Kabir Ahmed & Ors v Ayubur Rahman Chowdhury & Ors

The Problem Prompting the Reference 8First it is necessary to go to the task that confronted Mr McDermott and to briefly explain his findings after dealing with the applicable legal framework. 9The objective of Mr McDermott's Report was straightforward. Despite their differences the parties had sensibly agreed upon the holding of fresh elections for the Executive Council of the Association at a General Meeting of the Association. It seemed to the Court that rather than raking over past issues about the legitimacy or otherwise of the positions of various members of the Executive Council, including the President and the General Secretary from time to time, the best resolution of the dispute between the parties to these proceedings was to give effect to their joint wishes for the holding of a General Election; to allow the Association to start afresh. The principal obstacle confronting the Association in achieving this though was the legacy of its past dysfunctional administration. That poor administration had meant that there were immense disputes about the accuracy of the membership lists of the Association. 10Because of the form of the Association's Constitution this presented something of a conundrum. The Association's Constitution requires the Executive Council to either approve or reject a nomination for membership: Constitution, Clause 9(b). That decision to reject or accept in turn depended upon a referral of the nomination to the Executive Council by the General Secretary: Constitution, Clause 9(b). But the parties could not agree upon who were the Executive Council and who was the General Secretary. Over the last two years, and possibly more, the issues between the parties challenging these respective positions, and the position of President, were complex. To solve all of this, the Court indicated to the parties that it would be possible to give effect to their wish to hold a general election and to start afresh, provided at least there was a certain group of persons who were agreed as at a particular point of time were either members or would have been eligible for membership but for any defect in the appointment of the General Secretary or members of the Executive Council. 11Mr McDermott's task was to settle that list of members of persons eligible for membership. Once that list was settled, through Mr McDermott's Report, if that Report were to be accepted (as this judgment finds it should be); the task of the Court becomes applying Corporations Act 2001, s 1322, to overcome any irregularities in the acceptance of nominations to produce a valid list of members, for holding a General Meeting. This will then facilitate the process for electing the Executive Council. Corporation Act 2001, s 1322 applies to the Association through the operation of Associations Incorporation Act 2009, s 96; Associations Incorporation Regulation 2010, Regulation 16. The Court can make orders and declarations invalidating a procedural irregularity in a disputed electoral process or one which may be defective because of issues about the qualifications of the officers involved: Corporation Act 2001, s 1322(4). 12It is useful now to briefly examine the relevant parts of the Association's Constitution to show how the issues that Mr McDermott has had to consider arise.

The Association's Constitution 13The full name of the Association is the "Bangladesh Islamic Centre of New South Wales Incorporated", which is sometimes referred to in the Association's Constitution as "the Centre". The objectives of the Association are defined under Constitution, Clause 3 which provides as follows:- "OBJECTIVES AND ACTIONS 3.The objectives of the Centre are: (a)To promote and share the unique cultural heritage of Bangladeshi Muslims with other Australian Muslims, and Muslims overseas; (b)To keep in close contact with all other Islamic organisations in Australia and overseas; (c)To promote and maintain unity and friendship among Muslims and between Muslims and other communities in Australia; (d)To maintain and enhance the Centre at its current location in Sydney;" 14The dispute between the parties relates to whether or not the Association's Constitution has been complied with for the nominations of persons to membership, their approval for membership and whether they have paid fees in respect of their membership. The provisions of the Constitution, Clauses 8 to 14, are relevant to these issues and will be set out shortly. But the definitions in the Constitution (Clause 5) relevant to the operation of those provisions, the terms "Eligible Voter", "Entrance Fee", "Executive Council", "Life Member", "Relevant Year" and "Returning Officer" are set out below:- "DEFINITIONS ... Eligible Voter means a member who has complied with rules 9 and 14 of this constitution. Entrance Fee means a single payment of the amount specified under rule 14(b) payable immediately upon admission to the Centre. Executive Council means the committee having the power of exercising functions relating to the management of day to day affairs of the Centre. Life Member means a natural person of Islamic faith, upon whom membership is conferred for the person's lifetime pursuant to rules 7, 8 and 9 subject to a lump sum payment as set by the Executive Council of the day. Member means a natural person, of Islamic faith, upon whom membership is conferred pursuant to rules 7, 8 and 9. Relevant Year means the year in which payment of the entrance fee and/or annual subscription is required to be paid no later than 21 days prior to the holding of Annual General Meeting in that year in order to enable a member to attend and vote at the Annual General Meeting for that year. Returning Officer means: (a)The person who is appointed by the Executive Council of the Centre. (b)The person who conducts election of the office bearer of the Executive Council of the Centre and shall not be eligible for nomination for any position in the Executive Council, or (c)That person who remains to be the interim administrator of the Centre in the event of a deadlock situation. (d)This person authority/appointment is assumed to end as soon as an elected Executive Committee of the Centre takes over." 15The scheme provided for under the Association's Constitution for becoming a member is to be found principally in Constitution, Clauses 7, 8 and 9. Other related provisions, Clauses 13 and 14 deal with the register of members and subscriptions. Constitution Clause 8 defines a person's entitlement to membership of the Association. Constitution Clause 9 then provides for a process by which a person qualified under Clause 8 becomes nominated for membership. It is a three step process involving: (1) nomination - by two members in writing: Clause 9(a); (2) referral by the General Secretary of a nomination to the Executive Council which then approves or rejects the nomination for membership: Clause 9(b); and (3) where the nomination is approved a process for payment of an entrance fee: Clause 9(d) and (e). Those provisions are set out below:- "MEMBERSHIP 7.The membership of the Centre shall be of two categories: (a)Member; and (b)Life Member. MEMBERSHIP QUALIFICATIONS 8.A person is entitled to be a member of the Centre, but only if- (a)The person is a person referred to in section 15(1)(a), (b) or (c) of the Act and has not ceased to be a member of the Centre at any time after incorporation of the Centre under the Act; or (b)At least one of the person's or nominee's parents is a descendent from Bangladesh; (c)The person is a Muslim aged 18 years or over who is willing to subscribe to the aims and objectives of the Centre; and (d)In the case of a member he/she: (i)has been nominated for the membership of the Centre as provided by rule 9; and ii.has been approved for membership of the Centre by the Executive Council of the Centre pray a General Meeting as provide by rule 9; and iii.has paid the Centre membership fee in terms of either entrance fee or annual subscription 9.A nomination of a person for membership of the Centre: (a)Shall be made by two members of the Centre in writing in the form set out in Appendix 1 to these rules and shall be lodged with the General Secretary of the Centre; (b)As soon as practicable after receiving a nomination for membership, the General Secretary shall refer the nomination to the Executive Council which shall then determine whether to approve or reject the nomination for membership. (c)Where the Executive Council determines to reject the nomination for membership, it shall refer the nomination to the next General Meeting which shall determine whether to approve or to reject the nomination. (d)Where the Executive Council or the General Meeting determines to approve a nomination for membership, the General Secretary shall: (i)within 28 days of such decision being made, notify the nominee of the approval; and (ii)request the nominee to pay within 14 days after the receipt by the nominee of the notification the sum payable under these rules by a member as entrance fee and/or annual subscription (non-refundable) of the Centre. (e)Notwithstanding rule 9(d)(ii) and rule 9(a) above, payment of the entrance fee or any outstanding annual subscription shall be made in accordance to rule 14. (f)The General Secretary shall enter the nominee's name in the register of members and, upon the name being so entered, the nominee becomes a member of the Centre. (g)Notwithstanding rule 9(f) above, the General Secretary shall be under no obligation to enter the nominees' name in the register of members should be the nominee and/or nomination fail to comply with rules 9(a) to 9(e), above. (h)Only those members whose names appear on the register of members shall be entitled to vote at any General Meeting. (i)Final eligible voters list will be prepared in accordance with rules 9(e) and 14(c) and will be made available to the Returning Officer 72 hours prior to the Annual General Meeting. No membership dispute shall be dealt with on the day of the Annual General Meeting. (j)The Centre will advise member(s) in writing in due time to renew their membership by the deadline as decided by the Executive Council. It is the member(s) responsibility to renew their membership and check the eligibility of the member(s) to vote with the General Secretary 7 days prior to the final membership list being prepared for the Returning Officer by the Centre." 16All of the disputes that the parties presented to Mr McDermott essentially related to these three main steps for membership. 17One of the obligations of the General Secretary of the Association is to maintain a register of life members in accordance with Constitution, Clause 13. Once a member is approved for membership a member is required to pay an entrance fee and then an annual subscription fee in accordance with Constitution, Clause 14. 18As Mr McDermott rightly observed the Membership fees in Clause 14 appeared to have been set at a fairly low amount in order to encourage membership applications.

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.

Late Membership Applications 35All that remains is the issue of late members. The precise problem in relation to late members was fully explained in [16] to [19] of my third judgment which are reproduced for convenience here:- "16.There will be one complication to Mr McDermott's task. The Court has already made orders on 8 September 2011, in anticipation of a referee's report, for the parties to gather the applications for membership that they wish to provide and to give them to Mr Sheikh, the second defendant, the treasurer of the Association by 5.00pm on 19 September 2011. I am pleased to say that Mr Sheikh, is trusted by all sides of this dispute to carry out some essentially neutral administrative tasks for the Association. 17.One of Mr Sheikh's tasks was to collect the membership applications and membership moneys in accordance with the Court's 8 September orders. But it appears that some of the applications were late by a period of between one and thee hours. So, I anticipate one issue which the referee will encounter is one party seeking to put before the referee the names of 107 candidates, whose applications were provided to Mr Sheikh within three hours after the 5.00pm expiry time of the orders. 18.It would be of assistance to the Court if that matter were dealt with in the course of the reference. The Court will probably be asked to consider giving an extension of time to allow these 107 applications to be taken into account. But the court will be reluctant to do this unless there has been a fair opportunity granted to any other party to demonstrate that such other party could also have provided the names of identified potential members to Mr Sheikh by up to three hours after the 5.00pm expiry of the orders. 19.If such evidence is available in the reference, the Court will be assisted in exercising its ultimate discretion as to whether the orders of 8 September should be relaxed. If the orders are relaxed then not only may the 107 late applicant become members but others who may have been able to lodge applications to become a member of the Association, within the same slightly extended period." 36On the issue of late applications the referee was told in the course of the reference that both parties could have procured over 100 additional votes in the three hours from 5pm to 8pm on 19 September 2011. Both parties initially provided lists of names but no supporting evidence of why they were prevented from lodging on time. Ultimately the first plaintiff provided 12 statutory declarations as to various reasons why they were late. He then made the following findings in paragraphs 144 to 148 of this Report:- "144.The First Plaintiff subsequently did provide 12 Statutory Declarations which were drawn as pro formas and offered the declarants the opportunity of confirming that they could have lodged an application by 8.00pm but were unable to do so by 5.00pm because of; (a) Traffic (b) Still being at work until 5.00pm (c) Personal reasons 145.No declarant in fact swore that he/she had completed an undelivered Application prior to 5.00pm, or that he/she would have been able to complete an Application with two nominators, by the later hour. 146.No declarant indicated that their particular difficulty, should it be traffic, personal reasons or working hours, would have been overcome by 8.00pm to enable the lodgement of an Application. 147.The Statutory Declarations were drafted on the basis that one of the three possible impediments would be nominated but a number of declarants did not select one of the three reasons. 148.Having regard to the above there is insufficient evidence for me to be satisfied that any of the 12 declarants from the Plaintiff's list would have been in a position to make an Application by 8.00pm, had the period for the making of nominations been extended. " 37In light of the referee's findings it seems to the Court that an adequate opportunity has been given to both parties to advance the names of any further persons whose late applications could have been received within three hours of 5pm on 19 September 2011. The evidence discloses that the late delivery occurred by mistake. No unfairness will occur to any party by allowing these late applications to be included. Accordingly, the Court will permit the late delivery of 105 applications to be part of the current members list for the purposes of calling a General Meeting to elect a new Executive Council. 38Finally, arrangements must now be made to call a General Meeting. There are still many procedural issues to be worked through in relation to this including the form of notice for the General Meeting, who will sign the Notice, who will preside at the Meeting and who will act as returning officer and what other business (if any) will be transacted at the Meeting. On those matters I will direct the parties to provide submissions to the Court by Friday, 20 April 2012 at 5pm by forwarding them to my Associate. But the important thing is a date for the Meeting be fixed immediately so that everyone can work to that date. I will ask the parties to nominate dates today so that the parties can commence working towards that date.

Conclusions and Orders 39Accordingly, the Court adopts the referee's Report and concludes for the purposes of holding a General Meeting to elect a new Executive Council of the Association that the Master List will be constituted by the persons referred to in paragraph 150(a), (b), (d), (e) and (f) of the referee's Report. The hundred and five late members will be permitted to be added to the Master List. The parties are directed to put on submissions in relation to the procedures for calling and the business to be transacted at the proposed General Meeting, the date of which I will fix today.

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. Decision last updated: 13 April 2012