Islamic Association of Western Suburbs Sydney v Dr H R K Survery

LEGISLATION CITED : Associations Incorporation Act 1984 Corporations Act 2001 (Cth)

Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 60 CASES CITED : Mulligan v Benton [1999] NSWCA 339 Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (unrep, NSWCA, 8 June 1994) Ryde City Council v Tourtouras [2007] NSWCA 218 Carpenter v Carpenter Grazing Co Ltd BC8701391 NSWCA (5 May 1987)

PARTIES : Islamic Association of Western Suburbs Sydney & Ors Dr H R K Survery & Ors

COUNSEL : Dr R Harper SC (with Mr M Pesman) [Plaintiffs] Mr F Santisi [Defendants]

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Date of Hearing: 19, 20 August 2008 Date of Judgment: 26 August 2008

6109/05 Islamic Association of Western Suburbs Sydney v Dr H R K Survery (Re Adoption of Referee's Report) JUDGMENT

1. REIN J: The first plaintiff ("the Association") is an Association incorporated pursuant to the Associations Incorporation Act 1984 ("the Act"). The Association was incorporated in November 1998.
2. The second plaintiff, the Australian Islamic College of Sydney ("the Islamic College"), is a company limited by guarantee incorporated under the Corporations Act. The third plaintiff, Ghulam Akbar Khan has been acting as President of the Association at various times. The other plaintiffs have all had varying levels of involvement with the Association of which they are or claim to be members, and or the College. Dr Harper SC, with Mr M. Pesman, appears for the plaintiffs.

3. The defendants are persons who are or claim to be members of the Association who are unhappy with the direction taken by the Association and the College, and in particular, with the actions of the third plaintiff. Mr Santisi of Counsel appears for the defendants.

4. Broadly speaking, these proceedings involve questions of control and management of the Association and the College. Some issues which have arisen in the proceedings have already been determined or resolved.

History of the Association 5. The Association began as an unincorporated association in 1983, and was incorporated under the Act in November 1998. It began as an Association of Muslim people, exclusively or principally of Pakistani background with a view to promoting the Muslim faith and its values, and to providing a suitable social and cultural Centre for adherents of the faith in Rooty Hill and surrounding suburbs. History of the College 6. The Association acquired and still owns land at Rooty Hill on which has been constructed a Mosque, a community centre, and more recently, a school. 7. The school or College began as the King Abdul Aziz College and its name was changed, without, it is asserted by the defendants, the consent of the members.

8. The College was registered on 19 November 1998 (it changed its name to Australian Islamic College of Sydney in October 2005). The College has, by its constitution, a very narrow membership base. It was agreed that whoever controls the Association controls the College.
9. It is important to note that when the Association was incorporated there was an attempt to enshrine in the Constitution a claim of "foundation members" with wide powers.
10. On 10 December 2000, the foundation members acted in purported reliance on those powers to remove the then Executive Council of the Association. It is one of the complications of the case that Dr Survery, the first defendant, was a foundation member who voted for the removal of the then Executive Council, and that the replacement Executive Council continued on without contest until matters came to a head in 2005. There are other foundation members who are defendants and some that are plaintiffs. The defendants in 2005, relying on the foundation members provisions, tried to unseat the Executive Council led by Dr Khan, the third plaintiff, which led to the initiation of Court proceedings by the plaintiffs.

Matters Determined or Resolved 11. Although there was a considerable controversy about which constitution governed the Association, the parties eventually were able to agree that the constitution governing the Association was that described as the 1998 constitution (Exhibit C). The parties' agreement on this point is encapsulated in the short minutes of 29 January 2008, pursuant to which declarations were made both as to the Constitution of the Association and as to the Constitution of the College (Exhibit B).

12. There was an issue as to whether provisions of the 1998 constitution relating to foundation members were valid. Hamilton J ruled that subclause 6(a), (b), (c), (e) and (f) of the 1998 Constitution were not valid, as they were either void for uncertainty or struck down by the Act: see the judgment handed down on 13 February 2008. The Reference
13. An issue of considerable importance, which was the subject of a reference out to the Honourable Mr A P Whitlam QC, was the question of who are the members of the Association eligible to vote at the Annual General Meeting of the Association. It is the question of whether the Court should adopt the report or part of it, which is the subject of this judgment.

