Rana v Survery

Judgment 1HER HONOUR: The appellants brought proceedings against, inter alia, the third respondent, the Islamic Association of Western Suburbs Sydney Inc (the Association), seeking a declaration that the expulsion or suspension of 116 named persons from membership of the Association as and from 2 January 2012 was invalid and of no effect. The respondents brought a cross-claim seeking a declaration as to the membership of the Association. The dispute as to membership dates back to at least 2010 and possibly earlier. There was also a dispute between the parties as to the appointment of the Board of the fourth respondent, The Australian Islamic College of Sydney Limited. 2The proceedings were heard by Pembroke J over five days in July 2012. His Honour delivered judgment on 10 August 2012: Rana v Survery (No 2) [2012] NSWSC 905. On 26 September 2012, his Honour made, relevantly, a declaration that the membership of the Association was as set out in accordance with the schedule attached to short minutes of order filed by the parties: see order 1 of short minutes of order. His Honour also noted the following agreement of the parties: "5 ... a. the Plaintiffs have abandoned their claim regarding the vacation of seats on the Executive Council of the Third Defendant by the Fourth Plaintiff and Zulfiquar Shah Khan, subject to the conduct of an election of the Executive Council of the Third Defendant being held in accordance with the terms of this agreement; b. the Defendants have abandoned any claim that the First, Second and Third Plaintiffs and Zaheer Shah Khan were expelled as members of the Third Defendant as from 1 July 2012; c. the next Annual General Meeting ('AGM') of the Third Defendant will be called by an election committee consisting of 2 persons to be nominated by the First Plaintiff and 2 persons to be nominated by the First Defendant ('the Election Committee') for the purposes of conducting an election of the Executive Council of the Third Defendant; d. the AGM is to take place no later than 60 days after the date of these orders; e. the Election Committee is to nominate an independent solicitor ('Independent Solicitor') to attend the AGM and in default of majority agreement the independent Solicitor is to be nominated by the President of the Law Society of NSW; f. the Independent Solicitor is to supervise the election of the Executive Council and in his or her absolute discretion may determine the procedure thereof, including any dispute in respect of polling or conducting the votes; g. the fees of the Independent Solicitor are to be paid by the Third Defendant; h. notice of the AGM, including as to the conducting of the election of the Executive Council, is to be given to all members of the Third Defendant in a form to be agreed by a majority of the Election Committee or in default of such agreement by the Independent Solicitor; i. the Executive Council of the Third Defendant is to operate as currently constituted until the election of the Executive Council at the AGM; j. prior to the election of the new Executive Council, the Plaintiffs and the First and Second Defendants will not initiate or encourage any action which may affect the status of any person as a member of the Third Defendant, including in particular proposing the approval or expulsion of members." 3The appellants filed a notice of appeal on 3 October 2012 in which they seek that the judgment and orders made by his Honour be set aside. The appellants seek in lieu, the declarations they claimed at first instance as to the invalidity of the expulsion or suspension of certain members of the Association and the formation of the School Board. 4On 5 November 2012, the appellants filed a notice of motion in which they sought the following order: "The effect of order 1 of the Short Minutes of Order dated 26 September 2012 and any election of the Executive Council of the Third Defendant at an Annual General Meeting is stayed until the hearing of the Appeal." 5The notice of motion was heard on 26 November 2012. On that occasion the appellants sought as an alternative to the order sought in the notice of motion the following orders: "On the plaintiffs by their counsel giving the usual undertaking as to damages:- 1. Order, pending the determination of the proceedings or further order of the Court, that the defendants be restrained from taking the steps set out in paragraphs 5(c), (e), (f), (g) and (h) (insofar as they relate to the election) of Short Minutes of Order dated 26 September 2012 2. Note that nothing in order 1 above operates to restrain the holding of an AGM of the Third Defendant" 6This alternative relief was sought because of the difficulty, which I considered was an obvious and insurmountable one, of the Court granting a stay of an agreement. The power to grant a stay is conferred on the Court in respect of orders not in respect of agreements. Accordingly, I propose to treat the application on the basis that the relief claimed is for an injunction. The Court was informed that the parties have agreed to an extension of the period of 60 days referred to in para 5(d). 7The notice of motion was supported by two affidavits of the second appellant, Mohammed Abdul Sami, sworn 1 November 2012 and 21 November 2012, and an affidavit of Mohammad Irfan Afzal sworn 21 November 2012. The respondents' opposition to the orders sought was supported by an affidavit of the second respondent, Masud Cheema, sworn 16 November 2012. 8Mr Sami is the Vice President of the Association, having been elected to the current Executive Council at the last election held on 10 October 2010. Mr Sami deposed in his affidavit to there having been 550 members of the Association at the time of the October 2010 election of whom approximately 300 members participated in the election. However, as a result of the orders made by Pembroke J, 202 of those 550 members will be unable to vote or to stand for election or re-election to the Executive Council at the upcoming elections. 