Associations Incorporation Act 1987

Electoral Act 1907

Supreme Court Act 1935

News Limited v Australian Rugby Football League Limited [1996] FCA 870; (1996) 64 FCR 410

Cummins v Perkins [1899] 1 Ch 16

Edgar v Meade [1916] HCA 70; (1916) 23 CLR 29

Baldwin v Everingham [1993] 1 Qld R 10

McKinnon v Grogan [1974] 1 NSWLR 295

D'Souza v Aaronisle Pty Ltd [2003] WASC 111

1 JOHNSON J: This application for the appointment of a receiver/manager is brought by the first, second and fifth defendants ("the applicants"). The applicants also sought an order that the One Nation (Western Australian Division) Incorporated ("the Party") be joined as the sixth defendant in the primary action. That order was not opposed and was made at the time of the hearing of the application. In support of the application the first defendant has filed an undertaking to the Court that he will pay to any party affected by the order for appointment of a receiver/manager such compensation as the Court may in its discretion consider in the circumstances to be just.

2 In the primary action the plaintiff seeks, inter alia, declarations as to the rightful holders of various positions on the State Executive of the Party which is the State branch of a national political party. The primary proceedings involve a dispute between two groups, each of which claim entitlement to the management of the Party at the State Executive level. Incidental to that dispute is the entitlement to operate the State Executive bank account and entitlement to access the Party's mail.

3 In order to determine this application it is necessary to identify the nature and extent of the dispute which is said to necessitate the appointment of a receiver/manager. It is apparent from the affidavits filed in support of the various interlocutory applications that there is considerable conflict between the groups on many issues of fact relating to the control of the Party and the conduct of meetings of the Party. It is neither possible nor appropriate in the context of an interlocutory application for the Court to resolve the factual disputes. I will, therefore, simply set out in summary form the uncontested facts and the more significant allegations without commenting on the merits.

4 The Party has at all material times been an association duly incorporated pursuant to the provisions of the Associations Incorporations Act 1987 and a registered political party under Pt IIIA of the Electoral Act 1907. The principles governing the conduct of the Party's affairs and the bodies responsible for implementing them in the State is the One Nation WA State Division State Constitution and Regulations ("the State Constitution"). Clause 8 of the State Constitution vests overall management and control of the Party in the State Executive which is stated in cl 8.3 to comprise a State President, State Vice-Presidents, Regional Presidents, a State Secretary, a State Treasurer, a State Policy Development Coordinator and the three Parliamentary Representatives from Western Australia and such other officers as may be deemed necessary.

5 At a General Meeting of members held in August and September 2001, the first defendant, John McKinlay, informed the meetings of his intention to stand down as State President while on a working holiday. On one version of events, the first defendant simply took a leave of absence. On the other, the first defendant actually resigned. In the interim, the plaintiff, Ronald McLean, who was one of the Vice-Presidents, performed the role of State President without, it is alleged, any formal appointment. I note, in passing, that the State Constitution does provide in cl 8.4 for the State Executive to appoint a member to a casual vacancy which can arise in a number of ways, including the resignation of the member or the absence of the member without leave from three consecutive ordinary meetings of the State Executive.

6 In June 2002, the first defendant returned from overseas and attempted to resume his position as State President. It is alleged in the affidavit evidence that, by this stage, the Party and the National Party had become deeply factionalised. At the State level two factions had emerged: one supporting the plaintiff ("the McLean faction") and the other supporting the first defendant ("the McKinlay faction").

7 During the period leading up to the holding of the Annual General Meeting in July 2002 ("the 2002 AGM") the Party machinery, including its office, the telephone and Party records, were in the day-to-day control and management of the McLean faction. Therefore, notification of the AGM, including the proposed notices of motion to be passed and the posting of ballot papers to members, was controlled by the McLean faction.

8 Amongst the papers sent to members prior to the AGM were two State Constitutions. One was the State Constitution lodged with the Ministry of Fair Trading when the Party was incorporated. The other was an amended form of the State Constitution ("the amended Constitution"). The differences between the two documents included a deletion of the ballot provisions, changes to the party's objectives, a deletion of a number of the National Executive's supervisory powers over the State Divisions and the deletion of the entitlement of the Party's three Parliamentary representatives from Western Australia to be members of the State Executive. It is alleged that prior to the 2002 AGM the members were also sent some ballot paper slips for positions on the State Executive. At least one of the positions identified in the ballot slips was Senior Vice President, a position which did not exist under the State Constitution, but one which was to be created under the amended Constitution.

9 The AGM was held on 27 July 2002. At that time various persons were elected as members of the State Executive, including the election of the plaintiff as State President. Affidavit evidence filed in support of an application for an interlocutory injunction identifies a raft of irregularities with respect to the meeting, including improperly disallowing proxies, inadequate verification of postal ballot slips, late or no receipt of ballot papers by members, inadequate circulation of the amended Constitution, circulation of different versions of the amended Constitution, failure to give members 14 days' notice of proposed change to the State Constitution, interference with attempts by members to be heard at the meeting, failure to call for candidates for the State Executive, counting of ballot papers before announcing the close of the ballot and not following the Constitution at the meeting. These allegations are firmly denied by the McLean faction which maintains that the election and the change to the Party's Constitution effected at the 2002 AGM were both valid.

10 On 1 August 2002 the newly elected Vice-Presidents lodged with the Department of Consumer and Employment Protection a certified notice dated 31 July 2002 of the special resolution to amend the Party's Constitution. The plaintiff alleges that, despite an objection being lodged by, or on behalf of, the McKinlay faction, the Commissioner dismissed the objection and processed the notice of special resolution in accordance with s 17 of the Associations Incorporation Act 1987.

