POPOVIC & ORS v TANASIJEVIC & ORS No. SCCIV-96-279 [2001] SASC 289

Supreme Court of SA|2001-08-22|Before: Doyle CJ, Martin JJ

Appellant: SERBIAN COMMUNITY WELFARE ASSOCIATION OF SA INC

Counsel: MR R SALLIS - Solicitors: GROPE HAMILTON BUDINI LAWYERS

Judgment No. [2001] SASC 289

On Appeal from SUPREME COURT (THE HONOURABLE JUSTICE OLSSON)

DOYLE CJ I would dismiss the appeal in this matter. I agree with the reasons given by Williams J. There is nothing that I wish to add to those reasons.

WILLIAMS J This is an appeal by the defendants from a judgment of a single Judge. The action involves a dispute as to the operation of the rules of Serbian Community Welfare Association of South Australia Inc (the Welfare Association) (which is itself a defendant to the action).

On 31 March 2000 the Judge delivered reasons (Judgment [2000] SASC 87) for reaching the conclusion that two plaintiffs, Popovic and Jovicevic were members of the Association and had standing to bring this action; His Honour also made a number of findings which led him to the view that the affairs of the Welfare Association were in a chaotic state. On 28 June 2000 the Judge gave further reasons (Judgment [2000] SASC 186) for exercising jurisdiction under s 61(4) of the Associations Incorporation Act 1985 (SA) to alter the rules of the Welfare Association. The order recites the Judge's findings of oppression in the conduct of the Welfare Association's affairs; the order is predicated on a need to provide a proper legal basis upon which the Association can conduct its undertaking in the future. For the purpose of removing doubt the order contains a declaration as to the names of the office bearers and committee members as at the date of the order; in particular the order recognises Popovic as President and Jovicevic as Vice President of the Committee of Management.

The appeal is brought against the final orders entered on 28 June 2000 and which incorporate the matters to which I have referred. The appellants dispute that Popovic and Jovicevic are members of the Association or of its Committee. The appellants also contend that Popovic and Jovicevic are not entitled to declaratory relief.

The dispute is effectively between two South Australian Serbian groups who are vying for management control of the Association. Tanasijevic and Popovic each claim to occupy the office of Committee President.

For some years the Welfare Association has been administered without proper regard for the requirements of its Rules and without the maintenance of proper records. In terms of the Association's rules its committee structure is supposed to mirror that of the Serbian Community of South Australia Inc ("the Community Association") so that each Association is managed by the same people occupying corresponding offices and committee positions in each organization. However the requirements of the Association's rules have been largely ignored. Moreover there have also been disputes as to the effect of attempted rule amendments leading to uncertainty as to the rules themselves.

The uncertainties in the rules have been resolved by the Trial Judge and there is no appeal with respect thereto. Accordingly it is possible for the present purposes to summarise the rules as now relevant.

The Welfare Association was incorporated under the Associations Incorporation Act on 3 November 1986; under its constitution (r 4a) its members were expressed to be the members of the Committee [for the time being] of the Community Association". The Welfare Association was formed for the purpose of acquiring the Norwood Nursing Home in conjunction with the Hungarian Caritas Society. More recently the Welfare Association has also operated the Pennington Aged Care Village. Each undertaking has benefited from substantial government grants. The Welfare Association has assets worth in excess of $2,000,000 and it continues to receive recurrent funding from the Australian Government to support its activities which provide valuable community services for the aged and infirm. In this respect the Trial Judge identified a significant public interest in ensuring the proper conduct of the Association's affairs.

The Community Association was incorporated on 15 July 1976 with an initial membership comprising eight affiliated Serbian organizations; there was provision in the rules to admit as members other Serbian organizations as well as Serbian individuals. It seems that the Rules of the Community Association take effect upon the basis that the various affiliated organizations (whether foundation members or otherwise) will be represented by delegates in relation to the affairs of the Community Association; these delegates thus qualify to be nominated for election to the Committee of Management of the Community Association.

Rule 5 of the Community Association's rules provides for a Committee of eight persons comprising five office bearers plus three other members. The office bearers comprise the President, Vice President, Administration Secretary, Public Liaison Officer and Treasurer.

The rules of the Welfare Association (r 8) provided for a Committee of nine persons comprising five office bearers (as above described for the Community Association) plus four other members "who hold the same office in the Committee of the Serbian Community of South Australia Inc and all of whom should be members of the Association". It will be observed that upon their face the rules of the Welfare Association are inconsistent with the rules of the Community Association in that the rules of the Welfare Association provide for nine committee members whilst the Community Association only provides eight. If it was intended (as seems to be the case) that the committee for the time being of the Community Association should be also the Committee of the Welfare Association then an error in drafting has occurred. (The Trial Judge considered that Rule 8 should be "read down" to accord with Rule 5 of the "parent" organization).

A further difficulty is created by the fact that whilst this dispute was developing the Community Association has departed from the letter of its own rules by purporting to elect a committee comprising eleven persons (instead of eight persons) without formal amendment to its rules.

The structure of the Welfare Association's membership and management in terms of its rules is such that the dispute necessarily involves an examination of the affairs of its parent - the Community Association whose Committee members ex officio constitute the members of the Welfare Association and provide its office bearers and committee members. However, the Community Association is not a party to this action.

Upon the findings of the Trial Judge, for some years a group led by the appellant Tanasijevic as President held office in the Community Association. Despite criticisms of his administration it seems that he has been remarkably generous in his financial support of the Norwood Nursing Home and the Pennington Aged Care Village. It seems that Tanasijevic made arbitrary decisions as to who would be treated as committee members of each Association. According to the Trial Judge, Tanasijevic had no experience of corporate organizations and made the decisions as to committee membership himself without regard to the formalities of the Rules. In particular it appears that the membership of the Community Association's committee fluctuated in number but at one stage reached twenty persons with a number of offices created in addition to those provided in the rules as abovementioned. The Trial Judge found that so far as the Welfare Association was concerned, Tanasijevic "acted as if [it] was akin to his own, personal fiefdom" [par 143].

On 15 October 1995 an informal meeting of representatives of many of the affiliate organizations by letter required Tanasijevic to convene an Annual General Meeting of the Community Association within four weeks. This demand was made against a background that no annual general meeting had been held for two years - there was a continuing default in calling meetings in January 1994 and 1995 as required by the Rules of the Community Association.

In the absence of any response to this request, a group on 17 November 1995 purported to convene an annual general meeting at the Church of St Sava Kilkenny for 3 December 1995. It is common ground that this meeting was not validly convened. Nevertheless the meeting took place and purported to remove the existing Committee of the Community Association and replace it with a different group. As later appears, the status of this lastmentioned group was confirmed by action taken at a properly convened meeting on 10 December 1995. Accordingly, the events of the meeting of 3 December 1995 have historical significance.

By letter dated 20 November 1995 Tanasijevic as President of the Community Association convened a meeting of the Community Association to be held at Beograd Sports Club on 10 December 1995. The letter convening the meeting was written in the Serbian language and the subsequent minutes were also recorded in Serbian. After resolving the translation difficulties (associated with the significance of nuances in language) the Trial Judge concluded that the meeting of 10 December 1995 was convened as an annual general meeting to meet a complaint that the Community Association was seriously in default in holding such a meeting. Despite the fact that the rules required that the Annual General Meeting should be held in January the Trial Judge (upon a construction of the rules) considered that the default could be rectified at some other time.

His Honour also found that at the meeting of 10 December 1995 "the Committee was dissolved by those present and stood down". His Honour's reasons show that the existing committee resigned voluntarily. In lieu of conducting separate elections to fill the vacant positions, the irregular meeting thereupon passed a motion appointing as a new committee those who were "elected" at the meeting held on 3 December 1995.

The new committee which was thus elected or confirmed comprised the eleven committee members who had been earlier selected at the meeting on 3 December 1995.

His Honour found that this election or confirmation did not accord with the rules of the Community Association. There was provision for only one Vice President and there was no position of Vice Secretary or of Deputy Treasurer provided for in Article 5 of the Rules of the Community Association. However, I observe that this disregard for the strict letter of the Rules reflects the way in which the affairs of the Community Association had been conducted for some years.

The Trial Judge dealt with this difficult situation by treating the election of a second vice president and the other holders of non existent offices (Vice Secretary and Deputy Treasurer) as being of no effect for the purpose of resolving the issue with which he was confronted. The Trial Judge concluded that the plaintiffs Popovic and Jovicevic had become committee members of the Community Association on 10 December 1995. This is the crucial finding of fact. (The Trial Judge in his reasons referred to the Community Association as "SCSA" and the Welfare Association as "SCWA").

"What is beyond question is that, at the general meeting convened by Tanasijevic on 10 December 1995, the then existing committee of the SCSA stood down. I have already recited the purported appointment of some eleven committee members of the SCSA at that time, including the three office holders not provided for by Article 5.

It follows that, as at 10 December 1995, the only lawful members of the committee of the SCSA were Popovic, the first elected Vice-President (Jovicevic), Rakich, Mijatovic, Jurkovic, Rakic, Lopac and Kleut. Ex officio, they were, therefore, also the only lawful members of both the SCWA and its committee of management.

So far as I can determine, those persons remained in office as at the time at which the present action was commenced, on 31 January 1996."

An Annual General Meeting of the Welfare Association was held at Pennington on 21 December 1995 and adjourned to 16 January 1996. On that latter date Tanasijevic claimed the right as President to occupy the chair although on the earlier occasion Popovic had done so. The meeting confirmed that Popovic should continue to occupy the chair whereupon Tanasijevic and nine others withdrew from the meeting. These persons included those who were claiming membership of the Welfare Association's Committee of Management. The defendants assert that before leaving the meeting Tanasijevic announced that as President he was adjourning the meeting; the Trial Judge rejected that evidence. His Honour recorded the events thereafter as follows:

"The minute secretary, Andja Ristivojevic, remained and recorded what transpired throughout the meeting. Tanasijevic subsequently wrote to her, as an employee of the Pennington Village, accused her of misconduct in so doing, and threatened her with dismissal from her employment if she misbehaved in the future. ....

Following the departure of Tanasijevic and those who left with him, the persons remaining at the meeting purported to pass a series of resolutions:-

(1) dissolving the existing committee and electing a new committee;

(2) rescinding amendments to the rules made on 14 November 1994; and

(3) making new amendments to the Rules relating to membership of the Association and the Constitution of its committee. (In essence this restricted membership of the body to five delegates from each of the two churches. The President was to be elected at the AGM for the forthcoming year, together with five members nominated by each church.) As appears from exhibit D21, the meeting purported to elect 11 persons, who were not the same persons as comprised the committee of management of the [Community Association].

These resolutions were all plainly invalid, both because they ran counter to the express provisions of the Constitution and Rules of the [Welfare Association] and also for want of proper notice.

It was the lastmentioned train of events which seems to have precipitated the present litigation.

In this regard Popovic said that the purported election of the replacement committee was intended to be a short term, stop-gap measure. However, its composition appears to bear no real relationship to the then composition of the committee of the [Community Association]."

A meeting at the offices of Tanasijevic's solicitors was held on 24 January 1996 which purported to be the "resumed meeting" of 16 January 1996. This meeting was convened by those who had de facto held office in the Welfare Association prior to 16 January 1996.

The Trial Judge's finding with respect to this meeting was as follows:

"According to exhibit P23, which are said to be minutes of the so called Third Session of the adjourned Annual General Meeting, it was attended by 17 financial members and four proxies. Tanasijevic then presided over the meeting which proceeded, inter alia, in effect, to deny the validity of what had transpired at the meeting on 16 January 1996. The minutes ultimately record as follows:-

"The vote of confidence took place by which Association's members expressed their full confidence in the Committee. The Committee has the mandate to lead the Serbian Community Welfare Association of SA Inc. until the next Annual General Meeting. CARRIED."

Once again, the evidence does not reveal how the list of 28 members was compiled, or what criteria were applied to determine "membership", bearing in mind that no proper, formal membership record had been maintained. ....It is by no means clear to me whether any written notice of the adjourned meeting was given, although Tanasijevic inferred that this was done ..... None has been produced in evidence.

A fundamental issue to be addressed in relation to the so-called "Third Session" meeting is as to whether, in the relevant circumstances, it was ever lawfully convened. If Tanasijevic and his associates were no longer lawfully members of the Committee of the SCWA, following the meeting of 16 January 1996, then, manifestly, they had no authority to call the meeting for 24 January 1996. I conclude that that was, indeed, the actual situation. Furthermore, the convening of the meeting and its conduct ignored the express provisions of the Constitution and Rules of the SCWA as to its membership and the members of its committee of management."

It is against this background that the plaintiffs have brought this action and applied on 31 January 1996 for injunctive relief. On 6 February 1996 a Judge of this Court appointed a Manager of the Welfare Association's affairs pending further order and otherwise made interlocutory orders restraining Tanasijevic and four others from administering the affairs of the Community Association or from calling a meeting in its name.

The significant features of what had transpired are:

1. Two groups were vying for control of the affairs of the Welfare Association with the plaintiff Popovic and the defendant Tanasijevic each claiming to officiate as President.

2. Maladministration of the affairs of the Welfare Association was chronic. Records had not been properly kept, there was doubt as to membership and there were disputes as to the identification of the current rules of the Welfare Association.

3. The problems were compounded by the fact that the membership and committee of the Welfare Association were formally linked in terms of the rules to the Committee of Management of the Community Association. The maladministration and struggle for control was common to both Associations.

