Application for Approval of the Report
19The Court made orders on 15 December 2011 appointing Mr McDermott the referee under UCPR, r 20.14 to determine the questions identified earlier in these reasons and to report to the Court under UCPR, r 20.17. The proceedings under the reference are conducted in such manner as the referee sees fit: UCPR, r 20.20. The Court may give directions in relation to the conduct of the proceedings under the reference. But in this case the Court did not give any such directions other than to note certain matters which the parties have agreed before the Court would not be put in issue on the reference. These were the following:-
14.Note the agreement of the plaintiffs and the defendants (but not the Association at this point) that in the course of the reference and otherwise during these proceedings that each party will not contend or object that any person is not a member of the Association on the grounds of: (1) the identity of or the validity of the appointment of the Association's General Secretary or its President; or, (2) the identity, constitution or the validity of the appointment of the Association's Executive Council, at the time that any application for membership, renewal of membership or application for life membership is made, approved or entered into the register of Members; or (3) whether or not any such register of Members is kept by the Plaintiffs or the Defendants."
20Another matter which was agreed between the parties was that no-one would take issue in the reference with was the qualifications of membership under Constitution, Clause 8(b): namely being a descendent of a person from Bangladesh. It was wholly impossible for the Court to be making enquiries about qualifications under Constitution, Clause 8(b) within a hearing such as this. Both sides agree that no such issue would be taken.
21The referee made a written report to the Court on the matters referred pursuant to UCPR, r 20.23, setting out his opinion on the matters referred and his reasons for that opinion. Upon receipt of the Report the Court, submitted it to both parties. There is no doubt upon my analysis of the Report that it does comply with UCPR, r 20.23 in that it does demonstrate sufficiently clearly the fundamental reasoning process that led to the conclusions set out in the report: Xuereb v Viola (1989) 18 NSWLR 453. For reasons which the referee has explained, the process in which he was involved did not require him to make express findings upon every matter of fact and law that was contested before him, in accordance with orthodox legal principle: Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 at 385.
22Neither party filed a formal motion for adoption of the referee's Report under UCPR, r 20.24. As both parties were unrepresented this was understandable. But in substance, the parties put short oral submissions and then were given an opportunity to put written submissions on the issue of the adoption of the referee's Report under UCPR, r 20.24.
23The principles that relate to rejection or variation of a referee's Report under UCPR, r 20.24 are well established. It requires a proper justification; neither party has an automatic right to have the referee's Report re-heard; the nature and purpose of the discretion is such that rejection of the Report is not justified by mere disagreement with a referee's factual findings: Bermira Pty Ltd v Homebush Abattoir Coporation (1991) 22 NSWLR 600; Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 and Ryde City Council v Tourtouras [2007] NSWCA 218.
24In this case I see no proper basis for not adopting the referee's Report in full and that is the course that I will take. There was some disagreement expressed with factual findings of the referee on both sides that the Court need not fully detail. But it is clear from the text of the referee's Report that he has given very detailed consideration to the parties' competing contentions, heard evidence, discussed their competing approaches and dealt with the somewhat disorganised material with which he was presented in a patient and painstaking way. The referee's Report is a lucid and compelling analysis of the issues. Accordingly, I adopt the referee's conclusions as set out below, subject to the matter that the referee has left for the Court to determine. This matter is best introduced through paragraph 150 of his Report.
25Paragraph 150 of the Report provides as follows:-
"ANNEXURES
150.This Report is also accompanied by the Master List portions of which are highlighted in the manner previously indicated and as regards which;
a)Life members are listed between numbers 1827 and 1958. They are current members entitled to vote at a General Meeting.
b)Renewing members whose details appear intermittently and unhighlighted in the Master List from number 1390 to 1826 are current members entitled to vote at a General Meeting.
c)Renewing members whose details appear highlighted yellow intermittently in the Master List from number 1542 to number 1826 are neither current members nor eligible for approval (see paragraph 37).
d)Renewing members whose details appear highlighted fawn intermittently in the Master List from number 1394 to number 1540 would be eligible for approval as members of the Association if the Court accepts that there was a functioning Executive Council in 2010/2011. Alternatively if paragraph 17(b) of the Decision is intended to extend this far these renewals could be approved on the basis that they would, had there been a functioning Executive Council, have been eligible in 2010/2011 as well as currently.