11 As a result of the events which transpired at and following the 2002 AGM, on 12 October 2002 the McKinlay faction held a meeting purporting to be a special general meeting of the Party. At the October meeting resolutions were passed rescinding all motions at the AGM, declaring vacant all positions on the State Executive and proposing a fresh ballot for office bearers to be held under the State Constitution, as opposed to the amended Constitution. At a further general meeting held immediately following that meeting resolutions were passed appointing a Steering Committee, of which the second defendants were all members. A series of resolutions were also passed providing for the Steering Committee to assume control of the Party, including the funds of the Party. It is alleged that, following the 12 October 2002 meetings, the first defendant purported to assume the position of State President and advised that he had stood down the State Executive and demanded that the State Secretary call an executive meeting of the previous State Executive as he did not recognise the State Executive elected at the AGM.

12 Further, following the 12 October 2002 meetings, the third defendant, the Australian Postal Corporation, and the fourth defendant, the Police & Nurses Credit Society Limited, were both advised by solicitors for the second defendants that they were the State Executive of the Party and were entitled to possession of the Party's mail and to operate the Party's accounts. As a result of those communications, the second and third defendants declined to allow the State Executive elected at the 2002 AGM to access the Party's mail or its funds. At a subsequent meeting convened by the McKinlay faction the fifth defendants were elected unopposed to hold the offices of the State Executive.

13 It is alleged by the McLean faction that the 12 October 2002 meetings held by the McKinlay faction purporting to remove the State Executive elected at the 2002 AGM and appointing the Steering Committee were not convened in accordance with the Party's Constitution. Consequently, the resolutions passed at the meeting are invalid and all actions subsequently taken by the Steering Committee are invalid. The response of the McKinlay faction is that the 2002 AGM was not convened or conducted in accordance with the Constitution and that the action taken by them was open to them under the State Constitution and appropriate in the circumstances which had arisen.

14 On 11 November 2002 the plaintiff filed the writ in these proceedings seeking declaratory and interlocutory injunctive relief. Interim orders were made providing for access to the Party's mail and its bank accounts. Thereafter, interpleader summons were filed by the third and fourth defendants, whose only interest is to ensure that the Party's mail and funds are accessed only by those who are lawfully entitled to do so. Both the third and fourth defendants have advised that they will abide the decision of the Court and have been excused from further attendance in relation to the action.

15 At the same time, the plaintiff filed a chambers summons for interlocutory injunctions restraining the first, second and fifth defendants (other than those appointed at the 2002 AGM) from representing or otherwise holding themselves out as being, or entitled to act as, office holders of the Party and from giving effect to the resolutions passed on 12 October 2002. Injunctive relief was also sought in relation to Party property and access to the Party's mail and bank accounts. The plaintiff's application for interlocutory injunctive relief was listed for hearing on 18 November 2002. As at that date, the second defendants had purported to call a general meeting of the Party to be held on 23 November 2002 for the purpose of conducting a fresh ballot for office bearers of the State Executive. The plaintiff had also given notice of a general meeting to be held on 30 November 2002. At the hearing on 18 November 2002 the parties spent the day negotiating a settlement of the dispute. The proceedings were adjourned after an agreement was reached between the plaintiff, the first defendant, the second defendants and fifth defendants which included provision for a special general meeting to be held where there would be the election of a new State Executive ("the Agreement").

16 As a result of the Agreement, the general meeting called for 30 November 2002 did not go ahead. The plaintiff states that it was his understanding that, in view of the Agreement, the meeting called for 23 November 2002 would not go ahead. However, according to the plaintiff, minutes of a meeting held by the second defendants on 17 January 2003 which were posted on a Web site which is operated by a supporter of the McKinlay faction indicate that the second defendants had proceeded with the 23 November 2002 meeting. Indeed, it is alleged that the McKinlay faction have held a number of purported general meetings of the Party, of which members of the McLean faction were not made aware or were actively excluded. In reply, the first defendant asserts that, prior to the agreement reached on 18 November 2003, a ballot for the election of the State Executive had already been conducted. It was intended to declare the outcome of the ballot at the next meeting, but it was not ultimately declared until a meeting held on 25 January 2003. The first defendant insists that general meetings were held only after it became clear that the plaintiff and his supporters were repudiating the Agreement and were not prepared to co-operate to carry out the meeting of 1 March 2003 which was required by the Agreement and which was to be conducted by the WA Electoral Commission. It is alleged by the McKinlay faction that the conduct of the plaintiff and his representatives effectively prevented the meeting from being organised. There was also dispute as to the accuracy of the database of financial members entitled to vote. The first defendant alleges that the plaintiff and his representatives sought to remove various financial members from the membership database by purporting to expel or suspend membership or by refusing to renew membership, thereby eliminating the first defendant's supporters. The McLean faction deny any failure to co-operate and any attempt to "sanitise" the membership database.

17 The State Executive elected at the 2002 AGM has, since November 2002, stopped holding monthly general meetings of members of the Party, allegedly because the meetings were continually interrupted by hecklers. It resumed holding monthly general meetings of members of the Party in March 2003, having engaged security guards to attend and to ensure there was no disruption. It would seem that, for whatever reason, the members of the McKinlay faction have not attended these general meetings, although the plaintiff maintains that they were given notice of the meetings.