The Trial Judge found the Rules of the Welfare Association to be as I have recited them and that attempted amendments were ineffective. His Honour concluded that the eight persons whom he identified had been elected as the Committee of the Community Association on 10 December 1995 and should be declared to be the committee of the Welfare Association for the time being in accordance with the rules of that body. His Honour republished the rules with some modification as a schedule to his order. The republication of the rules includes a clause in which Popovic and Jovacevic are identified (along with six others) as comprising the Committee of Management of the Welfare Association for the time being.

In summary the grounds of appeal as argued upon appeal were:

1. That the plaintiffs Popovic and Jovicevic had insufficient standing to bring the proceedings because they were not members of the Welfare Association and had no special interest entitling them to declaratory relief.

2. That the meeting of 10 December 1995 of the Community Association (upon which Popovic and Jovicevic rely for their status) was an invalid meeting. The appellants contend that the meeting was called otherwise than in the month of January as required by the rules and did not take effect as an Annual General Meeting convened for the purpose of electing a new committee.

3. That the learned trial judge erred in law, or mixed fact and law, in finding that the principles of Cameron & Ors v Hogan [1934] HCA 24; (1934) 51 CLR 358 do not apply to the Association.

4. The purported election of Popovic and Jovicevic at the meeting on 10 December 1995 was discordant with the requirements of the Rules and Constitution of the Community Association. The appellants pointed to the fact that the resolution passed at that meeting contemplated a committee of eleven persons.

(I note that other grounds of appeal were abandoned).

During the course of argument upon the appeal counsel developed ground 2. His argument in outline was:

"The meeting was not held in January, which is the month prescribed for the Annual General Meeting. Accordingly, the meeting could not have been an Annual General Meeting but some other form of meeting. Office bearers of Community Association could only be elected at an AGM (Rule 8). By Articles 8c and 8a of the Rules, the Annual General Meeting was premature, and not permitted by the Rules.

By Article 8c of the Rules the committee can only be dismissed at an Annual General Meeting, and the December meetings were not Annual General Meetings.

The notice for the meeting of 3 December 1995 wrongly described the meeting as an Annual General Meeting."

I consider that grounds 1, 2 and 3 are the subject of settled authority and can be disposed of quite shortly. Ground 4 needs to be dealt with separately.

In my opinion the plaintiffs were entitled to approach the Court by reason of the events of 16 and 21 January 1996. An impasse was reached in which there was a dispute as to the identification of the Rules of the Welfare Association and as to the construction thereof (which in any event contained an internal inconsistency). The plaintiffs Popovic and Jovicevic had duties to perform as officers of the Welfare Association - if indeed they had been validly elected. The personal defendants were denying (inter alia) the claimed authority of Popovic and Jovicevic. Only a court could resolve this deadlock (see Green v Page cited below).

The Community Association was not a party to the present proceedings and I have some reservation as to the extent of the court's jurisdiction to determine a collateral question involving the internal management of the Community Association - particularly without that body being joined as a party. If I had reached the conclusion that there was a basis for concluding that the court prima facie was required to treat as invalid some act of the Community Association then even at this late stage I would have considered the need to join that Association as a party.

The appellants argue that the meeting of 10 December 1995 was not a valid meeting and that Popovic and Jovicevic were not validly elected. The Trial Judge held as a matter of fact that the meeting was properly convened as an annual general meeting and upon this basis gave effect to the resolutions of the meeting. The Trial Judge construed the notice of meeting given in the Serbian language; His Honour's finding of fact as to the effect of the notice has not been challenged.

In order to defeat the efficacy of the meeting held on 10 December 1995 the defendants were required to demonstrate that the meeting (and the business transacted thereat) was of no effect. It would be necessary to show that those present at the meeting acted ultra vires the rules of the association; a mere irregularity would be insufficient. However, it seems clear that the matters relied upon by the appellants are to be placed in this lastmentioned category.

The general rule is that the Court will not interfere with the internal management of associations. Therefore even if a meeting is held without the requisite quorum as required by the rules the Court (in the ordinary course) will not concern itself with that fact (in the absence of fraud or oppression). Such a defect is liable to be treated as an irregularity only. Thus In re Wages and Working Conditions of Persons Employed as Clerks and Clerical Workers and Office Workers [1941] SAStRp 17; [1941] SASR 65 upon a case stated to the Full Court Murray CJ at 71-72 said:

"A further objection urged against the application is that at the meetings held on 20th September 1939 and 18th October 1939, when the secretary and president of the organization were authorized to formulate the terms and scope of the proposed award, there were only twelve persons present at the first meeting and not more than twelve at the second, whereas the rules of the organization prescribe that the quorum at meetings shall be seventeen. Mention was made at the same time of the fact stated in the case that at each of the meetings some of those present were in arrear with their respective subscriptions, but no point was made of this because it does not appear that the subscriptions were so long in arrear as to affect the defaulters' status as members of the organization. In reply to the quorum objection Mr Stanley, for the applicant, relied on the principle of Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461, which is thus stated by Lord Davey in delivering the judgment of the Privy Council in Burland v Earle [1902] AC 83:- "It is an elementary principle of the law relating to joint stock companies that the Court will not interfere with the internal management of companies acting within their powers, and in fact has no jurisdiction to do so." His Lordship then mentioned a further principle which has no application here, and continued:- "These cardinal principles are laid down in the well-known cases of Foss v Harbottle (supra) and Mozley v Alston (1847) 1 Ph 790 and in numerous later cases, which it is unnecessary to cite." The applicant is not, of course, a joint stock company, but there can be no doubt that the principle applies to it."

A general power to alter the rules of an association is prima facie valid but it must be exercised in good faith; in general terms the alteration must not go to the foundation of the association and must not be incompatible with the fundamental objects of the association (see Morgan v Driscoll (1922) 38 TLR 251 and Hole v Garnsey [1930] AC 472 at 496 and 500). When an association's rules require particular notice of a proposed amendment a failure to comply strictly with the rules may sometimes be treated as an irregularity which does not affect the validity of the subsequent alteration (see Finlayson v Carr [1978] 1 NSWLR 657).

Against this background the Trial Judge was correct in deciding that the appellants had not established in the present proceedings the invalidity of the resolution of 10 December 1995 because the matters of complaint are mere irregularities. However, what consequences that resolution has with respect to the affairs of the Welfare Association is another matter. Clearly a way must be found for reconciling the requirements of the Welfare Association's rules in terms of maintaining consistency with the rules of the parent organization.

The appellants' arguments upon grounds 1, 2 and 3 may each be disposed of by reference to the judgment of Burbury CJ in Green v Page [1957] TASStRp 9; [1957] TAS SR 66. Indeed, I have already adopted the gist of that decision in my abovementioned remarks. The facts of that case bear some resemblance to the present and the arguments advanced cover much the same ground. (However, the matter raised in ground 4 which is peculiar to this case will require separate consideration).

In Green v Page the rules (or constitution) of the Tasmanian Lawn Tennis Association provided that the election of office bearers for the ensuing year should take place at the Annual General Meeting to be held in September each year. After three successive Annual General Meetings were held in November the committee treated the elections as void and appointed acting officers.

"The refusal of the defendants to recognise the validity of the election and their insistence that the defendants Murtagh and Harvey still hold the offices of secretary and treasurer respectively has brought about a deadlock which cannot be resolved by the members. It cannot be so resolved because the dispute involves a determination whether the members acted within their powers. Short of an amendment of the constituent document there is no machinery by which the present dispute could be resolved except by the determination of a court or other independent tribunal....

The determination of the basic issue in this action involves only the construction of par 15 of the Constitution of the Association, ie whether upon its true construction an annual general meeting can only validly be held in September. To construe the Constitution for the purpose of determining whether the election of the officers of the Association was an ultra vires act is not to enforce the rules upon a contractual basis. The decision of the House of Lords in Braithwaite's Case [1922] 2 AC 440 is in point."

"To construe a rule is not directly to enforce any agreement between the members, and I am unable to see any reason why the words of the statute should be so extended as to exclude a trade union itself or any of its members from obtaining the advantage of having obscure words construed by a wholly independent and impartial tribunal".

"For these reasons I think the decision in Cameron v Hogan [1934] HCA 24; (1934) 51 CLR 358 is distinguishable and does not prevent the court passing upon the validity of the election of the two officers of the Association by construing r 15 of the Constitution of the Association and making at least a declaration of right."

The jurisdiction of the court under O XXVII, r 5, (corresponding to the English O XXV, r 5) to make a declaration of right is discretionary. In Hansen v Radcliffe Urban Council [1922] 2 Ch 490 at p 507, Lord Sterndale, MR said:-

"In my opinion, under Order XXV., r 5, the power of the Court to make a declaration, where it is a question of defining the rights of two parties, is almost unlimited; I might say only limited by its own discretion. The discretion should of course be exercised judicially, but it seems to me that the discretion is very wide."

