as the proposed expulsions. In my view, as I said in my interlocutory judgment, both the proposal of multiple expulsion resolutions and the proposal of business relating to the Executive Committee and the secretaryship are other "business" that if conducted, in addition to a single expulsion, would contravene Rule 8.4(a). (2) Validity of the Suspension Resolution 41 The plaintiffs also challenge the Executive Committee Resolutions of 3 July 2010 suspending Ms Lowe and Ms Wu from their positions either as officer bearers in the Association or member of its Executive Committee pending their response to the petition. The plaintiffs' contention is that there is no power in the Executive Committee to suspend it own members from holding office. The plaintiffs' contention is that this lack of power is reinforced by the content of rule 8.3(c) which creates a limited power of suspension within the context of the decision making process contemplated by rule 8. 42 The plaintiffs' argument for the invalidity of the suspension resolution proceeds from a consideration of rules 12, 13, 15 and 18. Officer bearers of the Association including a President, the Honorary Treasurer, the Honorary Secretary and three Vice Presidents are provided for by rule 15.1 of the Constitution. Rule 15.2 provides that the Executive Committee shall elect among themselves the positions of the three Vice Presidents, Honorary Assistant Treasurer and Honorary Assistant Secretary.

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43 Rule 12.1 provides that "The management of the Association shall be vested in the Executive Committee" which "shall be elected at the Annual General Meeting and shall consist of (a) the office bearers of the Association; and (b) fourteen (14) other committee members." A combined reading of rules 15 and 12 makes clear that the positions of President, Honorary Treasurer and Honorary Secretary are all directly elected by the Association in General Meeting and not elected by the Executive Committee itself. 44 Rule 13.1 provides for the term of office of all Executive Committtee members including these officer bearers. Rule 13.1 provides:- "Each member of the Executive Committee shall, subject to these rules, hold office until the conclusion of the Annual General Meeting following the date of the members' election or appointment, but shall be eligible for re-election." 45 But the Executive Committee members' term of office may be terminated prior to the next Annual General Meeting. Rule 13.1 must be read subject to rule 18.2 which provides for removal of a member of the Executive Committee before the expiration of the members' term of office:- "The Association in General Meeting may by Ordinary Resolution remove any member of the Executive Committee before the expiration of the member's term of office and may by resolution appoint another eligible member to hold office until the expiration of the term of office so removed." 46 The plaintiffs' submission is that the cumulative effect of these provisions is that members of the Executive Committee are to hold office for a period between Annual General Meetings of the Association subject only to the possibility of removal by the Association in General Meeting. 47 I agree with the plaintiffs' submission. There are two reasons why it should be inferred that the Executive Committee does not have the power of suspension of a member from the Executive Committee, a power which the Executive Committee is assuming here. 48 First, it is inconsistent with the structure of the rules of the Association, which make Executive Committee members accountable to a General Meeting. The structure of the rules means that all Association members know who will be leading and managing the organisation between General Meetings. Committee Members in my view cannot be unseated (or the practical equivalent by wholly suspending them from their duties) by actions within the Committee contrary to the wishes that were last expressed in General Meeting. The setting of the term of office by rule 13.1 and the precise regime for removal of a Committee member by rule 18.2 all point to the continuation of Executive Committee members in office and the maintenance of the integrity of their positions subject only to their submission to the will of the General Meeting. 49 Second, the express conferral of a power of suspension within the rule 8 decision making process by rule 8.3(c) contemplates that where a power of suspension exists in the Executive Committee that it will be expressly identified in the rules as it is in rule 8.3(c). The limited power of suspension from the privileges of membership is conditioned by rule 8.3(c) upon the Executive Committee being satisfied that the facts alleged within (in that case a complaint) are proved. Suspension from office to which a General Meeting elects a person is a serious act that may have consequences for the individual that are comparable to suspension from membership. It should be inferred that the rules' failure to provide for a mechanism for suspension from membership of the Executive Committee equivalent to rule 8.3(c) for expelling a member indicates that there is no such power of suspension invested in the Executive Committee. 50 I agree with the plaintiff's submission that the suspension resolution was accordingly invalid. The defendant's arguments in response that the Executive Committee is merely exercising a discretion entrusted to it and conducting its affairs as it sees fit fails in my view to address the effect of the rules to deprive the Executive committee of the power to do this particular act which is expressly entrusted to the Association in General Meeting. 51 The plaintiffs put an alternative argument that even if the Executive Committee did possess a power to suspend its own members that it did not exercise that power in accordance with its own procedures on this occasion. 52 On its face the suspension resolution is based upon the Executive Committee's consideration of the petition. The plaintiffs' point is that the petition could not have been received and considered by the Executive Committee by any process recognised by the rules. The 3 July suspension resolution was consequently the culmination of a course of enquiry upon which the Executive Committee had no power to embark. And the plaintiffs say the invalidity of that course of enquiry taints the validity of the suspension resolution. 53 The procedural steps that were not followed were said to be the following. The petition was said to have been lodged pursuant to rule 21.1 of the Constitution which provides as follows:- "Special General Meetings shall be called by the Honorary Secretary at the written request of at least four (4) members of the Executive Committee or at the written request of not less than fifty (50) members entitled to vote, within fourteen (14) days from the date of receipt of the request, except where the Executive Committee resolves that the businesses scandalous, frivolous or vexatious." 54 The petition did not comply with rule 21.1 in several ways. It was not a written request of 50 members entitled to vote. The petition did not go through the Honorary Secretary, Ms Lowe herself; rather it was tabled at the Meeting of the Executive Committee on 3 July 2010. I accept the plaintiffs' submission that the petition could not validly have been received and considered by the Executive Committee as a prelude to suspension of one of its members otherwise than by rule 8.3(c) because of its non compliance with rule 21.1. 55 The defendant says in response that it was not necessary for the Executive Committee to consider the petition before passing the suspension resolution. But it has not been demonstrated what material the suspension resolution was based other than the petition.