18 The affidavit material filed in this matter identifies allegations that the McLean faction has failed to renew the membership of persons opposed to it, of failing to comply with the requirements for calling a valid meeting, of failing to provide details of the Party's day-to-day expenses and of paying amounts other than day-to-day expenses from Party funds. Allegations have also been made that the McLean faction has inaccurately advised the Australian Electoral Commission as to who is, and who is not, a member of the Party, that Party records have been moved and the Party's telephone number diverted to the home of Mary Daniels, the plaintiff's de facto partner, and a member of the McLean faction. Concerns have also been expressed that the Party's database maintained by, and under the control of, Ms Daniels is not an accurate record of the Party's membership. The consequence would be that, if a meeting were to be called, not everyone entitled to vote would be advised. An allegation has also been made with respect to receipt of membership fees by the McKinlay faction. These allegations are variously denied by the respective parties or, in relation to the calling of meeting and dealings with Party records and funds, admitted as being appropriated conduct for a properly elected State Executive.

19 Without commenting on the merits of any of these allegations, the position is that each faction alleges that the purported appointment of the other to the State Executive is void and of no effect. Further, based on the extensive affidavit material, I am able to determine that the division of the Party into two factions, each of which is implacably opposed to the other assuming or maintaining control of the Party, has resulted in a situation where the Party is unable to operate effectively and in the manner appropriate to a political party. It is also abundantly clear that the factions are unable to put even a negotiated agreement into affect without dispute. Consequently, the dispute between the two factions is highly unlikely to be resolved other than by order of this Court.

20 On 18 July 2003 McLure J granted an interlocutory injunction restraining the first, second and fifth defendants from representing or otherwise holding themselves out as office holders of the Party. In her reasons for decision McLure J made it abundantly clear that her decision to grant the plaintiff's application for injunctive relief, the only application before her at that time, should not be taken as giving approval to, or accepting the legitimacy of, the McLean faction's management of the Party. Rather, the decision was based on the undesirability of there being two factions purporting to act and represent the Party.

21 In the course of her reasons, McLure J also made the following observation:

"In my view, this is a situation for the appointment of a receiver and manager to manage the party until a new state executive can be elected based on a membership database that is regularised or accepted as being regular. But no party seeks such relief, so I say nothing further on it."

22 The affidavit material provided to her Honour contained numerous allegations concerning the adequacy and accuracy of the membership database as a result of it being controlled by the McLean faction. Indeed, the affidavit material contained serious allegations of an attempt to "sanitise" the database by removing supporters of the McKinlay faction. It would seem that this issue was uppermost in McLure J's mind when she made her comment. However, no reference was made by her Honour to the issue of the validity of constitutional changes made at the 2002 AGM and she made no attempt to determine the question of whether it was appropriate, in all the circumstances, to appoint a receiver/manager; McLure J merely suggested it as a possible resolution of the impasse which had arisen.

23 I turn now to consider the legal principles relevant to an application to appoint a receiver. Section 25(9) of the Supreme Court Act 1935 provides that a receiver may be appointed by an interlocutory order of the Court or a Judge in all cases in which it shall appear to the Court or a Judge to be just or convenient that such order should be made; and any such order may be made either unconditionally or upon such terms and conditions as the Court or Judge shall think just. It can be seen that the jurisdiction is quite general and, in its terms, unlimited. Indeed, it has been held that the sub-section enlarges rather than limits the power of the Court at common law to appoint receivers: Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547 at 552. However, the words "just or convenient" do not confer an arbitrary or unregulated discretion on the court: Harris v Beauchamp Bros [1894] 1 QB 801 at 809. The power to appoint a receiver is to be exercised judicially and with due regard to authorities which are binding on the court: Parker v Campden London Borough Council [1986] Ch 162 per Donaldson MR, at 173 and 179.

24 It should also be emphasised that the appointment of a receiver is a remedy to be exercised with the utmost care and caution: National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386, at 539 and 541 ("Bond"). As the Full Court observed (at 539):

"The appointment of a receiver which is to be, so to speak, at the expense of the defendant's possession and without his consent is a step never to be taken without proper consideration of the defendant's position: Owen v Homan [1853] EngR 883; (1853) 10 ER 752."

25 The Full Court also considered the approach taken in the United States of America where the power has been described in various authorities as a drastic, harsh and dangerous one which should be exercised with care and caution and that the appointment of a receiver is an extraordinary and drastic remedy to be exercised with utmost care and caution and only where the Court is satisfied there is imminent danger of loss if it is not exercised: Bond at 541. However, in my view, the Court in Bond did not adopt that test as being of general application. Indeed, the effect of the American authorities is stated in 65 American Jurisprudence 2d to be in the following, less stringent terms (Bond at 541 - 542):

"A court in exercising its discretion to appoint or refuse a receiver must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, the ends of justice, the rights of all the parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies. This discretion is to be exercised with great caution and circumspection, after full consideration of the facts of a particular case and the interests of all parties concerned, for a reason strongly appealing to the judge to whom the application is made."

26 The Full Court in Bond, while clearly adopting the requirement for the exercise of great caution and circumspection because of the serious nature of the remedy, did not extend the requirement for exceptional circumstances to other than ex parte applications for the relief. The Full Court's reasons are also coloured by the circumstances then under consideration: an ex parte application by a creditor for the appointment of a receiver to a group of companies "in a very large way of business" (at 540). As the Court observed (at 551):

"But we do not think that it was or is a correct exercise of the power to appoint receivers and managers to enable a creditor or creditors, in hostile proceedings, to have an administrator appointed to manage the affairs, business and property of the debtor company on the ground that the company is financially embarrassed."