"There is no magic in the title "Constitution" frequently given to the rules of a voluntary association. There is a disposition to consider the provisions of a "Constitution" as stating a code of fundamental rights and to characterise the slightest departure from them as "unconstitutional" and "invalid". But a provision in a document of this kind is to be construed in accordance with the same principles of construction adopted by the courts in problems of interpretation of statutes and documents. A provision in a "Constitution" of this kind prescribing the time for performance of some act has no greater force or different legal effect than a similar provision in an ordinary contract or statute. In the case of contracts not coming within well defined exceptions, stipulations as to time are not to be regarded as of the essence of the contract unless the contract itself so provides or unless from the nature of the contract or the surrounding circumstances it appears that that was the intention of the parties (Halsbury's Laws of England, 3rd edn., Vol 8, p 164). Provisions in statutes prescribing that certain things are to be done within a certain time may be mandatory or directory according to their nature (Halsbury's Laws of England, 2nd Edn, Vol 31, p 530). R v Loxdale [1758] EngR 46; (1758) 1 Burr 445 is a case in point. That was a case where by the statute 43 Eliz, c2 it was provided that overseers of a parish should be nominated "yearly in Easter week." The Court of King's Bench held that this provision was merely directory. Lord Mansfield CJ said:-

"There is a known distinction between circumstances which are of the essence of a thing required to be done by an act of parliament, and clauses merely directory. The precise time, in many cases, is NOT of the essence."

Even if the provision in r 15 as to the holding of the annual general meeting in September were construed as mandatory it by no means follows that an annual general meeting held in November must be treated as having been invalidly convened and unable legally to do any business. Assuming that there was a legal duty on the committee to convene the meeting in September and it failed to do so in September that duty did not cease to exist because it had not been performed within the prescribed time. (See Milne v The Attorney-General for Tasmania [1956] HCA 48; (1956) 95 CLR 460 at 476). If otherwise it were a proper case the court would grant mandamus to compel the performance of the duty after the expiration of the time (R v Sparrow (1740) 2 Strange 1123). But as the members of an association would ordinarily have the remedy in their own hands by convening a general meeting to instruct the committee to call the annual general meeting the court would not grant mandamus.

The contention that no annual general meeting could validly be held except in the month of September does not bear analysis. If under the "Constitution" office bearers are only elected for a year it would mean that if no new office bearers were elected before the end of September in a given year there could be no office bearers legally elected until the following September. If on the other hand the "Constitution" means that office bearers once elected hold office until their successors are elected then the committee could perpetuate itself against the will of the members until such time as it could by resolution of the members be compelled to convene an annual general meeting in a month of September. To interpret r 15 as making the holding of the annual general meeting in September as a condition precedent to validity of the meeting might therefore produce either an indefinite interregnum of office bearers or an indefinite self-perpetuation of office bearers. Unless the Rules clearly compelled an interpretation leading to such absurd consequences the court would not so construe them. But there is in my opinion clearly nothing in the Rules which requires the provision as to the time of the meeting to be construed as mandatory or as essential to the validity of the meeting."

"Lest it be thought by litigiously-minded members of clubs and associations that the court will readily intervene in their internecine warfare, I desire to emphasise the limitations upon the court's jurisdiction. The general rule is that the court will not intervene in the domestic affairs of clubs and other voluntary associations, but will leave the members to settle their own disputes. In the present case the court is only intervening because the deadlock reached in the management and control of the affairs of the Tasmanian Lawn Tennis Association is such that it cannot be resolved by the members. It can only be resolved by a judicial determination upon the question whether the meeting of members held on 17 November 1956 acted within its powers in electing office bearers at that meeting."

In my opinion this reasoning disposes of the appellants' arguments based on Grounds 1, 2 and 3. As the third ground of appeal specifically seeks to rely upon the principles of Cameron v Hogan, I will identify these principles but only to demonstrate that the appellants' argument based upon that case are misconceived. However, I note that Cameron v Hogan has been the subject of examination by this court in Plenty v Seventh Day Adventist Church of Port Pirie (1986) 43 SASR 121.

The ratio of Cameron v Hogan is based upon the proposition that (in the absence of some clear contrary indication) a voluntary association of persons who come together to further some common interest (whether "social, sporting, political, scientific , religious, artistic or humanitarian in character") do not intend to create legal relationships between themselves for private gain or material advantage. Accordingly, in such cases the essence of the relationship will be treated by the courts as depending upon the continuing consensus of a group of people in maintaining their association with each other upon particular terms; when this consensus ceases to exist so also does the association. The bond which draws such volunteers together is to be regarded not as a contract recognised and enforceable by law but only as a purely personal relationship. The application of Cameron v Hogan has the consequence that the terms of the consensus are not enforceable by the court. Like the domestic agreement in Balfour v Balfour [1919] 2 KB 571 the court would not regard as justiciable a claim of right arising under the rules of the voluntary association (see also Rose & Franko v Crompton & Bros [1923] 2 KB 261 at 288). The position would necessarily be different if the dispute involved property which was susceptible of personal enjoyment. Cases since Cameron v Hogan show that there may be debate as to the point at which the proprietary or personal interests of a person (including reputation) are to be regarded upon the facts of the case as sufficiently substantial to warrant the protection by the court (see for example Clarke v Australian Labor Party, SA Branch, Hurley & Ors & Brown [1999] SASC 365; (1999) 74 SASR 109). However, if such an issue be treated as justiciable, the character of the voluntary association is not thereby altered.