The highlighting occurs because the alternative proposition may need to be considered (see paragraph 135).
e)New Applicants whose details appear intermittently and unhighlighted in the Master List from number 1 to 1389 are eligible for approval as members of the Association if the Association had a functioning Executive Council.
f)New Applicants who appear intermittently and whose details are highlighted green in the Master List from number 7 to number 826 are eligible for approval as members of the Association if the Association had a functioning Executive Council.
Here, as with the renewing Applications highlighted fawn, the highlighting occurs because the position over a period of two years may need to be considered (see paragraph 140).
g)New Applicants whose details appear in the Master List highlighted blue have had their details entered twice. One such entry should be deleted from the Master List but these Applicants for new membership are otherwise eligible for approval as members of the Association if the Association had a functioning Executive Council.
h)New Applicants for membership whose details appear intermittently highlighted brown in the Master List do not qualify either as current members or as being eligible for approval. Their details should be deleted from the List. See paragraph 137(e)(i.), (ii.), (iii.), (iv.) subject to checking and (vii.) subject to checking. "
26The "Master List" referred to in the Report has been tendered and I have marked Exhibit A on the application for adoption of the Report. Although I understand the data has been re-entered by the referee into a more manageable form, this "Master List" is the same as "Exhibit KA2" to the affidavit of the first plaintiff of 4 October 2011, filed in the proceedings. Exhibit A, the Master List, represents an appropriate basis for the Court to make orders of the character here required. Moreover, the Master List together with paragraph 150 of the referee's Report represents an answer to the questions referred to the referee. Subject to the matter set out in paragraph 150 of the Report, the Master List identifies "the current members of the Association who would be entitled to vote at a General Meeting" and "the identity of the persons, who, if not members of the Association are nevertheless eligible for approval as members if the Association had a functioning Executive Council".
27The Court adopts the conclusion in paragraph 150 of the referee's Report that the persons in the Master List referred to in sub-paragraphs 150(a) and (b) are current members of the Association. The referee has determined these persons are current members of the Association entitled to vote at a General Meeting and the Court adopts that conclusion.
28The referee has decided that a number of persons whose details appear in the Master list either do not qualify as current members or are the subject of duplicated entries and the Court finds these persons are neither current members of the Association, nor are they eligible for approval as members of the Association, if the Association had a functioning Executive Council. These are the persons referred to in paragraphs 150(g) and (h).
29That leaves the persons referred to in paragraph 150(d), (e) and (f). These are all persons in different categories who the referee has found either are, or at least on one alternative basis of analysis as to their positions are persons, who are "eligible for approval as members of the Association if the Association had a functioning Executive Council" within question 17(b). In respect of these persons, the Court adopts the Referee's conclusions, that all of these persons, in paragraph 150(d), (e) and (f), are eligible as members. And the Court concludes that they should now be treated as current members of the Association by reason of the operation of Corporations Act 2001, s 1322. It is necessary to briefly analyse the position of these persons and show why the Court may exercise this discretion.
30These persons all fall into one or other of the following general categories. They are renewing members, whose renewals have been challenged on the basis that a prior Executive Council did not approve them as members or, they are new members whose membership was accepted at a time when the Executive Council's authority to accept their membership was under challenge. The persons in both these categories would qualify as members if the problems with the Executive Council had been solved earlier.
31In my view, this is a classic case for the operation of Corporations Act, s 1322(4) which provides as follows:-
"(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit."
32This section has recently been considered by the Court of Appeal. As Young JA and Sackville AJA explained in Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [223] not every invalid action within a corporation may be validated under s 1322; but provided the impugned action can be achieved under the Act or the Constitution then, where the action is performed in a different and invalid way, it may be validated under the section.
33Here, all that has happened is that in respect of the persons who fall within sub-paragraphs 150(d),(e) and (f), their membership is disputed because there is not agreement that an Executive Council existed or exists to approve their nominations under Constitution, Clause 9(b). Were there to be a valid Executive Council there would be no obstacle to their approval as members. The Court can now do that under s 1322.
34Thus, subject to the issue of late membership applications to which I will come, the membership of the Association for the purposes of holding a General Election will be the members recorded on the Master List as described in the referee's Report, paragraphs 150(a),(b), (d), (e) and (f) only.