27 The rationale behind the Court's approach is best understood from the following extract from the judgment (at 539 - 540):

"Where a receiver is sought, not merely of a particular asset of the defendant, but of all his assets, particular caution is required and where, as in the present case, the receiver is to possess himself of and to manage the assets and undertaking of a collection of companies which, whether they are solvent or not, are in a very large way of business, very great circumspection is required. Of course in a strong enough case the court might, without warning to a trading company, divest it of control of its undertaking and assets. But it must always be borne in mind that the appointment of a receiver in such a case authorises an irresistible invasion and that even if the army of occupation is withdrawn after only a short time things may never be the same again. Rights of property and the company's privacy are violated. Only the most pressing need can warrant such an invasion without notice."

28 It is apparent from the facts to which I have already referred that the situation confronting the Court in Bond was very different from the situation here being considered. In my view, the proper approach to the appointment of a receiver is best described by the extract from 65 American Jurisprudence 2d as reproduced by the Full Court in Bond (at 541 - 542) and referred to above.

29 In determining whether it is appropriate to appoint a receiver in any set of circumstances, it is necessary to consider the role which the receiver is to play. The role of a receiver is to take possession of the property as the Court's officer with the duty of dealing with it fairly in the interests of all the parties to the proceedings: Re Newdigate Colliery Ltd [1912] 1 Ch 468 at 478. The receiver's responsibility is to the Court. He or she is not the agent of, or the trustee for, any of the parties, nor subject to their control: Co-operative Farmers' & Graziers' Direct Meat Supply Ltd v Smart [1977] VicRp 47; [1977] VR 386, at 391. It must be appreciated that his or her position is quite different from that of receivers appointed pursuant to contractual arrangements or pursuant to other statutory provisions: Seaman's Civil Procedure 51.0.3.

30 There is certainly precedent for appointing receivers to partnerships: Tate v Barry (1928) 28 SR (NSW) 380, at 382 - 383, Long Innes J citing Baxter v West (1858) 28 LJ Ch 169; Lamerand v Lamerand (No 1) (1960) 80 WN (NSW) 198 per Jacobs, at 198; Mitchell v Simons (1862) 1 SCR (NSW) Eq 70, at 73. These authorities support the appointment of a receiver where there is a partnership. That partnership has been dissolved, or will be dissolved, by court order or otherwise, and, in particular, where there are allegations of improper conduct. The role of a receiver in such circumstances is to take possession of the property which is in dispute between the parties so that it may be preserved for the benefit of the party found to be entitled to it on the hearing of the action.

31 There is also a well-established jurisdiction to appoint a receiver upon default in payment of principal or interest under a mortgage: Hopkins v Worcester and Birmingham Canal Proprietors (1868) LR 6 Eq 437; Re Crompton & Co Ltd [1914] 1 Ch 967. The jurisdiction is also exercised on the application of a debenture holder to appoint a receiver of the assets and undertakings of a company: see, for example, Moss Steamship Co Ltd v Whinney [1912] Ac 254. A receiver is often appointed to enable a judgment creditor to obtain the benefit of a judgment at law. There is also jurisdiction to appoint a receiver to protect the assets in a deceased estate pending a grant of probate or letters of administration: Re Oakes [1917] 1 Ch 230. A receiver and manager may be appointed on the application of a landlord to preserve licences to which he is entitled upon reversion: Charrington & Co Ltd v Camp [1902] 1 Ch 386, at 389 - 390.

32 Usually equity will not intervene by the appointment of a receiver in an action between two parties, each claiming under a legal title. The parties will be left to their remedies at law. But a receiver may be appointed in a very clear case where jeopardy is established. In John v John [1898] 2 Ch 537, an action of ejectment, the rents of the property were in jeopardy and the Court held that to be sufficient justification for the appointment of a receiver pending the determination of the ejectment proceedings. However, it is not in every case of competing claims of legal title that a receiver will be appointed. In Marshall v Charteris [1920] 1 Ch 520 the Court distinguished John v John because of the fact that a third party was in possession.

33 I am not aware of any authority which addresses the appointment of a receiver to a political party. Indeed, for some time the law considered that disputes between members of political parties, being voluntary associations, were not justiciable. In Cameron v Hogan [1934] HCA 24; [1934] 51 CLR 358 the High Court held that the executive of a branch of the Australian Labor Party, a voluntary association, by passing an unauthorised resolution for the exclusion of a member of the association or by failing to observe the rules governing the association's affairs commits no breach of contract actionable either at common law or in equity, unless the member complaining has under the rules some civil right of a proprietary nature. However, more recent single judge decisions distinguish Cameron v Hogan on the basis that the statutory recognition of a political party under the State and Commonwealth Electoral Acts, including, as it does, an entitlement to the provision of public moneys, takes the Party beyond the ambit of a mere voluntary association. In Clarke v Australian Labour Party (SA Branch) [1999] SASC 365; (1999) 74 SASR 109 the plaintiffs sought injunctive and declaratory relief in relation to, inter alia, a constitutional amendment with retrospective effect. The first defendant was an unincorporated association. Mulligan J, relying on the effect of the relevant electoral legislation, held that, whilst the rules of the party do not contemplate the establishment of legal relations inter se, and consequently should not be treated as amounting to an enforceable contract, the statutory recognition of the party took the party beyond the ambit of a mere voluntary association. Accordingly, the dispute regarding the interpretation and application of the Constitution was held to be justiciable: see 133, 139 and 138 - 140. In this case, the sixth defendant is both a body incorporated for "political purposes" under s 4(1)(e) of the Associations Incorporation Act 1987 and a political party registered under s 62H of the Electoral Act 1907. In my view, there is no impediment to the Court appointing a receiver to a political party if the circumstances warrant it.

34 The appointment of a receiver may be an inadequate remedy if it is necessary that the business or entity should continue to trade or operate. In such a case the appointment must be of a receiver and manager: Re Manchester & Milford Railway Co; Ex parte Cambrian Rail Co (1880) 14 Ch D 645, at 653 and 658.