9Mr Sami said that to the best of his recollection, most of the 202 members now unable to participate in the elections were amongst the approximately 300 members who voted in 2010. He observed that the effect of his Honour's declaration was that the composition of the membership is now only 35 per cent of the total membership that voted in 2010. Mr Sami also said that should the elections proceed and the appeal be successful, the appellants would challenge the election of the Executive Council on the basis that it was invalidly elected, in that 65 per cent of the active membership was unable to vote. 10Mr Afzal is one of the persons who is no longer a member of the Association as a result of Pembroke J's declaration, notwithstanding that he believed that he was a member, having received a membership approval letter, paid membership fees and participated in the affairs of the Association. Mr Afzal also expressed his concern that even if he applied for membership again, he would not be able to stand for election for any position on the Executive Council, as the Constitution required a minimum period of membership of two years to be qualified to stand for election. In addition, as the Constitution provided for a minimum period of membership of 10 years before Full Members could apply to be elected as Foundation members, his becoming a Foundation member would be correspondingly delayed. 11Mr Cheema is the secretary of the Association. He deposed to there being "two camps" on the Executive Council, with the respective allegiances being split as to six in support of the respondents and five in support of the appellants. A quorum of seven persons is required for a meeting of the Executive Council. Mr Cheema said that in respect of two of the six meetings held between 2 August and 5 November 2012, none of the members of the Executive Council in the appellants' camp attended, so there was no quorum and no business could be transacted. He also said that members in the appellants' camp have not been attending all meetings. Mr Cheema said that the Association had important matters to discuss and resolve, but that "at the moment we simply cannot get beyond the disputes in the Committee to be able [to do so]". He listed as an example of the matters that were presently of importance to the Association the following: "a. the Association is looking at buying land in order to reduce the burden on the facilities in Rooty Hill; b. the Association is looking at improving the supply of religious teaching, including employing more teachers; c. the association has plans to start providing burial and funeral services to the community; d. the association plans to renovate the mosque at Rooty Hill; e. the issues in the legal proceedings continue to distract the members of the Executive Committee and the School Board from their ordinary duties and particular from their planning for the future given the considerable ongoing uncertainties." 12Mr Cheema also said that members of both the Association and the community associated with the mosque frequently approached him asking when the Annual General Meeting (AGM) and the election were going to be held. 13In Mr Sami's affidavit of 21 November 2012 sworn in reply to Mr Cheema's affidavit, Mr Sami denied Mr Cheema's allegations that he was deliberately staying away from meetings, or that he had no intention to participate in the important affairs of the Association. He pointed out that the day-to-day affairs of the Association were being conducted in an orderly way. He also said that he knew that many members of the Association were overseas due to the holiday period and would return at the end of January 2013. He said that elections have never been held from mid November until the end of January. 14The Constitution of the Association requires that the AGM be held at least once in each calendar year and within eight weeks after the expiration of each financial year of the Association: Constitution, cl 24. The affairs of the Association are controlled and managed by the Executive Council: Constitution, cl 12, which holds office for a period of two years: Constitution, cl 22(3). The Executive Council is elected by the General Members of the Association at an AGM: Constitution, cl 22(3). Only Foundation Members are eligible to be elected to the positions of President, Secretary and Treasurer of the Executive Council. All financial full members of the Association of at least two years standing are eligible for election for other positions on the Executive Council: Constitution, cls 22(1) and (2). 15As I understand it, the financial year of the Association ends on 30 June in any given year. It follows that the AGM for 2012 is already out of time. It appears that this may be a regular feature, or at least one that has occurred previously, as the last election of the Executive Council was in October 2010. The Constitution does not provide any sanction or consequence for the late holding of the AGM. Nor does the Constitution provide that the Executive Council is dissolved at the end of a two year period. The appellants submitted that in that circumstance, the Executive Council would continue to hold office until the election was held: see Luen Fook Tong Incorporated & Ors v Daphne Lowe & Ors [2011] NSWSC 1004 especially at [68]-[88] per Slattery J 16The appellants submitted, therefore, that if the election of the Executive Council is delayed pending the resolution of the appeal, the affairs of the Association will continue to be managed by the existing Executive Council and accordingly, no prejudice will flow from the grant of the injunction now sought. The appellants also submitted that if the election proceeded now with a significant number of persons disenfranchised as a result of the trial judge's declaration, it was likely that further proceedings would be necessary to challenge the election of the Executive Council should the appeal be successful. 17The respondents accepted that if the appeal was successful, it was likely that an election of an Executive Council by only those members declared by Pembroke J to be members of the Association would be invalid. They made no submission or concession as to whether any challenge to the election would be contested. The respondents are not criticised for taking this position, as the personal respondents may not be elected to the new Executive Council and the affairs of the Association may be managed and controlled by persons or by a majority of persons, who are not presently elected members of the Executive Council. 