14. The following questions were referred to Mr Whitlam: "(a) the determination of who are the members of the Association eligible to vote at the annual general meeting of the Association referred to in (b) below including which of those members are foundation members; (b) the appropriate manner of the calling and conduct of the next annual general meeting and election of office bearers of the Association and the College; and (c) any additional steps necessary to regularise the affairs of the Association and the College".

15. Mr Whitlam on Friday 1 August delivered a report to the Court which I shall describe in more detail below, and which I have had marked now as Exhibit E. It was handed to the parties on 4 August, which date had earlier been set for the commencement of the hearing. On Wednesday 6 August, the parties agreed that a timetable for submissions should be put in place, and a date set for hearing of the question of whether the report should be adopted wholly or in part. On that occasion, I raised with the parties a concern that I had in respect of Mr Whitlam's expressed inability to determine who were "financial" members. Given that the parties had had the opportunity to put before him all material available and that Mr Whitlam could not determine an important matter due to the inadequacy of record keeping by the Association, it seemed to me that there a existed a fundamental difficulty in respect of that matter. Rule 33(5), Mr Whitlam noted, provides: "A member is not entitled to vote at any general meeting of the association unless all money due and payable by the member of the Association has been paid, other than the amount of the annual subscription payable in respect of the then current year".
16. Mr Santisi and Mr Pesman (who on that occasion appeared without Senior Counsel) both accepted that Mr Whitlam's conclusion on that point created a problem, and they and their respective clients set about reaching an agreement in respect of how the persons determined by this Court, whether by adoption of Mr Whitlam's report or otherwise, to be members could be determined to be "financial"; agreement was reached and noted by the Court on 8 August. It follows that the Court will not have to be concerned with that aspect.

17. There was evidence taken by the Referee on 26 and 27 June, and 8 July 2008. Affidavits were read on the reference and there was extensive cross-examination of witnesses.
18. The Report, to describe it in brief terms, noted that there was no dispute that a list of members known as the 1999 ASIC list (part of Exhibit A) recorded the members of the Association as at 26 May 1999 and found that the list known as "the 2001 list" (propounded by the defendants and also part of Exhibit A) was accurate as at 15 February 2001. The Referee did not accept the list known as "the 2007 list" as reliable, which list contains some 208 additional names, and was propounded by the plaintiffs - as the Executive Council had been invalidly removed by the foundation members in December 2000 (see Exhibit D) and none of the Executive Council meetings at which members were approved subsequently were valid. Mr Whitlam also highlighted that he was unable to determine which of the persons on the 2001 list were financial members due to the absence of sufficient record keeping of the Association, and he noted in this context the delinquency and partiality of Mr Syed (one of the plaintiffs) who had acted as Treasurer: see para 31 of the Report.
19. The plaintiffs' position was that the Report was flawed because the Referee had determined that from December 2000 to 2008 there had been no validly constituted meeting of the Association or of the Executive Council, and did not invite argument on whether the failure to organise properly constituted meetings of the Association or the Executive Council ought be excused pursuant to s 18 of the Act. The Report, although brief and subject to one matter to which I shall refer below, on its face appeared to me to be cogently reasoned. It contains however, no reference to s 18 of the Act or any consideration of relief on that basis and it is agreed that no submissions were put to the Referee concerning s 18.
20. There was also an attack on the report by the plaintiffs because: (a) it was argued the Referee had not explained why he came to the conclusion (in para 12 of the Report) that the 2001 list ought be accepted; (b) the defendants had never asserted that the meeting of 10 December 2000, by which a meeting of Executive Members which had been called and which had purported to dismiss the then Executive Committee and replace that Committee with members decided upon by the foundation members, was invalid. Indeed, the first defendant was one of the persons who took part in that decision; (c) Mr Whitlam assumed that the foundation members relied on rule 3(6)(e) in purporting to dismiss the then Executive Council in December 2005.
21. Mr Santisi, in many of the more than 60 pages of written submissions, argued for a reading of the report that seemed to go well beyond its contents.
22. Guidance as to the approach which should be taken by the Court when considering whether or not to adopt a referee's report has been provided in a number of decisions of the Court of Appeal: Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 60; Mulligan v Benton [1999] NSWCA 339; Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (unrep, NSWCA, 8 June 1994); and Ryde City Council v Tourtouras [2007] NSWCA 218.
23. In Super at p 563, Gleeson CJ (with whom Mahoney and Clarke JJA agreed) said: "That wider setting is a system for the administration of justice according to law. In so far as the subject matter of dissatisfaction with a referee's report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine that matter afresh. That was decided by this Court in Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605: see also, Cape v Maidment (1991) 98 ACTR 1 at 4. That conclusion is entirely consistent with the history of the rules and the reasoning of the High Court in Buckley which, although the case related to different provisions is also instructive as to the present provisions.