35 In determining whether it is appropriate to appoint a receiver/manager in this case, it is also necessary to consider the nature of the remedy. The jurisdiction rests upon the principle that the applicant's legal remedy to protect his or her right is inadequate and that equity should intervene by the special remedy of a receiver: Bond Brewing Holdings Ltd v National Australia Bank Ltd [1991] VicRp 31; (1990) 1 ACSR 445, at 461 - 462. The appointment is made at the instance of a party to an action to take possession of and get in the property which is the subject matter of the action or the title to which, or control of which, is in dispute between the parties. The receiver is to hold the property so that it may be preserved for the benefit of the party found entitled, or, ultimately, distributed among the parties in accordance with their entitlements: Meagher Gummow & Lehane's "Equity: Doctrines and Remedies" 4th Edition at 908.

36 The appointment of a receiver is necessarily an interim measure. In short, the object of the appointment of a receiver is to protect something which may turn out to belong to another: Clydesdale v McManus and Anor (1934) 36 WALR 89 per Northmore CJ, at 90. As the authors of Meagher, Gummow & Lehane observed at 923:

"... one may talk loosely of a receiver of a company, but unless that means receiver of the property (or some of it) of a company the phrase is not only loose but meaningless."

37 However, the protection of property, although a necessary part of the remedy, need not be the primary motivation for the appointment of a receiver. The case of Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382 is an example of the appointment of a receiver/manager for the primary purpose of resolving a dispute within an organisation, whilst at the same time preserving the organisation's property. The case, which was an action by minority shareholders for a court-appointed receiver under the Companies Act 1961, illustrates the convenience of the remedy pending the resolution of disputes between shareholders. As Street J observed at 383:

"The receiver and manager is appointed as an officer of the Court to undertake in that capacity the management of the business of the company as well, of course, as undertaking the care of the company's assets."

38 In my view, providing there is property to be preserved, this type of equitable relief is available despite the fact that it is primarily being sought to resolve conflicts which seriously prejudice the operation of the organisation.

39 There are two further principles which have considerable bearing on the outcome of this application. The first principle is that, generally speaking, the Court will not appoint a receiver where there is a grave risk of injury to the interests of other parties. In Owen v Homan [1853] EngR 883; (1853) 10 ER 752 the House of Lords made the following statement (at 766):

"The receiver, if appointed in this case, must be appointed on the principle on which the court of chancery acts, of preserving property pending the litigation which is to decide the right of the litigant parties. In such cases the Court must of necessity exercise a discretion as to whether it will or will not take possession of the property by its officer. No positive unvarying rule can be laid down as to whether the court will or will not interfere by this kind of interim protection of the property. Where indeed the property is as it were in medio, in the enjoyment of no one, the Court can hardly do wrong in taking possession. It is the common interest of all parties that the Court should prevent a scramble ... . But where the object of the Plaintiff is to assert a right to property of which of which the Defendant is in the enjoyment, the case is necessarily involved in further questions. The Court by taking possession at the instance of the Plaintiff may be doing a wrong to the Defendant; in some cases an irreparable wrong. If the Plaintiff should eventually fail in establishing his right against the Defendant, the Court may by its interim interference have caused mischief to the defendant for which the subsequent restoration of the property may afford no adequate compensation. In all cases, therefore, where the court interferes by appointing a receiver of property in the possession of the Defendant before the title of the Defendant is established by decree, it exercises a discretion to be governed by all the circumstances of the case."

40 The second principle is that an appointment will not be made on a disputed claim where its effect would be to pre-judge the action: Marshall v Charteris, at 526. In Marshall v Charteris the defendant in an ejectment action was in actual occupation of a house which was in dispute in the action, but was not in receipt of any rents and profits of the same. The Court refused, on an interlocutory application, to exercise its discretionary jurisdiction by appointing a receiver of the rents and profits of the house and ordering the defendant to give up possession to the receiver. As Eve J observed at 523 - 524:

"... if the procedure adopted by the plaintiff results in the order for which she asks, she will, in substance, be obtaining judgment in the action on this interlocutory motion. Several objections occur to me to such a course being adopted. It operates to the prejudice of the right of the defendant in possession to plead her possession as a statutory defence and thereby put the plaintiff to the proof of the paramount title upon which she relies; it imposes on the defendant at a stage of the action before any pleading has been delivered the obligation of disclosing the title under which she claims and requires her to defend that title or at least displace the plaintiff's title without the protection afforded in cases where the action comes on to be heard in the ordinary way after pleadings, and the other usual steps in the action, including discovery; finally it puts the court in this difficulty, that the substantial issue in the action may, by this procedure, be determined in some degree upon evidence admissible on an interlocutory application but properly open to objection at the trial."

41 The applicants seek the appointment of a receiver/manager on an interim basis only pending the holding of a fresh election. More significantly, the applicants seek an order that the fresh election be held under the State Constitution rather than the amended Constitution. Both the applicants and the plaintiff (the only active respondent to this application) agree that a court-appointed receiver/manager must act according to a Constitution in relation to which there is no dispute. It is necessary then for the Court to determine which of the two Constitutions binds the court-appointed receiver/manager, for without such a determination the appointment simply will not resolve the conflict which divides the party. An integral step in that process is the consideration of whether it is open to this Court on an interlocutory application to make such a determination.

42 On behalf of the applicants, it is said that it is not possible to clothe the amended Constitution with legal validity, leaving the State Constitution as the only option. The plaintiff submits that the State Constitution was validly amended at the 2002 AGM and, despite objection, the amendments were subsequently accepted by the Commissioner under s 17 of the Associations Incorporation Act 1987.

43 The applicants submit that the issue of the validity of the amended Constitution can be resolved by making findings of law based on a number of undisputed facts and, hence, there is no impediment to the Court determining this application without a full hearing. The applicants identify three sources of invalidity of the amended Constitution:

(1) Procedural irregularities in the calling and the conduct of the 2002 AGM;

(2) The passing of the amendments at an AGM presided over by a State Executive from which the three sitting State Parliamentarians had been excluded; and

(3) The failure to have the amendments ratified at a national level.

44 It was conceded by the applicants that the first source of invalidity involves unresolved factual disputes and cannot be relied upon for the purposes of this application.

45 Essentially, the submission made in relation to the second source of invalidity is that the 2002 AGM was not held in accordance with the procedure set out in cl 15, cl 17 and cl 18 of the State Constitution. As I understand the submission, such non-compliance has a two-fold effect: it invalidates the election of the State Executive which, in turn, invalidates the amendments which were subsequently made.

46 Clause 18.1 of the State Constitution relevantly provides that the Constitution may only be amended by special resolution at a general meeting held in accordance with cl 15. Clause 15.4 sets out the requirements for giving notice of any motion or special resolution to be moved at a general meeting. However, the subclause on which the applicant specifically relies is cl 15.6 which is in the following terms:

"In the case of an annual general meeting, the order in which business is to be transacted is:

(a) the consideration of the accounts and report of the State Executive; then

(b) the election of the State Executive members to replace outgoing State Executive members; then

(c) any other business requiring consideration by the WA State Division in a general meeting."

47 It does not seem to be in dispute that the order of business at the AGM was the holding of the election of office bearers, followed by the motion to amend the Constitution. Although, prima facie, in accordance with the order set out in cl 15.6, the positions to which office bearers were elected were those identified in the amended Constitution, thereby excluding the three State Parliamentarians. Accordingly, it is said that the practical effect was a reversal of the order of business required by cl 15.6, thereby invalidating the constitutional amendments. I am not persuaded that such a conclusion must necessarily be drawn from the wording of the provision and the undisputed facts. A competing view is that there were certain defects in the way in which the election was carried out, including the failure to elect the three Parliamentary representatives as office bearers. Whilst it would appear to be the case that those in control of the meeting may have acted precipitously by holding elections only for those positions identified in the amended Constitution, in my view, this issue has not been fully dealt with either by evidence or submission and I do not consider it appropriate to make final findings on the point on an application of this type.

48 Even accepting for the purposes of this application that there was such a reversal of the appropriate order of business, it does not automatically follow that all business transacted at the meeting was thereby rendered invalid. Essentially, it is a matter of construction of the relevant constitutional provisions. Does cl 15.6 impose a binding obligation to follow the order identified which, if not complied with, invalidates the business conducted at the AGM, or does it merely set out an appropriate order of business which allows for the proper conduct of the meeting? Certainly, the terminology of cl 15.6 is directive. However, in my view, it is not mandatory in its terms. There are a number of subclauses of cl 15 which use the standard mandatory terminology of "shall": see cl 15.1(b), cl 15.1(c), cl 15.2, cl 15.4, cl 15.5 and cl 15.10. Other subclauses use the standard discretionary terminology of "may": see cl 15.1(a), cl 15.3, cl 15.7, cl 15.9(a) and cl 15.12. Clause 15.6 uses neither form. Further, I am unable to identify any other provision of the State Constitution which expressively or impliedly supports the proposition that the consequence of a mere non-compliance with the order of business at an AGM, or a defect in the carrying out of one item of business, would have the very drastic effect of rendering invalid other matters subsequently dealt with at the meeting. In my view, an express statement would reasonably be expected if such a drastic result were indeed intended.

49 It is further said by the applicants that, even if the amendments were lawfully adopted at the AGM, it would be necessary to hold a further election of office bearers at a subsequent general meeting. I do not accept that submission. There is, in my view, no support for such an interpretation of the constitutional provisions.

50 According to the applicants' submission, the primary area of difficulty with the election of the State Executive was the exclusion of the three State Parliamentarians as members. However, there is no suggestion, on the materials before me, that the Parliamentarians were thereby precluded from voting on the motion. Indeed, the way in which their exclusion invalidated the subsequent amendment was not, in my view, adequately articulated. There was some evidence from the bar table that, because of the inappropriate way in which the meetings is alleged to have been conducted, the Parliamentarians felt they could not speak to the meeting regarding any proposed amendments to the Constitution and, as a consequence, they left the meeting before its conclusion. However, counsel for the applicants ultimately conceded that this was a matter of evidence requiring a determination of facts and, as such, could not properly be relied upon for the purposes of this application.

51 The final source of alleged invalidity of the amendments to the State Constitution is the failure to have the amendments ratified at a national level. Clause 1 of the State Constitution identifies the relationship between the Party and the One Nation Party. Clause 1.2 states that, notwithstanding being referred to as "One Nation WA", the Party shall continue to be the West Australian Division of the One Nation Party. The Party's purpose is described, inter alia, in cl 1.3 as being to achieve the objectives of the One Nation Party. Further, the State Constitution expressly provides in cl 1.4 that the State Constitution is subordinate to the National Constitution to the effect that where there is any inconsistency between the provisions of the State Constitution and the provisions of the National Constitution which has not been approved by the National Executive, the provisions of the National Constitution prevail. In cl 2.1 the term "State Constitution" is defined as meaning "this constitution, established under and pursuant to the National Constitution to achieve the objectives of the Party in the State".

