TIAO -v- LAI [No 2] [2010] WASCA 189 (23 September 2010)

TIAO -v- LAI [No 2] [2010] WASCA 189 (23 September 2010) - WASCA 2010 case summary — Zoe

[144]

It would appear that, in so far as the information on the banner has later been transferred to the marble plaque, further donations were included. This would appear to be the only rational explanation for the increase in some of the figures in view of the nature of the list and the fact there was no suggestion of error in the figures. In relation to the difference in the entry for Lai, it appears that there can be two possible explanations. Either there was an error in the banner, or a decision has been made in preparing the marble plaque to set out the dollar amount of the contribution, irrespective of the purpose to which the moneys were put. If the latter interpretation is correct, then, as the second contribution of $50,000 does not appear in the marble plaque and would appear to have been included in a single contribution, the amount of Lai's contribution for the 'land' was $157,000. It is relevant to note that no other person is identified in the marble plaque as having contributed all or part of the moneys for the purchase of the land.

There is no evidence to suggest that there was an error in the banner which was corrected when the marble plaque was produced. No witness suggested that was the case. Settlement of the property took place on 9 June 1993. The temple was completed in 1996 and the opening, at which the banner was displayed, took place in April 1996. I have no doubt that in a period of three years the board members would have been well aware of which funds were used to purchase the property and which were used to build the temple. A banner suggesting that Lai paid for the land when he did not could not have escaped the attention of his fellow board members.

Further, there are good reasons why there is a single entry on the marble plaque representing Lai's contribution. Reduced cost and space is one such reason. The fact that a reference to a donation of the land does not indicate the value of the contribution is another.

There is, therefore, evidence independent of Lai which supports the conclusion that Lai donated the land and, therefore, supports his evidence that the funds contributed by him were used to reimburse the Association for the money used to purchase the land [174] - [177].

[147]

I find that Chou, supported by Lai, put before the board a proposal for the various divisions or worship groups to jointly run the Association and to identify the aims and policy of a jointly run Association. In particular, the proposal involved the Association being run by an elected board of directors in accordance with the constitution with power to control all expenditure and income, rather than an Association run by individual board members acting without the knowledge and approval of the board. Consequently, there was a very strong reason for Master Wang and any director aligned with him, in this case Tiao and Hui Ping Wang, to be concerned about and reject the proposal put forward by Chou. I further find that Lai and Chou were frustrated at the refusal of the other board members to give reasonable consideration to the proposals put before them, rather than angry at the rejection of a claim to have the majority use of the temple.

Chou's notes also supports [sic] the conclusion I have drawn that, amongst other matters, the issue of the dominance of a particular worship group underlies the conduct of Tiao and Hui Ping Wang in their dealings with Lai and Chou and in the management of the Association.

On Tiao's own evidence, between 1996 and February 2005 the Association's affairs continued to be conducted in an informal manner with no AGMs held during that period. The failure by Master Wang, Hui Ping Wang and Tiao to adopt the aims and practices set out in Chou's note to Tiao and discussed at the 8 April meeting, and to identify the requirements of the constitution, meant that the mismanagement of the Association continued for another nine years and a group of 'members' who had generously contributed to the purchase of the land and the construction of the temple were effectively excluded from involvement in the Association.

I also consider that Master Wang, Tiao and Hui Ping Wang were given sufficient warning in this meeting of the requirements for the proper management of an Association as a result of which they should have taken steps to have the constitution translated and to act in accordance with the terms of the constitution. In my view, they preferred the informal way in which the Association was being run by them and deliberately failed to take the appropriate steps.

There is no doubt in my mind that Lai and Chou were in a difficult position following the 8 April 1996 meeting. They were aware that the majority of the board, one of whom was the master of the temple, were not prepared to adopt the requirements of the constitution or to run the Association in a way which would allow the contributors from different worship groups to utilise the Association's facilities on a fair and reasonable basis. It was also apparent that there was a majority of the board members who were aligned in their views on the way in which the Association should be managed. Consequently, there was little, if anything, that Lai or Chou could do to change that situation. Further, if no formal meetings of directors were held and if neither Lai nor Chou were made aware of issues being considered, there would be no opportunity for them to have any input into the management of the Association. Further, if no meetings of members were held, there would be no opportunity to change the composition of the board and thus change the way in which the Association was managed [226] - [230].

[221]

As I have already concluded, the board of directors referred to in cl 8 is a board of directors elected by ordinary members at an AGM. Consequently, the three year period of office is the appropriate time frame for board members elected in that way. It is not the appropriate time frame for the inaugural board operating through the formation stage. Consequently, I do not accept that after three years, if there has been no AGM and no election of board members, the inaugural board made up of the foundation members must cease to operate. However, neither do I accept that the inaugural board could simply continue on, either by notionally re-electing itself or by some other means, until such time as the majority of the foundation members saw fit to call an AGM, in this case in 2006. Such a construction would only encourage those who wished to personally control the Association to continue in office rather than hand over to an elected board of directors. It may be that, if the membership is growing but not sufficiently quickly to be at the required level of 30 members at the time an AGM is to be held to elect a new board of directors, it would be in the interests of the Association for the inaugural board to continue to operate the Association but only for the purposes of increasing the membership to the required level and then holding a delayed AGM.

Consequently, it is my view that, although the foundation members were entitled to act as the board of directors pending the membership increasing to the necessary level, once the membership reached that level an AGM should have been held in accordance with the constitution. Clause 11.2 of the constitution requires an AGM to be convened not later than 30 October of each year. In other words, in my opinion, an AGM should have been held no later than 30 October in the first year that the membership reached 30 members. In Popovic v Tanasijevic [2001] SASC 289, the South Australian Full Court referred with approval to the decision in Green v Page [1957] Tas SR 66, 78 - 79, where it was held that, even if a provision of the constitution requires the AGM to be held in a particular month it by no means follows that an annual general meeting held at a later time must be treated as having been invalidly convened and unable legally to do any business. It was further held that the legal duty to convene the meeting did not cease to exist because it had not been performed within the prescribed time: Green v Page (42). Therefore, if the meeting which was held on 26 February 2005, or any subsequent meeting, was not validly convened, and despite the fact that an AGM should have been convened at a much earlier stage, the legal duty to convene the AGM continues to exist and an AGM could and should be called by the inaugural board of directors to overcome their failure to call the AGM in accordance with cl 11.2 of the constitution [368] - [369].

[225]

Mason CJ considered (at 407) that the authorities dealing with waiver of statutory rights did not call for special consideration and said that they spoke 'with different voices, sometimes in the language of election, at times in that of estoppel and at other times in terms of unconscionability'. He also said (at 406 - 407) that the better view was that 'apart from estoppel and new agreement, abandonment of a right occurs only where the person waiving the right is entitled to alternative rights inconsistent with one another such as the right to insist on performance of a contract and the right to rescind for essential breach' and that this category of waiver was an example of the doctrine of election.

Brennan J, while considering (at 422) that waiver was a term of 'shifting meaning', believed that it was different from estoppel and (at 423) that it 'recognises the unilateral divestiture of certain rights'. He also considered that waiver is distinct from election, saying (at 424) that the 'sterilising of a right might, in some circumstances, be attributable to either a waiver or an election, but the doctrines are distinct, for a right may be waived though there is no alternative right inconsistent with it'.

Deane J (at 449 - 450) thought it 'preferable to confine the rubric of "waiver" within the area of the law in which, notwithstanding the absence of consideration, the act of the alleged waivor is of itself directly operative to "waive" a right or entitlement without there being any need to establish that the other party has acted upon the basis that the right or entitlement in question was no longer asserted'.

Dawson J favoured the view (at 451) that waiver was an imprecise term 'used to describe what is done in a variety of circumstances rather than to assert any particular legal process'. He said that, when not used in the sense of election, if it had any identifiable legal consequence, it was generally indistinguishable from estoppel. However, he added that, where the term was not used to describe an election or estoppel, it might be used, loosely, to refer to non-insistence upon a right by choice or default.

Toohey J considered (at 468) that 'waiver as a notion applicable both to the loss of a right and the loss of a defence' had 'a reputable lineage' and (at 471) that it 'has a role to play'. He went on to say (at 473):

[230]

Waiver has often been used in senses synonymous with election or estoppel. It has been suggested (see, eg, Finagrain SA Geneva v P Kruse Hamburg [1976] 2 Lloyd's Rep 508 at 534 per Megaw LJ) that waiver is indistinguishable from one or other of those doctrines. Sometimes, although expressed in terms of waiver, the reasoning adopted in cases reveals the elements for applying a more specific principle, typically election (see, eg, R v Paulson [1921] 1 AC 271 at 280, 283; Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The Kanchenjunga) [1990] 1 Lloyd's Rep 391 at 397-398) or estoppel (see, eg, Enrico Furst & Co v WE Fischer Ltd [1960] 2 Lloyd's Rep 340 at 349-350; W J Alan & Co Ltd v El Nasr Export & Import Co [1972] EWCA Civ 12; [1972] 2 QB 189 at 213). And it may be that in cases of the several kinds last mentioned, the term is used as no more than a conclusionary word stating the consequences of the operation of that more specific principle, rather than as indicating the application of any distinct and independent principle.

Nonetheless, it is clear that there are cases in which the word has been used in senses other than those embraced by principles of election, estoppel or variation of contract. So, for example, waiver has been used in the sense of rescission where what has occurred is 'an entire abandonment and dissolution of the contract' (Mulcahy v Hoyne [1925] HCA 17; (1925) 36 CLR 41 at 53 per Isaacs J, citing Price v Dyer [1810] EngR 588; (1810) 17 Ves Jr 356 at 364 [34 ER 137 at 140]). It has been used in connection with a party not insisting upon a term of a contract which is identified as a term for that party's sole benefit (see, eg, Mulcahy v Hoyne [1925] HCA 17; (1925) 36 CLR 41 at 55 per Isaacs J; at 58 per Starke J; Gange v Sullivan [1966] HCA 55; (1966) 116 CLR 418 at 429 per Barwick CJ). And from time to time 'waiver' has been used (see, eg, Bacon v Purcell [1916] UKPCHCA 2; (1916) 22 CLR 307 at 312; Embrey v Earp (1890) 6 WN (NSW) 130 at 131) to describe some modification of the terms of a contract without the formalities, or consideration, necessary for an effective contractual variation.

The uncertainties and difficulties which attach to the use of the term 'waiver' have been recognised in judgments of this court (see, eg, The Commonwealth v Verwayen (1990) 170 CLR 394 at 406 per Mason CJ; at 422 per Brennan J; at 467, 472 per Toohey J; Mann v Carnell [1999] HCA 66; (1999) 201 CLR 1 at 13 [28] per Gleeson CJ, Gaudron, Gummow and Callinan JJ). Yet 'waiver' remains firmly embedded in the lawyer's lexicon. For example, in Osland v Secretary to the Department of Justice (2008) 234 CLR 275 this court considered the circumstances in which by its conduct a party entitled to legal professional privilege against the production of documents is to be taken to have 'waived' that privilege ((2008) 234 CLR 275 at 296-297 [45], 298-299 [49], 312-313 [97], 321 [131]).

The uncertainties and difficulties which attach to the use of the term have prompted attempts to construct a taxonomy of waiver in which distinctions are drawn between 'waiver by election' and 'pure waiver' (Wilken and Villiers, The Law of Waiver, Variation and Estoppel, 2nd ed (2002), pp 45-46 [4.01], 60 [4.28]) or between 'waiver by election' and 'unilateral waiver' (Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] EWCA Civ 1068; [2002] 2 Lloyd's Rep 487 at 506 [64] per Potter LJ). It is not necessary to consider whether such classifications are useful. Rather, it is important to identify the principles that are said to be engaged in the particular case [51] - [54].

[331]

There be judgment for [Mr Lai].
[Mr Lai], Yung Sen Chou and the Members are not to be denied access to the property of the Association including the Temple situated at Lot 42 Warton Road, Canning Vale ('Property') and all financial records of the Association.
[Mr Tiao and Mr Hui Wang] do pay [Mr Lai's] costs of the action, including reserved costs, to be taxed if not agreed and paid by [Mr Tiao and Mr Hui Wang] within one month from the date of taxation or agreement.
[Mr Tiao and Mr Hui Wang] and Song Tyan Kuo be and are permanently restrained from giving effect to or further proceedings with the Level Holdings contract.
Once the Association has held a General Meeting, elected a board of directors, identified is financial position and passed a resolution at a validly convened general meeting which identifies the extent to which the development of the land under the Level Holdings contract needs to be reversed, there be liberty to apply for an order that [Mr Tiao and Mr Hui Wang] do restore the Land to its original condition as it stood prior to 11 May 2004 at their own costs.
A General Meeting of the Association is to be convened in accordance with the terms of the constitution to appoint a new board and is to be held within 60 days from the date of this order.
[Mr Lai] is to take all necessary steps under the Association's Constitution to convene, organize and chair the general meeting referred to in order 5.
No new members shall be admitted to the Association between the date of this order and the holding of the general meeting.
[Mr Tiao and Mr Hui Wang] be and are restrained from operating or opening any bank accounts of the Association or any bank account in which funds of the Association are held until the conclusion of the general meeting referred to in order 6.
[Mr Tiao and Mr Hui Wang] pay [Mr Lai's] costs of the hearing on 6 March 2009 and 22 May 2009, to be taxed if not agreed.
All monies paid by the Association to Conal O'Toole, Butcher Paull & Calder or Peter McGowan of counsel be repaid to the Association by [Mr Tiao and Mr Hui Wang] jointly and severally within one month with interest at 6% per annum payable from 22 June 2009.
Liberty to apply with 48 hours' notice until such time as the general meeting referred to in order 6 has been held and a new board elected.

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TIAO -v- LAI [No 2] [2010] WASCA 189 (23 September 2010)

Legislation Cited (4)

Cases Cited (19)