Subject to what has just been said, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised: cf Nicholls v Stamer [1980] VR 479 at 495 per Brooking J. The nature of the complaints made about the report, the type of litigation involved, and the length and complexity of the proceedings before the referee, may all be relevant considerations. The purpose of Pt 72 is to provide, where the interests of justice so dictate, a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest. On the other hand, if the referee's report reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, that would ordinarily be a reason for rejecting it: cf Jordan v McKenzie (1987) 26 CPC (2d) 193. So also would perversity or manifest unreasonableness in fact-finding". 24. In Nine Network Gleeson CJ endorsed the statement of Giles CJ Comm Div (as he then was) who heard the matter at first instance, that: "As a broad proposition, depending upon the circumstances of each case, the Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusion he [or she] did, particularly where the disputed questions are in a technical area where the referee enjoys an appropriate expertise." 25. The Court of Appeal in Tourtouras affirmed the correctness of the approach of Gleeson CJ articulated in Super. 26. I summarise the relevant principles applicable: (1) the Court has a wide discretion whether to adopt, vary or reject the report; (2) provided the referee has factual material sufficient to entitle the referee to reach a conclusion, the Court will not reconsider disputed questions of fact, particularly if disputed questions are in a technical area where the referee enjoys appropriate expertise or where conclusions have been reached by the referee on the credit of witnesses; (3) there is no obligation on a Court to review the evidence or submissions before the referee in relation to facts, but it may do so particularly if it is not comfortably satisfied that the reasons disclosed in the report reasonably lead to the finding of fact made by the referee; (4) if an error of law in the report is identified, the Court is required to consider and determine the legal issue afresh.

27. Mr Santisi accepted that the plaintiffs could not be shut out from arguing that legal conclusions drawn by the Referee were wrongly drawn.
28. Dr Harper accepted that there were contained within the Report, some factual findings that could not be described as reflecting error, or as having been inappropriately made.
29. There was agreement that it would be desirable to avoid extensive argument about whether the Report should or should not be adopted, argument as to the precise ambit of authorities dealing with adoption of reports and how the report, if adopted, was to be interpreted. If the plaintiffs, who wished to argue that s 18 of the Act ought be permitted to 'validate' (I use the word broadly) any irregularities in the past, could be protected by a formulation and if the Referee's findings could be identified then the Court could adopt the Referee's findings but leaving for argument at a later time the legal matters and inferences which the plaintiffs contended were either not considered or not adequately considered by the Referee.
30. This measure of agreement lead me to invite the parties to: (a) identify the factual findings made by Mr Whitlam in his report ("contended findings") (b) indicate whether or not there was acceptance of the relevant finding (c) propose a form of wording that would allow the plaintiffs to argue any legal points arising from the findings of the Referee "the legal argument formulation".

31. This course is unusual, but it seemed to me a desirable one in the interests of justice and of avoiding the spectre of possibly having to reopen the factual matters which were before Mr Whitlam either by referring the matter back or by the Court having to trawl again through the extensive material that was put to the Referee. It also has the benefit of avoiding argument later as to how the Report, if adopted, ought be interpreted.