52 The constitutional primacy of the National Constitution and the National Executive is further evidenced by the terms of cl 8.12:

"The State Executive shall not have the power to make decisions in relation to any of the following matters without the prior approval in writing of the National Executive:-

...

(b) Relationships with other political parties (including alliances, coalitions and joint endorsement of candidates);

(c) Party Policy;

(d) The State Constitution or the National Constitution of the Party;

(e) The leadership of the Party at any level of Government."

53 The applicant submits that the effect of these clauses is that, notwithstanding the Party's status as an incorporated association under the Associations Incorporation Act 1987, there can be no amendment to the State Constitution without the prior approval in writing of the National Executive. The applicants allege that the National Executive had not given its prior approval in writing to the proposed constitutional amendments. In particular, it had not given its prior approval in writing to the exclusion of the three Parliamentary Representatives from the leadership by excluding them as ex officio members of the State Executive. It is also alleged that there has been no subsequent adoption or ratification of the constitutional amendments or the exclusion of the sitting Parliamentarians from the State Executive.

54 The plaintiff disputes the proposition that there can be no amendment to the State Constitution without the prior written approval of the National Executive. First, it is said that there is a conflict between the provisions of the Associations Incorporation Act 1987 and a constitution, the terms of which restrict the power of the incorporated association by requiring written approval on some matters from what is effectively a third party. The plaintiff relies on s 17(1) of the Associations Incorporation Act 1987, which is in the following terms:

"Subject to sections 18 and 19 an incorporated association may alter its rules by special resolution but not otherwise."

55 Sections 18 and 19 are of no relevance for present purposes. The plaintiff's submission, as I understand it, is that s 17 empowers the incorporated association to alter its rules and that any restraint on that power conflicts with s 17. I am not aware and have not been taken to any authority directly on this point. There exists some authority for the validity of reading the Constitution of a "dependent" political party together with the Constitution of the parent body: see Lewis v Heffer [1978] 1 WLR 1061. However, that case dealt with unincorporated associations and no question of a conflict with relevant statutory provisions arose.

56 Having considered the terms of the State Constitution and the relevant legislation, I have concluded that no such inconsistency exists between cl 8.12 and s 17. Section 17 does allow for alteration of an association's rules, but in the context of creating an obligatory method for implementing the alteration. It does not expressly prohibit constitutional restrictions antecedent to placing a special resolution on the agenda of a general or special meeting and I can see no valid reason for interpreting the section to include an implied restriction. In my view, s 17 does not prevent the constitution or the rules of an incorporated association from creating compliance with an obligation to an affiliated body. Each member of the incorporated association has access to the Constitution and would be aware, on joining, of the restriction on constitutional change.

57 The plaintiff further submits that the precise terms of cl 8.12 require a more restricted interpretation than that suggested by the applicants. It is said that cl 8.12 precludes only the State Executive from making decisions in relation to the State Constitution without the prior approval in writing of the National Executive. As the decision was made by the Party's members in general meeting, cl 8.12 has no application.

58 In determining the proper construction of cl 8.12, it is useful to consider whether the clause would have any real effect if it were to be construed as suggested by the plaintiff. The plaintiff submits that there are a number of decisions to be made with respect to the State Constitution by the State Executive other than amendments to its terms. One example referred to was cl 14.10 which allows the State Executive to specify various matters related to the taking of ballots, including the matters to be determined by ballot, the method of counting and the majority required. However, cl 14.10 is stated to apply "except as may be otherwise provided for in this Constitution". In my view, cl 14.10 confers a power which is not to be exercised in conflict with the Constitution and is not a power to make decisions in relation to the State Constitution to which the requirement for the prior approval in writing of the National Executive under cl 8.12 would logically apply. Further, if prior approval were required from the National Party for such matters, the State Executive would be greatly restricted in carrying out its basic and ordinary obligations.

59 Counsel for the plaintiff also identified the regulation-making power in cl 17 of the State Constitution as another example of a provision to which cl 8.12 might apply. However, cl 17.2 requires that the regulations be prescribed, repealed, added to or amended by the State Executive in conjunction with the National Executive in any event and further provides that such amendments are not to be inconsistent with the provisions of the State Constitution. In my view, the two examples given do not in fact assist the plaintiff's argument.

60 Neither do the more general provisions identifying the powers of the State Executive sit comfortably with the respondent's interpretation of cl 8.12. Those powers are set out in cl 4 of the State Constitution. They are expressly stated to be subject to the provisions of cl 8.7 of the Constitution which states as follows:

"The National Executive shall at all times, have the power to veto and change the decision of the State Executive or any other person or body exercising any power under this Constitution and to exercise all or any of the powers of the State Executive under this Constitution and/or its rules or regulations at any time, if the National Executive, in its absolute discretion, considers it necessary in the best interests of the Party or to ensure compliance with the National Party's objectives."

61 Clause 8.7 is set out in the section of the State Constitution dealing with the State Executive's obligations. Clause 8.1 provides that the State Executive shall be responsible for the overall management of the Party in the WA State Division and shall be subject to any directions by the National Executive from time to time.

62 It can be seen that the State Executive's powers and obligations under the State Constitution are already fettered by control of the National Executive without the need for cl 8.12(c).