18The respondents referred the Court to two decisions, which they submitted supported their opposition to the making of the orders sought by the appellants. In Contouris v Kallos [2008] NSWSC 840; 67 ACSR 543 Young CJ in Eq (as his Honour then was) declined to grant an injunction to restrain the holding of an AGM of a company which was the operating vehicle for the parish of a Greek Orthodox Church. Pursuant to the Company's constitution, elections for the Committee were to be held within one month of each successive second AGM, although it was the practice for the election to be held at the same time as the AGM. Only financial members were eligible to vote. A total of 95 supporters had made applications for membership, which had not and would not be processed in time for them to be eligible to vote at the AGM. The membership applications had, for the most part, been lodged many months previously but had not been processed because negotiations had been in progress between the warring parties. 19Refusing the injunction, Young CJ in Eq said, at [14], that "[g]enerally speaking, courts are very loathe to prevent meetings of members or people casting votes at meetings of members". His Honour continued: "As a general rule, the court will not prevent meetings and discussions and voting, and a fortiori that is the situation where if subsequently it is shown that there was equitable fraud or breach of duty or operative maliciousness that the election would be set aside." His Honour noted that should any of those matters be established, the directors could be removed pursuant to the procedure provided for by the Corporations Act 2001 (Cth). The present case is not one which involves any of the matters to which his Honour referred. Nonetheless, the respondents submitted that the approach taken by his Honour would apply in circumstances where the election of the Executive Council is invalid because members had been wrongly disenfranchised. 20The respondents further submitted that the purpose of a stay is to prevent irremediable prejudice pending the hearing of an appeal: His Eminence Petar The Diocesan Bishop Of The Macedonian Orthodox Diocese Of Australia And New Zealand v Lambe Mitreski [2012] NSWSC 1207 at [10] per Brereton J. They contended that the appellants had failed to demonstrate irremediable prejudice, nor was there any, given that any election of the Executive Council could be challenged should the appeal be successful. 21The respondents also submitted that it was relevant that the parties had reached agreement as to the holding of the AGM, the appropriate timing thereof and the procedures under which the meeting was to be conducted. They submitted that no reason had been advanced by the appellants as to why that agreement should be set aside or effectively stayed, pending the hearing of the appeal. Rather, they contended that the evidence was that the proper functioning of the Association was being impaired whilst the present position remained. In addition, there were procedures specified in the Constitution whereby an AGM may be adjourned with the consent of the majority of members present: Constitution, cl 30(1). If members wished the AGM to be adjourned, they could engage the relevant procedures. 22There is a preliminary question as to the principles the Court should apply in determining whether to grant the injunction. As I have said, the respondents relied upon the comment of Brereton J in His Eminence Petar The Diocesan Bishop Of The Macedonian Orthodox Diocese Of Australia And New Zealand v Lambe Mitreski that it was necessary for the appellants to demonstrate irremediable prejudice. Without making any comment as to whether that principle is correct: cf Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685, the present application is not one for a stay but for an injunction. The principles relating to the grant of a temporary injunction are well established. Stated briefly, the Court is required to be satisfied that there is an arguable case and to determine whether the balance of convenience calls for the grant of the injunction. The authorities are well known. It is sufficient to refer to Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57. 23In my opinion, the appellants have not made out a case for the grant of the injunction. Within barely a month of entering into an agreement as to the conduct of the affairs of the Association, the appellants sought to put a stop to the very matter to which they had agreed. When pressed as to what had occurred since the agreement was made that had changed the position, the appellants' only response was that an appeal had been filed. That is hardly any response in circumstances where the appeal was filed within a week of the agreement being made and where Pembroke J's judgment had been available to the parties for approximately seven weeks before the agreement was entered into. 24If it becomes necessary for the appellants to challenge the validity of any election, they are likely to be protected as to their costs. Even if there is a risk the appellants will not be so protected, I am not satisfied that it is just and convenient to grant the injunction, for the reasons I have expressed in the preceding paragraph. Whilst there may be a significant inconvenience to the appellants and to the Association if fresh elections have to be held, I do not consider that itself is sufficient to warrant the exercise of discretion to grant the injunction. In this regard, I will assume for present purposes the Corporations Act, s 1322 as to procedural irregularities does not apply. 25I am of the opinion that the matter should be granted expedition. The affairs of the Association should be able to be managed without the uncertainty as to the validity of the election of the governing body. The matter will be listed before the Registrar further directions. Accordingly, the orders I make are as follows: