The Muslim Council of New South Wales Inc v Australian Federation of Islamic Councils Inc & Anor

Supreme Court of NSW|2009-05-05|Before: Bergin CJ

CITATION : The Muslim Council of New South Wales Inc v Australian Federation of Islamic Councils Inc & Anor [2009] NSWSC 360

DECISION : Defendant restrained from putting motion to Congress to expel plaintiff

CATCHWORDS : [ASSOCIATIONS] - Structure of defendant organisation - Whether Model Rules form part of the Constitution - Exercise of power to expel - Appellate rights on expulsion - Whether defendant should be restrained from putting the motion for expulsion of the plaintiff before the Congress on 9 and 10 May 2009

CASES CITED : Islamic Council of South Australia Inc v Australian Federation of Islamic Councils Inc [2009] NSWSC 211

PARTIES : The Muslim Council of New South Wales Inc (Plaintiff) Australian Federation of Islamic Councils Inc (Defendant)

COUNSEL : MR Pesman (Plaintiff) AP Cheshire (Defendant)

SOLICITORS : Carters Law Firm (Plaintiff) Goldrick Farrell Mullan (Defendant)

1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5452 of 2008 THE MUSLIM COUNCIL OF NEW SOUTH WALES INC v AUSTRALIAN FEDERATION OF ISLAMIC COUNCILS INC & ANOR JUDGMENT 1 The plaintiff, The Muslim Council of New South Wales Inc, filed a Statement of Claim on 10 February 2009 seeking relief against the first defendant, Australian Federation of Islamic Councils Inc (the defendant) and its President, the second defendant, in respect of the decision of the Executive Committee of the defendant to reject certain applications for membership. 2 The plaintiff filed a Notice of Motion on 27 April 2009 seeking an order that the defendant be restrained from proposing at the Federal Congress of the defendant to be held on 9 and 10 May 2009, motions referred to in a letter dated 24 April 2009. The Notice of Motion was heard in the Duty List on 4 and 5 May 2009 at which time Mr MR Pesman, of counsel, appeared for the plaintiff and Mr AP Cheshire, of counsel, appeared for the defendants. 3 Although there were preliminary submissions on an interlocutory basis on 4 May 2009, it was ultimately agreed that I would hear certain aspects of the application on a final basis. The issue to be determined on a final basis is whether the Federal Congress of the defendant is able to expel the plaintiff from membership of the defendant. Although the letter of 24 April 2009 is expressed differently, the parties have agreed that the proposed motion to be put to the Federal Congress is a motion to expel the plaintiff from membership of the defendant. 4 The urgent final hearing has proceeded on the basis of the following agreed facts:

(2) The defendant consists of Societies and State Councils.

(4) The defendant's Constitution, excluding any consideration of the Model Rules, contains no express provision authorising the expulsion of a State Council.

(5) The defendant contends that Model Rule 32 is incorporated into the Constitution. The plaintiff disputes that contention.

(6) The Acting Secretary of the defendant wrote to the members of the defendant on 24 April 2009 informing them that the defendant would be proposing a motion at the meeting of the Federal Congress to expel the plaintiff from membership.

(7) The letter of 24 April 2009 was not considered by any meeting of the defendant's Executive Committee, nor did any meeting authorise its despatch.

Federal Congress 5 The Federal Congress consists of members of the Executive Committee of the defendant and Delegates representing State Councils (s 11). Each State Council is entitled to be represented at the Federal Congress by its Chairman or its nominee from its Executive Committee and an additional delegate from each of the member Societies, being the Society's President or his nominee from among its Executive Committee (s 12). 6 Section 13 of the Constitution sets out the powers and functions of the Federal Congress which include:

(a) To control, manage and administer the affairs of the Federation generally.

(d) To advise and adjudicate upon all disputes concerning the Federation and Islamic Affairs and give decisions in respect thereof.

(e) To adjudicate upon all matters of controversy and differences between the Federal Council, Executive Committee and State Councils or between State Councils and their member Societies and give decisions in respect thereof.

Federal Council 7 The Federal Council consists of the President and Vice President of the defendant; the President/Chairman of each State Council or nominee; the Secretary and Treasurer of the defendant. The powers and functions of the Federal Council are (s 15):

(a) To carry out decisions and resolutions of the Federal Congress and to exercise such powers as may be delegated to it by the Federal Congress.

(b) To determine the time, place and agenda of the meetings of the Federal Congress. (c) To act for and exercise all the functions of the Congress between its meetings in all matters provided always that such actions or decisions might be ratified or reversed by the Congress.

(d) To appoint any Committee, Sub-Committee for any special purpose as it may deem essential for the purpose of carrying out the objects and functions of the Federation.

(e) To delegate any of its powers and functions to the Executive Committee or any other Committee or Sub-Committee appointed by it. 8 The powers and functions of the Federal Council are subject to the control and scrutiny of the Federal Congress (s 16).

Executive Committee 9 The Executive Committee is comprised of the President, Vice President, Secretary and Treasurer of the defendant, all of whom are to be elected by the Federal Congress. The other members of the Executive Committee are the Assistant Secretary and the Assistant Treasurer appointed by the elected President and three Executive Members appointed by the Federal Congress on the recommendation of the President (s 17). 10 The powers and functions of the Executive Committee include (s 18):

(a) To manage and administer the business and affairs of the Federation.

(b) To carry out decisions and resolutions of the Federal Congress and the Federal Council and to exercise such powers and functions as may be delegated to it by them.

(c) To appoint Sub-Committees to perform such functions as it may be decided upon by the Federal Council or Federal Congress, and co-opt such members of the organisation or individuals as may be regarded fit for the purpose. 11 The powers and functions of the Executive Committee are subject to the control and scrutiny of the Federal Council and Federal Congress (s 19). Expulsion 12 The only provision of the Constitution dealing with expulsion is s 5(7) which provides:

(7) Acceptance of new member Societies or expulsion of an existing member Society shall be in accordance with the provisions of this Constitution and relevant resolutions of the Federal Congress/Council. Only member societies of the AFIC which have paid their membership subscription to the AFIC are eligible to participate in the affairs of the AFIC or the relevant State Council. Congress Meetings 13 Section 36 of the Constitution provides as follows:

Persons Entitled to be Present and to Attend Congress - Meetings

(1) the delegates representing the State Councils and the members of the Federal Executive shall be entitled to be present at the Congress meetings and participate in the deliberations, the right to vote being regulated by Section 46.

(2) Other members of the Federation may attend the meetings of the Federal Congress and participate in the discussions, if permitted to do so by the Chairman of the Meeting.

Notices of Motion 14 Section 38 of the Constitution provides:

Notice of Motion at the Annual/Bi-annual Congress

(1) Subject to Section 57(2) any State Council may submit motions by giving notice thereof to the Secretary of the Federation at least three (3) weeks prior to the date of the Annual/Bi-Annual meetings. The motion shall then be placed on the Agenda.

(2) Members of the Federation may submit a motion to the State Councils to be submitted to the Secretary of the Federation as provided herein

Model Rules 15 Section 16(3) of the Associations Incorporation Act 1964 (Tas), the relevant legislation applying to the defendant, provides as follows:

(3) Where an association is incorporated under this Act, in so far as any rules lodged, pursuant to section 7, with its application for incorporation are not inconsistent with or do not exclude or modify the model rules as then in force, the model rules shall be deemed to form part of the rules of the association in the same manner and to the same extent as if they were contained in the rules so lodged. 16 The Model Rules define "committee" as the committee of management of the Association (R 2(1)). Rule 32 provides as follows: Expulsion of Members 32. (1) Subject to this rule, the committee may expel a member from the Association if, in the opinion of the committee the member has been guilty of conduct detrimental to the interests of the Association. (2) The expulsion of a member pursuant to sub-rule (1) of this Rule does not take effect - (a) until the expiration of fourteen days after the service on the member of a notice under sub-rule (3) of this rule; or (b) if the member exercises his right of appeal under this rule, until the conclusion of the special general meeting convened to hear the appeal, whichever is the later date. (3) Where the committee expels a member from the Association, the public officer of the Association shall, without undue delay, cause to be served on the member a notice in writing - (a) stating that the committee has expelled the member; (b) specifying the grounds for the expulsion; and (c) informing the member that if he so desires he may, within fourteen days after the service of the notice on him appeal against the expulsion as provided in this rule.

(4) A member on whom a notice under sub-rule (3) of this rule is served may appeal against the expulsion to a special general meeting by delivering or sending by post to the public officer of the Association, within fourteen days after the service of that notice, a requisition in writing demanding the convening of such a meeting for the purpose of hearing his appeal. (5) Upon receipt of the requisition under sub-rule (3) ( sic ) of this rule, the public officer shall forthwith notify the committee of its receipt and the committee shall thereupon cause a special general meeting of members to be held within twenty-one days after the date on which the requisition is received by the public officer. (6) At a special general meeting convened for the purpose of this rule - (a) no business other than the question of the expulsion shall be transacted; (b) the committee may place before the meeting details of the grounds of the expulsion and the committee's reasons for the expulsion; (c) the expelled member shall be given an opportunity to be heard; and (d) the members present shall vote by secret ballot on the question whether the expulsion should be lifted or confirmed. (7) If at the special general meeting a majority of the members present vote in favour of the lifting of the expulsion, the expulsion shall be deemed to have been lifted and the expelled member is entitled to continue his membership of the Association. (8) If at the special general meeting a majority of the members present vote in favour of the confirmation of the expulsion, the expulsion takes effect, and the expelled member ceases to be a member of the Association.

Letter 24 April 2009 17 The letter referred to in the Notice of Motion was written by the Acting Secretary of the defendant and directed to the defendant's State Council Chairmen, the defendant's Member Societies and the defendant's Executive Committee Members. The letter was headed "Resolution to Remove" the plaintiff. It claimed that the plaintiff had been requested to comply with its Constitution and confirm that it only accepted Societies for membership who were members of the defendant. The letter advised that such request was rejected on 23 April 2009 and that there was therefore "no choice but to recommend to Congress the removal of" the plaintiff. 18 As I have said, although the wording of the letter is in different terms, the parties have accepted that it is a motion to expel the plaintiff from the membership of the defendant.

Model Rule 32 19 The plaintiff submits that the Constitution is inconsistent with and excludes Rule 32. It was submitted that Rule 5(7) specifically provides for the expulsion of member Societies and that the Court should infer that a deliberate decision has been made not to provide for the expulsion of State Councils. It was also submitted that such a conclusion is supported by the fact that State Councils have numerous rights referred to in the Constitution which are not afforded to member Societies. These include the right to be represented at the Federal Congress and to vote and a right to have a Chairman as member of the Federal Council, to nominate candidates for Executive Committee positions, to vote in the election of the Executive Committee and a right to propose resolutions at Federal Congress. 20 Rule 5(7) relates to member Societies. It deals with both acceptance and expulsion of those Societies and requires such to be "in accordance with the provisions" of the Constitution. There is nothing in the Constitution dealing with a regime or scheme to be followed for the expulsion of such member Societies. 21 I am not satisfied that there is anything in the Constitution as it relates to the expulsion of "members" that is inconsistent with the Model Rules. Section 5(7) is not an exhaustive provision covering expulsion of members. It deals specifically with the expulsion of a "member Society", and in my view is not inconsistent with Rule 32. Indeed Rule 32 provides the regime for the expulsion process. 22 It is an agreed fact that the plaintiff is a member of the defendant. It was not suggested in argument that the use of the personal pronouns in Rule 32 precluded its application to either member Societies or other members. There being nothing inconsistent in the Constitution I am satisfied Rule 32 forms part of the Constitution pursuant to s 16(3) of the Associations Incorporation Act 1964 (Tas).

Motion to Expel 23 The next question is whether the Congress is able to deal with a Motion to expel the plaintiff. Rule 32 provides a detailed regime for the expulsion of members. It is the Executive Committee that "may" expel a member. There is no express power given to any other identified body of the defendant. The Executive Committee may only expel a member if it has formed a relevant opinion, being that the member has been guilty of conduct detrimental to the interests of the defendant. The only time that the member has an express right to be heard is at the special general meeting convened to hear the appeal from the decision of the Executive Committee. 24 Mr Cheshire submitted that because the Congress is able to control and scrutinise the powers and functions of the Executive Committee pursuant to s 19 of the Constitution it can control the process under Rule 32 and, itself, resolve to expel the plaintiff. That seems to me to be inconsistent with the provisions of the Constitution, including Rule 32. The process of expelling a member for conduct detrimental to the interest of the defendant is confined to the members of the Executive Committee. The membership of the Congress is far wider than the membership of the Executive Committee. Section 19 of the Constitution does not in my view permit the Congress to operate as the Executive Committee and form the relevant opinion. Rather it gives the Congress a general power of control, such as requiring the Executive Committee to review certain conduct of members for the purpose of the Committee forming its relevant opinion. It may also closely examine the powers exercised by the Committee and its functions. Section 19 does not allow the Congress to usurp the role of the Committee in the expulsion of members. 25 The only entity entitled to place before the special general meeting details of the grounds of the expulsion is the Committee. It is the Committee's reasons that may be placed before the special general meeting when it is convened to hear the appeal from the Committee's decision. 26 The terms of the Constitution, in particular the scheme in Rule 32, support the conclusion that it was never envisaged that the Congress, with broader membership than the Executive Committee would have the power to expel members. There are good reasons for that limitation. The wider constituency, being those delegates who are able to attend the Congress, have various and different obligations to those of the Executive Committee members who are charged with the obligation of managing and administering the business and affairs of the defendant. The affairs of the defendant include ensuring that its objects and purposes are achieved, the achievement of which is dependent in part upon the maintenance of the reputation and standing of the defendant. That reputation and standing is dependent upon its members acting in a manner that is not detrimental to the interests of the defendant. The delegates of the Congress have obligations both to the Congress and to their own members and constituent bodies, whereas the Executive Committee has the interests of the defendant as its paramount obligation. 27 The basis upon which the defendant seeks to expel the plaintiff is its admission to membership of persons who have been rejected as members of the defendant. It was never envisaged that the wider constituency would debate and decide in open forum whether the conduct of the plaintiff warrants its expulsion without the limitations imposed by Rule 32. That Rule provides for an appeal process at a special general meeting at which a member, the subject of an adverse decision, may be heard, after which there is to be a secret ballot. If the Congress were to proceed with the proposed motion and expel the plaintiff, the plaintiff would be left without the protection of the limitation of formulation of the relevant opinion and the appellate rights under the Rule. It would have to resort to seeking some administrative law relief in the courts. It was never intended that such a process would be necessary where a member is expelled. It was always envisaged that an internal system of appeal would be available to a member who had been the subject of a decision by the Executive Committee.

Contract 28 The defendant relied upon the Brereton J's conclusion in Islamic Council of South Australia Inc v Australian Federation of Islamic Councils Inc [2009] NSWSC 211 at [49], that the Constitution is a legally binding and enforceable contract between the defendant and its member institutions to submit that the Congress is entitled to terminate its contract with the plaintiff. The defendant is still constrained by the terms of its contract. The terms of its contract allow termination in a particular manner. Firstly, the Executive Committee must form an opinion in relation to the conduct of the member prior to expulsion or termination. Secondly the member is entitled to appeal from that expulsion or termination. The defendant cannot obtain greater or broader powers contractually than it has within the terms of its Constitution and is limited by the terms of that contract. 29 I am not satisfied that the Congress has the power under the Constitution to put the Motion to the Congress on 9 or 10 May 2009. Procedural Irregularities 30 Mr Pesman submitted that in any event, there has been a failure to comply with section 38 of the Constitution. It was submitted that there is no motion by the State Council to the Secretary of the defendant. That is so. Accordingly it was submitted that the Secretary did not receive a motion in the required period of at least three weeks prior to the Congress meeting this weekend. It was also submitted that the members of the defendant did not submit a motion to the State Councils to be submitted to the Secretary of the Federation pursuant to s 38(2). That is so. 31 There is in evidence an email from the State Council of Tasmania stating that it "supports the resolution" of the defendant with regard to the plaintiff with a request that it be placed in the Agenda for the "coming Congress". That email is dated 25 April 2009 and is less than two weeks before the date of the Congress meeting. Section 37 provides that the Agenda for the Congress meeting has to be forwarded to those entitled to vote at least two weeks before the date before the meeting.

32 In the light of my findings it is not necessary to decide whether these irregularities would prevent the Motion being debated and decided at the Congress, if it were otherwise able to be debated and decided at the Congress. However if it were necessary, it seems to me that there should be strict compliance with procedural requirements where there is a prospect of expulsion. Such a serious consequence requires procedural regularity.

Conclusion 33 I make the order in paragraph 1 of the Notice of Motion filed on 27 April 2009. The defendant is to pay the plaintiff's costs of the Notice of Motion. **********

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