63 In reply, the applicant points out that the Constitution can only be amended by a special resolution at a general meeting in accordance with cl 15: cl 18.1. Clause 15.1 places the power to call a general or special meeting in the State Executive and also requires it to convene any AGM within four months of the end of the Party's financial year. The State Executive is further required to make provision in the agenda of the AGM for special resolution of constitutional matters. Clause 15.1(c) provides that even a meeting request by the required 50 or more members must be convened by the State Executive in accordance with the Constitution and, therefore, in accordance with cl 8.12. Further, under cl 15.2 members requesting a special meeting must state in that request the purpose for which the special meeting concerned is required. The State Executive would then become immediately aware that a constitutional amendment was being proposed for which it would require National Executive approval before taking any steps under the Constitution in relation to the amendment. There is, therefore, some substance in the respondent's submission that even if cl 8.12 were confined to the State Executive, the impact would be the same: approval of the National Executive is required for any amendment to the Constitution. The only difficulty with that argument is cl 15.3 which provides that, if a special meeting is not convened with the relevant period, the members may themselves convene a special meeting as if they were the Secretary. However, the position of Secretary is a State Executive position under cl 8.3. In my view, any group of members conducting a meeting as Secretary pursuant to cl 15.3 would be bound by the requirements of cl 8.12 and the ultimate effect remains the same.

64 The requirement for prior written approval of the National Executive of any constitutional amendment is, in my view, consistent with the tenor of the State Constitution. Clause 1.4 provides that the Constitution is subordinate to the National Constitution to the effect that where there is any inconsistency between the provisions of this Constitution and the provisions of the National Constitution and the National Executive have not approved such inconsistency, the provisions of the National Constitution shall prevail. I note, in passing, that the issue of inconsistency between the June Constitution and the National Constitution and the effect thereof has not been raised by either party in this application. Clause 8.1 subordinates the State Executive to the directions of the National Executive from time to time. Clause 8.7 confers on the National Executive an unfettered power of veto over the activities of the State Executive. It would be somewhat odd if a group of members were empowered under the Constitution to do that which the body elected by the members to be responsible for the overall management of the Party could not do without National Executive approval. Of course, the effect of such a construction is that the members of the State Party, either as a group of 50 or more calling for constitutional amendment, or as represented by their elected representatives, the State Executive, have no power to separate themselves from the National Executive unless the National Executive allows them to. Whilst this may seem a somewhat restrictive framework, it must be kept in mind that it was the choice of the individual member to join an organisation which is constitutionally tied to a national body. As Lord Denning MR observed in Lewis v Heffer, at 1071:

"Each of these parties, the national party and the local constituency party is, in law an unincorporated association. In that sense each of them is a 'separate entity' as Megarry J said in John v Rees [1970] Ch 345, 389. But they are inextricably tied together. The legal bonds between these two associations are as tight as rules can make them."

65 Lord Denning went on to conclude that, in the circumstances of the case, the local constituency party could not be regarded as independent of the national party, at 1071.

66 Before I make any concluded finding on the issue of National Executive approval which may fetter or influence a determination of the claim should it proceed to a full hearing, I must consider the plaintiff's final submissions on the issue of the need for approval of constitutional amendments by the National Executive. The plaintiff submits that, since there is an argument as to the correct interpretation of cl 8.12, this is an issue that should not be resolved on an interlocutory application. The applicant's position is that the issue for resolution is one of statutory construction alone and can properly be dealt with on an application such as this where there has been notice of the issue and argument upon it. In view of the conclusion I have drawn in relation to another matter raised by the plaintiff, it is unnecessary to decide this point.

67 The plaintiff further asserts that there is no evidence of an absence of National Executive approval. No affidavit evidence has been adduced to suggest that approval was not obtained. In reply, the applicants state that there is uncontroverted affidavit evidence that the National Executive had not met since March 2002. The Court is asked, based on that evidence and the absence of any direct evidence of approval, to draw an inference that such approval was not, and has not, been given. My difficulty with that proposition is the affidavit material which indicates that the rifts in the party at the State level are mirrored to a certain extent at the National level. Such a state of disarray, as is alleged in the affidavit material, cautions me against drawing such an inference in the absence of direct and tested evidence on the point. The appointment of a receiver/manager is certainly an attractive solution to the impasse which has resulted from the unfortunate happenings within the Party because it brings the matter to an end by way of an early court-managed resolution. If not for the issue of the appropriate Constitution under which a court-appointed receiver/manager should act, I would have no hesitation in making such an appointment in view of the apparently irreconcilable factional differences within the Party.

68 However, the practical effect of granting the relief sought, involving, as it does, the conduct of an election in accordance with a Constitution, the validity of which is clearly in dispute, would be to finally determine the dispute without a hearing. As I have indicated, such a course is firmly cautioned against in the authorities. To do so by way of drawing inferences from the various, mostly disputed, matters raised in affidavits filed in interlocutory proceedings is a path of last resort. In particular, to draw an inference as to the absence of the necessary National Executive approval for constitutional amendment based solely on the absence of positive evidence to the contrary, or on the mere untested allegation that there has been no formal meeting of the National Executive, is a course fraught with the potential for injustice. For these reasons I am not prepared to conclude on an interlocutory basis on the material before me that the amendments made to the State Constitution at the 2002 AGM were invalid.

69 It is unnecessary for me to determine any other of the matters raised by the plaintiff in view of my finding that it is neither possible nor appropriate for me to make the necessary findings of fact or law without the assistance of a full hearing.

70 Finally, counsel for the plaintiff requests that the order made by McLure J on 18 July 2003 freezing the Party's account be vacated. It is said that it was intended only to be an interim measure. The order was made pending further order. Her Honour was disinclined to make any further order without One Nation being a party to the action. One Nation is now a party to the action, but there is no application before me in relation to the moneys. I would, in any event, be reluctant to vary the order where the circumstances which led to the funds being frozen persist. In my view, the issues in this case must inevitably be determined at trial.

71 I would dismiss the application for the appointment of a receiver/manager.