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Denial of Procedural Fairness 56 The plaintiffs also contend that they had been denied procedural fairness. They put this contention two ways. They first submit they have not been given an adequate opportunity to present their cases to the Executive committee before the Special General Meeting was called. The plaintiffs relied in support of this argument on much of the same material that was advanced under their earlier contention. 57 Depending on the precise form of the rules of an association, if a Special General Meeting is characterised as an appeal from the decision of the Executive Committee, then such a Special General Meeting can cure prior defects in providing procedural fairness: McClelland v Burning Palms Surf Lifesaving Club (2002) 191 ALR 759; [2002] NSWSC 470, per McClelland J. But in my view the Special General Meeting here proposed will not be able to cure the prior denial of procedural fairness. 58 A basic element of procedural fairness is that a person who may be affected by a decision should have the benefit of knowing the material upon which and the basis on which an adverse decision may be made, at least to the extent necessary for that person to have a meaningful opportunity to be heard in relation to the making of the decision: R v Solicitors' Disciplinary tribunal; Ex parte L (a solicitor) [1988] VR 757 at 768-770. 59 The defendant's Rules provide for the plaintiffs' to obtain an understanding what might be said against them before a Special General Meeting. The process of the Executive Committee considering something that answers the description of a "complaint" before acting to call a General meeting is designed to ensure this. The material preferred so far against these plaintiffs does not allow them to know what case they are to meet at a General Meeting. It merely invites the question "What is this really all about?" The plaintiffs would have to defend themselves at a General meeting against an established position by the Executive Committee who would be seen as being "satisfied that the facts alleged in the complaint have been proved" - (Rule 8.3) that there was a case to answer. But they would have to do so in my view without knowing what that case actually was. This in my view is an independent basis for restraining the holding of the proposed General Meeting. 60 The defendant Association says that it is for the Executive Committee to struggle with the "vagueness" of the petition and to determine the facts and that the Executive Committee's position was not assisted by the plaintiffs' failure to respond to correspondence. But in my view these submissions fail to recognise just how deficient of all factual content the petition really is; and it is not up to the plaintiffs to suggest what the allegations against them should be. Apprehended Bias 61 The plaintiffs' further case is that the members of the Executive Committee who voted on the resolutions on 3 July and 11 August 2010 were not impartial. The plaintiff relies upon the doctrine of apprehended bias. If a fair minded lay observer may reasonably apprehend that the decision maker might not have brought an impartial mind to the resolution of the question he or she is required to decide then doctrines of apprehended bias are engaged: Ebner v Official Trustee in Bankruptcy (2000) 176 ALR 644; (2000) 205 CLR 337 at 334 (6). Here the plaintiffs submit that the evidence strongly supports an apprehension of pre-judgment. I do not have to decide this question as I have already found the resolutions invalid on other grounds.

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Damages 62 The plaintiffs claim damages. They do so on the basis that the contract between members in this case was one to provide pleasure, enjoyment, personal protection or relaxation or to avoid vexation - in such circumstances damages are recoverable for inconvenience, vexation and distress: Baltic Shipping Company v Dillon (1992) 176 CLR 344 at 363 per Mason CJ, 382-383 per Deane and Dawson JJ. 63 Such damages are available in cases involving unincorporated associations: Rose v Boxing NSW Inc [2007] NSWSC 20 at [112] and Goodwin v Vietnam Veterans' Motorcycle Club Australia NSW Chapter Inc (2008) 72 NSWLR 224 at 233 [46]. 64 The plaintiffs' case is that the objects of the Association are antithetical to the causing of vexation, distress or disappointment within membership of the Association and that these principles apply. Clause 2.1 of the Constitution defines the objects of the Association as including "to encourage and assist the integration of Chinese immigrants into the Australian community" and "to stimulate interest amongst Australians of Chinese descent in economic, cultural and political matters" and can in my view be taken as a basis for inferring that pleasure and relaxation and personal enjoyment are a purpose of the contract between member of the Association. However the evidence in this case does not in respect of any of the plaintiffs make out a case of proven personal distress or depression which had provided the basis for an award of damages in cases such as Rose and Goodwin. This is not an appropriate case for the award of nominal damages in my view. The plaintiffs have been successful with a full award of equitable relief. I decline to award any damages in the plaintiff's favour. Conclusions and Orders 65 I have found that the 3 July 2010 Executive Committee resolution suspending Ms Lowe and Ms Wu from their positions on the Executive Committee are invalid. I have also found that the 11 August 2010 Executive Committee resolutions expelling the plaintiffs from the Association are also invalid. The plaintiffs should be recognised in those positions by the Association immediately for all purposes. I will grant the final relief sought in the summons. This relief may have to be adjusted to precisely accommodate the current affairs of the Association. I will therefore direct that the parties bring in short minutes of order to give effect to these reasons. 66 Accordingly the orders of the Court will be: 1. Direct the parties to bring in short minutes of order to give effect to these reasons; and 2. Grant liberty to apply.

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Cases Cited (13)

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