If the issue be justiciable the procedural difficulties which were identified in Cameron v Hogan have been alleviated by the expansive and somewhat benevolent view taken by the courts more recently with respect to the power to grant declaratory relief under s 31 of the Supreme Court Act to define the rights of the parties.

Claiming to rely upon Cameron v Hogan, the present appellants contend that the respondents have no standing to bring these proceedings. However, the question of justicibility of an issue is not necessarily co-extensive with the question of the plaintiff's standing. It is true that in Cameron v Hogan the court was not prepared to concede to Mr Hogan a right to maintain his action but this was because the matter raised was only of domestic concern. The present case is different. The Welfare Association is an incorporated body pursuant to the Associations Incorporation Act 1985 (SA) and (in accordance with s 23) its rules bind the association and its members. The principles of Cameron v Hogan are confined to voluntary organizations whose membership is based upon consensus; they are not applicable to an incorporated organization whose rules are binding in law by virtue of the statute. When (as in the present case) a plaintiff sues for a declaration as to the effect of a transaction in light of the rule of an association, the court may grant discretionary declaratory relief in the exercise of its jurisdiction when it is useful to do so (cf Ibeneweka v Egbuna [1964] 1 WLR 219 at 225). When two persons are in dispute in claiming a right to occupy the President's chair in accordance with the rules of an incorporated organization, the situation of deadlock which is thereby created is sufficient to enable the court to intervene. Bearing in mind the role of the Welfare Association in delivery of community services, the fact of the disagreement and the chaos attaching thereto is sufficient to attract the Court's jurisdiction. In other words, Mr Popovic's status as a claimant in competition with that of Mr Tanasijevic in respect of this incorporated association is sufficient as a jurisdictional fact to enable the Court to interfere. In my view the defendants' challenge to the plaintiffs' status to maintain the action is misconceived.

Having regard to the substantial business conducted by the Welfare Association and the extensive assets which it administers there were adequate reasons (and indeed a pressing need) for the court to grant declaratory relief upon the application of one faction to resolve the important issues of control of the Welfare Association; the issue could not otherwise be settled. In the circumstances the fact of a genuine dispute to which the plaintiffs were parties was sufficient to provide the court's jurisdiction and to provide status to the plaintiffs.

There remains the appellants' argument that under the rules of the Community Association its Management Committee should comprise one representative from each of the eight affiliated "founding organizations" whereas the meeting on 10 December 1995 (of the Community Association) appointed eleven Committee members whose credentials have not been established. (The appellants make a further point that the Trial Judge was only prepared to recognise eight of these eleven persons for the purpose of identifying the composition of the Management Committee of the Welfare Association).

Referring to the election held on 10 December 1995 the appellants contend:

1. The rules provide a particular establishment for the Community Association's Committee and the election did not accord with that establishment.

2. There were more committee members elected than the 8 positions provided for in the rules.

3. There is no evidence that the 8 founding members were represented by their delegate as one of the committee members. (Article 5).

It seems to me that it would be necessary to demonstrate that the resolution of 10 December 1995 was void in order to avail the appellants' present argument. If there were irregularities which in substance were within the power of the majority at the meeting to do regularly, then the court will not now be concerned with such points. The Community Association is not a party to the proceedings but even if it were, I do not consider that the Court would concern itself with these alleged irregularities in internal management which a meeting of the Community Association had the power to resolve if the matter were drawn to its attention. The Community Association was entitled to amend its rules at its annual general meeting by a simple majority. The rules contained no fetter (in terms of manner and form) which required a special resolution or any other special procedure. It is arguable that the appointment of the eleven committee members (including supplementary office holders) ought to have been accompanied by a formal declaration that the appointments were being made in variation of the association's rules. Others may argue that this qualification of the rules was necessarily to be implied in the actions of the meeting. I consider that the matter is one of form in the internal conduct of the Community Association's affairs. I do not consider that the appellants have established any basis upon which the Court ought now to impugn what occurred on 10 December 1995.

A properly constituted meeting on 10 December 1995 resolved to confirm the position of those selected on 3 December 1995. A committee of eleven persons was put in place whereas the rules of the Community Association only provided for eight persons. The Rules had originally required that these eight persons be representative of the eight affiliated organizations named in the rules. However, we were told that with the passage of time some organizations apparently had disappeared (for example the Serbian Chess Club) and other organizations had become affiliated. How the rules are to be applied in this changing climate has not been addressed in the rules. In my opinion it was within the power of a properly constituted annual general meeting to address the problem and to depart from the strict letter of the rules.

The rules of the Welfare Association are far from satisfactory because those rules have not been properly linked to those of the Community Association. Although there is no fetter upon amendment to the Rules of the Community Association by simple majority in Annual Meeting the situation is different within the Welfare Association where rules stipulate that an amendment thereto requires a special majority. The Rules of the Welfare Association prescribe how its Committee of Management is to be constituted. There is an expectation that this committee will be a mirror of the Community Association's committee. This scheme only works satisfactorily whilst the Community Association retains a committee structure which reflects that which is specifically provided in the Welfare Association's rules. There needs to be a degree of co-operation to maintain literal harmony between the two sets of rules. The fact must be faced that the Community Association validly elected a committee of eleven persons whereas the Welfare Association's rules specifically provide for a lesser number.

The question then arises as to how this awkward situation can be accommodated within the rules of the Welfare Association which can only be altered by special resolution.

It may be that r 4(a) of the Welfare Association prevails over rule 8 so that its Committee structure and membership is automatically modified from time to time to follow and to keep it in step with the changes in the Community Association's Management structure. That is how I would be inclined to view the situation. Upon that basis the Welfare Association would have a committee of eleven following the meeting on 10 December 1995. The Trial Judge was prepared to "read down" Rule 8 to bring it into line with rule 5 of the parent organization [see AB 1190 par 404]. I would take this process a step further to accord with the outcome of the meeting of 10 December 1995.

The Trial Judge has gone down a different path. Having recognised the election of Popovic and Jovacevic he has exercised a discretion under s 61(4) of the Associations Incorporations Act 1985 (SA) to put in place a set of rules which dealt with the untidy situation. His Honour took the view that:

"It is not for me to foist on the parties a totally different constitutional structure, even if I consider that this might be more attuned to the present operating requirements. After all the oppression which is currently being addressed is, in large measure, a failure to observe and implement the Constitution and Rules of the SCWA, according to their original tenor."

To implement this policy the Trial Judge included in his order a declaration as to whom for the time being will constitute the Welfare Association's committee. The order nominates only eight persons in order to fill the five offices and three committee positions mentioned in the Welfare Association's rules. In my opinion it would have been more appropriate that the eleven persons elected at the meeting on 10 December 1995 should hold a corresponding position in the Welfare Association. The present appellants are not seeking to resolve the question whether there should be eight or eleven members on the committee. The appellants merely contend that the plaintiffs Popovic and Jovicevic have no standing.

It should be borne in mind that the Trial Judge was dealing with a case of oppression when exercising jurisdiction under s 64(4). That section confers wide discretionary powers in the court for regulating the Association's affairs and to alter the rules of the association and to make "any other order that is in the opinion of the Court necessary...to resolve any dispute". In restoring order to the affairs of the Welfare Association His Honour was entitled to modify the rules of the Association in order to settle the differences between the parties. The powers of the court are so wide that the orders made were clearly within the proper exercise of the judicial discretion and there is no reason to interfere with His Honour's decision.

In my opinion the status of Popovic and Jovicevic as members of the Welfare Association and as members of its committee of management is established by the meeting of the "parent organization" on 10 December 1995 irrespective of the actual size of the elected committee.

In my view the appellants' criticisms of the Trial Judge's decision to recognise as Committee members (of each Association) only eight of the eleven elected on 10 December 1995 do not advance the appellants' position. It may be that if the Rules were strictly applied the whole body of eleven persons should take office as the meeting intended but that will not alter the position of the appellants. In any event the discretion exercised by the Trial Judge (as I have observed) has been superimposed upon the rules as they previously applied.

The grounds of appeal would not justify this Court in making an order bringing the management structure of the Welfare Association into line with that of the Community Association.

In my view whether the Management Committee of the Welfare Association comprises eight or eleven members, the fact remains that Popovic and Jovicevic are to be included on that Committee and they are therefore members also of the Welfare Association. It is the membership of the respondents Popovic and Jovicevic which is at issue on this appeal. I am satisfied that each of them was properly elected and that a declaration should be made to resolve the doubts which have arisen.

MARTIN J I agree that the appeal should be dismissed for the reasons given by Williams J.

Associations Incorporation Act 1985(SA)

Associations Incorporations Act 1985(SA)

Associations Incorporation Act 1985(SA)

Associations Incorporations Act 1985(SA)

At a glance

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Judgment (109 paragraphs)

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