32. Dr Harper proposed a legal argument formulation and it was in the following terms: "The adoption of those findings is without prejudice to any factual argument by way of inference or conclusion following from those findings, or any legal argument affecting, or consequent upon those findings, including the application of section 18 of the Associations Incorporation Act and discretionary considerations".
33. Mr Santisi accepted the legal argument formulation.
34. The parties accepted the approach indicated and counsel prepared a document containing their respective contended findings. The defendant proposed and submitted the Court should accept the following: "(1) The ASIC list of members was correct as at 1999 (2) The 2001 list of members is authentic as at this date (3) Nine Executive Council meetings of the Association held between 2002-2007 were not valid meetings (4) Annual General Meetings and general meetings in and after 2001 were not valid meetings (5) The plaintiffs' 2007 list was not reliable because it contained names of persons who had been admitted pursuant to decisions of the Executive Council which were not validly called, by an Executive that was not properly constituted (5a) That the plaintiffs 2007 list and the documents produced were not evidence of membership of 208 persons that do not appear on the 2001 list (5b) The foundation members are those identified as such from the 2001 list and those names as appearing on the meetings of 13 May 2001 and 1 September 2002 only (5c) That members in arrears should be given a fair notice and an opportunity to bring themselves up-to-date (6) From the material before him, it was not possible to determine who were "financial members" and who were not".
35. The plaintiff proposed and submitted the Court should accept all but (2) of the following: "(1) The 1999 ASIC List accurately records the members of the Association as at 26 May 1999. (2) The 2001 List accurately records the members of the Association as at 15 February 2001". This finding, the plaintiffs submitted, should not be adopted for reasons to which I shall return. "(3) Notice was given to all members for any AGM after 1999. (4) No AGM of the Association was held in 2000 or 2001. (5) Notice was not given to two members of the executive council for the nine meetings of the council between 2005 and 2007 at which membership applications were considered. (6) Because of 3 to 5 above, the May 2007 list records the names of members who purported to join after 2000 but who may not be members. (7) The referee was unable to determine which members will be entitled to vote at the next AGM".
36. In my view, the following findings have been made by Mr Whitlam: (1) that the 1999 ASIC List accurately records the members of the Association as at 26 May 1999 (see para 11 of the Report); (2) that the 2001 List accurately records the members of the Association as at 15 February 2001 (para 12); (3) that no Annual General Meeting of the Association was held in 2000 or 2001 (para 23); (4) that no members of the Executive Council continued in office after 25 August 2000 or, at the latest, 31 December 2000, (paras 19-23); (5) that Annual General Meetings of the Association for 2002, 2003, and 2004 were not duly convened because there was no Executive Council in office and because notice was not given to Mr Siddiqui and Mr Rahman, two members of the Executive Council (paras 19-25, 29) (6) that the 2007 List was not reliable because it contained the names of persons whose applications had been considered at Executive Council meetings that were not validly constituted because of the matters referred to in (5); (7) that the Association's financial records were a "shambles" and it was not possible from them to determine who were financial members and who were not (paras 32, 36); (8) foundation members are those persons shown on the 2001 List to be foundation members and also the persons elected as foundation members on 13 May 2001 and 1 September 2002 should also be regarded as foundation members (para 36); (9) a conclusion that "members in arrears should be given fair notice and an opportunity to bring themselves up to date"; (10) that persons who had endeavoured to apply for membership of the Associations including Mr Shafquat Hussein and Mr Mohammed Taksim had not been permitted to advance their application by reason of the actions of Mr Syed, who whilst purporting to act as Treasurer was delinquent and partial in his handling of applications (see para 31 of the Report); (111) only a properly constituted Executive Council can bestow membership status on applicants, with the consequence that persons who applications were not properly processed or processed at all could not be made members by a Court order (para 31).

37. Given Mr Whitlam's view that there was no valid Executive Council in place from 2000, the reference to absence of notice to two of its members would appear to be irrelevant unless found to be an alternate basis of invalidity. Although not so expressed, I will treat it as such. This is the qualification referred to in [19] above.
38. There was in submissions no dispute concerning (1), (3), (10) and (11). I think that (9) is not really contentious, because although not strictly a finding, it is a response to one of the questions asked, and is entirely consistent with the agreed scheme that was put in place on 6 August. This leaves (2), (4), (5), (6) , (7), and (8).

Item (2) 39. Dr Harper argued that this should not be adopted because: (a) there was no explanation of the reasoning of the Referee and (b) because there were names on the 2001 List of persons who were described as having joined prior to 1999 but who were not on the ASIC List. So far as the first point is concerned, Mr Whitlam explains why he regarded the 2001 List as authentic in para 13 and he deals with Mr Syed's assertions in para 14 (Mr Shakil Syed being one of the plaintiffs). It is clear that he did not accept Mr Syed's evidence on this, and on other points (see also paras 32 and 34 of the Report). I think that in a case where each party was contending that its list reflected the membership, the Referee was entitled to have regard to the matters referred to by him and form the view on the evidence that he did. I do not think that the fact that the list includes the names of persons who ought to have been on the 1999 List necessarily impugns the authenticity of the 2001 List, and it was open to the Referee to form that view. It was always open to the plaintiffs to impugn the 2001 List on the basis that it contained names of persons shown on the list to have been admitted earlier, and they did not do so. Mr Santisi explained what response would have been given to the anomaly had it been raised but I think it is sufficient to note that it was not raised by the plaintiffs at the reference.

40. A further argument advanced on behalf of the plaintiffs was that the Referee's acceptance of the 2001 List was inconsistent with his finding that no valid Executive Committee occurred after 25 August 2000, or at the latest December 2000, meant that any members admitted after August (and it was submitted August 25 was the relevant date) must have been invalidly admitted.
41. To this argument, Mr Santisi had a number of responses: (a) It was not an argument put to the Referee as a reason not to accept the 2001 List (b) There is nothing to indicate when the persons who became members within the period of 1999 to February 2001 and the Court should not hold that they were admitted in a period when they were not able to be admitted in preference to a period when they were. A presumption of regularity was relied on to support this; no cases were cited but Carpenter v Carpenter Grazing Co Ltd BC8701391 NSWCA (5 May 1987) per Hope JA, Samuels JA and Priestly JA is an example of the application of the presumption (c) The Treasurer had been validly appointed in 1999 and continued on to December 2000 irrespective of whether other members of the Council were removed or not (d) The 2001 List was published at February 2001 the date of publication says nothing about the date that the members were admitted and no inference can be drawn based on a half-way point between the list and the last valid meeting.
42. The plaintiffs responded by saying that whilst it was true that the plaintiffs had not put such an argument to the Referee, that was because they did not know that the Referee was proposing to adopt the view that the Executive Council was invalidly appointed in 2000 and that if they had known that he was proposing to take such a course, they would have run the argument that if he was to so find, then he would have to reject the 2001 List as well.
43. Given that Justice Hamilton had ruled that the provisions of clause 6 under which the foundation members had purported to act were invalid, I find it surprising that no thought was given to the prospect that Mr Whitlam would conclude that actions of the substitute Executive Council were not valid. Mr Santisi's written submissions to the Referee and which were provided to me on the application, contained the following after referring to the "undisputed" fact that Mr Iqbal Qazi was the Treasurer from 1999: "From December 2000 to June 2001, Iqbal Qazi, in the absence of annual general meeting for the election of the Executive Committee, as provided for in the Constitution of the Association, lawfully continued to maintain and update the member's register to about 15 February 2001, as the only lawfully elected Treasurer".
44. I do not think it is clear from that paragraph that the defendants were asserting that what was done on 10 December 2000 was invalid, and given the involvement of Dr Survery in the dismissal of the prior Executive Council, it would be surprising that they did intend to make such an assertion. It was however open to the plaintiffs to argue that the Referee should not accept the 2001 List because it contained members who had been admitted after August 2000 and they did not, it was accepted, take that course. One factor that would have made such an argument problematic was that the Association could not establish from its records that any of those members were in fact admitted after August 2000, rather than before, so it is unlikely that even if Mr Whitlam had considered the point it would have lead him to any different conclusion.
45. I am not persuaded that the conclusion to which the Referee came ought be rejected.

Item (4) 46. It is true that the minutes of 10 December 2005 do not expressly state the basis upon which the foundation members were taking the action which they purported to take, but given that Justice Hamilton was asked to consider the validity of clause 6 in the context of another attempt in 2005 by foundation members to remove the persons then acting as Executive Council the inescapable conclusion is that the foundation members must have been relying on one or other part of rule 3(6), of which the only relevant subclause was (e). I think this assumption was one Mr Whitlam was well justified in making. Finding (4) is a conclusion which is capable of being seen as a conclusion of both law and fact, and it is open to the plaintiffs to argue that the Executive Council did validly continue in office, by reference to s 18. I think it should be adopted.

Items (5), (6), (7) and (8) 47. I think these findings were made and they are clearly based on material available. To the extent that they contain a legal conclusion, it is open to the plaintiffs to contend for a different conclusion. The significance of the finding in (8) however, is open to doubt and legal argument can be advanced on this aspect. Conclusion 48. It follows in my view that the findings set out at 31-(11) are findings made by the Referee and subject to the qualification set out in [27] above, should be adopted. It was agreed by Counsel that such of the findings as the Court regards as appropriate for adoption should become findings of the Court, again subject to the qualification. Costs 49. I will hear the parties on the question of costs.

Further Steps 50. I will invite the parties to put before me submissions as to how the balance of proceedings are to be progressed, and as to the length of time which will need to be allocated.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.